-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OmWCAm9tGOmnNvJiuwiRsgMk6PX7f9+oPK6+vkXzf8KnqyTs5XGS4FjD1IlicaIn 0YNsNVnUskgBiZJI8u+J2g== 0000911420-04-000090.txt : 20040312 0000911420-04-000090.hdr.sgml : 20040312 20040312143145 ACCESSION NUMBER: 0000911420-04-000090 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20040312 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PVC FUNDING PARTNERS LLC CENTRAL INDEX KEY: 0001221490 IRS NUMBER: 061677943 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 830 3RD AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128295800 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PROXYMED INC /FT LAUDERDALE/ CENTRAL INDEX KEY: 0000906337 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 650202059 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-45897 FILM NUMBER: 04665675 BUSINESS ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FORT LAUDERDALE STATE: FL ZIP: 33317-7424 BUSINESS PHONE: 9544731001 MAIL ADDRESS: STREET 1: 2555 DAVIE ROAD STREET 2: SUITE 110 CITY: FT LAUDERDALE STATE: FL ZIP: 33317 FORMER COMPANY: FORMER CONFORMED NAME: HMO PHARMACY INC DATE OF NAME CHANGE: 19930601 SC 13D 1 d948536.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) PROXYMED, INC. (FT. LAUDERDALE) ------------------------------- (Name of Issuer) Common Stock, Par Value $.001 Per Share -------------------------------------- (Title of Class of Securities) 744290305 --------- (CUSIP Number of Class of Securities) Michael Falk PVC Funding Partners, LLC 830 Third Avenue New York, NY 10022 (212) 829-5800 ------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copy to: Alan I. Annex, Esq. Greenberg Traurig, LLP 200 Park Avenue New York, New York 10166 (212) 801-9200 March 2, 2004 ---------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a Statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D and if filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ] (continued on following pages) (Page 1 of 12 Pages) - -------------------------------------------------------------------------------- CUSIP No. 744290305 13D Page 2 of 12 Pages - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON: PVC Funding Partners, LLC S.S. OR I.R.S. IDENTIFICATION No. OF ABOVE PERSON: 06-1677943 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS WC (SEE ITEM 3) - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - -------------------------------------------------------------------------------- NUMBER OF 7. SOLE VOTING POWER SHARES --------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 2,080,115 --------------------------------------------------- EACH REPORTING 9. SOLE DISPOSITIVE POWER PERSON --------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 2,080,115 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,080,115 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 17.2% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON OO (Page 2 of 12 Pages) - -------------------------------------------------------------------------------- CUSIP No. 744290305 13D Page 3 of 12 Pages - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON: Michael Falk S.S. OR I.R.S. IDENTIFICATION No. OF ABOVE PERSON: ###-##-#### - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS AF/PF (SEE ITEM 3) - -------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF 7. SOLE VOTING POWER SHARES 189,080 --------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 2,674,262 --------------------------------------------------- EACH REPORTING 9. SOLE DISPOSITIVE POWER PERSON 189,080 --------------------------------------------------- WITH 10. SHARED DISPOSITIVE POWER 2,674,262 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,674,262 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.0% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON OO (Page 3 of 12 Pages) Item 1. Security and Issuer. This Statement relates to shares (the "Shares") of the Common Stock, $.001 par value per share (the "Common Stock") of ProxyMed, Inc., a Florida corporation (the "Issuer") that were issued by the Issuer to each Reporting Person on March 2, 2004 in connection with the merger of Planet Acquisition Corp., the wholly-owned subsidiary of the Issuer ("Sub") with and into PlanVista Corporation ("PV"), pursuant to the terms and conditions of an Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 5, 2003, by and among the Issuer, PV and Sub. The principal executive offices of the Issuer are located at 2555 Davie Road, Suite 110, For Lauderdale, FL 33317-7424. Item 2. Identity and Background. This statement is filed jointly by PVC Funding Partners, LLC, a Delaware limited liability company ("PVC Funding") and Michael Falk, an individual ("Falk") and the managing partner of ComVest Venture Partners, L.P., a Delaware limited liability company ("ComVest Venture"), the principal member of PVC Funding. PVC Funding is managed by Commonwealth Associates, LP, a Delaware limited partnership ("Commonwealth Associates") and ComVest Venture. Falk is the managing partner of ComVest Venture, the principal member of PVC Funding. In addition, Falk is the Chairman and the principal member of Commonwealth Associates Group Holdings, LLC, a Delaware limited liability company ("CAGH"), which is an affiliate of PVC Funding. CAGH also owns Commonwealth Management, LLC, a Delaware limited liability company ("Commonwealth Management"), which is the general partner of Commonwealth Associates. Further, Falk is the managing member of each of Commonwealth Associates Liquidation LLC, a Delaware limited liability company ("Commonwealth Liquidation") and ComVest Capital Partners LLC, a Delaware limited liability company ("ComVest Capital"), both affiliates of PVC Funding. Falk is a citizen of the United States of America. The business address for PVC Funding, Falk and each of the other individuals described in this Item 2 is 830 Third Avenue, 8th Floor, New York, New York 10022. (d) and (e). During the last five years, neither PVC Funding nor Falk nor any other person enumerated in this Item 2, has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (Page 4 of 12 Pages) Item 3. Source and Amount of Funds or Other Consideration. Pursuant to an Agreement and Plan of Merger, dated December 5, 2003 (the "Merger Agreement"), by and among the Issuer, the Sub and PV, the Sub was merged (the "Merger Transaction") with and into PV and the holders of capital stock of PV exchanged their respective shares of capital stock of PV for shares of capital stock of the Issuer. Each outstanding share of common stock of PV was cancelled and exchanged for .80271 shares of Common Stock of the Issuer. In addition, each share of Series C Preferred Stock of PV was converted into shares of common stock of PV at the internal rate of 751.8796992 and each resulting share of common stock of PV was exchanged for .06852 shares of Common Stock of the Issuer. In connection with the Merger Transaction, the Issuer entered into a Stock Purchase Agreement, dated as of December 5, 2003 (the "Stock Purchase Agreement"), with PVC Funding, ComVest Venture and the other individuals named therein. In accordance with the Stock Purchase Agreement, PVC Funding purchased 175,438 shares of Common Stock of the Issuer in exchange for a purchase price of $2,500,000 at a rate of $14.25 per share. In addition, ComVest Venture purchased 112,281 shares of Common Stock of the Issuer in exchange for a purchase price of $1,600,000 at a rate of $14.25 per share. In each case, the purchase price was paid from working capital of PVC Funding or ComVest Venture, as applicable, each of which maintain an investment fund, consisting of capital contributions from its members and capital appreciation derived therefrom for the principal purpose of buying and selling securities and interests in domestic and foreign securities, including, without limitation, convertible securities, stock index features contracts, options, puts and calls on stock and warrants. Item 4. Purposes of Transaction. PV, of which PVC Funding is a principal stockholder, entered into the Merger Agreement in furtherance of PV's long-term business strategy. PVC Funding and ComVest Venture each purchased shares of Common Stock of the Issuer under the Stock Purchase Agreement for investment purposes and not with the view to or for sale in connection with any distribution thereof. Except in the ordinary course of business or as set forth below, neither Reporting Person has any present intention or plans or proposals which relate to or could result in any of the matters referred to in paragraphs (a) through (j) of Item 4 of Schedule 13D. In accordance with Section 8.5 of the Stock Purchase Agreement, PVC Funding, ComVest Venture and certain other of their respective affiliates that purchased shares of Common Stock of the Issuer pursuant to the Stock Purchase Agreement, shall not sell (directly or indirectly) any of the shares of Common Stock of the Issuer purchased or received by such individuals in the Merger Transaction except such individuals shall be entitled to sell, in the aggregate, that number of such shares in any three (3) month period as would be permitted to be sold pursuant to Rule 144(e)(1)(i) of the Securities Act of 1933, as amended (the "Act"). In addition, such individuals shall be entitled to sell their shares of Common Stock of the Issuer to certain permitted transferees, in connection with certain sale transactions of the Issuer, and in transactions that are otherwise approved by the Board of Directors of the Issuer. (Page 5 of 12 Pages) As contemplated by the Amended and Restated Registration Rights Agreement, dated as of March 2, 2004, by and among the Issuer, PVC Funding, ComVest Venture and the other individuals named therein (the "Registration Rights Agreement"), PVC Funding and ComVest Venture and certain of their respective affiliates who purchased shares of Common Stock of the Issuer (the "Affiliates") shall be entitled, at any time, to demand (upon the affirmative vote of a majority-in-interest of PVC Funding, ComVest and the Affiliates) that the Issuer register for resale under the Act all or a portion of the shares of Common Stock of the Issuer held by PVC Funding, ComVest Venture and the Affiliates, subject to certain customary cut-backs and hold-back provisions. In addition, PVC Funding, ComVest Venture and the Affiliates shall be entitled to exercise customary "piggyback" registration rights at any time. Further, PVC Funding, ComVest Venture and the Affiliates shall be entitled to request (upon the affirmative vote of a majority-in-interest of PVC Funding, ComVest and the Affiliates) that the Company register for resale under the Act on Form S-3 all or a portion of the shares of Common Stock of the Issuer held by PVC Funding, ComVest Venture and the Affiliates, subject to certain customary cut-backs and hold-back provisions. Notwithstanding anything to the contrary contained herein, each Reporting Person reserves the right, depending on all relevant factors, to change its intention with respect to any and all of the matters referred to above. The foregoing descriptions of the Merger Transaction, the Merger Agreement, the Stock Purchase Agreement and the Registration Rights Agreement are not intended to be complete and are qualified in their entirety by the complete texts of each such agreement, which are incorporated herein by reference. Copies of the Merger Agreement, the Stock Purchase Agreement and the Registration Rights Agreement are filed as Exhibits 1, 2, and 3 hereto, respectively. Item 5. Interests in Securities of the Issuer. (a) and (b) As of the close of business on the date hereof, PVC Funding beneficially owned a total of 2,080,115 shares of Common Stock of the Issuer (representing approximately 17.2% of the outstanding capital stock of the Issuer as of March 2, 2004). By virtue of his status as the managing partner of ComVest Venture, the principal member of PVC Funding, Falk may be deemed to have indirect beneficial ownership of all of the shares of Common Stock of the Issuer owned by PVC Funding. However, Falk disclaims any beneficial ownership of that portion of such shares that are beneficially owned by third-party investors in PVC Funding. As of the close of business on the date hereof, Falk could be deemed to beneficially own a total of 2,674,262 shares (the "Falk Shares") of Common Stock of the Issuer (representing approximately 18.0% of the outstanding capital stock of the Issuer as of March 2, 2004). Of the Falk Shares, Falk benefically owns of record an aggregate of 189,080 shares of Common Stock, representing (i) 124,190 shares of Common Stock of the Issuer owned by Falk prior to the Merger Transaction, (ii) 1,000 shares of Common Stock of the Issuer owned by Falk's IRA prior to the Merger Transaction, (iii) 4,674 shares of Common Stock of the Issuer received by Falk in exchange for 56,511 shares of common stock of PV owned by Falk, at a conversion rate of .08271 per share, and (iv) options to purchase an aggregate of 59,216 shares of Common Stock of the Issuer, which options were exercisable by Falk as of May 29, 2003 at an exercise price of $10.63 per share and shall expire on May 29, 2013. (Page 6 of 12 Pages) The remainder of the Falk Shares are owned as follows: (i) 5,000 shares of Common Stock of the Issuer are owned by the Falk Family Foundation. Such Shares were owned prior to the Merger Transaction. Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of these shares. (ii) 1,000 shares of Common Stock of the Issuer are owned by the Mikaela Falk Trust, of which Michael Falk's wife, Annie Falk, is Trustee. Such shares were owned prior to the Merger Transaction. Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of these shares. (iii) 1,000 shares of Common Stock of the Issuer are owned by the Gianna Falk Trust, of which Michael Falk's wife, Annie Falk, is Trustee. Such shares were owned prior to the Merger Transaction. Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of these shares. (iv) 1,101 shares of Common Stock of the Issuer are owned by Annie Falk, Michael Falk's wife. Such shares were owned prior to the Merger Transaction. By virtue of his status as Annie Falk's husband, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of these shares. (v) An aggregate of 19,431 shares of Common Stock of the Issuer are owned by Commonwealth Associates, of which 19,402 shares were owned prior to the Merger Transaction and 29 shares were received by Commonwealth Associates in exchange for 359 shares of common stock of PV owned by Commonwealth Associates, at a conversion rate of .08271 per share. By virtue of his status as Chairman and majority member of CAGH, which owns 100% of Commonwealth Management, the general partner of Commonwealth Associates. Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of these shares. However, Falk disclaims any beneficial ownership of that portion of these shares owned by third-party investors in Commonwealth Associates. (vi) 248,446 shares of Common Stock of the Issuer are owned by Commonwealth Liquidation. Such shares were owned prior to the Merger Transaction. By virtue of his status as managing member of Commonwealth Liquidation, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of these shares. However, Falk disclaims any beneficial ownership of that portion of these shares owned by third-party investors in Commonwealth Liquidation. (vii) 16,278 shares of Common Stock of the Issuer are owned by ComVest Capital Partners. Such shares were owned prior to the Merger Transaction. By virtue of his status as managing member of ComVest Capital, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of these shares. However, Falk disclaims any beneficial ownership of that portion of these shares owned by third-party investors in ComVest Capital. (Page 7 of 12 Pages) (viii) 530 shares of Common Stock of the Issuer were received by CAGH in exchange for 6,408 shares of common stock of PV owned by CAGH, at a conversion rate of .08271 per share. By virtue of his status as Chairman and majority member of CAGH, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of these shares. However, Falk disclaims any beneficial ownership of that portion of these shares owned by third-party investors in CAGH. (ix) 112,281 shares of Common Stock of the Issuer were purchased by ComVest Venture for a purchase price of $1,600,000 at a rate of $14.25 per share. By virtue of his status as managing member of ComVest Venture, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of these shares. However, Falk disclaims any beneficial ownership of that portion of these shares owned by third-party investors in ComVest Venture. (x) An aggregate of 2,080,115 shares of Common Stock of the Issuer are owned by PVC Funding, of which (a) PVC Funding purchased 175,438 shares for a purchase price of $2,500,000, at a rate of $14.25 per share, (b) PVC Funding received 1,702,274 shares in exchange for 33,037 shares of Series C Preferred Stock of PV owned by PVC Funding (which were internally converted into 24,839,850 shares of common stock of PV at a rate of 751.8796992 per share, which were then converted into 1,702,274 shares of Common Stock of the Issuer at a rate of .06853 per share), (c) PVC Funding received 4,516 shares in exchange for 54,602 shares of common stock of PV owned by PVC Funding, at a conversion rate of .08271, and (d) PVC Funding received 197,887 shares of Common Stock of the Issuer upon conversion of two notes in the aggregate principal amount of $2,392,542, issued by PV to PVC Funding on March 31, 2003 and April 18, 2003, which notes were converted on a 1-to-1 basis into 2,392,542 shares of common stock of PVC, which were then converted into an aggregate of 197,887 shares of Common Stock of the Issuer at a conversion rate of .08271. By virtue of his status as the managing partner of ComVest Venture, the principal member of PVC Funding, Falk may be deemed to share voting and dispositive power with respect to such shares and may therefore be deemed to have indirect beneficial ownership of all of the shares of Common Stock of the Issuer owned by PVC Funding. However, Falk disclaims any beneficial ownership of that portion of such shares that are beneficially owned by third-party investors in PVC Funding. Falk (and certain other members of CAGH) may be entitled to receive a portion of CAGH's financial intrest in PVC, which could result in the increase in the number of shares of capital stock of the Issuer of which Falk could be deemed to have beneficial ownership. (c) Not applicable. (d) Not applicable. (e) Not applicable. (Page 8 of 12 Pages) Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Other than as set forth above, neither PVC Funding, Falk nor any other person named in Item 2 above has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, including but not limited to any contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. The following documents are being filed as Exhibits to this Statement and are each incorporated by reference herein. EXHIBIT NO. DOCUMENT 1 Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Issuer, Planet Acquisition Corp. and PlanVista Corporation 2 Stock Purchase Agreement, dated December 5, 2003, by and among the Issuer, PVC Funding Partners, LLC, ComVest Venture Partners, L.P. and certain other investors named therein 3 Registration Rights Agreement, dated March 2, 2004, by and among the Issuer, PVC Funding Partners, LLC, ComVest Venture Partners, L.P. and certain other individuals named therein (Page 9 of 12 Pages) SIGNATURE After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct. Dated: March 12, 2004 PVC FUNDING PARTNERS, LLC By: /s/Michael Falk ---------------------------------------- Name: Michael Falk Title: Authorized Signatory Dated: March 12, 2004 /s/Michael Falk -------------------------------------------- MICHAEL FALK, individually (Page 10 of 12 Pages) EXHIBIT NO. DOCUMENT 1 Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Issuer, Planet Acquisition Corp. and PlanVista Corporation 2 Stock Purchase Agreement, dated December 5, 2003, by and among the Issuer, PVC Funding Partners, LLC, ComVest Venture Partners, L.P. and certain other investors named therein 3 Registration Rights Agreement, dated March 2, 2004, by and among the Issuer, PVC Funding Partners, LLC, ComVest Venture Partners, L.P. and certain other individuals named therein (Page 11 of 12 Pages) JOINT FILING AGREEMENT The undersigned hereby consent to the joint filing by any of them of a Statement on Schedule 13D and any amendments thereto, whether heretofore or hereafter filed, relating to the securities of ProxyMed, Inc., and hereby affirm that this Schedule 1D is being filed on behalf of each of the undersigned. Dated: March 12, 2004 PVC FUNDING PARTNERS, LLC By: /s/Michael Falk ---------------------------------------- Name: Michael Falk Title: Authorized Signatory Dated: March 12, 2004 /s/Michael Falk -------------------------------------------- MICHAEL FALK, individually (Page 12 of 12 Pages) EX-1 3 e949295.txt EXHIBIT 1 EXHIBIT 1 AGREEMENT AND PLAN OF MERGER Dated as of December 5, 2003 By and Among PROXYMED, INC. PLANET ACQUISITION CORP. and PLANVISTA CORPORATION AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger (this "Agreement"), dated as of December 5, 2003, is entered into by and among ProxyMed, Inc., a Florida corporation ("Parent"), PlanVista Corporation, a Delaware corporation (the "Company"), and Planet Acquisition Corp., a Delaware corporation ("Sub") and a wholly owned subsidiary of Parent. WHEREAS the respective Boards of Directors of Parent, Sub and the Company have approved the merger (the "Merger") of Sub with and into the Company on the terms and subject to the conditions set forth in this Agreement; WHEREAS, the Board of Directors of the Company has determined that the Merger is consistent with and in furtherance of the long-term business strategy of the Company and in the best interests of the Company, the holders of the Series C Preferred Stock, par value $0.01 per share of the Company (the "Series C Stock") and the holders of the common stock, par value $0.01 per share, of the Company (the "Company Common Stock"), and has approved this Agreement, declared its advisability, and recommended that the stockholders of the Company adopt this Agreement; WHEREAS, the Board of Directors of Parent (i) has determined that the Merger is consistent with and in furtherance of the long-term business strategy of Parent and in the best interests of Parent and its shareholders and has approved and adopted this Agreement, the Merger and the other transactions contemplated by this Agreement and (ii) has recommended that the stockholders of Parent approve the issuance of shares of common stock, par value $0.001 per share, in Parent ("Parent Common Stock") in connection with the Merger and the other transactions contemplated hereby; WHEREAS, the Board of Directors of Sub has determined that the Merger is consistent with and in furtherance of the long-term business strategy of Sub and in the best interests of Sub and its stockholder and has approved this Agreement, declared its advisability, and recommended that Parent adopt this Agreement; WHEREAS, Parent, in its capacity as sole stockholder of Sub, will adopt this Agreement in accordance with the requirements of the General Corporation Law of the State of Delaware (the "DGCL") immediately after the execution and delivery of this Agreement; and WHEREAS, for federal income tax purposes, it is intended by Parent, Sub and the Company that the Merger shall qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall constitute a plan of "reorganization;" WHEREAS, simultaneously with the execution and delivery of this Agreement and as a condition and inducement to the willingness of the Company to enter into this Agreement, the Company and certain shareholders of Parent (the "Parent Voting Shareholders") are entering into an agreement, dated as of the date hereof (the "Parent Voting Agreement") pursuant to which the Parent Voting Shareholders will agree to vote all of their shares of Parent Common Stock in favor of the issuance of shares of Parent Common Stock in connection with the Merger and to take certain other actions in furtherance of the transactions contemplated by this Agreement upon the terms and subject to the conditions set forth in the Parent Voting Agreement, substantially in the form attached hereto as Exhibit A; WHEREAS, simultaneously with the execution and delivery of this Agreement and as a condition and inducement to the willingness of Parent and Sub to enter into this Agreement, Parent and Sub and certain stockholders of the Company (the "Company Voting Stockholders") are entering into an agreement, dated as of the date hereof (the "Company Voting Agreement") pursuant to which the Company Voting Stockholders will agree to vote all of their shares of Company Common Stock or Series C Stock, as the case may be, in favor of the adoption of this Agreement and to take certain other actions in furtherance of the transactions contemplated by this Agreement upon the terms and subject to the conditions set forth in the Company Voting Agreement, substantially in the form attached hereto as Exhibit B; and WHEREAS, Parent, Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I. THE MERGER 1.01. The Merger. On the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL, Sub shall be merged with and into the Company at the Effective Time (as defined in Section 1.02). At the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation (the "Surviving Corporation"). The Surviving Corporation shall possess all the rights, privileges, immunities, powers and franchises of the Company and Sub, and the Surviving Corporation shall by operation of law become liable for all of the debts, liabilities and duties of the Company and Sub. 1.02. Effective Time; Closing. As promptly as practicable (and in any event within two business days) after the satisfaction or waiver of the conditions set forth in Article VII hereof (other than those conditions that by their nature are to be satisfied at the Closing), the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware and by making all other filings required under the DGCL in connection with the Merger, in such form as is required by, and executed in accordance with the relevant provisions of, the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later time as the parties hereto agree and as shall be specified in the Certificate of Merger (the date and time the Merger becomes effective, the "Effective Time"). On the date of such filing, a closing (the "Closing") shall be held at 10:00 a.m., Eastern Standard Time, at the offices of Holland & Knight LLP, One East Broward Boulevard, Suite 1300, Fort Lauderdale, Florida 33301, or at such other time and location as the parties hereto shall otherwise agree. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date." -2- 1.03. Effects. At the Effective Time, the Merger shall have the effects set forth in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. 1.04. Certificate of Incorporation and By-laws. (a) The Certificate of Incorporation of the Company shall be amended in the Merger to read in its entirety in the form of Exhibit C attached hereto, and, as so amended, such Certificate of Incorporation shall be the Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law (as defined in Section 3.05). (b) Subject to Section 6.06, at the Effective Time, Parent shall cause the By-laws of Sub, as in effect immediately prior to the Effective Time, a copy of which has been provided to the Company prior to or on the date of this Agreement, to be the By-laws of the Surviving Corporation until thereafter changed or amended as provided by applicable Law. 1.05. Directors. At the Closing, Parent shall take all requisite action to cause the directors of Sub to be the directors of the Surviving Corporation and such directors shall hold office until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. 1.06. Officers. At the Closing, Parent shall designate the officers of the Surviving Corporation and such officers shall hold office until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be. ARTICLE II. EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 2.01. Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Sub, the Company or the holders of any of the following securities: (a) Capital Stock of Sub. Each issued and outstanding share of capital stock of Sub shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation ("Surviving Corporation Common Stock"), and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. Following the Effective Time, each certificate evidencing ownership of shares of Sub common stock shall evidence ownership of such shares of Surviving Corporation Common Stock. (b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of Company Common Stock or warrant for the purchase of shares of Company Common Stock that is owned directly by the Company, Parent or Sub or any direct or indirect wholly owned subsidiary of Company or of Parent shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and no other consideration shall be delivered or deliverable in exchange therefor. Parent agrees that its warrant to purchase Company Common Stock will be canceled at the Effective Time with no consideration being deliverable in respect thereof. -3- (c) Stock Options. (i) All stock options ("Company Options") outstanding, whether or not exercisable and whether or not vested, at the Effective Time under those stock options plans described in Schedule 2.01(c) (collectively, the "Company Stock Option Plans"), and all stock appreciation rights linked to the price of Company Common Stock and granted under any Company Stock Option Plan (a "Company SAR") shall be canceled at or prior to the Effective Time. As soon as practicable following the date of this Agreement, the Company Board of Directors (or, if appropriate, any committee administering the Company Stock Option Plans) shall adopt such resolutions or take such other actions as are required to effect such cancellation. The Company Stock Option Plans shall terminate as of the Effective Time, and the provisions in any other benefit plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company shall be deleted as of the Effective Time, and the Company shall ensure that following the Effective Time no holder of Company Option or Company SARs or any participant in any Company Stock Option Plan or other Company benefit plan shall have any right thereunder to acquire any capital stock of the Company or the Surviving Corporation. For purposes of the foregoing, those certain warrants dated April 12, 2002 between the Company and Centra Benefits Services, Inc. for the purchase of an aggregate of 200,00 shares of Company Common Stock at a price of $6.398 per Company share may not be canceled by the Company prior to the Closing. The Company represents that if such warrants are not canceled such warrants will be adjusted such that they are exercisable for the purchase of up to 17,379 shares of Parent Common Stock at an exercise price of $73.63 per share. The Company agrees to use commercially reasonable efforts to cause such warrants to be canceled prior to the Closing. (ii) At the Effective Time, the Compensation Committee of the Board of Directors of Parent (the "Parent Compensation Committee") shall grant to those officers and employees of the Company identified by the Compensation Committee of the Board of Directors of the Company (the "Company Compensation Committee") who continue as officers and employees of the Surviving Corporation after the Closing, options under Parent's stock option plans to purchase an aggregate of 200,000 shares of Parent Common Stock in amounts as determined by the Company Compensation Committee. The persons named to receive such options and the amounts thereof must be approved by the Parent Compensation Committee provided that the Parent Compensation Committee shall not unreasonably withhold, delay or condition such approval. The options so granted shall have an exercise price equal to the lower of the last reported sale price of the Parent's Common Stock on the Nasdaq Stock Market on the Closing Date or $17.74 per share. All such options shall vest over a three year period commencing on the grant date, such that two-thirds of each such option shall vest on the first anniversary of the grant date, and the remaining one-third of each such option shall vest on the third anniversary of the grant date. (iii) Schedule 2.01(c) sets forth a list of all Company Options and Company SARs as of the date hereof, including the name of the holder of each such Company Option or Company SAR, the number of shares of Company Common Stock subject thereto, the exercise price thereof and whether vesting of such Company Option or Company SAR would (but for the operation of paragraph 2.01(c)(i)) be accelerated immediately prior to the consummation of the Merger (either alone or in conjunction with any other event). -4- (iv) The Company has heretofore taken or shall take all actions with respect to the Company Stock Option Plans and the Company Options and Company SARs that are necessary to implement the provisions of this and the other matters noted in Schedule 2.01(c). Parent has heretofore taken or shall take all actions that are necessary to implement the provisions of this Section 2.01(c), including all corporate action necessary to reserve for issuance 200,000 shares of Parent Common Stock for delivery upon exercise of new Parent options pursuant to the terms set forth in this Section 2.01(c). (d) Conversion of Company Common Stock (i) Subject to Sections 2.01(b) and 2.02(e), each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) will be canceled and extinguished and automatically converted (subject to Section 2.02(e)) into the right to receive a fraction of one fully paid and nonassessable share of Parent Common Stock, the numerator of which is (A) 1,826,829 (the "Common Pool") and the denominator of which is (B) the total number of issued and outstanding shares of Company Common Stock immediately prior to the Effective Time (such fraction being referred to in this Agreement as the "Common Stock Exchange Ratio") upon surrender of the certificate representing such share of Company Common Stock in the manner provided in Section 2.02. Notwithstanding the foregoing, in the event any shares of Series C Stock shall convert into Company Common Stock after the execution and delivery hereof, (I) the Common Pool shall be increased by a number equal to the following: the number of shares of Company Common Stock issued upon such conversion of Series C Stock, multiplied by a fraction, the numerator of which is (A) the Common Pool immediately prior to such conversion and the denominator of which is (B) the total number of issued and outstanding shares of Company Common Stock immediately prior to such conversion; and (II) the Preferred Pool shall be decreased by the same amount that the Common Pool is increased. (ii) Subject to Sections 2.01(b) and 2.02(e), each share of Series C Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) will be canceled and extinguished and automatically converted (subject to Section 2.02(e)) into the right to receive a fraction of one fully paid and nonassessable share of Parent Common Stock, the numerator of which is (A) 1,773,171 (the "Preferred Pool") and the denominator of which is (B) the total number of issued and outstanding shares of Series C Stock immediately prior to the Effective Time (such fraction being referred to in this Agreement as the "Series C Exchange Ratio") upon surrender of the certificate representing such share of Series C Stock in the manner provided in Section 2.02. (iii) The shares of Parent Common Stock issuable upon the conversion of shares of Company Common Stock and Series C Stock pursuant to this Section 2.01 are referred to collectively as the "Merger Consideration." As of the Effective Time, all shares of Company Common Stock and Series C Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock or Series C Stock shall cease to have any rights with respect thereto, except the right to receive Merger Consideration upon surrender of such certificate in accordance with Section 2.02, without interest. -5- (iv) The Common Stock Exchange Ratio and the Series C Exchange Ratio shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock, Company Common Stock or Series C Stock), reorganization, recapitalization, reclassification or other like change with respect to Parent Common Stock, Company Common Stock or Series C Stock occurring on or after the date hereof and prior to the Effective Time. (v) In the event that the actual amount of Capped Expenses (as such term is defined in Section 3.18(b)) exceed the amount of such Capped Expenses set forth on Schedule 3.18(b), then the total number of shares of Parent Common Stock issuable as Merger Consideration shall be reduced by an amount equal to (A) the difference between the actual amount of the Capped Expenses and the amount of such Capped Expenses set forth on Schedule 3.18(b) divided by (B) $14.25 (such number of shares of Parent Common Stock being referred to as the "Adjustment Shares"). The Common Pool will be reduced by an amount equal to the number of Adjustment Shares multiplied by a fraction the numerator of which is the then Common Pool and the denominator of which is the sum of the then Common Pool and the Preferred Pool, and the Preferred Pool will be reduced by an amount equal to the number of Adjustment Shares multiplied by a fraction the numerator of which is the then Preferred Pool and the denominator of which is the sum of the then Common Pool and the Preferred Pool. (e) 401(k) Plans. To the extent requested in writing by Parent no later than ten business days prior to the Closing Date, the Company shall take (or cause to be taken) all actions necessary or appropriate to terminate, effective as of the Closing Date, any Company Plan (as defined in Section 3.11(a)) that contains a cash or deferred arrangement intended to qualify under Section 401(k) of the Code (the "401(k) Plans") in accordance with the provisions of the 401(k) Plans and applicable Law. (f) Severance Agreements. Upon the request of Parent, the Company and its subsidiaries agree that they shall terminate any and all group severance, separation, retention and salary continuation plans, programs, agreements or arrangements prior to the Closing Date other than agreements that by their terms cannot be unilaterally terminated by the Company and are set forth on Schedule 2.01(f). 2.02. Exchange of Certificates. (a) Exchange Agent. Parent shall select an institution reasonably acceptable to the Company to act as the exchange agent (the "Exchange Agent") in the Merger and shall enter into an agreement with the Exchange Agent, reasonably satisfactory to the Company. (b) Exchange Fund. At the Effective Time, Parent shall deliver to the Exchange Agent for exchange in accordance with this Article II, the shares of Parent Common Stock (such shares of Parent Common Stock, together with cash in lieu of fractional shares and any dividends or distributions with respect thereto, are hereinafter referred to as the "Exchange Fund") issuable pursuant to Section 2.01(d) and Section 2.02(e) in exchange for outstanding shares of Company Common Stock. -6- (c) Exchange Procedures. Immediately after the Effective Time, Parent shall instruct the Exchange Agent to mail to each holder of record of a certificate or certificates ("Certificates") which immediately prior to the Effective Time represented outstanding shares of Company Common Stock or Series C Stock whose shares were converted into the right to receive shares of Parent Common Stock pursuant to Section 2.01(d), cash in lieu of any fractional shares pursuant to Section 2.02(e) and any dividends or other distributions pursuant to Section 2.02(d), (i) a letter of transmittal in customary form (that shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass only upon proper delivery of the Certificates to the Exchange Agent and shall contain such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Parent Common Stock. Upon surrender of Certificates for cancellation to the Exchange Agent together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holders of such Certificates shall be entitled to receive in exchange therefor the number of whole shares of Parent Common Stock (after aggregating all Certificates surrendered by such holder) to which such holder is entitled pursuant to Section 2.01(d) (which shall be in uncertificated book entry form unless a physical certificate is requested or required by applicable law or regulation), payment in lieu of fractional shares that such holders have the right to receive pursuant to Section 2.02(e) and any dividends or distributions payable pursuant to Section 2.02(d), and the Certificates so surrendered shall forthwith be canceled. Until so surrendered, outstanding Certificates will be deemed from and after the Effective Time, for all corporate purposes, to evidence only the right to receive the number of full shares of Parent Common Stock which such shares of Company Common Stock or Series C Stock shall be entitled pursuant to the terms hereof and the right to receive an amount in cash in lieu of the issuance of any fractional shares in accordance with Section 2.02(e) and any dividends or distributions payable pursuant to Section 2.02(d). No interest will be paid or accrued on any cash payable in lieu of fractional shares of Parent Common Stock or on any unpaid dividends or distributions payable to holders of Certificates. In the event of a transfer of ownership of shares of Company Common Stock or Series C Stock that is not registered in the transfer records of Company, a certificate representing the proper number of shares of Parent Common Stock and cash may be issued to a transferee if the Certificate representing such shares of Company Common Stock or Series C Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid. (d) Distributions With Respect to Unexchanged Shares. No dividends or other distributions declared or made after the date of this Agreement with respect to Parent Common Stock with a record date after the Effective Time will be paid to the holders of any unsurrendered Certificates until the holders of record of such Certificates shall surrender such Certificates. Subject to applicable Law, following surrender of any such Certificates, the Exchange Agent shall deliver to the record holders thereof, without interest, (i) immediately after such surrender, the amount of any cash payable with respect to a fractional share of Parent Common Stock to which such holder is entitled pursuant to Section 2.02(e) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock to which such holder is entitled pursuant to Section 2.01(d), and (ii) at the appropriate payment date, the amount of dividends or other distributions -7- with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of Parent Common Stock. (e) Fractional Shares. No fraction of a share of Parent Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of shares of Company Common Stock or Series C Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would be received by such holder) shall, upon surrender of such holder's Certificate(s), receive from Parent an amount of cash (rounded to the nearest whole cent), without interest, less the amount of any withholding taxes as contemplated by Section 2.02(f), which is required to be withheld with respect thereto, equal to the product of: (i) such fraction, multiplied by (ii) the average closing sale price of one share of Parent Common Stock for the ten most recent trading days that Parent Common Stock has traded ending on the trading day one day prior to the Closing Date, as reported on The Nasdaq Stock Market. (f) Required Withholding. Each of the Exchange Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of Company Common Stock or Series C Stock such amounts as may be required to be deducted or withheld therefrom under the Code or under any provision of state, local or foreign tax law or under any other applicable Law (as defined in Section 3.05(a)). To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid. (g) Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue and pay in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, certificates representing the shares of Parent Common Stock into which the shares of Company Common Stock or Series C Stock formerly represented by such Certificates were converted into the right to receive pursuant to Section 2.01(d), cash in lieu of fractional shares, if any, as may be required pursuant to Section 2.02(e) and any dividends or distributions payable pursuant to Section 2.02(d); provided, however, that Parent may, in its discretion and as a condition precedent to the issuance of such certificates representing shares of Parent Common Stock, cash and other distributions, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed. (h) No Liability. Notwithstanding anything to the contrary in this Section 2.02, neither the Exchange Agent, Parent, the Surviving Corporation nor any party hereto shall be liable to a holder of shares of Parent Common Stock, Company Common Stock or Series C Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law. (i) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Company Common Stock or Series C Stock for six months after the Effective Time shall be delivered to Parent, upon demand, and any holders of -8- Company Common Stock or Series C Stock who have not theretofore complied with the provisions of this Section 2.02 shall thereafter look only to Parent for the shares of Parent Common Stock, any cash in lieu of fractional shares of Parent Common Stock to which they are entitled pursuant to Section 2.02(e) and any dividends or other distributions with respect to Parent Common Stock to which they are entitled pursuant to Section 2.02(d), in each case, without any interest thereon. (j) Dissenting Shares. Any Dissenting Shares will not be converted into the right to receive shares of Parent Common Stock as provided in Section 2.01(d) and cash in lieu of fractional shares of Parent Common Stock to which they are entitled pursuant to Section 2.02(e), but will be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to the DGCL. The Company will give Parent prompt notice (and in any case, within one business day) of any demand received by the Company for appraisal of shares of Company Common Stock or Series C Stock, and Parent and the Company will jointly control all negotiations and proceedings with respect to such demand. The Company agrees that, except with Parent's prior written consent which shall not be unreasonably withheld, delayed or conditioned, it will not voluntarily make any payment with respect to, or settle or offer to settle, any such demand for appraisal. If any Company stockholder fails to make an effective demand for payment or otherwise loses its status as a holder of Dissenting Shares, Parent will, as of the later of the Effective Time or ten business days from the occurrence of such event, issue and deliver, upon surrender by such Company stockholder of its Certificate(s), the shares of Parent Common Stock, any cash payment in lieu of fractional shares, and any dividends or other distributions with respect to Parent Common Stock to which they are entitled pursuant to Section 2.02(d), in each case without interest thereon, to which such Company stockholder would have been entitled to under Section 2.01(d) and Section 2.02(e), subject to the other provisions of this Agreement. "Dissenting Shares" means any shares of Company Common Stock or Series C Stock that are outstanding immediately prior to the Effective Time held by a person who has properly demanded appraisal for such shares in accordance with the DGCL in connection with the Merger. 2.03. No Further Ownership Rights in Company Common Stock. All shares of Parent Common Stock issued in accordance with the terms hereof (including any cash paid in respect thereof pursuant to Section 2.02(e) or Section 2.02(d)) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Common Stock or Series C Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock or Series C Stock that were outstanding immediately prior to the Effective Time. If after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II. 2.04. Restricted Stock. If any shares of Company Common Stock or Series C Stock that are outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition providing that such shares may be forfeited or repurchased by Company upon any termination of the stockholder's s employment, directorship or other relationship with Company (and/or any Affiliate (as defined herein) of Company) under the terms of any restricted stock purchase agreement or other agreement with Company, then the shares of Parent Common Stock issued upon the conversion of such shares of Company -9- Common Stock or Series C Stock in connection with the Merger will continue to be unvested and subject to the same repurchase options, risks of forfeiture or other conditions following the Effective Time, and the certificates representing such shares of Parent Common Stock may accordingly be marked with appropriate legends noting such repurchase options, risks of forfeiture or other conditions. The Company shall take all actions that may be necessary to ensure that, from and after the Effective Time, Patent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement. 2.05. Tax Consequences. It is intended by the parties hereto that the Merger shall constitute a "reorganization" within the meaning of Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.3683(a) of the United States Income Tax Regulations. 2.06. Further Action. At and after the Effective Time, the officers and directors of Parent and the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of Company, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of Company, any other actions to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. Parent shall cause Sub to perform all of its obligations relating to this Agreement and the transactions contemplated hereby. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in the disclosure schedule delivered by the Company to the Sub and the Parent in connection with the execution of the Agreement (the "Company Disclosure Schedule"), the Company represents and warrants to Parent and Sub all of the statements contained in this Article III. The Company Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections contained in Article III and shall qualify only the corresponding sections in this Article and any other section hereof where it is reasonably clear upon a reacting of such disclosure that the disclosure should apply to such other section. 3.01. Organization, Standing and Power. (a) The Company and each of its subsidiaries (the "Company Subsidiaries") is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals, and has made all filings, registrations and declarations, in each case whether domestic or foreign, necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted in each case other than such franchises, licenses, permits, authorizations, approvals, filings, registrations and declarations the lack of which, individually and in the aggregate, has not had and would not reasonably be likely to have a material adverse effect on (i) the business, assets, liabilities, capitalization, operations, financial condition, or results of operation of the Company -10- and the Company Subsidiaries, taken as a whole, including a termination of the Company's relationship with a material customer or a substantial diminution in such relationship, (ii) the ability of the Company to consummate the Merger and the transactions contemplated thereby or perform its obligations under this Agreement, or (iii) the ability of Parent to operate the business of the Company and each of the Company Subsidiaries immediately after the Closing (collectively, a "Company Material Adverse Effect"); provided, however, that, in no event shall any of the following, alone or in combination, be deemed to constitute, nor taken into account in determining whether a Company Material Adverse Effect has occurred: (i) general economic or financial market conditions or conditions generally affecting the industry in which the Company is engaged, (ii) the announcement or pendency of the Merger or any other transactions expressly contemplated hereby, (iii) compliance with the terms and conditions of this Agreement, (iv) a change in the stock price or trading volume of the Company (or any failure of the Company to meet published revenue or earnings projections), provided that clause (iv) shall not exclude any underlying effect which is attributable to any of the foregoing and may have caused a failure of the Company to meet published revenue or earnings projections, (v) any election of stockholders of the Company to seek appraisal of their shares in accordance with the DGCL, (vi) any change in accounting requirements or principles or any change in applicable Laws, rules, or regulations or the interpretation thereof, or (vii) any litigation or other similar proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby. (b) The Company and each Company Subsidiary is duly qualified or licensed to do business in, and is in good standing in, each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary, except where the failure to do so would cause a Company Material Adverse Effect. The Company has made available to Parent true and complete copies of the certificate of incorporation of the Company, as amended to the date of this Agreement (as so amended, the "Company Charter"), and the by-laws of the Company, as amended to the date of this Agreement (as so amended, the "Company By-laws"), and the comparable charter and organizational documents of each Company Subsidiary, in each case as amended through the date of this Agreement. 3.02. Company Subsidiaries; Equity Interests. (a) Schedule 3.02 lists each Company Subsidiary and its jurisdiction of organization. All the outstanding shares of capital stock of each Company Subsidiary have been validly issued and are fully paid and nonassessable and are owned by the Company, a wholly-owned subsidiary of Company, or Company and another wholly-owned subsidiary of Company, free and clear of all pledges, liens, charges, mortgages, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens"). (b) Except for its interests in the Company Subsidiaries and except for the ownership interests set forth in Schedule 3.02, the Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person. 3.03. Capital Structure. The authorized capital stock of the Company consists of 100,000,000 shares of the Company Common Stock and 20,000,000 shares of preferred stock, 40,000 of which are designated as Series C Stock and the remainder of which are undesignated. -11- At the close of business on December 4, 2003, (i) 16,995,481 shares of Company Common Stock were issued and outstanding, (ii) 33,536 shares of the Company's Series C Stock were issued and outstanding, (iii) 7,940 shares of Company Common Stock were held by the Company in its treasury, (iv) 5,426,869 shares of Company Common Stock were subject to outstanding Company Options granted under Company Stock Option Plans and 299,031 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Option Plans, (v) 25,215,038 shares of Company Common Stock were reserved for issuance upon the conversion of issued and outstanding Series C Stock, (vi) 35,492 shares of Company Common Stock have yet to be issued under Company Director Equity Plans and 3,016 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Director Equity Plans, (vii) 61,192 shares of Company Common Stock have been issued under Company Options granted under Company Stock Purchase Plans and 188,808 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Purchase Plans, (viii) 96,000 shares of Company Common Stock were subject to outstanding Company Options granted under Company Consultant Stock Option Plans and 3,800 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Consultant Stock Option Plans, (ix) 200,000 shares of Company Common Stock were reserved for issuance upon the conversion of issued and outstanding Company warrants, excluding the Company warrant held by Parent and (x) 4,785,085 shares of Company Common Stock reserved for issuance upon the conversion of the Centra Benefit Services, Inc. and PVC Funding Partners LLC notes. Except as set forth above, at the close of business on December 4, 2003, no shares of capital stock or other voting securities of the Company were issued, reserved for issuance or outstanding other than shares reserved for issuance for the Company's make-whole obligation set forth in the Registration Rights Agreement between the Company and HealthPlan Holdings, Inc. dated June 18, 2001 and shares reserved for issuance upon the exercise of the Company Warrant held by Parent. All outstanding shares of Company Common Stock are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company Charter, the Company By-laws or any Contract (as defined in Section 3.05) to which the Company is a party or otherwise bound. There are not any bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Company Common Stock or Series C Stock may vote ("Voting Company Debt"). Except as set forth on Schedule 3.03, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company or any Company Subsidiary is a party or by which any of them is bound (i) obligating the Company or any Company Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or of any Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or any Company Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (iii) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits -12- and rights occurring to holders of Company Common Stock. No anti-dilution rights or pre-emptive rights of any capital stock or other securities issued by the Company shall be triggered as a result of the transactions contemplated hereby. As of the date of this Agreement, there are not any outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary. Neither the Company nor any of its affiliates, as such term is defined in Rule 405 promulgated under the Securities Act of 1933, as amended (the "Securities Act") (each, an "Affiliate"), is a party to or is bound by any agreements or understandings with respect to the voting (including voting trusts and proxies) or sale or transfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of the Company or any of the Company Subsidiaries. There are no registration rights of any nature granted by the Company to any of the Company Subsidiaries. 3.04. Authority; Execution and Delivery; Enforceability. (a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, and, subject to obtaining adoption of this Agreement by the affirmative vote of the holders of a majority in voting power of the outstanding shares of the Company's Common Stock and the Series C Stock, voting together as a single class (the "Company Stockholder Approval"), to consummate the transactions contemplated hereby and thereby. The execution, delivery, and performance by the Company of this Agreement and the Ancillary Agreements to which the Company is a party, and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate action on the part of the Company and, except for obtaining the Company Stockholder Approval, no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby. The Company has duly executed and delivered this Agreement and the Ancillary Agreements, and this Agreement and the Ancillary Agreements constitute a legal, valid and binding obligation (subject to the Company Stockholder Approval with respect to the Merger if required by Law) of the Company, enforceable against it in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar Laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of the principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (b) The Board of Directors of the Company has unanimously (except for Michael Falk, who abstained from voting) by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified (i) determined that the Merger is fair to, and in the best interests of the Company and its stockholders, (ii) approved this Agreement and the transactions contemplated hereby, including the Merger, (iii) declared the advisability of the Agreement and recommended that the stockholders of the Company adopt this Agreement, and (iv) directed that such matter be submitted to Company stockholders at the Company Stockholders' Meeting (as defined below). No state anti-takeover, control share acquisition, fair price, moratorium or other similar statute or regulation (each a "Takeover Statute") (including Section 203 of the DGCL, which is inapplicable to the Company) is applicable to the execution, -13- delivery or performance of this Agreement or to the consummation of the Merger without any further action on the part of the Company or its Board of Directors or any committee thereof. The restrictions on business combinations (as defined in Section 203(c)(3) of the DCCL) contained in Section 203 of the DGCL do not apply to this Agreement, the Merger or the transactions contemplated thereby or hereby pursuant to Section 203(b)(4) of the DGCL. 3.05. No Conflicts; Consents. (a) The execution and delivery by the Company of this Agreement does not, and the consummation of the Merger and compliance with the terms hereof will not, result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of the Company or any Company Subsidiary under, any provision of (i) the Company Charter, the Company By-laws or the comparable charter or organizational documents of any Company Subsidiary, (ii) any contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument (a "Contract") to which the Company or any Company Subsidiary is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 3.05(b), any judgment, order, injunction or decree, domestic or foreign ("Judgment"), or statute, law (including common law), legislation, interpretation, ordinance, rule or regulations, domestic or foreign ("Law"), applicable to the Company or any Company Subsidiary or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually and in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. (b) No consent, approval, license, permit, order or authorization ("Consent") of, or registration, declaration or filing with, any Federal, state, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (a "Governmental Entity") is required to be obtained or made by or with respect to the Company or any Company Subsidiary in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than (i) if required, compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with the Securities and Exchange Commission ("SEC") of (A) a proxy or information statement relating to the adoption of this Agreement by the Company's stockholders, and (B) such reports under Section 13 of the Exchange Act as may be required in connection with this Agreement and the Merger, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of the other jurisdictions in which the Company is qualified to do business, (iv) such filings as may be required in connection with the Taxes described in Section 6.10, (v) compliance with and filings under any foreign jurisdictions, in each case if and to the extent required, and (vi) such other items that, individually and in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect. -14- 3.06. SEC Documents; Undisclosed Liabilities; Closing Date Liabilities. (a) The Company has filed with the SEC, and has heretofore made available to Parent, true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by the Company and the Company Subsidiaries since December 31, 2000 under the Exchange Act and the Securities Act (as such documents have been amended since the time of their filing, collectively, the "Filed Company SEC Documents"). As of their respective dates, each Filed Company SEC Document, including any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit 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 and (b) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act of 2002 since the applicable effective date thereunder and the applicable rules and regulations of the SEC thereunder. As of the date of this Agreement, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (filed on March 31, 2003) as amended by the amendment filed on November 25, 2003 (the "2002 Form 10-K"), its definitive Proxy Statement with respect to its 2002 Annual Meeting (filed on April 18, 2003), and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (filed on November 14, 2003) (collectively, the "2003 SEC Documents") taken together do not contain any untrue statement of a material fact or omit to state any 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. The consolidated financial statements of the Company included in the Filed Company SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of the dates of their respective filing, were prepared in accordance with generally accepted accounting principles applicable in the United States of America ("GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). (b) Except as set forth in the Filed Company SEC Documents, neither the Company nor any Company Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto, other than liabilities or obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent financial statements included in the Filed Company SEC Documents. (c) Excluding the Series C Stock for purposes hereof, debt that would be required by GAAP to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto, if such a balance sheet were prepared at and as of the date immediately preceding the Closing Date (but after giving effect to the transactions contemplated to be consummated at the Closing), will not exceed an aggregate of $26,700,000 and will consist only of the debt set forth on Schedule 3.06(c). -15- 3.07. Information Supplied. The information supplied by the Company for inclusion in the Form S-4 Registration Statement (or any similar successor form thereto) to be filed by Parent with the SEC in connection with the issuance of Parent Common Stock in connection with the Merger (the "Registration Statement") shall not at the time the Registration Statement is filed with the SEC and at the time it becomes effective under the Securities Act contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The information supplied by the Company for inclusion or incorporation by reference in the proxy statement/prospectus to be filed with the SEC as part of the Registration Statement (the "Proxy Statement/Prospectus") shall not, on the date the Proxy Statement/Prospectus is mailed to the Company's stockholders or Parent's stockholders, at the time of the meeting of the Company's stockholders (the "Company Stockholders' Meeting") to consider the Company Stockholder Approval, at the time of the meeting of Parent's stockholders (the "Parent Stockholders' Meeting") to consider the Parent Stockholder Approval (as defined in Section 4.05) or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Stockholders' Meeting or the Parent Stockholders' Meeting which has become false or misleading. The proxy statement included in the Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Exchange Act and the Securities Act and the rules and regulations thereunder. If at any time prior to the Effective Time any event relating to the Company or any of its Affiliates, officers or directors should be discovered by the Company which is required to be set forth in an amendment to the Registration Statement or a supplement to the Proxy Statement/Prospectus, the Company shall promptly inform Parent. 3.08. Absence of Certain Changes or Events. From the date of the most recent audited financial statements included in the Filed Company SEC Documents, the Company has conducted its business only in the ordinary course, and during such period there has not been: (i) any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Company Common Stock or Series C Stock or any repurchase for value by the Company of any Company Common Stock or Series C Stock (other than dividends in Series C Stock to Series C Stockholders in accordance with the terms thereof and payments of interest in common stock under the Centra Benefit Services, Inc. and PVC Funding Partners LLC notes totaling in the aggregate approximately $4,788,085); (iii) any split, combination or reclassification of any Company Common Stock or Series C Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Common Stock or Series C Stock; -16- (iv) (A) any granting by the Company or any Company Subsidiary to any current or former director, officer or employee of the Company or any Company Subsidiary of any increase in compensation, except to the extent required under employment agreements in effect as of the date of the most recent audited financial statements included in the Filed Company SEC Documents or, with respect to employees (other than directors, officers or key employees) in the ordinary course of business consistent with past practice and except for Company Stock Options that are reflected as outstanding in clause (iii) of Section 3.03, (B) any granting by the Company or any Company Subsidiary to any such director, officer or employee of any material increase in severance or termination pay, except as was required under any employment, severance or termination policy, practice or agreements in effect as of the date of the most recent audited financial statements included in the Filed Company SEC Documents or (C) any entry by the Company or any Company Subsidiary into, or any amendment of, any employment, severance or termination agreement with any such director, officer or employee, except for such agreements or amendments with employees (other than directors, officers or key employees) that are entered into in the ordinary course of business consistent with past practice; (v) any termination of employment or departure of any key employee of the Company or any Company Subsidiary; (vi) any change in accounting methods, principles or practices by the Company or any Company Subsidiary materially affecting the consolidated assets, liabilities or results of operations of the Company, except insofar as may have been required by a change in GAAP; (vii) any material elections with respect to Taxes (as defined in Section 3.09) by the Company or any Company Subsidiary or settlement or compromise by the Company or any Company Subsidiary of any material Tax liability or refund; or (viii) any notification or, to the knowledge of the Company, threat, whether oral or in writing, that and there have not been, one or more material distributors, licensors, networks, customers or suppliers that have terminated or intend to terminate their respective business relationships or have modified or intend to modify such relationships with the Company and the Company Subsidiaries in a manner which would have a Company Material Adverse Effect. 3.09. Taxes. (a) Each of the Company and each Company Subsidiary has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns, individually and in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. All Taxes of the Company and each of the Company Subsidiaries have been timely paid, except to the extent that any failure to pay, individually and in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any of its Company Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return. -17- (b) The most recent financial statements contained in the Filed Company SEC Documents reflect an adequate reserve (in accordance with GAAP) for all Taxes payable by the Company and the Company Subsidiaries for all taxable periods and portions thereof through the date of such financial statements (in addition to any reserve for deferred Taxes established to reflect timing differences between book and tax income). No deficiency with respect to any Taxes has been proposed, asserted or assessed against the Company or any Company Subsidiary, and no waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or waiver, individually and in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect. (c) No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to the Company or any of the Company Subsidiaries. All material assessments for Taxes due with respect to completed and settled audits or proceedings or any concluded litigation have been fully paid, and the Company has delivered to Parent correct and complete copies of all examination reports and statements of deficiency with respect to such audits, proceedings, and litigations. (d) There are no Liens for Taxes (other than for current Taxes not yet due and payable and for which adequate reserves have been established in accordance with GAAP) on the property or assets of the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary is bound by any agreement with respect to Taxes. (e) No claim has been made by any authority in a jurisdiction within which the Company or any Company Subsidiary does not file Tax Returns that it is, or may be, subject to taxation by that jurisdiction. (f) Neither the Company nor any Company Subsidiary has constituted either a "distributing corporation" or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying or intended to qualify for tax-free treatment under Section 355 of the Code (A) in the two years prior to the date of this Agreement or (B) in a distribution that could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) in conjunction with the Merger. (g) The Company has delivered to Parent correct and complete copies of all federal, state and local income Tax Returns, of the Company and the Company Subsidiaries for the last four taxable years. (h) Neither the Company nor any of the Company Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any "excess parachute payment" within the meaning of Code ss.280G (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Code 162(m) (or any corresponding provision of state, local or foreign Tax law). (i) Neither the Company nor any of the Company Subsidiaries (A) is or has been a member of any "affiliated group" within the meaning of Code ss.1504(a) (or any similar provision -18- of state, local or foreign law) (an "Affiliated Group") filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (B) has any liability for the Taxes of any person (other than any of the Company and the Company Subsidiaries) under Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (j) Neither Company nor any of its Company Subsidiaries has been a United States real property holding corporation within the meaning of Code ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii). Each of Company and its Company Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of the Code ss.6662. Neither Company nor any of its Company Subsidiaries is a party to or bound by any Tax allocation or sharing agreement. (k) Schedule 3.09 sets forth the following information with respect to each Company and its Company Subsidiaries (or, in the case of clause (B) below, with respect to each of the Company Subsidiaries) as of the most recent practicable date: (A) the basis of Company or Company Subsidiary in its assets; (B) the basis of the stockholder(s) of the Company Subsidiary in its stock (or the amount of any excess loss account); (C) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to the Company or Company Subsidiaries; and (D) the amount of any deferred gain or loss allocable to Company or Company Subsidiary arising out of any intercompany transaction. The information required to be included on Schedule 3.09 pursuant to clause (B) may be provided after the date hereof and prior to the Closing. (1) None of Company and Company Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Time as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) "closing agreement" as described in Code ss.7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code ss.1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date. (m) Neither Company nor any Company Subsidiary has experienced an ownership change within the meaning of Code ss.382(g) that affects its net operating loss. (n) For purposes of this Agreement: "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including -19- any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other person. "Tax Return" means any Federal, state, local, provincial or foreign Tax return, declaration, statement, report, schedule, form attachment or information return relating to Taxes and any amendment thereof. 3.10. Employees. (a) (i) The Company and the Company Subsidiaries are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety, and wages and hours; (ii) neither the Company nor any of the Company Subsidiaries has received written notice of any charge or complaint against the Company or any of the Company Subsidiaries pending before the Equal Employment Opportunity Commission, the National Labor Relations Board, or any other government agency or court or other tribunal regarding an unlawful employment practice; (iii) neither the Company nor any of the Company Subsidiaries is a party to any collective bargaining agreement and there is no labor strike, slowdown or stoppage actually pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Company Subsidiaries; (iv) neither the Company nor any of the Company Subsidiaries has received notice that any representation petition respecting the employees of the Company or any of the Company Subsidiaries has been filed with the National Labor Relations Board, and, to the knowledge of the Company, there has been no labor union prior to the date hereof organizing any employees of the Company or any of its Subsidiaries into one or more collective bargaining units; (v) there are no complaints, lawsuits, arbitrations or other proceedings pending, or to the knowledge of the Company, threatened by or on behalf of any present or former employee of the Company or any of the Company Subsidiaries alleging breach of any express or implied contract of employment; (vi) the Company has not received any written notice that a federal, state, or local agency responsible for the enforcement of labor or employment Laws intends to conduct an investigation with respect to or relating to the Company or any of the Company Subsidiaries and no such investigation is in progress; (vii) there are no personnel arrangements, understandings, policies, rules or procedures (whether written or oral) applicable to employees of the Company or any of the Company Subsidiaries other than those set forth in Schedule 3.10(a), true, correct and complete copies of which have heretofore been delivered to Parent; and (viii) there are no employment contracts, severance agreements, confidentiality agreements (other than standard employee non-disclosure agreements as contemplated by Section 3.10(vii)) or any other agreements (whether written or oral) with any employees of the Company or any Company Subsidiary thereto. (b) The Company and the Company Subsidiaries are and have been in substantial compliance with all notice and other requirements under the Worker Adjustment and Retaining Notification Act ("WARN") or similar state statute. None of the employees of the Company or any of the Company Subsidiaries have suffered an "employment loss" (as defined in WARN) during the ninety (90)-day period prior to the execution of this Agreement. (c) Neither the Company nor any of the Company Subsidiaries is bound by any contract, arrangement, understanding, policy, rule or procedure (whether written or oral) that -20- restricts its ability to terminate the employment of any of its employees at any time without payment or other liability. (d) To the Company's knowledge, no executive officer or key employee has any plans to terminate employment with the Company or the Company Subsidiaries. (e) The Company and each of the Company Subsidiaries are compliant in all material respects with all legal requirements relating to the collection and use of personally identifiable health information as required by HIPAA ("PHI") gathered in the course of its respective operations, and the Company and each of the Company Subsidiaries are compliant in all material respects with the rules, policies and procedures established by the Company from time to time with respect to the foregoing. No claims have been asserted or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries (and to the knowledge of Company, no such claims are likely to be asserted or threatened against Company or any of its subsidiaries) by any person or entity alleging a violation of such person's or entity's privacy, personal or confidentiality tights under any such rules, policies or procedures. The execution of this Agreement and the consummation of the transactions contemplated herein will not materially breach or otherwise cause any material violation of any terms and conditions of any Contract or applicable privacy policy of Company expressly governing the collection and use of PHI. To the knowledge of the Company, since April 14, 2003 there has been no unauthorized access to or other material misuse of PHI. 3.11. Employee Benefits. (a) Schedule 3.11 contains a true and complete list of each Employee Benefit Plan that any of the Company and the Company Subsidiaries maintains or to which any of the Company and the Company Subsidiaries contributes or has an obligation to contribute relating to current or former employees, officers or directors (or their beneficiaries) of the Company and the Company Subsidiaries (each a "Company Plan"). "Employee Benefit Plan" means any (a) deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) Employee Welfare Benefit Plan or fringe benefit plan or program or (c) profit sharing, savings, stock option, restricted stock, stock purchase, equity, stock appreciation, bonus, incentive deferred compensation, termination, insurance, severance plan, supplemental benefit, medical, education reimbursement or other benefit plan, program, agreement or arrangement which is not an Employee Pension Benefit Plan or an Employee Welfare Benefit Plan maintained or contributed to or required to be contributed to by the Company or by any trade or business whether or not incorporated that together with the Company or by any trade or business, whether incorporated, that together with the Company would be deemed a "single employer" within the meaning of section 4021 of ERISA (a "Company ERISA Affiliate") or with respect to which the Company or any Company ERISA Affiliate could incur liabilities under Section 4069 of ERISA. "Employee Pension Benefit Plan" has the meaning set forth in ERISA ss. 3(2). "Employee Welfare Benefit Plan" has the meaning set forth in ERISA 3(1). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (i) Each Company Plan (and each related trust, custodial account insurance contract, or fund) complies in form and in operation with its terms, the applicable requirements of ERISA, the Code, and other applicable Laws. -21- (ii) All required returns, reports and descriptions (including Form 5500 Annual Returns/Reports, "top-hat" plan notices, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions) have been filed or distributed appropriately and in a timely fashion in accordance with applicable law with respect to each Company Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code ss. 4980B, collectively the "COBRA Requirements", have been met with respect to each Company Plan which is an Employee Welfare Benefit Plan subject to the COBRA Requirements. (iii) All contributions (including all employer contributions and employee salary reduction contributions) which are (or previously have been) due have been paid in a timely fashion in accordance with applicable law to each Company Plan which is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been paid to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of the Company. All premiums or other payments for all periods ending on or before the Closing Date have been paid in a timely fashion with respect to each Company Plan, which is an Employee Welfare Benefit Plan. (iv) Each Company Plan which is an Employee Pension Benefit Plan intended to be qualified under Code ss. 401(a) timely received a favorable determination letter from the IRS to the effect that the Plan is so qualified under ss. 401 of the Code and that the trust maintained pursuant thereto is exempt from federal income taxation under ss. 501 of the Code and nothing has occurred since the date or dates of such determination letter or letters from the IRS which is reasonably likely to adversely affect the qualified status of such Plan or the exempt status of any such trust. (v) With respect to each Company Plan, to the extent applicable or to the extent the Company has been required to prepare or maintain such documents by applicable law, the Company has delivered to Parent and Sub correct and complete copies of the plan documents, related trust agreement and insurance contracts, including any amendments and descriptions of vacation and severance policies, and summary plan descriptions, summary of material notifications, and all material communications to participants, the most recent determination letter received from the Internal Revenue Service with respect to such Plan that is intended to be qualified under ss. 401(a) of the Code, the most recent Form 5500 Annual Return/Report, any communication with the Internal Revenue Service or the Department of Labor regarding the compliance or non-compliance of any Company Plan with applicable law, and all related trust agreements, insurance contracts, and other funding agreements which implement such Employee Benefit Plan. (b) With respect to each Employee Benefit Plan that any of the Company, the Company Subsidiaries and the Controlled Group of Corporations (as defined in Code ss. 1563) which includes the Company and the Company Subsidiaries maintains or ever has maintained or to which any of them contributes, ever has contributed, or ever has been required to contribute: (i) Neither the Company nor any Company ERISA Affiliate has any actual or contingent liability under Title IV of ERISA or Code ss. 412 (other than payments to the PBGC) including without limitation any liability in connection with the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or a withdrawal of any Employee -22- Benefit Plan subject to Title IV of ERISA or a withdrawal from a "multiemployer" plan as discussed under ss. 4063 of ERISA and, no fact or event exists which is reasonably likely to give rise to such liability. (ii) There have been no Prohibited Transactions with respect to any such Employee Benefit Plan. To the knowledge of the Company, no Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan "Prohibited Transaction" has the meaning set forth in ERISA ss. 406 or Code ss. 4975. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or to the knowledge of the Company threatened. The Company is not aware of any basis for any such action, suit, proceeding, hearing, or investigation. (c) None of the Company and the Company Subsidiaries maintains or ever has maintained or contributes, ever has contributed, or ever has been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code ss. 4980B). (d) No promise or commitment to amend or improve any Employee Benefit Plan for the benefit of current or former directors, officers, or employees of the Company or the Company Subsidiaries which is not reflected in the documentation provided to Parent and Sub has been made. (e) The transactions contemplated by this Agreement shall not alone or upon the occurrence of any additional or subsequent event, result in (i) any payment, of severance or otherwise, or acceleration, vesting or increase in benefits under any Employee Benefit Plan for the benefit of any current or former director, officer, or employee of the Company or any of the Company Subsidiaries, or (ii) any payment or benefit under any Company Plan failing to be deductible by reason of Code ss. 280G. (f) Without limitation of the foregoing, to the extent a Company Plan which is or has been subject to non-discrimination testing requirements under the Code, ERISA or other applicable law, fails or has failed to satisfy such requirements as of or before the Effective Time, the Company has taken in a timely fashion (as determined by applicable law) the necessary corrective action (which may include qualified nonelective contributions or corrective distributions) so that the Company Plan successfully passed and passes the applicable non-discrimination tests in accordance with applicable Law. (g) The Company has made available to Parent and Sub: (i) copies of all employment agreements with the top five most highly compensated executive officers of the Company and the Company Subsidiaries; and (ii) copies of all material plans, programs, agreements, and other arrangements of the Company or the Company Subsidiaries with or relating to its or its subsidiaries' employees which contain change in control provisions. Neither the execution or delivery of this Agreement nor the consummation of the transactions completed hereby will (I) result in any payment becoming due to any director, officer, or employee of the Company or any -23- of the Company Subsidiaries under any Company Plan or otherwise, which is material in relation to the compensation previously provided to such individual, (II) materially increase any benefits otherwise payable under any Company Plan, which increase is material in relation to the benefits previously provided, or (III) result in any acceleration of the time of payment or vesting of any material benefits. 3.12. Absence of Changes in Benefit Plans. Prom the date of the most recent audited financial statements included in the Filed Company SEC Documents, there has not been any adoption or amendment in any material respect by the Company or any Company Subsidiary of any collective bargaining agreement or any Employee Benefit Plan of the Company and the Company Subsidiaries. As of the date of this Agreement there are not any employment, consulting, indemnification, severance or termination agreements or arrangements between the Company or any Company Subsidiary and any current or former employee, officer or director of the Company or any Company Subsidiary, nor does the Company or any Company Subsidiary have any general severance plan OT policy. 3.13. Litigation. Other than any litigation arising out of or in connection with this Agreement or the transactions contemplated hereby, there are no claims, suits, actions, investigations, indictments, or administrative, arbitration or other similar proceedings ("Proceedings") pending or, to the knowledge of the Company, threatened against or affecting the Company or any Company Subsidiary (and, to the knowledge of the Company, there is not any basis for any such proceeding) that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect, nor is there any Judgment outstanding against the Company or any Company Subsidiary. Schedule 3.13 lists all pending proceedings which the Company has notice of and all threatened Proceedings of which the Company has knowledge. 3.14. Compliance With Applicable Laws. The Company and the Company Subsidiaries have complied in a timely manner and in all material respects, with all Laws, statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any court or Governmental Entity relating to any of the property owned, leased or used by them, or applicable to their business, including Laws relating to equal employment opportunity, discrimination, occupational safety and heath, environmental, interstate commerce and antitrust. Neither the Company nor any Company Subsidiary has received any written communication during the past three years from a Governmental Entity that alleges that the Company or a Company Subsidiary is not in compliance in any material respect with any applicable Law. 3.15. No Illegal Payments, Etc. None of the Company or the Company Subsidiaries, nor any of their directors, officers, employees or agents, has (a) directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other person who was, is or may be in a position to help or hinder the Company or any of the Company Subsidiaries (or assist in connection with any actual or proposed transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office (i) which might subject any of the Company and the Company Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) the non-continuation of which, in the case of (i) and (ii), has had or might have, individually or in the aggregate, a Company Material Adverse Effect or (b) established or -24- maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose. 3.16. Contracts. Schedule 3.16 lists the following contracts and other agreements to which any of the Company and the Company Subsidiaries is a party, excluding customer contracts and network contracts: (a) any agreement (or group of related agreements) for the lease of personal property to or from any person providing for lease payments in excess of $25,000 in any one year; (b) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year; (c) any agreement concerning a partnership or joint venture; (d) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness or under which it has imposed a Lien on any of its assets, tangible or intangible; (e) any agreement concerning confidentiality or noncompetition; (f) any agreement relating to the Company and the Company Subsidiaries, their assets, liabilities and business, or relating to shares of the Company Common Stock between or among the Company, any of the Company Subsidiaries and any or their Affiliates; (g) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees; (h) any collective bargaining agreement; (i) any agreement providing for the employment or consultancy with any individual on a full-time, part-time, consulting or other basis or providing severance or retirement benefits; (j) any agreement under which it has advanced or loaned any amount to any of its stockholders, Affiliates, directors, officers, or employees other than in the ordinary course of business; (k) any agreement under which the consequences of a default or termination would reasonably be expected to have a Company Material Adverse Effect; or (1) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $50,000. The Company has delivered to Parent and Sub a correct and complete copy of each written agreement listed in Schedule 3.16 and a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 3.16. Except as disclosed in Schedule 3.15, with -25- respect to each such agreement, neither the Company nor any of the Company Subsidiaries is in material breach or default under, and neither the Company nor any of the Company Subsidiaries has received written notice that it has materially breached or defaulted, any of the terms or conditions of any Company Material Contract. 3.17. Intellectual Property. (a) The Company or the Company Subsidiaries have a valid right to use all trademarks, service marks, trade names, Internet domain names, designs, slogans, trade dress and general intangibles of like nature (collectively, "Trademarks"); Software (as defined below); technology; trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models, and methodologies (collectively, "Trade Secrets") used in Company's and each Subsidiary's business as currently conducted. The Company or the Company Subsidiaries either (i) own or have the right to use all patents, Trademarks, and copyrights necessary for the conduct of the Company's and each of the Company Subsidiary's businesses as currently conducted, and/or (ii) are validly licensed under third party patents, Trademarks and copyrights necessary for the same. As used in this Agreement, the term "Intellectual Property" means patents, copyrights, Trademarks, applications for any of the foregoing, and Trade Secrets; the term "Company License Agreements" means any license agreements granting any right to use or practice any rights under any Intellectual Property (except for such agreements for software already installed by the manufacturer before purchase on computers purchased by the Company, shrink-wrap or click wrap software or other off-the-shelf products that are generally available for less than $10,000), and any written settlements relating to any Intellectual Property, to which the Company or any of the Company Subsidiaries is a party or otherwise bound; and the term "Software" means any and all computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code. (b) Schedule 3.17(b)(1) sets forth, for the Intellectual Property owned by the Company or the Company Subsidiaries, a complete and accurate list of all U.S. and foreign (1) patents and patent applications; (2) issued and pending Trademark registrations (including Internet domain name registrations) and applications and material unregistered Trademarks; and (3) copyright registrations and applications, indicating for each, the applicable jurisdiction, registration number (or application number), date issued (or date filed) and current status. Schedule 3. 17(b)(2) sets forth a complete and accurate list of all third party Software that is incorporated in any Software sold, licensed, leased or otherwise distributed by or used in the course of rendering services offered by the Company or any of the Company Subsidiaries, indicating for each the title, owner/licensor of the Software. (c) The Intellectual Property owned by the Company or any Company Subsidiary is free and clear of all Liens. (d) The patents, Trademarks and Trade Secrets owned by the Company or any of the Company Subsidiaries are valid and enforceable, in full force and effect, and have not been canceled, expired, or abandoned. The Intellectual Property (other than patents) owned by the Company or any of the Company Subsidiaries is valid and enforceable, in full force and effect, and to the extent such Intellectual Property is the subject of a registration or application (as -26- described in Section 3 3.17(b)), such Intellectual Property is subsisting and has not been canceled, expired, or abandoned. There is no pending or, to the knowledge of the Company, threatened opposition, interference or cancellation proceeding before any court or registration authority in any jurisdiction against any of the items listed in Schedule 3.17(b)(1), or, to the knowledge of the Company, against any Intellectual Property licensed to the Company or the Company Subsidiaries. (e) The conduct of the Company's and the Company Subsidiaries' business as currently conducted does not infringe upon any Intellectual Property rights owned or controlled by any third party (either directly or indirectly such as through contributory infringement or inducement to infringe). Schedule 3.17(e) lists all U.S. and foreign patents concerning which: (i) the Company has obtained or requested written opinion of counsel; or (ii) the Company has received written allegation or notice of infringement or license offer outside the ordinary course of business. There axe no claims or suits pending or, to the knowledge of the Company, threatened against the Company or any of the Company Subsidiaries, and neither the Company nor any of the Company Subsidiaries has received any notice of a third party claim or suit against the Company or any of the Company Subsidiaries (1) alleging that its past or present activities, products, services or the conduct of its businesses infringes or has infringed upon, violates, or constitutes the unauthorized use of the Intellectual Property rights of any third party or (2) challenging the ownership, use, validity or enforceability of any Intellectual Property. (f) There are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations to which the Company or any of the Company Subsidiaries are bound which (1) restrict the Company's or the Company Subsidiaries' rights to use any Intellectual Property, (2) restrict the Company's s or the Company Subsidiaries' business in order to accommodate a third party's Intellectual Property or (3) permit third parties to use any Intellectual Property owned by the Company or any of the Company Subsidiaries. The Company or the Company Subsidiaries have not licensed or sublicensed its rights in any material Intellectual Property other than pursuant to the Company License Agreements, and no royalties, honoraria or other fees are payable by the Company or the Company Subsidiaries for the use of or right to use any Intellectual Property licensed to the Company or the Company Subsidiaries, except pursuant to the Company License Agreements. The Company License Agreements are valid and binding obligations of all parties thereto, enforceable in accordance with their terms. There exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default by the Company or, to the knowledge of the Company, any other party under any such Company License Agreement. (g) No Trade Secret of the Company or the Company Subsidiaries have been disclosed or authorized to be disclosed to any third party other than pursuant to a non-disclosure agreement that protects the Company and the applicable Subsidiary's proprietary interests in and to such Trade Secrets. Neither the Company nor, to the knowledge of the Company, any other party to any non-disclosure agreement relating to the Company's Trade Secrets is in breach or default thereof. (h) To the knowledge of the Company, no third party is misappropriating, infringing, diluting, or violating any Intellectual Property owned by the Company or any of the Company -27- Subsidiaries and no such claims have been brought or threatened against any third party by the Company or any of the Company Subsidiaries, (i) The consummation of the transactions contemplated hereby will not result in the loss or impairment of the Company or any of the Company Subsidiaries' right to own or use any of the Intellectual Property, nor will require the consent of any governmental authority or third party in respect of any such Intellectual Property. (j) Schedule 3.17(j) lists all Software sold, licensed, leased or otherwise distributed by or used in the course of rendering services offered by the Company or any of the Company Subsidiaries to any third party, and identifies which Software is sold, licensed, leased, or otherwise distributed, or used, as the case may be. With respect to the Software set forth in Schedule 3.17(j) which the Company or any of the Company Subsidiaries purports to own, such Software was either developed (1) by employees of the Company or any of the Company Subsidiaries within the scope of their employment; or (2) by independent contractors who have unconditionally assigned all of their rights in such Software and all copyrights in the Software to the Company or any of the Company Subsidiaries pursuant to written agreements. (k) The Company and each of the Company Subsidiaries has all requisite licenses to use any shrink-wrap or click wrap software, other off-the-shelf products, or any other Software used by any of them in connection with their business, and neither the Company nor any Company Subsidiary is using any such products or Software where all requisite consideration has not been paid for the use thereof. Neither the Company nor any of the Company Subsidiaries is in violation of any applicable Law or any contract or other agreement, arrangement or understanding regarding or in connection with such products or Software, and neither the Company nor any of the Company Subsidiaries has any payment obligations or other actual or potential liabilities related to or in connection with such products or Software. 3.18. Brokers; Schedule of Fees and Expenses. (a) No broker, investment banker, financial advisor or other person, other than Peter J. Solomon Company, Jefferies & Company, Inc. and Commonwealth Group Holdings, LLC, the fees and expenses of which will be paid by the Company, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Merger and the transactions contemplated thereby based upon arrangements made by or on behalf of the Company or any Company Subsidiary. (b) All fees and expenses that the Company is obligated to pay any broker, investment banker, or financial advisor (including the fees of Peter 3. Solomon Company, Jefferies & Company, Inc. and Commonwealth Group Holdings, LLC), or other similar fee or commission are set forth in Part I of Schedule 3.18(b). Part II of Schedule 3.18(b) sets forth (i) all payments or amounts that are or become due (including the acceleration of the date on which a payment is due) to any director, officer, employee or consultant of the Company or any Company Subsidiary or other person as a result of or in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby based upon arrangements made by or on behalf of the Company or any Company Subsidiary, and (ii) all estimated fees and expenses incurred and to be incurred by the Company in connection with -28- the Merger and the transactions contemplated thereby, other than any unanticipated, legal or accounting fees or expenses incurred by the Company in connection with the SEC review of the Proxy Statement/Prospectus, or any legal, accounting, expert witness or similar fees or expenses incurred by the Company in connection with litigation arising out of this Agreement or the transactions contemplated hereby. The amounts required to be set forth on Parts I and II of Schedule 3.18(b) are referred to as the "Capped Expenses"; provided that the Capped Expenses shall not include amounts that are paid in shares of Company Common Stock prior to the Closing. 3.19. Opinion of Financial Advisor. The Board of Directors of the Company has received the opinion of Peter J. Solomon Company, dated the date of this Agreement, to the effect that, as of such date, the consideration to be received in the Merger by the holders of Company Common Stock (other than Commonwealth Group Holdings, LLC, or any affiliates or associates thereof) is fair to such holders from a financial point of view and a copy of the signed opinion has been provided to Parent. 3.20. Title and Operation of Properties. (a) Schedule 3.20 lists all real property owned by the Company or any of the Company Subsidiaries and all real property leases to which the Company or any of the Company Subsidiaries is a party and each amendment thereto that is in effect as of the date of this Agreement. All such current leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default by the Company or any of the Company Subsidiaries, or to the knowledge of the Company, by any third party thereto (or event which with notice or lapse of time, or both, could constitute a default). (b) The Company and the Company Subsidiaries have good and valid title to, or in the case of leased properties and assets, valid leasehold interests in, all of their tangible properties and assets, real, personal and mixed, used or held for use in its business, in each case, free and clear of any Liens, 3.21. Insurance. Schedule 3.21 sets forth a list of all insurance policies and fidelity bonds carried by the Company and any of the Company Subsidiaries involving annual premiums in excess of $25,000 and the amounts of coverage provided, and premiums payable, thereunder. There is no claim pending under any of such policies or bonds as to which coverage has been denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies have been paid and the Company and the Company Subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds. To the knowledge of the Company, there has been no threatened termination of, or material premium increase with respect to, any of such policies. 3.22. Affiliates. Schedule 3.22 is a complete list of those persons who may be deemed to be, in Company's good faith judgment, Affiliates of Company within the meaning of Rule 145 promulgated under the Securities Act. Since the date of the Company's last proxy statement filed with the SEC, no event has occurred as of the date of this Agreement that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC -29- (except for amounts due as normal salaries and bonuses and reimbursements of ordinary expenses). 3.23. Key Employee Compensation. Schedule 3.23 lists the total compensation or benefit due or subsequently due pursuant to any agreement or understanding (written or otherwise), including as of the date hereof for the Company executive officers and the key employees of the Company listed on Schedule 3.23, including the following: (1) salary (on an annual basis), (2) bonus or any other incentive compensation arrangement (including performance objectives and payout schedule), (3) options (including type (i.e. NSO or ISO), quantity, exercise price, vesting schedule and acceleration), (4) advances or loans; and (5) any other form of compensation or payment paid or payable to such executive officer or key employee, 3.24. Customers. Schedule 3.24 lists the Company's top 20 customers (collectively, the "Customers") and the Company's top 20 networks (collectively, the "Networks"), by the unaudited revenues received by Company from each such Customer or made to each Network during 2002 and 2003. The Company does not have any knowledge of any oral or written notice from any of the Customers or Networks to the Company stating that such Customer or Network intends to terminate its business relationship with the Company or materially reduce the volume of business it does with Company. 3.25. Accounts Receivable. The accounts receivable shown in the balance sheet of the Company included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, as filed with the SEC prior to the date of this Agreement (the "Company Balance Sheet"), arose in the ordinary course of business; were not, as of the date of the Company Balance Sheet, subject to any material discount, contingency, claim of offset or recoupment or counterclaim except for normal reserves consistent with past practice.; and represented, as of the date of the Company Balance Sheet, bona fide claims against debtors for sales, leases, licenses and other charges. All accounts receivable of the Company and the Company Subsidiaries arising after the date of the Company Balance Sheet through the date of this Agreement arose in the ordinary course of business and, as of the date of this Agreement, are not subject to any material discount, contingency, claim of offset or recoupment or counterclaim, except for normal reserves consistent with past practice. The amount carried for doubtful accounts and allowances disclosed in the Company Balance Sheet is believed by the Company as of the date of this Agreement to be sufficient to provide for any losses which may be sustained in respect of the realization of the accounts receivable shown in the Company Balance Sheet. 3.26. Environmental Matters. (a) The Company and the Company Subsidiaries are in compliance in all material respects with federal, state, local and foreign Laws and regulations relating to pollution, protection or preservation of human health or the environment, including laws and regulations relating to emissions, discharges, releases or threatened releases of toxic or hazardous substances, materials or wastes, petroleum and petroleum products, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon, or lead or lead-based paints or materials ("Materials of Environmental Concern"), or otherwise relating to the generation, storage, containment (whether above ground or underground), disposal, transport or handling of Materials of Environmental Concern, or the preservation of the environment or mitigation of adverse effects thereon (collectively, "Environmental Laws"), and including compliance with any permits or other governmental authorizations or the terms and conditions thereof (b) neither -30- the Company nor any of the Company Subsidiaries has received any communication or notice, whether from a governmental authority or otherwise, alleging any violation of or noncompliance with any Environmental Laws by any of the Company or the Company Subsidiaries or for which the any of them is responsible, and there is no pending or, to the knowledge of the Company, threatened claim, action, investigation or notice by any person or entity alleging potential liability for investigatory, cleanup or governmental response costs, or natural resources or property damages, or personal injuries, attorney's fees or penalties relating to (i) the presence, or release into the environment, of any Materials of Environmental Concern at any location owned or operated by the Company or the Company Subsidiaries, now or in the past, or (ii) any violation, or alleged violation, of any Environmental Law (collectively, "Environmental Claims"), except where such Environmental Claims would not have a Company Material Adverse Effect; and (c) there are no past or present facts or circumstances that could form the basis of any Environmental Claim against the Company or the Company Subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or the Company Subsidiaries have retained or assumed either contractually or by operation of law, except where such Environmental Claim, if made, would not have a Company Material Adverse Effect. All permits and other governmental authorizations currently held or required to be held by the Company and the Company Subsidiaries pursuant to any Environmental Laws are identified in Schedule 3.26. The Company has provided to Parent all assessments, reports, data, results of investigations or audits, and other information that is in the possession of or reasonably available to the Company regarding environmental matters pertaining to the environmental condition of the business of the Company and the Company Subsidiaries, or the compliance (or noncompliance) by the Company or the Company Subsidiaries with any Environmental Laws. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB Except as set forth in the disclosure schedule delivered by Parent or Sub to the Company in connection with the execution of the Agreement (the "Parent Disclosure Schedule"), Parent and Sub, jointly and severally, represent and warrant to the Company all of the statements contained in this Article IV. The Parent Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections contained in Article IV and shall qualify only the corresponding sections in this Article and any other section hereof where it is reasonably clear upon a reading of such disclosure that the disclosure should apply to such other section. 4.01. Organization, Standing and Power. (a) Parent and each of its subsidiaries (the "Parent Subsidiaries") is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals, and has made all filings, registrations and declarations, in each case whether domestic or foreign, necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted in each case other than such franchises, licenses, permits, authorizations, approvals, filings, registrations and declarations the lack of which, individually and in the aggregate, has not had and would not reasonably be likely to have a material adverse effect on (i) the business, assets, liabilities, -31- capitalization, operations, financial condition, or results of operation of Parent and the Parent Subsidiaries, taken as a whole including a termination of the Parent's relationship with a material customer or a substantial diminution in such relationship, (ii) the ability of the Parent or the Parent Subsidiaries to consummate the Merger and the transactions contemplated thereby or perform its obligations under this Agreement (collectively, a "Parent Material Adverse Effect"); provided, however, that, in no event shall any of the following, alone or in combination, be deemed to constitute, nor taken into account in determining whether a Parent Material Adverse Effect has occurred: (i) general economic or financial market conditions or conditions generally affecting the industry in which the Parent is engaged, (ii) the announcement or pendency of the Merger or any other transactions expressly contemplated hereby, (iii) compliance with the terms and conditions of this Agreement, (iv) a change in the stock price or trading volume of the Parent (or any failure of the Parent to meet published revenue or earnings projections), provided that clause (iv) shall not exclude any underlying effect which is attributable to any of the foregoing and may have caused a failure of the Parent to meet published revenue or earnings projections, (v) any election of stockholders of the Company to seek appraisal of their shares in accordance with the DGCL, (vi) any change in accounting requirements or principles or any change in applicable Laws, rules, or regulations or the interpretation thereof, or (vii) any litigation or other similar proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby. (b) Parent and each of the Parent Subsidiaries is duly qualified or licensed to do business in, and is in good standing in, each jurisdiction where the nature of its business or the ownership or leasing of its properties make such qualification necessary, except where the failure to do so would cause a Parent Material Adverse Effect. Parent has made available to the Company true and complete copies of the articles of incorporation of Parent, as amended to the date of this Agreement (as so amended, the "Parent Charter"), and the by-laws of Parent, as amended to the date of this Agreement (as so amended, the "Parent By-laws"), and the comparable charter and organizational documents of each Parent Subsidiary, in each case as amended through the date of this Agreement. 4.02. Sub. (a) Since the date of its incorporation, Sub has not carried on any business or conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto. Sub was incorporated solely for the purpose of consummating the Merger and the transactions contemplated thereby. (b) The authorized capital stock of Sub consists of 100 shares of common stock par value $0.01 per share, all of which have been validly issued, are fully paid and nonassessable and are owned by Parent free and clear of any Lien. 4.03. Parent Subsidiaries; Equity Interests. (a) Schedule 4.03 lists each Parent Subsidiary and its jurisdiction of organization. All the outstanding shares of capital stock of each Parent Subsidiary have been validly issued and are fully paid and nonassessable and are owned by Parent, a wholly-owned subsidiary of Parent, or Parent and another wholly-owned subsidiary of Parent, free and clear of all Liens. -32- (b) Except for its interests in the Parent Subsidiaries and except for the ownership interests set forth in Schedule 4.03, Parent does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person. 4.04. Capital Structure. The authorized capital stock of Parent consists of 13,333,333 shares of the Parent Common Stock and 2,000,000 shares of preferred, 130,000 of which are designated as Series A Preferred Stock, 15,000 of which are designated as Series B Preferred Stock, 300,000 of which are designated as Series C 7% Convertible Preferred Stock (the "Parent Series C Stock"), and the reminder of which are undesignated. At the close of business on December 4, 2003, (i) 6,783,493 shares of Parent Common Stock were issued and outstanding, (ii) 731,321 shares of Parent Common Stock axe contingently issuable upon conversion of those 4% convertible promissory notes set forth on Schedule 4.04, (iii) no shares of Parent Common Stock were held by Parent in its treasury, (iv) 1,648,482 shares of Parent Common Stock were reserved for issuance pursuant to Parent Stock Option Plans, of which 1,370,080 were issued and outstanding, (v) 2,000 shares of Parent Series C Preferred Stock are issued and outstanding, convertible into 13,333 shares of Parent Common Stock, and (vi) 1,460,994 shares of Parent Common Stock were reserved for issuance upon the conversion of issued and outstanding Parent warrants. Except as set forth above, at the close of business on December 4, 2003, no shares of capital stock or other voting securities of Parent were issued, reserved for issuance or outstanding. All outstanding shares of Parent Common Stock are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Florida Business Corporation Act (the "FBCA"), the Parent Charter, the Parent By-laws or any Contract to which Parent is a party or otherwise bound. There are not any bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Parent Common Stock or Parent Series C Stock may vote. Except as set forth above, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which Parent or any Parent Subsidiary is a party or by which any of them is bound (i) obligating the Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, Parent or of any Parent Subsidiary, (ii) obligating Parent or any Parent Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (iii) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of Parent Common Stock. No anti-dilution rights or pre-emptive rights of any capital stock or other securities issued by Parent shall be triggered as a result of the transactions contemplated hereby including the Parent Financing. As of the date of this Agreement, there are not any outstanding contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of Parent or any Parent Subsidiary. Neither Parent nor any of its affiliates, as such term is defined in Rule 405 promulgated under the Securities Act, is a party to or is bound by any agreements or understandings with respect to the voting (including voting trusts -33- and proxies) or sale or transfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of Parent or any of the Parent Subsidiaries. There are no registration rights of any nature granted by Parent or any of the Parent Subsidiaries. 4.05. Authority; Execution and Delivery; Enforceability. Each of Parent and Sub has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, and, subject to obtaining (i) approval of the issuance of Parent Common Stock in connection with the Merger and the approval of the issuance of the Parent Common Stock in connection with the Parent Financing (as defined in Section 6.19) by the affirmative vote of the holders of a majority in voting power of the shares of the Parent's Common Stock (including shares of Parent Series C Stock entitled to vote as a class with the Parent Common Stock) present in person or proxy at a properly convened meeting of Parent's shareholders and (ii) approval of the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent Common Stock to 30 million shares by the holders of a majority of the shares of Parent capital stock entitled to vote at such meeting (the "Parent Stockholder Approval"), to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of Parent and Sub of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Sub and, except for obtaining the Parent Stockholder Approval, no other corporate action on the part of the Parent is necessary to authorize the execution and delivery by the Parent of this Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby. Parent, as sole stockholder of Sub, will adopt this Agreement immediately after execution and delivery hereof. Each of Parent and Sub has duly executed and delivered this Agreement, and this Agreement constitutes its legal, valid and binding obligation (subject to the Parent Stockholder Approval with respect to the issuance of Parent Common Stock in connection with the Merger if required by the NASDAQ National Market), enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar Laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of the principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). 4.06. No Conflicts; Consents. (a) The execution and delivery by each of Parent and Sub of this Agreement, do not, and the consummation of the Merger and compliance with the terms hereof will not, result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of Parent or any Parent Subsidiary under, any provision of (i) the charter, by-laws or other organizational documents of Parent or any of its subsidiaries, (ii) any Contact to which Parent or any Parent Subsidiary is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 4.06(b), any Judgment or Law applicable to Parent or any Parent Subsidiary or their respective properties or assets, other than, -34- in the case of clauses (ii) and (iii) above, any such items that, individually and in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. (b) No Consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Parent or any of the Parent Subsidiary in connection with the execution, delivery and performance of this Agreement or the consummation of the Merger, other than (i) if required, compliance with and filings under the HSR Act, (ii) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the Merger, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (iv) such filings as may be required in connection with the Taxes described in Section 6.10, and (v) such other items that, individually and in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect. 4.07. Information Supplied. The Registration Statement (or any amendment thereof or supplement thereto) will not, on the date the Proxy Statement/Prospectus is mailed to the Company's stockholders or Parent's stockholders, at the Company Stockholders' Meeting, at the Parent Stockholders Meeting, or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made by Parent or Sub with respect to statements made therein based on information supplied by the Company for inclusion in the Registration Statement. None of the information supplied by Parent or Sub for inclusion or incorporation by reference in the Proxy Statement/Prospectus, at the date mailed to stockholders and at the times of the Company Stockholders' Meeting and the Parent Stockholders' Meeting, will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Registration Statement, as to information supplied by Parent or Sub, will comply in all material respects with the provisions of the Securities Act and the rules and regulations thereunder. If at any time prior to the Effective Time any event relating to the Parent or any of its Affiliates, officers or directors should be discovered by the Parent which is required to be set forth in an amendment to the Registration Statement or a supplement to the Proxy Statement/Prospectus, the Parent shall promptly inform the Company. 4.08. SEC Filings; Parent Financial Statements. Parent has filed with the SEC, and has heretofore made available to the Company, true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by Parent since December 31, 2000 under the Exchange Act and the Securities Act (as such documents have been amended since the time of their filing, collectively, the "Parent SEC Documents"). As of their respective dates, each Parent SEC Document, including any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit 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 and (b) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC thereunder. As of the date of this Agreement, Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (filed on April 15, 2003) (the "2002 Form 10-K"), its -35- definitive Proxy Statement with respect to its 2002 Annual Meeting (filed on April 28, 2003), and its Quarterly Report on Form 1O-Q for the quarter ended September 30, 2003 (filed on November 14, 2003) (collectively, the "2003 Parent SEC Documents") taken together do not contain any untrue statement of a material fact or omit to state any 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. The consolidated financial statements of Parent included in the 2003 Parent SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as of the dates of their respective filing, were prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented the consolidated financial position of Parent and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Filed Parent SEC Documents, neither Parent nor any Parent Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of Parent and its consolidated subsidiaries or in the notes thereto, other than liabilities or obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent financial statements included in the Filed Parent SEC Documents. 4.09. Absence of Certain Changes or Events. From the date of the most recent audited financial statements included in the Filed Parent SEC Documents to the date of this Agreement, Parent has conducted its business only in the ordinary course, and during such period there has not been: (i) any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Parent Common Stock or any repurchase for value by Parent of any Parent Common Stock; (iii) any split, combination or reclassification of any Parent Common Stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Parent Common Stock; (iv) (A) any granting by Parent or any Parent Subsidiary to any current or former director, officer or employee of Parent or any Parent Subsidiary of any increase in compensation, except to the extent required under employment agreements in effect as of the date of the most recent audited financial statements included in the Filed Parent SEC Documents or, with respect to employees (other than directors, officers or key employees) in the ordinary course of business consistent with past practice and except for Parent stock options, (B) any granting by Parent or any Parent Subsidiary to any such director, officer or employee of any material increase in severance or termination pay, except as was required under any employment, severance or termination policy, practice or agreements in effect as of the date of the most recent audited financial statements included in the Filed Parent SEC Documents or (C) any entry by -36- Parent or any Parent Subsidiary into, or any amendment of, any employment, severance or termination agreement with any such director, officer or employee, except for such agreements or amendments with employees (other than directors, officers or key employees) that are entered into in the ordinary course of business consistent with past practice; (v) any termination of employment or departure of any key employee of Parent or any Parent Subsidiary; (vi) any change in accounting methods, principles or practices by Parent or any Parent Subsidiary materially affecting the consolidated assets, liabilities or results of operations of Parent, except insofar as may have been required by a change in GAAP; (vii) any material elections with respect to Taxes by Parent or any Parent Subsidiary or settlement or compromise by Parent or any Parent Subsidiary of any material Tax liability or refund; or (viii) any notification or, to the knowledge of the Parent, threat, whether oral or in writing, that and there have not been, one or more material distributors, licensors, payers, customers or suppliers that have terminated or intend to terminate their respective business relationships or have modified or intend to modify such relationships with the Parent and the Parent Subsidiaries in a manner which would have a Parent Material Adverse Effect. 4.10. Parent Contracts. Neither Parent nor any Parent Subsidiary is in material breach or default under, and neither Parent nor any Parent Subsidiary has received written notice that it has materially breached or defaulted, any of the terms or conditions of any Parent Material Contract in such a manner as would have a Parent Material Adverse Effect. As used in this paragraph, "Parent Material Contract" means any "material contracts" (as that term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to Parent and any contract to which Parent is a party, the termination of which would have a Parent Material Adverse Effect. 4.11. Board Approval. The Board of Directors of Parent has, by resolutions duly adopted at a meeting duly called and held and not subsequently rescinded or modified (i) unanimously (x) (except for Michael Falk, who abstained from voting) approved and declared advisable this Agreement and the transactions contemplated hereby, (y) (except for Michael Falk and Braden Kelly, who abstained from voting) approved the Parent Financing, and (z) (except for Michael Falk, who abstained from voting) recommended the amendment to the Parent Articles of Incorporation to increase the number of authorized shares of Parent Common Stock to 30 million shares, (ii) subject to the receipt of the Parent Stockholder Approval, authorized and reserved for issuance sufficient shares of Parent Common Stock to consummate the transactions contemplated hereby and for the Parent Financing, and (iii) recommended that the stockholders of Parent approve the issuance of the Parent Common Stock in connection with the Merger, the issuance of the Parent Common Stock in connection with the Parent Financing, and the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent to 30 million shares. Except for the Parent Stockholder Approval, there exists no impediment, contractual or otherwise, which would prohibit Parent from or require the consent of any person in order for Parent to carry out the Parent Financing. -37- 4.12. Brokers. Other than William Blair & Company, L.L.C., no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Merger based upon arrangements made by or on behalf of Parent. 4.13. Taxes. (a) Each of Parent and each Parent Subsidiary has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed Tax Returns, individually and in the aggregates has not had and would not reasonably be expected to have a Parent Material Adverse Effect. All Taxes of Parent and each of the Parent Subsidiaries have been timely paid, except to the extent that any failure to pay, individually and in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. Neither Parent nor any of the Parent Subsidiaries currently is the beneficiary of any extension of time within which to file any Tax Return (b) The most recent financial statements contained in the Filed Parent SEC Documents reflect an adequate reserve (in accordance with GAAP) for all Taxes payable by Parent and the Parent Subsidiaries for all taxable periods and portions thereof through the date of such financial statements (in addition to any reserve for deferred Taxes established to reflect timing differences between book and tax income). No deficiency with respect to any Taxes has been proposed, asserted or assessed against Parent or any Parent Subsidiary, and no waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or waiver, individually and in the aggregate, has not had and would not reasonably be expected to have a Parent Material Adverse Effect. (c) No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Parent or any Parent Subsidiary. All material assessments for Taxes due with respect to completed and settled audits or proceedings or any concluded litigation have been fully paid and the Parent has delivered to the Company correct and complete copies of all examination reports and statements of deficiency with respect to such audits, proceedings, and litigations. (d) There are no Liens for Taxes (other than for current Taxes not yet due and payable and for which adequate reserves have been established in accordance with GAAP) on the property or assets of the Parent or any Parent Subsidiary. Neither Parent nor any Parent Subsidiary is bound by any agreement with respect to Taxes. (e) No claim has been made by any authority in a jurisdiction within which Parent or any Parent Subsidiary does not file Tax Returns that it is, or may be, subject to taxation by that jurisdiction. (f) Neither Parent nor any Parent Subsidiary has constituted either a "distributing corporation" or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying or intended to qualify for tax-free treatment under Section 355 of the Code (A) in the two years prior to the date of this Agreement or (B) in a -38- distribution that could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) in conjunction with the Merger. (g) The Parent has delivered to Company correct and complete copies of all federal, state and local income Tax Returns, of the Parent and the Parent Subsidiaries for the last four taxable years. (h) Neither Parent nor any Parent Subsidiary is party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any "excess parachute payment" within the meaning of Code ss.280G (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Code 162(m) (or any corresponding provision of state, local or foreign Tax law). (i) Neither Parent nor any Parent Subsidiary (A) is or has been a member of any "affiliated group" within the meaning of Code ss. 1504(a) (or any similar provision of state, local or foreign law) (an "Affiliated Group") filing a consolidated federal income Tax Return (other than a group the common parent of which was the Parent) or (B) has any liability for the Taxes of any person (other than Parent and the Parent Subsidiaries) under Reg. ss. 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (j) Neither Parent nor any Parent Subsidiary has been a United States real property holding corporation within the meaning of Code ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii). Each of Parent and the Parent Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of the Code ss. 6662. Neither Parent nor any Parent Subsidiary is a party to or bound by any Tax allocation or sharing agreement. (k) None of Parent and Parent Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Time as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) "closing agreement" as described in Code ss.7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code ss. 1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date. (l) Neither Parent nor any Parent Subsidiary has experienced an ownership change within the meaning of Code ss.382(g) that affects its net operating loss. 4.14. Employees. (a) (i) Parent and the Parent Subsidiaries are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety, and wages and hours; (ii) neither Parent nor any of the Parent Subsidiaries has -39- received written notice of any charge or complaint against Parent or any of the Parent Subsidiaries pending before the Equal Employment Opportunity Commission, the National Labor Relations Board, or any other government agency or court or other tribunal regarding an unlawful employment practice; (iii) neither Parent nor any of the Parent Subsidiaries is a party to any collective bargaining agreement and there is no labor strike, slowdown or stoppage actually pending or, to the knowledge of Parent, threatened against or affecting Parent or any of the Parent Subsidiaries (iv) neither Parent nor any of the Parent Subsidiaries has received notice that any representation petition respecting the employees of Parent or any of the Parent Subsidiaries has been filed with the National Labor Relations Board, and, to the knowledge of Parent, there has been no labor union prior to the date hereof organizing any employees of Parent into one or more collective bargaining units; (v) there are no complaints, lawsuits, arbitrations or other proceedings pending, or to the knowledge of Parent, threatened by or on behalf of any present or former employee of Parent or any of the Parent Subsidiaries alleging breach of any express or implied contract of employment; (vi) neither Parent nor any of the Parent Subsidiaries has received any written notice that a federal, state, or local agency responsible for the enforcement of labor or employment Laws intends to conduct an investigation with respect to or relating to Parent or any of the Parent Subsidiaries and no such investigation is in progress; (vii) there are no personnel arrangements, understandings, policies, rules or procedures (whether written or oral) applicable to employees of Parent or any of the Parent Subsidiaries other than those set forth in Schedule 4.14(a), true, correct and complete copies of which have heretofore been delivered to the Company; and (viii) there are no employment contracts, severance agreements, confidentiality agreements (other than standard employee non-disclosure agreements as contemplated by Section 4.14(vii)) or any other agreements (whether written or oral) with any employees of Parent or any of the Parent Subsidiaries thereto. (b) Parent and the Parent Subsidiaries are and has been in substantial compliance with all notice and other requirements under the Worker Adjustment and Retaining Notification Act ("WARN") or similar state statute. None of the employees of Parent or any of the Parent Subsidiaries has suffered an "employment loss" (as defined in WARN) during the ninety (90)-day period prior to the execution of this Agreement. (c) Neither Parent nor any of the Parent Subsidiaries is bound by any contract, arrangement, understanding, policy, rule or procedure (whether written or oral) that restricts its ability to terminate the employment of any of its employees at any time without payment or other liability. (d) To Parent's knowledge, no executive, officer or key employee, has any plans to terminate employment with Parent or any of the Parent Subsidiaries. (e) Parent and each of the Parent Subsidiaries has taken reasonable steps to protect Parent's and the Parent Subsidiaries' rights in Parent's confidential information that it wishes to protects or any trade secrets or confidential information of third parties provided to Parent or any of the Parent Subsidiaries. Without limiting the foregoing, Parent and the Parent Subsidiaries has and enforces a policy requiring each employee to execute a proprietary information/confidentiality agreement substantially in the form provided to the Company, and all employees of Parent or any of the Parent Subsidiaries have executed such an agreement. -40- (f) Parent and the Parent Subsidiaries are compliant in all material respects with all legal requirements relating to the collection and use of PHI gathered in the course of its respective operations, and Parent and each of the Parent Subsidiaries are compliant in all material respects with the rules, policies and procedures established by Parent from time to time with respect to the foregoing. No claims have been asserted or, to the knowledge of Parent, threatened against Parent (and to the knowledge of Parent, no such claims are likely to be asserted or threatened against Parent or any of the Parent Subsidiaries) by any person or entity alleging a violation of such person's or entity's privacy, personal or confidentiality rights under any such rules, policies or procedures. The execution of this Agreement and the consummation of the transactions contemplated herein will not materially breach or otherwise cause any material violation of any terms and conditions of any Contract or applicable privacy policy of Parent expressly governing the collection and use of PHI. To the knowledge of Parent, since April 14, 2003, there has been no unauthorized "use" or "disclosure" of PHI, as such terms are defined under HIPAA. 4.15. Employee Benefits. (a) Schedule 4.15 contains a true and complete list of each Employee Benefit Plan that Parent and the Parent Subsidiaries maintains or to which Parent and the Parent Subsidiaries contributes or has an obligation to contribute relating to current or former employees, officers or directors (or their beneficiaries) of Parent (each a "Parent Plan"). "Employee Benefit Plan" means any (a) deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) Employee Welfare Benefit Plan or fringe benefit plan or program or (c) profit sharing savings, stock options, restricted stock, stock purchase, equity, stock appreciation, bonus, incentive deferred compensation, termination, insurance, severance plan, supplemental benefit, medical, education reimbursement or other benefit plan, program, agreement or arrangement which is not an Employee Pension benefit Plan or an Employee Welfare Benefit Plan maintained or contributed to or required to be contributed to by Parent or by any trade or business whether or not incorporated that together with Parent or by any trade or business, whether incorporated, that together with Parent would be deemed a "single employer"` within the meaning of section 4021 of ERISA (a "Parent ERISA Affiliate") or with respect to which Parent or any Parent ERISA Affiliate could incur liabilities under Section 4069 of ERISA. "Employee Pension Benefit Plan" has the meaning set forth in ERISA ss. 3(2). "Employee Welfare Befefit Plan" has the meaning set forth in ERISA 3(1). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. (i) Each Parent Plan (and each related trust, custodial account insurance contract, or fund) complies in form and in operation with its terms, the applicable requirements of ERISA, the Code, and other applicable Laws. (ii) All required returns, reports and descriptions (including Form 5500 Annual Returns/Reports, "top-hat" plan notices, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions) have been filed or distributed appropriately and in a timely fashion in accordance with applicable law with respect to each Parent Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code ss. 4980B, collectively the "COBRA Requirements", have been met with respect to each Parent Plan which is an Employee Welfare Benefit Plan subject to the COBRA Requirements. -41- (iii) All contributions (including all employer contributions and employee salary reduction contributions) which are (or previously have been) due have been paid in a timely fashion in accordance with applicable law to each Parent Plan which is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been paid to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of Parent. All premiums or other payments for all periods ending on or before the Closing Date have been paid in a timely fashion with respect to each Parent Plan, which is an Employee Welfare Benefit Plan. (iv) Each Parent Plan which is an Employee Pension Benefit Plan intended to be qualified under Code ss. 401(a) timely received a favorable determination letter from the IRS to the effect that the Plan is so qualified under ss. 401 of the Code and that the trust maintained pursuant thereto is exempt from federal income taxation under ss. 501 of the Code and nothing has occurred since the date or dates of such determination letter or letters from the IRS which is reasonably likely to adversely affect the qualified status of such Plan or the exempt status of any such trust. (v) With respect to each Parent Plan, to the extent applicable or to the extent Parent has been required to prepare or maintain such documents by applicable law, Parent has delivered to the Company correct and complete copies of the plan documents, related trust agreement and insurance contracts, including any amendments and descriptions of vacation and severance policies, and summary plan descriptions, summary of material modifications, and all material communications to participants, the most recent determination letter received from the Internal Revenue Service with respect to such Plan that is intended to be qualified under ss. 401(a) of the Code, the most recent Form 5500 Annual Return/Report, any communication with the Internal Revenue Service or the Department of Labor regarding the compliance or non-compliance of any Parent Plan with applicable law, and all related trust agreements, insurance contracts, and other funding agreements which implement such Employee Benefit Plan. (b) With respect to each Employee Benefit Plan that Parent, Parent Subsidiaries and the Controlled Group of Corporations (as defined in Code ss. 1563) which includes Parent and Parent Subsidiaries maintains or ever has maintained or to which any of them contributes, ever has contributed, or ever has been required to contribute: (i) Neither Parent nor any Parent ERISA Affiliate has any actual or contingent liability under Title IV of ERISA or Code ss. 412 (other than payments to the PBGC) including without limitation any liability in connection with the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or a withdrawal of any Employee Benefit Plan subject to Title IV of ERISA or a withdrawal from a "multiemployer" plan as discussed under ss. 4063 of ERISA and no fact or event exists which is reasonably likely to give rise to such liability. (ii) There have been no Prohibited Transactions with respect to any such Employee Benefit Plan. To the knowledge of Parent, no Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. "Prohibited Transaction" has the meaning set forth in ERISA ss. 406 or Code ss. 4975. No action, suit, proceeding, hearing, or -42- investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or to the knowledge of Parent threatened. Parent is not aware of any basis for any such action, suit, proceeding, hearing, or investigation. (c) None of Parent and the Parent Subsidiaries maintains or ever has maintained or contributes, ever has contributed, or ever has been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code ss. 4980B). (d) No promise or commitment to amend or improve any Employee Benefit Plan for the benefit of current or former directors, officers, or employees of Parent which is not reflected in the documentation provided to the Company has been made. (e) The transactions contemplated by this Agreement shall not alone or upon the occurrence of any additional or subsequent event, result in (i) any payment, of severance or otherwise, or acceleration, vesting or increase in benefits under any Employee Benefit Plan for the benefit of any current or former director, officer, or employee of Parent, or (ii) any payment or benefit under any Parent Plan failing to be deductible by reason of Code ss. 280G. (f) Without limitation of the foregoing, to the extent a Parent Plan which is or has been subject to non-discrimination testing requirements under the Code, ERISA or other applicable law, fails or has failed to satisfy such requirements as of or before the Effective Time, Parent has taken in a timely fashion (as determined by applicable law) the necessary corrective action (which may include qualified nonelective contributions or corrective distributions) so that the Parent Plan successfully passed and passes the applicable non-discrimination tests in accordance with applicable Law. (g) Parent has made available to the Company: (i) copies of all employment agreements with the top five most highly compensated executive officers of Parent and the Parent Subsidiaries and (ii) copies (or summaries) of all material plans, programs, agreements, and other arrangements of Parent or the Parent Subsidiaries with or relating to its or its subsidiaries' employees which contain change in control provisions. Neither the execution or delivery of this Agreement nor the consummation of the transactions completed hereby will (I) result in any payment becoming due to any director, officer, or employee of Parent or any of the Parent Subsidiaries under any Parent Plan or otherwise, which is material in relation to the compensation previously provided to such individual, (II) materially increase any benefits otherwise payable under any Parent Plan, which increase is material in relation to the benefits previously provided, or (III) result in any acceleration of the time of payment or vesting of any material benefits. 4.16. Absence of Changes in Benefit Plans. From the date of the most recent audited financial statements included in the Filed Parent SEC Documents to the date of this Agreement, there has not been any adoption or amendment in any material respect by Parent or any the Parent Subsidiary of any collective bargaining agreement or any Employee Benefit Plan of Parent and the Parent Subsidiaries. -43- 4.17. Compliance With Applicable Laws. Parent and the Parent Subsidiaries have complied in a timely manner `and in all material respects, with all Laws, statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any court or Governmental Entity relating to any of the property owned, leased or used by them, or applicable to their business, including Laws relating to equal employment opportunity, discrimination, occupational safety and health, environmental, interstate commerce and antitrust. Neither Parent nor any Parent subsidiary has received any written communication during the past three years from a Governmental Entity that alleges that Parent or a Parent Subsidiary is not in compliance in any material respect with any applicable Law. 4.18. Litigation. There are no Proceedings pending or, to the knowledge of Parent, threatened against or affecting Parent or any Parent Subsidiary (and, to the knowledge of Parent, there is not any basis for any such proceeding) that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect, nor is there any Judgment outstanding against Parent or any Parent Subsidiary. Schedule 4.18 lists all pending Proceedings which Parent has notice of and all threatened Proceedings of which Parent has knowledge. 4.19. No Illegal Payments. Etc. None of Parent or the Parent Subsidiaries, nor any of their directors, officers, employees or agents, has (a) directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other person who was, is or may be in a position to help or hinder Parent (or assist in connection with any actual or proposed transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office (i) which might subject Parent to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) the non-continuation of which, in the case of (i) and (ii), has had or might have, individually or in the aggregate, a Parent Material Adverse Effect or (b) established or maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose. 4.20. Intellectual Property. (a) Parent or the Parent Subsidiaries have a valid right to use all Trademarks, Software and Trade Secrets used in Parent's and each Subsidiary's business as currently conducted. Parent or the Parent Subsidiaries either (i) own or have the right to use all patents and copyrights necessary for the conduct of Parent and each of the Parent Subsidiary's businesses as currently conducted, and/or (ii) are validly licensed under third party patents and copyrights necessary for the same. The term "Parent License Agreements" means any license agreements granting any right to use or practice any rights under any Intellectual Property (except for such agreements for software already installed by the manufacturer before purchase on computers purchased by Parent, shrink-wrap or click wrap software or other off-the-shelf products that are generally available for less than $10,000), and any written settlements relating to any Intellectual Property, to which Parent or any of the Parent Subsidiaries is a party or otherwise bound. b) Schedule 4.20(b)(1) sets forth, for the Intellectual Property owned by the Parent or the Parent Subsidiaries, a complete and accurate list of all U.S. and foreign (1) patents and -44- patent applications; (2) issued and pending Trademark registrations (including Internet domain registrations) and applications and material unregistered Trademarks and (3) copyright registrations and applications, indicating for each, the applicable jurisdiction, registration number (or application number), and date issued (or date filed) and current status. Schedule 4.20(b)(2) sets forth a complete and accurate list of all third party Software that is incorporated in any Software sold, licensed, leased or otherwise distributed by or used in the course of rendering services offered by Parent or any of the Parent Subsidiaries, indicating for each the title, owner/licensor of the Software. (c) The Intellectual Property owned by Parent or any Parent Subsidiary is free and clear of all Liens. (d) The patents, Trademarks and Trade Secrets owned by Parent or any of the Parent Subsidiaries are valid and enforceable, in full force and effect, and have not been canceled, expired, or abandoned. The Intellectual Property (other than patents) owned by Parent or any of the Parent Subsidiaries is valid and enforceable, in full force and effect, and to the extent such Intellectual Property is the subject of a registration or application (as described in Section 4.20(b)), such Intellectual Property is subsisting and has not been canceled, expired, or abandoned. There is no pending or, to the knowledge of Parent, threatened opposition, interference or cancellation proceeding before any court or registration authority in any jurisdiction against any of the items listed in Schedule 4.20(b)(1), or, to the knowledge of Parent, against any Intellectual Property licensed to Parent or the Parent Subsidiaries. (e) The conduct of Parent's and the Parent Subsidiaries' business as currently conducted does not infringe upon any Intellectual Property rights owned or controlled by any third party (either directly or indirectly such as through contributory infringement or inducement to infringe). Schedule 4.20(e) lists all U.S. and foreign patents concerning which: (i) Parent has obtained or requested written opinion of counsel; or (ii) Parent has received written allegation or notice of infringement or license offer outside the ordinary course of business. There are no claims or suits pending or, to the knowledge of Parent, threatened against Parent of any of the Parent Subsidiaries, and neither Parent nor any of its subsidiaries has received any notice of a third party claim or suit against Parent or any of the Parent Subsidiaries (1) alleging that its past or present activities, products, services or the conduct of its businesses infringes or has infringed upon, violates, or constitutes the unauthorized use of the Intellectual Property rights of any third party or (2) challenging the ownership, use, validity or enforceability of any Intellectual Property. (f) There are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations to which Parent or any of the Parent Subsidiaries are bound which (1) restrict the Parent's or the Parent Subsidiaries' rights to use any Intellectual Property, (2) restrict Parent's or the Parent Subsidiaries' business in order to accommodate a third party's Intellectual Property or (3) permit third parties to use any Intellectual Property owned by Parent or any of the Parent Subsidiaries. Parent or the Parent Subsidiaries have not licensed or sublicensed its rights in any material Intellectual Property other than pursuant to the Parent License Agreements, and no royalties, honoraria or other fees are payable by Parent or the Parent Subsidiaries for the use of or right to use any Intellectual Property licensed to Parent or the Parent Subsidiaries, except pursuant to the Parent License Agreements. The Parent License Agreements are valid and -45- binding obligations of all parties thereto, enforceable in accordance with their terms. There exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default by Parent or, to the knowledge of Parent, any other party under any such Parent License Agreement. (g) No Trade Secret of Parent or the Parent Subsidiaries have been disclosed or authorized to be disclosed to any third party other than pursuant to a non-disclosure agreement that protects Parent and the applicable Subsidiary's proprietary interests in and to such Trade Secrets. Neither Parent nor, to the knowledge of Parent, any other party to any non-disclosure agreement relating to Parent's Trade Secrets is in breach or default thereof. (h) To the knowledge of Parent, no third party is misappropriating, infringing, diluting, or violating any Intellectual Property owned by Parent or any of the Parent Subsidiaries and no such claims have been brought or threatened against any third party by Parent or any of the Parent Subsidiaries. (i) The consummation of the transactions contemplated hereby will not result in the loss or impairment of Parent or any of the Parent Subsidiaries' right to own or use any of the Intellectual Property, nor will require the consent of any governmental authority or third party in respect of any such Intellectual Property. (j) Schedule 4.20(j) lists all Software sold, licensed, leased or otherwise distributed by or used in the course of rendering services offered by Parent or any of the Parent Subsidiaries to any third party, and identifies which Software is sold, licensed, leased, or otherwise distributed, or used, as the case may be. With respect to the Software set forth in Schedule 4.20(j) which Parent or any of the Parent Subsidiaries purports to own, such Software was either developed (1) by employees of Parent or any of the Parent Subsidiaries within the scope of their employment; or (2) by independent contractors who have unconditionally assigned all of their rights in such Software and all copyrights in the Software to Parent or any of the Parent Subsidiaries pursuant to written agreements. (k) Parent and each of the Parent Subsidiaries have all requisite licenses to use any shrink-wrap or click wrap software, other off-the-shelf products, or any other Software used by any of them in connection with their business, and neither Parent nor any Parent Subsidiary is using any such products or Software where all requisite consideration has not been paid for the use thereof. Neither Parent nor any of the Parent Subsidiaries is in violation of any applicable Law or any contract or other agreement, arrangement or understanding regarding or in connection with such products or Software, and neither Parent nor any of the Parent Subsidiaries has any payment obligations or other actual or potential liabilities related to or in connection with such products or Software. 4.21. Environmental Matters. (a) Parent and the Parent Subsidiaries are in compliance in all material respects with federal, state, local and foreign Laws and regulations relating to pollution, protection or preservation of human health or the environment, including Environmental Laws, and including compliance with any permits or other governmental authorizations or the terms and conditions thereof; (b) neither Parent nor any of the Parent Subsidiaries has received any communication or notice, whether from a governmental authority or otherwise, alleging any -46- violation of or noncompliance with any Environmental Laws by any of Parent or the Parent Subsidiaries or for which it is responsible, and there is no pending or, to the knowledge of Parent, threatened claim, action, investigation or notice by any person or entity alleging potential liability for investigatory, cleanup or governmental response costs, or natural resources or property damages, or personal injuries, attorney's fees or penalties relating to (i) the presence, or release into the environment, of any Materials of Environmental Concern at any location owned or operated by Parent or the Parent Subsidiaries, now or in the past, or (ii) any Environmental Claims, except where such Environmental Claims would not have a Parent Material Adverse Effect or otherwise require disclosure in the Filed Parent SEC Documents; and (c) there are no past or present facts or circumstances that could form the basis of any Environmental Claim against Parent or the Parent Subsidiaries or against any person or entity whose liability for any Environmental Claim Parent has retained or assumed either contractually or by operation of law, except where such Environmental Claim, if made, would not have a Parent Material Adverse Effect or otherwise require disclosure in the Filed Parent SEC Documents. All permits and other governmental authorizations currently held or required to be held by Parent and the Parent Subsidiaries pursuant to any Environmental Laws are identified in Schedule 4.21. Parent has provided to the Company all assessments, reports, data, results of investigations or audits, and other information that is in the possession of or reasonably available to Parent regarding environmental matters pertaining to the environmental condition of the business of the Parent and the Parent Subsidiaries, or the compliance (or noncompliance) by Parent with any Environmental Laws. 4.22. Affiliates. Schedule 4.22 is a complete list of those persons who may be deemed to be, in Parent's good faith judgment, Affiliates of Parent within the meaning of Rule 145 promulgated under the Securities Act. Since the date of Parent's last proxy statement filed with the SEC, no event has occurred as of the date of this Agreement that would be required to be reported by Parent pursuant to Item 404 of Regulation S-K promulgated by the SEC (except for amounts due as normal salaries and bonuses and reimbursements of ordinary expenses). 4.23. Customers. Schedule 4.23 lists Parent's top 20 customers (collectively, the "Customers") and top 20 Payers ("Payers"), by the unaudited revenues received by Parent from each such Customer or Payer during 2002 and 2003. Parent does not have any knowledge of any oral or written notice from any of the Customers or Payers stating that such Customer or Payer intends to terminate its business relationship with Parent or materially reduce the volume of business it does with Parent. 4.24. Accounts Receivable. The accounts receivable shown in the balance sheet of Parent included in Parent's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, as filed with the SEC prior to the date of this Agreement (the "Parent Balance Sheet"), arose in the ordinary course of business; were not, as of the date of the Parent Balance Sheet, subject to any material discount, contingency, claim of offset or recoupment or counterclaim; and represented, as of the date of the Parent Balance Sheet, bona fide claims against debtors for sales, leases, licenses and other charges. All accounts receivable of Parent and the Parent Subsidiaries arising after the date of the Parent Balance Sheet through the date of this Agreement arose in the ordinary course of business and, as of the date of this Agreement, are not subject to any material discount, contingency, claim of offset or recoupment or counterclaim, except for normal reserves consistent with past practice. The amount carried for doubtful accounts and allowances disclosed -47- in the Parent Balance Sheet is believed by Parent as of the date of this Agreement to be sufficient to provide for any losses which may be sustained in respect of the realization of the accounts receivable shown in the Parent Balance Sheet. ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS 5.01. Conduct of Business. (a) Conduct of Business by the Company. Except as expressly consented to in writing by Parent, which consent shall not be unreasonably withheld, delayed or conditioned, as set forth on Schedule 5.01 or otherwise expressly permitted by this Agreement, from the date of this Agreement to the earliest to occur of (i) the date of the termination of this Agreement, or (ii) the Effective Time, the Company shall, and shall cause each Company Subsidiary to, conduct the business of the Company and each of the Company Subsidiaries in the usual, regular and ordinary course in substantially the same manner as previously conducted and use all commercially reasonable efforts to preserve intact its current business organization, keep available the services of its current officers and employees and keep its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them to the end that its goodwill and ongoing business shall be unimpaired in all material respects at the Effective Time. In addition, and without limiting the generality of the foregoing, except for matters set forth in Schedule 5.01, matters expressly consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), or otherwise expressly permitted by this Agreement, from the date of this Agreement to the earliest to occur of the date of the termination of this Agreement or the Effective Time, the Company shall not, and shall not permit any Company Subsidiary to, do any of the following without the prior written consent of Parent: (i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by a direct or indirect wholly owned subsidiary of the Company to its parent, or PIK dividends and interest on the obligations set forth on Schedule 5.01, (B) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (C) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any Company Subsidiary or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell or grant (A) any shares of its capital stock, (B) any Voting Company Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, Voting Company Debt, voting securities or convertible or exchangeable securities or (D) any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units, other than the issuance of Company Common Stock upon the exercise of Company Stock Options outstanding on the date of this Agreement and in accordance with their present terms; (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents other than in connection with the Merger; -48- (iv) acquire or agree to acquire (A) by merging or consolidating with, or by purchasing an equity interest in or portion of the assets of, or by any other manner, any business or any corporations partnership, joint venture, association or other business organization or division thereof or (B) any assets in excess of $50,000, except for purchases of equipment or software in the ordinary course of business consistent with past practice; (v) (A) grant to any current or former director, officer or employee of the Company or any Company Subsidiary any increase in compensation, except to the extent required under employment agreements listed on Schedule 3.10 or, with respect to employees (other than directors, officers or key employees) in the ordinary course of business consistent with past practice, (B) grant to any current or former employee, officer or director of the Company or any Company Subsidiary any increase in severance or termination pay, except to the extent required under any agreement listed on Schedule 3.10, (C) enter into any employment, consulting, indemnification, severance or termination agreement with any such employee, officer or director, (D) establish, adopt, enter into or amend in any material respect any collective bargaining agreement or Company Plan or (E) take any action to accelerate any rights or benefits, or make any material determinations not in the ordinary course of business consistent with past practice, under any collective bargaining agreement or Company Plan; (vi) except as shown on Schedule 5.01, make any change in accounting methods, principles or practices materially affecting the reported consolidated assets, liabilities or results of operations of the Company, except insofar as may be required by a change in GAAP; (vii) sell, lease (as lessor), license or otherwise dispose of or subject to any Lien any material properties or assets, except (A) sales of obsolete assets in the ordinary course of business consistent with past practice, and (B) sales of inventory in the ordinary course of business consistent with past practice; (viii) except as set forth on Schedule 5.0l(a)(viii) with respect to settling the Company's obligations with HealthPlan Holdings, Inc., (A) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for short-term borrowings from persons that are not directors, officers or employees of the Company or any Company Subsidiary incurred in the ordinary course of business consistent with past practice, or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than to or in the Company or any direct or indirect wholly owned subsidiary of the Company or loans, investments and advances in connection with the sale of the products of the Company and the Company Subsidiaries in the ordinary course of business consistent with past practice to persons that are not directors, stockholders, officers or employees of the Company or any Company Subsidiary, not to exceed $10,000 individually or $100,000 in the aggregate; (ix) make or agree to make any new capital expenditure or expenditures that are in excess of an average of $25,000 per calendar month in the aggregate between the date of -49- this Agreement and February 28, 2004, provided that the Company shall be allowed to spend additional funds up to $250,000 in the aggregate for software licensing, if necessary to bring all its Software use in compliance with licensing requirements as required under Section 6.20; and provided further that the Company shall not make any capital expenditure for the purpose of acquiring an accounting or financial system without the prior consent of Parent; (x) make or change any material Tax election or settle or compromise any material Tax liability or refund, except for liabilities not in excess of $10,000 individually or $100,000 in the aggregate; (xi) (A) except for the items set forth on Schedule 5.01 (xi), pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $10,000 individually or $100,000 in the aggregate, other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Filed Company SEC Documents or incurred in the ordinary course of business consistent with past practice, (B) cancel any indebtedness owed to the Company or the Company Subsidiaries in excess of $5,000 individually or $50,000 in the aggregate, (C) cancel any indebtedness owed to the Company or the Company Subsidiaries in excess of $20,000 individually or $400,000 per month in the aggregate as adjustments to client accounts in the normal course of business (with the Company providing to Parent a report showing all such cancellations or adjustments during each calendar month ending after the date of this Agreement within 10 days following the end of such calendar month), or (D) waive the benefits of, or agree to modify in any manner, any confidentiality or similar agreement to which the Company or any Company Subsidiary is a party; (xii) enter into, renew, extend, amend, modify, waive any material provision of, or terminate any lease or similar commitment, in each case providing for payments in excess of $25,000 over the term of such lease or commitment (or until the date on which such lease or commitment may be terminated by the Company without penalty); (xiii) (a) permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without the consent of Parent, or (b) permit the Company's directors and officers liability insurance policy, and any excess liability policy related thereto, to be canceled, terminated or otherwise not be renewed or replaced with at least an equivalent amount of coverage and on other terms no less favorable to the Company and its officers and directors; (xiv) license or otherwise transfer, dispose of, permit to lapse or otherwise fail to preserve any of the Company's or any of the Company Subsidiaries' Intellectual Property rights, or dispose of or disclose to any person any trade secret, formula, process or know-how not theretofore a matter of public knowledge, except in the ordinary course of business and consistent with past practice; -50- (xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of the Company's Subsidiaries; (xvi) take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate as of Closing, such that the condition set forth in 7.03(a) would not be satisfied at the Closing; and (xvii) enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. (b) Interim Operations of Parent. Parent covenants and agrees that, except (i) as expressly provided in this Agreement, or (ii) with the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned, after the date hereof and prior to the Effective Time: (i) the business of Parent will be conducted in the ordinary and customary course consistent with past practice and Parent shall use its best efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees, creditors and business partners; (ii) except for (y) Parent Common Stock issued in connection with the Parent Financing (as defined in Section 6.19) and (z) up to an additional $3,000,000 of Parent Common Stock to be sold by Parent at a price per share of not less than $13.50, Parent shall not issue, deliver, sell or grant (A) any shares of its capital stock (except pursuant to the exercise or conversion of warrants or other rights outstanding on the date hereof), (B) any Voting Parent Debt or other voting securities, (C) any securities convertible into or exchangeable for, or any options (except pursuant to the Parent Stock Option Plans), warrants or rights to acquire, any such shares, Voting Parent Debt, voting securities or convertible or exchangeable securities or (D) any "phantom" stock, "phantom" stock rights, stock appreciation rights or stock-based performance units, other than the issuance of Parent Common Stock upon the exercise of Parent Stock Options outstanding on the date of this Agreement and in accordance with their present terms; (iii) Parent will not, directly or indirectly, split, combine or reclassify the outstanding Parent Common Stock; (iv) Parent shall not acquire or agree to acquire (A) by merging or consolidating with, or by purchasing an equity interest in or portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (B) any assets in excess of $50,000, and, except for purchases of equipment or software in the ordinary course of business consistent with past practice; (v) Parent shall not: (i) amend its articles of incorporation or by-laws; or (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock other than those consistent with past practice; -51- (vi) Parent shall not (i) change any of the accounting principles used by it unless required by a change in GAAP; or (ii) take or allow to be taken any action which would jeopardize qualification of the Merger as a reorganization within the meaning of Section 368(a) of the Code; (vii) Except as set forth on Schedule 5.01(b), Parent shall not sell, lease (as lessor), license or otherwise dispose of or subject to any Lien any material properties or assets, except (A) sales of obsolete assets in the ordinary course of business consistent with past practice, and (B) sales of inventory in the ordinary course of business consistent with past practice; (viii) Except as set forth on Schedule 5.01(b), Parent shall not (A) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Parent or any Parent Subsidiary, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for short-term borrowings from persons that are not directors, officers or employees of the Parent or any Parent Subsidiary incurred in the ordinary course of business consistent with past practice, or (B) make any loans, advances or capital contributions to, or investments in, any other person, other than to or in the Parent or any direct or indirect wholly owned subsidiary of the Parent or loans, investments and advances in connection with the sale of the products of the Parent and the Parent Subsidiaries in the ordinary course of business consistent with past practice to persons that are not directors, stockholders, officers or employees of the Parent or any Parent Subsidiary, not to exceed $10,000 individually or $100,000 in the aggregate; (ix) Parent will not take, or agree to commit to take, any action that would make any representation or warranty of Parent and Sub contained herein inaccurate as of Closing, such that the condition set forth in 7.02(a) would not be satisfied at the Closing; and (x) Parent shall not adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization of the Parent or any of the Parent's Subsidiaries; and (xi) Parent will not enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. (c) Other Actions. Unless otherwise required by Law, the Company and Parent shall not, and shall not permit any of their respective subsidiaries to, take any action that would, or that would reasonably be expected to, result in (i) any of the representations and warranties of such party set forth in this Agreement that is qualified as to materiality becoming untrue, (ii) any of such representations and warranties that is not so qualified becoming untrue in any material respect, or (iii) any condition to the Merger set forth in Article VII, not being satisfied. -52- (d) Advice of Changes. Each party shall promptly advise the other orally and in writing of any change or event that has had or would reasonably be expected to have a Company Material Adverse Effect or a Parent Material Adverse Effect, as the case may be, as to it. 5.02. Solicitation. (a) From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to Article VIII, the Company and the Company subsidiaries will not, nor will they authorize or permit any of their respective officers, directors, affiliates or employees or any investment banker, attorney or other advisor, or person (any such officer, director, affiliate, employee, investment banker, attorney, advisor, or person, a "Representative") retained by any of them to, directly or indirectly, (i) solicit, initiate, seek, entertain, encourage, intentionally facilitate, support or induce the making, submission or announcement of any Acquisition Proposal (as hereinafter defined), (ii) participate in any discussions or negotiations regarding, or deliver or make available to any person any non-public information with respect to, or take any other action to knowingly facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in discussions with any person with respect to any Acquisition Proposal, except to note the existence of this Section 5.02(a), (iv) approve, endorse or recommend any Acquisition Proposal or (v) enter into any letter of intent or any other Contract contemplating or otherwise relating to any Acquisition Proposal; provided, however, that prior to the adoption of this Agreement by the stockholders of the Company, this Section 5.02(a) shall not prohibit the Company from delivering or making available nonpublic information regarding the Company and the Company Subsidiaries to, or entering into discussions with, any person or group who has submitted (and not withdrawn) to the Company an unsolicited, written, bona fide Acquisition Proposal that the Board of Directors of the Company concludes in good faith (after consultation with its outside legal counsel and a financial advisor of national standing) is reasonably likely to result in a Superior Offer (as defined in Section 6.02(c)) if (1) neither the Company nor any Representative shall have violated any of the restrictions set forth in this Section 5.02(a) or 5.02(b), (2) the Company gives Parent written notice no later than twenty-four hours after receiving such Acquisition Proposal of the identity of such person or group and all of the material terms and conditions of such Acquisition Proposal and of the Company's intention to deliver or make available nonpublic information to, or enter into discussions with, such person or group, (3) prior to delivering or making available any such non-public information to, or entering into any such discussions with, such person or group, the Company receives from such person or group an executed confidentiality agreement containing terms at least as restrictive with regard to the Company's confidential information as the Confidentiality Agreement (as defined in Section 6.01(b) and (4) contemporaneously with delivering or making available any such nonpublic information to such person or group, the Company delivers such non-public information to Parent (to the extent such nonpublic information has not been previously delivered by the Company to Parent). The Company and the Company Subsidiaries will immediately cease any and all existing activities, discussions or negotiations with any parties conducted prior to the date of this Agreement with respect to any Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding two sentences by any Representative shall be deemed to be a material breach of this Section 5.02(a) by the Company. -53- For purposes of this Agreement, "Acquisition Proposal" shall mean any offer or proposal (other than an offer or proposal by Parent) relating to, or involving: (A) any acquisition or purchase from the Company or any Company Subsidiary by any person or "group" (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) of more than a 15% interest in the total outstanding voting securities of such party or any of its subsidiaries or any tender offer or exchange offer that if consummated would result in any person or "group" (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) beneficially owning 15% or more of the total outstanding voting securities of the Company or any of the Company Subsidiaries; (B) any merger, consolidation, or similar transaction involving the Company or any Company Subsidiary; (C) any sale, lease, exchange, transfer, license, acquisition, or disposition of 15% or more of the assets of the Company or any Company Subsidiary; or (D) any liquidation or dissolution of the Company or any Company Subsidiary. (b) In addition to the obligations of the Company set forth in paragraph (a) of this Section 5.02, the Company shall as promptly as practicable and in any event within twenty-four hours advise Parent orally and in writing of any request for non-public information which the Company reasonably believes may lead to an Acquisition Proposal or of any Acquisition Proposal, or any inquiry with respect to or which the Company reasonably believes may lead to any Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the person or group making any such request, Acquisition Proposal or inquiry. The Company will (i) keep Parent informed as promptly as practicable in all material respects of the status and details (including any amendments, modifications or proposed amendments or modifications) of any such request, Acquisition Proposal or inquiry and (ii) provide to Parent as promptly as practicable a copy of all written and other materials and information provided to the Company in connection with any such request, Acquisition Proposal or inquiry. (c) Notwithstanding the foregoing or anything in this Agreement or the Confidentiality Agreement to the contrary, Parent and the Company and each representative of Parent and the Company may disclose to any and all persons, without limitation of any kind, the Tax treatment and any facts that may be relevant to the Tax structure of an Acquisition Proposal with respect to the Company beginning on the earliest of (i) the date of the public announcement of discussions relating to such Acquisition Proposal, (ii) the date of public announcement of such Acquisition Proposal, or (iii) the date of the execution of an agreement (with or without conditions) to enter into such Acquisition Proposal, provided, however, that neither Parent nor any representative of Parent may disclose any other information that is not relevant to understanding the Tax treatment and Tax structure of such Acquisition Proposal (including the identity of any party and any information that could lead another to determine the identity of any party), or any other information to the extent that such disclosure could reasonably result in a violation of any federal or state securities laws. 5.03. Certain Company Liabilities. The Company agrees that prior to the Closing Date, (i) the Company shall cause the persons identified in Part I of Schedule 5.03 to either settle completely or enter into binding written agreements with the Company, the terms of which are acceptable to Parent in its sole discretion, with respect to the final resolution and release of all claims in the matters referenced in Part I of such schedule; and (ii) the Company shall have used its reasonable commercial efforts from and after the date of this Agreement to the Closing Date to cause the -54- Persons identified in Part II of Schedule 5.03 to settle completely or enter into binding written agreements with the Company, the terms of which are acceptable to Parent in its sole discretion, with respect to the final resolution and release of all claims in the matters referenced in Part II of such schedule. The Company shall not incur any obligation to pay any amount in excess of $1,150,000 in the aggregate with respect to the resolution and release of the matters identified in clause (i) of the preceding sentence. 5.04. Employee Confidentiality. The Company and each of the Company Subsidiaries shall use commercially reasonable efforts to obtain from each of its employees prior to the Closing a confidentiality agreement in substantially the form of Exhibit 5.04 attached hereto. 5.05. Company Audit. The Company shall use commercially reasonable efforts to have its financial statements for the fiscal year ended December 31, 2003, audited by its current independent accounting firm prior to the Closing or such earlier date as such audited financial statements are required to be filed with the SEC. 5.06. Parent Audit. Parent shall use commercially reasonable efforts to have its financial statements for the fiscal year ended December 31, 2003, audited by its current independent accounting firm prior to the Closing or such earlier date as such audited financial statements are required to be filed with the SEC. ARTICLE VI. ADDITIONAL AGREEMENTS 6.01. Preparation of Proxy Statement/Prospectus; Registration Statement; Antitrust and Other Filings. (a) As promptly as practicable after the execution of this Agreement, Parent and the Company will prepare and file with the SEC, the Proxy Statement/Prospectus and Parent will prepare and file with the SEC the Registration Statement in which the Proxy Statement Prospectus will be included as a prospectus. Each of the Company and Parent will provide each other with any information which may be required in connection with the preparation and filing of the Proxy Statement/Prospectus and the Registration Statement. Each of the Company and Parent will respond to any comments of the SEC, will use its respective commercially reasonable efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and Parent and the Company will cause the Proxy Statement/Prospectus to be mailed to their respective stockholders at the earliest practicable time after the Registration Statement IS declared effective by the SEC. Promptly after the date of this Agreement, each of the Company and Parent will prepare and file (i) with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice Notification and Report Forms relating to the transactions contemplated herein as required by the HSR Act, as well as comparable pre-merger notification forms required by the merger notification or control Laws and regulations of any applicable jurisdiction, as agreed to by the parties (the "Antitrust Filings") and (ii) any other filings required to be filed by it under the Exchange Act, the Securities Act or any other federal, state or foreign Laws relating to the Merger and the transactions contemplated by this Agreement (the "Other Filings") The Company and Parent each shall promptly supply the other with any information which may be required in order to effectuate any filings pursuant to this Section 6.01. -55- (b) Each of the Company and Parent will notify the other promptly (i) upon the occurrence of any event which is required to be set forth in an amendment or supplement to the Proxy Statement/Prospectus, the Registration Statement or any Antitrust Filing or Other Filing or (ii) upon the receipt of any comments from the SEC or its staff or any other government officials in connection with any filing made pursuant hereto and of any request by the SEC or its staff or any other government officials for amendments or supplements to the Registration Statement, the Proxy Statement/Prospectus or any Antitrust Filings or Other Filings or for additional information and will supply the other with copies of all correspondence between such `party or any of its Representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Registration Statement, the Proxy Statement/Prospectus, the Merger or any Antitrust Piling or Other Piling. Except where prohibited by applicable legal requirements, and subject to the mutual confidentiality agreement between the Company and the Parent (the "Confidentiality Agreement"), each of the Company and Parent shall consult with the other prior to taking a position with respect to any such filing, shall permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with any analyses, appearances, presentations, memoranda, briefs, white papers, arguments, opinions and proposals before making or submitting any of the foregoing to any Governmental Entity by or on behalf of any party hereto in connection with any investigations or proceedings in connection with this Agreement or the transactions contemplated hereby (including under any antitrust or fair trade legal requirement), coordinate with the other in preparing and exchanging such information and promptly provide the other (and its counsel) with copies of all filings, presentations or submissions (and a summary of any oral presentations) made by such party with any Governmental Entity in connection with this Agreement or the transactions contemplated hereby; provided that with respect to any such filing, presentation or submission, each of Parent and the Company need not supply the other (or its counsel) with copies (or in case of oral presentations, a summary) to the extent that any law, treaty, rule or regulation of any Governmental Entity applicable to such party requires such party or its subsidiaries to restrict or prohibit access to any such properties or information or where such properties or information is subject to the attorney-client privilege (it being understood that the participation and cooperation contemplated herein is not intended to constitute, nor shall be deemed to constitute, any form of direct or indirect waiver of the attorney-client privilege maintained by any party hereto). Each of the Company and Parent will cause all documents that it is responsible for filing with the SEC or other regulatory authorities under this Section 6.01 to comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder. 6.02. Meeting of Company Stockholders; Board Recommendation. (a) Promptly after the date hereof, the Company will take all action necessary in accordance with the DGCL and its Certificate of Incorporation and By-laws to convene and hold the Company Stockholders' Meeting to be held as promptly as practicable, and in any event (to the extent permissible under applicable law) within 45 days after the declaration of effectiveness of the Registration Statement, for the purpose of voting upon adoption of this Agreement. Parent and the Company shall use all reasonable efforts to hold their respective stockholder meetings on the same date. Unless the Board of Directors of the Company has made a Company Change of Recommendation (as defined in Section 6.02(c)), the Company will use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the adoption of this -56- Agreement, and the Company will take all other action necessary or advisable to obtain such approvals and to secure the vote or consent of its stockholders required by the DGCL, its Certificate of Incorporation and By-laws or any other applicable requirement. Notwithstanding anything to the contrary contained in this Agreement, but subject to applicable Law, the Company may adjourn or postpone the Company Stockholders' Meeting to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement/Prospectus is provided to the Company's stockholders in advance of a vote on the Merger and this Agreement or, if as of the time for which the Company Stockholders' Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Stockholders' Meeting. The Company shall ensure that the Company Stockholders' Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by the Company in connection with the Company Stockholders' Meeting are solicited, in compliance with the DGCL, its Certificate of Incorporation and By-laws, and all other applicable legal requirements. The Company's obligation to call, give notice of, convene and hold the Company Stockholders' Meeting in accordance with this Section 6.02(a) shall not be limited to or otherwise affected by the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal or Superior Offer (as defined below), or by any Company Change of Recommendation. (b) Subject to Section 6.02(c): (i) the Board of Directors of the Company shall unanimously (except for Michael Falk, who may abstain from voting) recommend that the Company's stockholders adopt this Agreement at the Company Stockholders' Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the effect that the Board of Directors of the Company has recommended that the Company's stockholders vote in favor of the adoption of this Agreement at the Company Stockholders' Meeting; and (iii) neither the Board of Directors of the Company nor any committee thereof shall withhold, withdraw, amend or modify, or propose or resolve to withhold, withdraw, amend or modify in a manner adverse to Parent, its recommendation that the Company's stockholders vote in favor of adoption of this Agreement. (c) Nothing in this Agreement shall prevent the Board of Directors of the Company from withholding, withdrawing, amending or modifying its recommendation in favor of adoption of this Agreement (any of the foregoing actions, a "Company Change of Recommendation") if the Board of Directors of the Company concludes in good faith, after consultation with its outside counsel, that such Company Change of Recommendation is required for the Board of Directors of the Company to comply with its fiduciary obligations to the Company's stockholders under applicable Law. The Board of Directors of the Company may, in the case of a Superior Offer, terminate this Agreement in accordance with Section 8.01(j) hereof, or make a Company Change of Recommendation, if, prior to the Company Stockholders' Meeting, (i) a Superior Offer is made to the Company and is not withdrawn, (ii) the Company shall have provided written notice to Parent no later than three business days after receiving such Superior Offer (a "Notice of Superior Offer") advising Parent that the Company has received a Superior Offer and that it intends (or may intend) to terminate this Agreement and/or change its recommendation and the manner and timing in which it intends (Or may intend) to do so, specifying all of the material terms and conditions of such Superior Offer and identifying the person or entity making such Superior Offer, (iii) Parent shall not have, within three business days of Parent's receipt of the Notice of Superior Offer, made an offer that the Board of Directors -57- of the Company determines in its good faith judgment (after consultation with a financial advisor of national standing) to be at least as favorable to the Company's stockholders as such Superior Offer (it being agreed that the Board of Directors of the Company shall convene a meeting to consider any such offer by Parent promptly following the receipt thereof), and (iv) the Company shall not have breached any of the restrictions set forth in Section 5.02(a), 5.02(b) or this Section 6.02. The Company shall provide Parent with the same amount of prior notice provided to the members of the Company's Board of Directors or any committee thereof (but in no event less than twenty-four (24) hours) of any meeting of the Company's Board of Directors or any committee thereof at which the Company's Board of Directors or any committee thereof is reasonably expected to consider any Acquisition Proposal to determine whether such Acquisition Proposal is a Superior Offer. Nothing contained in this Section 6.02(c) shall limit the Company's obligation to hold and convene the Company Stockholders' Meeting (regardless of whether there shall have been a Company Change of Recommendation). For purposes of this Agreement, "Superior Offer" shall mean an unsolicited, bona fide written offer made by a third party to acquire, directly or indirectly, pursuant to a tender offer, exchange offer, merger, consolidation or other business combination, all or substantially all of the assets of the Company or the Company Subsidiaries or a majority of the total outstanding voting securities of the Company or any of the Company Subsidiaries, with respect to which the Board of Directors of the Company has in good faith concluded (following consultation with its outside legal counsel and its financial advisor), taking into account, among other things, all legal, financial, regulatory and other aspects of the offer and the person making the offer, that the offer is more favorable to the Company's stockholders (in their capacities as stockholders) than the terms of the Merger, that the person making the offer has secured or is reasonably likely to secure all financing necessary to consummate the transactions contemplated by the offer and that the transactions contemplated by the offer are otherwise reasonably capable of being consummated. (d) Nothing contained in this Agreement shall prohibit the Company or its Board of Directors, or any committee thereof, from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act; provided, however, that the Board of Directors of the Company shall comply with Sections 5.02(a) and 5.02(b) prior to taking and disclosing such position. Nothing in this Agreement shall prohibit the members of the Board of Directors of the Company from exercising their duties of disclosure and candor under applicable Law. The Company's obligation to call, give notice of, convene and hold the Company Stockholders' Meeting in accordance with Section 6.02(a) shall not be limited to or otherwise affected by the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal or Superior Offer (as defined below), or by any Company Change of Recommendation. 6.03. Meeting of Parent Stockholders; Board Recommendation. (a) Promptly after the date hereof, Parent will take all action necessary in accordance with the FBCA and its Articles of Incorporation and By-laws to convene and hold the Parent Stockholders' Meeting to be held as promptly as practicable, and in any event (to the extent permissible under applicable law) within 45 days after the declaration of effectiveness of the Registration Statement, for the purpose of voting upon the approval of the issuance of Parent -58- Common Stock in connection with the Merger and in connection with the Parent Financing. Unless the Board of Directors of Parent has made a Parent Change of Recommendation (as defined in Section 6.03(c)), Parent will use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the approval of the issuance of Parent Common Stock in connection with the Merger and in connection with the Parent Financing and the approval of the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent Common Stock to 30 million shares, and Parent will take all other action necessary or advisable to obtain such approvals and to secure the vote or consent of its stockholders required by the rules of the Nasdaq Stock Market, the FBCA and its Articles of Incorporation and By-laws. Notwithstanding anything to the contrary contained in this Agreement, Parent may adjourn or postpone the Parent Stockholders' Meeting to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement/Prospectus is provided to Parent's stockholders in advance of a vote on the approval of the issuance of Parent Common Stock in connection with the Merger, in connection with the Parent Financing and in connection with the amendment of the Articles of Incorporation of Parent, or, if as of the time for which the Parent Stockholders' Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus) there are insufficient shares of Parent Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Stockholders' Meeting. Parent shall ensure that the Parent Stockholders' Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by Parent in connection with the Parent Stockholders' Meeting are solicited, in compliance with the FBCA, its Articles of Incorporation and By-laws, the rules of the Nasdaq Stock Market and all other applicable legal requirements. Parent's obligation to call, give notice of, convene and hold the Parent Stockholders' Meeting in accordance with this Section 6.03(a) shall not be limited to or otherwise affected by any withholding, withdrawal, amendment or modification of the recommendation of the Board of Directors of Parent with respect to the Parent Stockholder Approval. (b) Subject to Section 6.03(c): (i) the Board of Directors of Parent shall unanimously (expect for Michael Falk, who may abstain from voting with respect to clauses (x), (y) and (z) below and Braden Kelly, who may abstain from voting with respect to clause (y) below) recommend that Parent's stockholders vote in favor of (x) the approval of the issuance of Parent Common Stock in connection with the Merger at the Parent Stockholders' Meeting, (y) the approval of the issuance of Parent Common Stock in connection with the Parent Financing at the Parent Stockholders' Meeting and (z) the approval of the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent Common Stock to 30 million shares; (ii) the Proxy Statement/Prospectus shall include a statement to the effect that the Board of Directors of Parent has recommended that Parent's stockholders vote in favor of the approval of the issuance of Parent Common Stock in connection with the Merger at the Parent Stockholders' Meeting and in favor of the approval of the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent Common Stock to 30 million shares; and (iii) neither the Board of Directors of Parent nor any committee thereof shall withhold, withdraw, amend or modify, or propose or resolve to withhold, withdraw, amend or modify in a manner adverse to the Company, the recommendation of the Board of Directors of Parent that Parent's stockholders vote in favor of and approve the issuance of Parent Common Stock in connection with the Merger and in connection with the Parent Financing and in favor of the approval of the amendment to the Articles of Incorporation of Parent to increase the number of authorized shares of Parent Common Stock to 30 million shares. -59- (c) Nothing contained in this Agreement shall prohibit Parent or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act. Nothing in this Agreement shall prohibit the members of the Board of Directors of Parent from exercising their duties of disclosure and candor under applicable Law. Parent's obligation to call, give notice of, convene and hold Parent's stockholders meeting in accordance with Section 6.03(a) shall not be limited to or otherwise affected by any Parent Change of Recommendation. Nothing in this Agreement shall prevent the Board of Directors of Parent from withholding, withdrawing, amending or modifying its recommendation in favor of adoption of this Agreement and the other proposals included in the Parent Stockholder Approval (any of the foregoing actions, a "Parent Change of Recommendation") if the Board of Directors of Parent concludes in good faith, after consultation with its outside counsel, that such Parent Change of Recommendation is required for Parent to comply with its fiduciary obligations to Parent's shareholders under applicable Law. 6.04. Access to Information; Confidentiality. The Company and the Parent shall, and shall cause each of their respective subsidiaries to, afford to the other, and the other's officers, employees, accountants, counsel, financial advisors and other representatives, upon reasonable notice, reasonable access during normal business hours during the period prior to the Effective Time to all their respective properties, books, contracts, commitments, personnel and records and, during such period, the Company and the Parent shall, and shall cause each of its subsidiaries to, furnish promptly to the other (a) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of Federal or state securities Laws and (b) all other information concerning its business, properties and personnel as the other may reasonably request; provided, however, that Parent or the Company, as the case may be, may withhold the documents and information described in the Company Disclosure Schedule or the Parent Disclosure Schedule, as the case may be, to the extent required to comply with the terms of a confidentiality agreement with a third party in effect on the date of this Agreement provided further, that the Company or the Parent, as the case may be, shall use all reasonable efforts to obtain, as promptly as practicable, any consent from such third party required to permit it to furnish such documents and information to the other party. 6.05. Reasonable Efforts; Notification. (a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties shall use all reasonable efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger, including (i) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings (including filings with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the Merger, including, when reasonable, seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed and (iv) the execution and delivery -60- of any additional instruments necessary to consummate the transactions contemplated hereby and to fully carry out the purposes of this Agreement; provided, however, that the obligations set forth in this sentence shall not be deemed to have been breached as a result of actions by the Company expressly permitted under Section 5.02(b). In connection with and without limiting the foregoing, the Company and the Company Board shall (i) take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to any Transaction or this Agreement and (ii) if any state takeover statute or similar statute or regulation becomes applicable to this Agreement, take all action necessary to ensure that the Merger may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger. Nothing in this Agreement shall be deemed to require any party to waive any substantial rights or agree to any substantial limitation on its operations, to dispose of any significant asset or collection of assets or breach any material agreement to which it is a party. (b) The Company shall give prompt notice to Parent, and Parent or Sub shall give prompt notice to the Company, of (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. 6.06. Takeover Statutes. No party hereto shall take any action that would cause the transactions contemplated by this Agreement to be subject to any Takeover Statute. If any Takeover Statute is or may become applicable to the Merger or the other transactions contemplated by this Agreement, each of Parent and the Company and their respective Boards of Directors shall grant such approvals and take such lawful actions as are necessary and possible to ensure that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize the effects of such statute and any regulations promulgated thereunder on such transactions. 6.07. Benefits and Benefit Plans. (a) From and after the Effective Time and except as otherwise provided herein, Parent shall cause the Company or the Surviving Corporations as applicable, to honor in accordance with their respective terms (as in effect on the date of this Agreement), all the Company's employment, severance and termination agreements, plans and policies disclosed in the Company Disclosure Schedule, including any change in control provisions contained therein. (b) With respect to any "employee benefit plan", as defined in Section 3(3) of ERISA, maintained by Parent or any of its subsidiaries (including any severance plan), for all purposes, including determining eligibility to participate and vesting, service with the Company or any Company Subsidiary shall be treated as service with Parent or any of its subsidiaries; provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits. -61- (c) All Company employees who remain as employees after Closing shall either be afforded the same benefits which the other employees of Parent and its Subsidiaries have without any requirement as to vesting or lapse of time or they shall continue to have the same benefits which were afforded to them by the Company prior to Closing. 6.08. Indemnification by Parent. (a) From and after the Effective Time, Parent will cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company pursuant to any indemnification Contracts between the Company and its directors and officers as of the Effective Time (the "Indemnified Parties") and any advancement of expenses or indemnification provisions under the Company's Certificate of Incorporation or By-laws as in effect on the date hereof, in each case, subject to applicable law. The Certificate of Incorporation and By-laws of the Surviving Corporation will contain provisions with respect to exculpation, advancement of expenses, and indemnification that are at least as favorable to the Indemnified Parties as those contained in the Certificate of Incorporation and By-laws of the Company as in effect on the date hereof, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company, unless such modification is required by law. (b) For a period of six years after the Effective Time, Parent shall maintain in effect a "tail policy" based on the current policies of directors' and officers' liability insurance maintained by the Company (provided that Parent may substitute therefor policies with reputable and financially sound carriers) with respect to claims arising from or related to facts or events which occurred at or before the Effective Time; provided, however, that the amount of the premium payments for a tail policy for the six years following the Effective Time shall be allocated between the Company and Parent as follows: the Company shall pay the amount that would be required to be paid in order to obtain from Parent's current insurer a two year tail policy, and Parent shall pay the difference between the cost of such a two year tail policy and the cost of the six year tail policy. All such premium payments for the two year tail policy shall be paid by the Company on or prior to the Closing Date, and on the Closing Date Parent shall be obligated to make premium payments for the remaining four years of the "tail policy." If the tail policy is canceled, Parent shall use commercially reasonable efforts to obtain a replacement tail policy at no greater expense to Parent than Parent would otherwise be required to incur under this paragraph. (c) The Company will maintain, through the Effective Time, the Company's existing directors' and officers' insurance in full force and effect without reduction of coverage. (d) In the event that Parent or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors or assigns of Parent or the Surviving Corporation, as the case may be, shall succeed to the obligations set forth in this Section 6.08. -62- 6.09. Public Announcements. Parent and Sub, on the one hand, and the Company, on the other hand, shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the Merger or this Agreement and shall not issue any such press release or make any such public statement prior to such consultation, except to the extent that counsel may advise the Company, Parent or Sub that such disclosure is required by applicable Law (including foreign regulations relating to competition), court process or by obligations pursuant to any listing agreement with any national securities exchange. 6.10. Transfer Taxes. All stock transfer, real estate transfer, documentary, stamp, recording and other similar Taxes (including interest, penalties and additions to any such Taxes) ("Transfer Taxes") incurred in connection with this Agreement and the Merger shall be paid by the party upon whom the primary burden for payment is placed by the applicable law. Each party shall cooperate with the other in preparing, executing and filing any Tax Returns with respect to such Transfer Taxes and shall use reasonable efforts to avail itself of any available exemptions from such Transfer Taxes, and shall cooperate in providing any information and documentation that may be necessary to obtain such exemptions. 6.11. Directors. At the Effective Time, the Board of Directors of Parent shall (i) appoint one independent director of the Company selected by the Company to serve as a member of the Board of Directors of Parent, and (ii) appoint one additional independent director, who shall not be affiliated with Parent or the Company, identified by the Board of Directors of the Company, and who shall be reasonably acceptable to the Parent, to serve as a member of the Board of Directors of Parent. The Board of Directors of Parent shall not be required to effect any appointment or nomination to the extent any such action would be inconsistent with the fiduciary duties of the members of the Board of Directors. 6.12. Stockholder Litigation. The Company shall give Parent the opportunity to participate in the defense or settlement of any stockholder litigation against the Company and its directors relating to any litigation to which the Company is a party, and the Company shall not settle any such litigation without the prior consent of Parent, which shall not be unseasonably withheld, delayed or conditioned. 6.13. Section 16 Matters. The Company shall and, provided that the Company delivers to Parent the Section 16 Information (as defined below) in advance of the meeting of Parent's Board of Directors where such matters are scheduled to be discussed, Parent shall use all reasonable efforts (to the extent permitted under applicable law) to cause any disposition of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the transactions contemplated by this Agreement by each Company Insider to be exempt under Rule 16b-3 promulgated under the Exchange Act. "Section 16 Information" shall mean information regarding the Company Insiders, the number of shares of Company capital stock held by each such Company Insider and expected to be exchanged for Parent Common Stock in connection with the Merger, and the number and description of the Company Options held by each such Company Insider and expected to be converted into options for Parent Common Stock in connection with the Merger. "Company Insiders" shall mean those -63- individuals who are or will be subject to the reporting requirement of Section 16(b) of the Exchange Act with respect to Parent or the Company. 6.14. Tax Treatment as Reorganization. Neither Parent, Sub nor the Company shall, and they shall not permit any of their respective subsidiaries to, take any action or cause any action to be taken prior to or following the Merger that would reasonably be expected to cause the Merger to fail to qualify as a reorganization with the meaning of Section 368(a) of the Code and shall use all reasonable efforts to cause the Merger to so qualify. Parent, Sub and the Company shall, and shall cause their respective subsidiaries to, take the position for all purposes that the Merger qualifies as a reorganization under that Section of the Code. 6.15. Company Affiliates; Restrictive Legend. The Company will use all reasonable efforts to deliver or cause to be delivered to Parent, as promptly as practicable on or following the date hereof, from each person listed on Schedule 3.23, an executed affiliate agreement pursuant to which such Affiliate shall agree to be bound by the provisions of Rule 145 in a form provided by Parent and reasonably acceptable to the Company. Parent will give stop transfer instructions to its transfer agent with respect to any Parent Common Stock received pursuant to the Merger by any such Company Affiliate, and there will be placed on the certificates representing such Parent Common Stock, or any substitutions therefor, an appropriate restrictive legend stating in substance that such shares were issued in a transaction to which Rule 145 promulgated under the Securities Act applies and that the transferability of such shares is therefore restricted but that such legend shall be removed by Parent upon receipt of an opinion of counsel that such legend may be removed. 6.16. Consents of Accountants. Parent and the Company will each use reasonable best efforts to cause to be delivered to each other consents from their respective independent auditors, dated the date on which the Registration Statement shall become effective, in form reasonably satisfactory to the recipient and customary in scope and substance for consents delivered by independent public accountants in connection with registration statements on Form S-4 under the Securities Act. 6.17. Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable, whether under applicable Laws and regulations or otherwise, or to remove any injunctions or other impediments or delays, legal or otherwise, to consummate and make effective the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement or the Ancillary Agreements, the proper officers and directors of the Company and Parent shall use all reasonable efforts to take, or cause to be taken, all such necessary actions. 6.18. Cooperation. Parent and the Company shall together, or pursuant to an allocation of responsibility to be agreed upon between them, use commercially reasonable efforts to coordinate and cooperate (i) with respect to the timing of the Company Stockholders' Meeting and the Parent Stockholders' Meeting and shall use commercially reasonable efforts to hold such meetings on the same day, (ii) in determining whether any action by or in respect of, or filing -64- with, any Governmental Entity is required, or any actions, consents approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, and (iii) in seeking any such actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith and timely seeking to obtain any such actions, consents approvals or waivers. Subject to the terms and conditions of this Agreement, Parent and the Company will each use its reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after the Registration Statement is filed, and Parent and the Company shall, subject to applicable law, use commercially reasonable efforts to confer on a regular and frequent basis with one or more representatives of one another to report operational matters of significance to the Merger and the general status of ongoing operations insofar as relevant to the Merger, provided that the parties will not confer on any matter to the extent inconsistent with law. 6.19. Parent Financing. Prior to the Closing, Parent agrees to sell a sufficient number of shares of its authorized common stock at a price per share of not less than $13.50 in order to generate gross proceeds to Parent at or prior to Closing of $21,100,000 (the "Parent Financing"). In connection with and subject to the Closing, Parent agrees to contribute proceeds of the Parent Financing to the Company as an additional capital contribution in order to enable the Company to pay off in full the Company's debt to its lenders for whom Wachovia Bank acts as agent in an aggregate amount of not more than $18,000,000. In addition, in connection with and subject to the Closing, Parent agrees to cause the letter of credit currently issued by Wachovia for the benefit of CG Insurance Services, Inc. to be (a) replaced with a letter of credit on another bank, (b) replaced with other satisfactory collateral or (c) paid in full. 6.20. Company Software Licensing. Prior to the Closing, the Company agrees to obtain valid, continuing licenses for all of the Software that the Company or any of the Company Subsidiaries uses in the operation of its business as currently conducted as of the date of the Closing. Each such license shall be fully transferable to Parent in connection with the Merger. Such transfer shall be effective immediately as of the date of the Closing without payment of any further license fee, transfer fee, royalty or other remuneration not expressly agreed to in advance and in writing by Parent. Compliance with any terms or conditions precedent to the full effectiveness of such transfer shall be the sole and exclusive responsibility of the Company at its own sole expense and shall be completed prior to Closing. Without limiting the generality of the foregoing, the Company or one of the Company Subsidiaries, shall timely notify the licensor of the transfer in such form and manner as may be required pursuant to the terms of any license agreement applicable to such Software. ARTICLE VII. CONDITIONS PRECEDENT 7.01. Conditions to Each Party's Obligation To Effect The Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Stockholder Approvals. The Company Stockholder Approval shall have been obtained by the requisite vote of the stockholders of Company under applicable Law and the Company's Certificate of Incorporation and By-laws. The Parent Stockholder Approval shall -65- have been obtained by the requisite vote of the stockholders of Parent under applicable law, the Parent's Articles of Incorporation and By-laws, and the applicable rules of the NASDAQ Stock Market. b) Registration Statement Effective; Proxy Statement. The SEC shall have declared the Registration Statement effective. No stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus, shall have been initiated or threatened in writing by the SEC. (c) No Order; HSR Act; Governmental Consents. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. All waiting periods, if any, under the HSR Act relating to the transactions contemplated hereby will have expired or been terminated. All material required approvals or consents of any Governmental Entity (including foreign antitrust approvals or consents) in connection with the Merger and the consummation of the other transactions contemplated hereby shall have been obtained. d) Nasdaq Listing. The shares of Parent Common Stock to be issued in connection with the Merger shall have been approved for listing on the Nasdaq Stock Market, subject to official notice of issuance. e) No Restraints. There shall not be pending or overtly threatened any action or proceeding by any Governmental Entity seeking to restrain or prohibit the Merger. 7.02. Additional Conditions to Obligations of Company. The obligation of the Company to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Company: (a) Representations and Warranties. The representations and warranties of Parent and Sub contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or material adverse effect or any similar standard or qualification, shall be true and correct as of the date of this Agreement and as of the Closing Date with the same force and effect as if made on the Closing Date (except that those representations and warranties which address matters only as of a particular date shall remain true and correct only as of such date), except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Parent Material Adverse Effect. The Company shall have received a certificate with respect to the foregoing signed on behalf of Parent by the Chief Executive Officer or Chief Financial Officer of Parent. (b) Agreements and Covenants. Parent and Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date, and Company shall have -66- received a certificate to such effect signed on behalf of Parent by the Chief Executive Officer or Chief Financial Officer of Parent. c) Majority of the Minority. This Agreement shall have been adopted by the affirmative vote of the holders of at least a majority of the outstanding shares of the Company Common Stock voting at the Company Stockholder Meeting and not taking into account any votes cast by holders of the Series C Stock, by Commonwealth Associates, L.P. or any affiliates or officers or directors thereof, or any director or executive officer of the Company (the "Minority Stockholder Approval"). d) Closing Certificate. Parent shall have furnished the Company with a certificate dated the Closing Date signed on behalf of it by the President of Parent to the effect that, to the actual knowledge of the President, the conditions set forth in Sections 7.02(a) and 7.02(b) have been satisfied. e) Material Adverse Effect. There shall not have occurred any event, change or effect having, individually or in the aggregate, a Parent Material Adverse Effect. 7.03. Additional Conditions to the Obligations of Parent and Sub. The obligations of Parent and Sub to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Parent: a) Representations and Warranties. The representations and warranties of Company contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or material adverse effect or any similar standard or qualification, shall be true and correct as of the date of this Agreement and as of the Closing Date with the same force and effect as if made on the Closing Date (except that those representations and warranties which address matters only as of a particular date shall remain true and correct only as of such date), except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Company Material Adverse Effect (other than the representations and warranties set forth in Section 3.06(c) and 3.18(b), which shall be true and correct in all respects). It being understood that, for purposes of determining the accuracy of such representations and warranties, any update of or modification to the Company Disclosure Schedule made or purported to have been made after the execution of this Agreement shall be disregarded. (b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Closing Date. (c) Material Adverse Effect. There shall not have occurred any event, change or effect having, individually or in the aggregate, a Company Material Adverse Effect. (d) Intentionally Omitted. (e) Consents. All consents or approvals necessary to the consummation of the Merger including consents from parties to loans, contracts, leases or other agreements, shall have -67- been obtained, other than consents the failure of which to obtain could not reasonably be expected to have a Company Material Adverse Effect. (f) Dissenting Stockholders. Holders of no more than ten percent (10%) of Company Common Stock shall have demanded appraisal of their shares pursuant to the DGCL. (g) Closing Certificate. The Company shall have furnished Parent with a certificate dated the Closing Date signed on behalf of it by the Chief Executive Officer of the Company to the effect that, to the actual knowledge of the Chief Executive Officer, the conditions set forth in Sections 7.03(a), (b), (c), and (e) have been satisfied. ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER 8.01. Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after the Parent Stockholder Approval or the Company Stockholder Approval: (a) by mutual written consent duly authorized by the Board of Directors of Parent and the Company; (b) by either the Company or Parent if the Merger shall not have been consummated by April 30, 2004 (the "Outside Date") for any reason; provided, however, that the right to terminate this Agreement under this Section 8.01(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a material breach of this Agreement; (c) by either the Company or Parent if a Governmental Entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger, which order, decree, ruling or other action is final and nonappealable; provided, however, that the party seeking to terminate this Agreement pursuant to this Section 8.01(c) shall have used commercially reasonable efforts to prevent the entry of and to remove such restraint; (d) by either the Company or Parent, if the Company Stockholder Approval shall not have been obtained by reason of the failure to obtain the required vote at the Company Stockholders' Meeting duly convened therefor or at any adjournment thereof; provided, however, that the right to terminate this Agreement under this Section 8.01(d) shall not be available to the Company where the failure to obtain such stockholder approval shall have been caused by the action or failure to act of such party and such action or failure to act constitutes a breach by such party of this Agreement; (e) by either the Company or Parent, if the Parent Stockholder Approval shall not have been obtained by reason of the failure to obtain the required vote at the Parent Stockholders' Meeting duly convened therefor or at any adjournment thereof; provided, however, that the right to terminate this Agreement under this Section 8.01(e) shall not be available to Parent where the failure to obtain such stockholder approval shall have been caused by the action or failure to act of such party and such action or failure to act constitutes a breach by such party of this Agreement; -68- (f) by Parent (at any time prior to obtaining the Company Stockholder Approval by the required vote of the Company stockholders) if a Parent Triggering Event (as defined below) shall have occurred; (g) by the Company (at any time prior to obtaining the Parent Stockholder Approval by the required vote of Parent stockholders) if a Company Triggering Event (as defined below) shall have occurred; (h) by the Company, either (i) upon a breach of any representation, warranty, covenant or agreement on the part of Parent set forth in this Agreement, or if any representation or warranty of Parent shall have become untrue, in either case such that the conditions set forth in Section 7.02(a) or Section 7.02(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, or (ii) if a Parent Material Adverse Effect shall have occurred; provided that if such inaccuracy in Parent's representations and warranties or breach by Parent, or a Parent Material Adverse Effect, is curable prior to the Outside Date by Parent, then the Company may not terminate this Agreement under this Section 8.01(h) for 30 days, with respect to an inaccuracy or breach, or 45 days, with respect to a Parent Material Adverse Effect, after delivery of written notice from the Company to Parent of such breach, inaccuracy or Parent Material Adverse Effect, if Parent continues to exercise all reasonable efforts to cure such breach, inaccuracy or Parent Material Adverse Effect (it being understood that the Company may not terminate this Agreement pursuant to this paragraph (h) if such breach by Parent or Parent Material Adverse Effect is cured during such 30 or 45-day period, or if the Company shall have materially breached this Agreement); (i) by Parent, either (i) upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Section 7.03(a) or Section 7.03(b) would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, or (ii) if a Company Material Adverse Effect shall have occurred; provided that if such inaccuracy in the Company's representations and warranties or breach by the Company, or Company Material Adverse Effect, is curable prior to the Outside Date by the Company, then Parent may not terminate this Agreement under this Section 8.01(i) for 30 days, with respect to an inaccuracy or breach, or 45 days, with respect to a Company Material Adverse Effect, after delivery of written notice from Parent to the Company of such breach, inaccuracy or Company Material Adverse Effect, if the Company continues to exercise all commercially reasonable efforts to cure such inaccuracy, breach or Company Material Adverse Effect (it being understood that Parent may not terminate this Agreement pursuant to this paragraph (i) if such inaccuracy or breach by the Company or Company Material Adverse Effect is cured during such 30 or 45-day period, or if Parent shall have materially breached this Agreement). (j) by the Company, in respect of a Superior Offer in accordance with Section 6.02(c); (k) by the Company, if the Parent does not mail the Proxy Statement/Prospectus to the Parent's stockholders by February 12, 2004; provided, that the Company has used all commercially reasonable efforts to mail the Proxy by such date; -69- (1) by Parent, if the Company does not mail the Proxy Statement/Prospectus to the Company's stockholders by February 12, 2004; provided, that Parent has used all commercially reasonable efforts to mail the Proxy by such date; For the purposes of this Agreement, a "Company Triggering Event" shall be deemed to have occurred if: (i) Parent's Board of Directors or any committee thereof shall for any reason have withheld, withdrawn, amended or modified in a manner adverse to the Company its recommendation in favor of the issuance of Parent Common Stock in connection with the Merger; (ii) Parent shall have failed to include in the Proxy Statement/Prospectus the recommendation of Parent's Board of Directors in favor of the issuance of Parent Common Stock in connection with the Merger; or (iii) Parent's Board of Directors fails to reaffirm (publicly, if so requested) its recommendation in favor of the issuance of Parent Common Stock in connection with the Merger within 10 business days after the Company requests in writing that such recommendation be reaffirmed. For the purposes of this Agreement, a "Parent Triggering Event" shall be deemed to have occurred if: (i) the Company's Board of Directors or any committee thereof shall for any reason have withheld, withdrawn, amended or modified in a manner adverse to Parent its recommendation in favor of adoption of this Agreement; (ii) the Company shall have failed to include in Proxy Statement/Prospectus the recommendation of the Company's Board of Directors or any committee thereof in favor of adoption of this Agreement; (iii) the Company's Board of Directors or any committee thereof fails to reaffirm its recommendation in favor of adoption of this Agreement within 10 business days after Parent requests in writing that such recommendation be reaffirmed; (iv) the Company's Board of Directors or any committee thereof shall have approved or publicly recommended any Acquisition Proposal; (v) the Company shall have entered into any letter of intent or other contract accepting any Acquisition Proposal; (vi) the Company shall have breached any of the provisions of Sections 5.02 or 6.02; or (vii) a tender or exchange offer relating to securities of the Company shall have been commenced by a person unaffiliated with Parent, and the Company shall not have sent to its security holders pursuant to Rule 14e-2 promulgated under the Exchange Act, within 10 business days after such tender or exchange offer is first published sent or given, a statement disclosing that the Company recommends rejection of such tender or exchange offer. 8.02. Notice of Termination; Effect of Termination. Any proper termination of this Agreement under Section 8.01 above will be effective immediately upon the delivery of written notice of the terminating party to the other parties hereto. In the event of the termination of this Agreement as provided in Section 8.01, this Agreement shall be of no further force or effect, except (i) as set forth in this Section 8.02, Section 8.03 and Article IX, each of which shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any party from liability for any willful breach of this Agreement. No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms. 8.03. Fees and Expenses. (a) General. Except as set forth in this Section 8.03, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby ("Transaction -70- Expenses") shall be paid by the party incurring such expenses whether or not the Merger is consummated; provided, however, that Parent and the Company shall share equally (i) all fees and expenses, other than attorneys' and accountants' fees and expenses, incurred in relation to the printing and filing with the SEC of the Proxy Statement/Prospectus (including any preliminary materials related thereto) and the Registration Statement (including financial statements and exhibits) and any amendments or supplements thereto and (ii) the filing fee(s) for the Antitrust Filings, in each case pursuant to Section 6.01. (b) Company Payments. In the event that this Agreement is terminated (i) pursuant to Section 8.01(f) or Section 8.01(j), or (ii) as a result of the failure of the Company to obtain the Company Stockholder Approval if (A) prior to such termination, an Acquisition Proposal with respect to the Company was publicly disclosed and (B) within 12 months following the termination of this Agreement, either an Acquisition (as defined in Section 8.03(c)) with respect to the Company is consummated, or the Company enters into a Contract providing for an Acquisition which is later consummated (whether during or after such 12-month period), then the Company shall pay to Parent a fee equal to $2,000,000, in immediately available funds promptly but in no event later than two business days after the date of such termination, if terminated pursuant to clause (i) above, or two business days after the consummation of such Acquisition, if terminated pursuant to clause (ii) above. In the event that (I) the Company obtains the Company Stockholder Approval but does not obtain the Minority Stockholder Approval, and (II) the Company does not waive the condition to Closing set forth in Section 7.02(c) in such a manner as to allow the Closing to occur, then the Company shall immediately reimburse Parent for all Transaction Expenses incurred by Parent, including without limitation Parent's portion of the shared Transaction Expenses under Section 8.03(a), up to a maximum amount of $500,000 upon Parent's submission of reasonable documentation of such expenses to the Company. (c) Acknowledgements. The Company and Parent acknowledge that (i) the agreements contained in Section 8.03(b) are an integral part of the transactions contemplated by this Agreement, (ii) the amount of, and the basis for payment of, the termination fee described therein is reasonable and appropriate in all respects, and (iii) without this agreement, Parent would not enter into this Agreement. Accordingly, if the Company fails to pay in a timely manner the termination fee due pursuant to Section 8.03(b), and, in order to obtain such payment, Parent makes a claim that results in a judgment for the amount set forth in Section 8.03(b), the Company shall pay Parent's costs and expenses (including reasonable attorneys' fees and expenses) in connection with such suit, together with interest on the amount set forth in Section 8.03(b) at the prime rate of Bank of America, N.A. in effect on the date such payment was required to be made. Payment of the fee described in Section 8.03(b) shall not be in lieu of damages incurred in the event of breach of this Agreement. For the purposes of this Agreement, an "Acquisition" shall mean any of the following transactions (other than the transactions contemplated by this Agreement); (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or Parent, as applicable, pursuant to which the stockholders of the Company or Parent, as applicable, immediately preceding such transaction hold less than 85% of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a sale or other disposition by the Company or Parent or its subsidiaries of assets (in a transaction or series of transactions) representing in excess of 50% of the aggregate fair market value of the -71- Company's or Parent's business immediately prior to such sale, or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by the Company or Parent), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of 50% of the voting power of the then outstanding shares of capital stock of the Company or Parent. 8.04. Amendment. Subject to applicable law, this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders of Parent and the Company; provided, however, that after any such approval, no amendment shall be made which by law or in accordance with the rules of any relevant stock exchange or the Nasdaq Stock Market requires further approval by such stockholders without such further stockholder approval. This Agreement may not be amended except by execution of an instrument in writing signed on behalf of each of Parent, Sub and the Company. 8.05. Extension; Waiver. Any time prior to the Effective Time any party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, except that Parent may not extend for the benefit of Sub and vice versa, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The agreement of Parent to any extension or waiver shall be deemed to be the agreement of Sub to such extension or waiver. Delay in exercising any right under this Agreement shall not constitute a waiver of such right. ARTICLE IX. GENERAL PROVISIONS 9.01. Nonsurvival of Representations and Warranties and Liability for Breach Prior to Closing. Except as provided in the last sentence of this Section 9.01, none of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. Except as set forth in Section 8.03(b) above, in the event of termination of this Agreement as provided in Section 8.01, there shall be no liability or obligation on the part of Parent, Sub or the Company, or their respective officers, directors, stockholders or affiliates; provided, however, that nothing herein shall relieve any party from liability from the intentional or willful breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud; and provided that the provisions of this Section 9.01, Section 8.03 and Section 6.04 of this Agreement and the confidentiality provisions set forth herein and in the Confidentiality Agreement shall remain in full force and effect and survive any termination of this Agreement. This Section 9.01 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. 9.02. Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given (i) seven days after mailing by certified mail, (ii) when delivered by hand, (iii) upon confirmation of receipt by telecopy or (iv) one -72- business day after sending by overnight delivery service, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or Sub, to ProxyMed, Inc. 2555 Davie Road, Suite 110 Fort Lauderdale, Florida 33317 Attention: President Facsimile: (954) 473-2341 with a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, Florida 33131 Attention: Rodney H. Bell, Esq. Facsimile: 305-789-7799 (b) if to the Company, to PlanVista Corporation 4010 Boy Scout Boulevard, Suite 200 Tampa, Florida 33607 Attention: Facsimile: with a copy to: Fowler White Boggs Banker P.A. 501 E. Kennedy Blvd., Suite 1700 Tampa, FL 33602 Attention: David C. Shobe, Esq. Facsimile: 813-228-9401 9.03. Definitions. For purposes of this Agreement: "Ancillary Agreements" means any and all other agreements, documents, and certificates required under Sections 7.01(e) and 7.03 of this Agreement. A "key employee" means an employee of the Company or any Company Subsidiary or Parent or Parent Subsidiary, as the case may be, listed on Schedule 9.03. A "person" means any individual, firm, corporation, partnership, company, limited liability company, trust, joint venture, association, Governmental Entity or other entity. -73- A "subsidiary" means in reference to any particular party, a corporation with respect to which the party either (i) is required to consolidate the reporting of its financial information in accordance with GAAP, or (ii) is a beneficial owner of either at least a majority of any class of the corporation's securities or securities of the corporation representing at least a majority of the voting power of all the corporation's outstanding securities that are entitled to vote in the election of its directors. "knowledge" of any specified corporation means the actual knowledge of any director or executive officer of such corporation, and unless otherwise specified also includes any knowledge that should have been obtained by any director or executive officer of such corporation after reasonable inquiry. 9.04. Interpretation; Disclosure Schedules. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Any matter disclosed in any section of the Company Disclosure Schedule shall be deemed disclosed only for the purposes of the specific Sections of this Agreement to which such section relates. 9.05. Severability, If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. 9.06. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 9.07. Entire Agreement, No Third-Party Beneficiaries. This Agreement, taken together with the Company Disclosure Schedule, Parent Disclosure Schedule, the Confidentiality Agreement and the Ancillary Agreements (a) constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the transactions contemplated hereby, and (b)except for the provisions of Section 6.08, are not intended to confer upon any person other than the parties any rights or remedies. 9.08. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof. -74- 9.09. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. 9.10. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery or any Federal court located in the State of Delaware, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Delaware Court of Chancery or any Federal court located in the State of Delaware in the event any dispute arises out of this Agreement or the Merger, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it will not bring any action arising out of or relating to this Agreement or the Merger in any court other than the Delaware Court of Chancery or any Federal court sitting in the State of Delaware. To the extent that a party to this Agreement is not otherwise subject to service of process in the State of Delaware, such party hereby appoints The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, as such party's agent in the State of Delaware for acceptance of legal process and agrees that service made on such agent shall have the same legal effect as if served upon such party personally within the State of Delaware. 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OP OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 9.12. Consents. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in Sections 8.04 and 8.05. Sub hereby agrees that any consent or waiver of compliance given by Parent hereunder shall be conclusively binding upon it, whether given expressly on its behalf or not. 9.13. Other Remedies. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other -75- remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] -76- IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this Agreement, all as of the date first written above. ProxyMed, Inc. By: ----------------------------------------- Name: Title: Planet Acquisition Corp. ----------------------------------------- Name: Title: PlanVista Corporation ----------------------------------------- Name: Title: EX-2 4 e949268.txt EXHIBIT 2 EXECUTION COPY EXHIBIT 2 ================================================================================ STOCK PURCHASE AGREEMENT by and among PROXYMED, INC., GENERAL ATLANTIC PARTNERS 77, L.P., GAP COINVESTMENT PARTNERS II, L.P., GAPSTAR, LLC, GAPCO GMBH & CO. KG, PVC FUNDING PARTNERS, LLC, COMVEST VENTURE PARTNERS, L.P., SHEA VENTURES, LLC, ROBERT PRIDDY, and (solely for the purpose of Section 8.5 and Section 10.5) GENERAL ATLANTIC PARTNERS 74, L.P. - ------------------------------------------------------------------------------- Dated: December 5, 2003 - ------------------------------------------------------------------------------- ================================================================================
Table of Contents Page ARTICLE I DEFINITIONS 1 1.1 DEFINITIONS................................................................1 ARTICLE II PURCHASE AND SALE OF COMMON STOCK 8 2.1 PURCHASE AND SALE OF COMMON STOCK..........................................8 2.2 USE OF PROCEEDS............................................................8 2.3 CLOSING....................................................................8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8 3.1 CORPORATE EXISTENCE AND POWER..............................................8 3.2 AUTHORIZATION; NO CONTRAVENTION; FBCA SECTIONS 607.0901 AND 607.0902.............................................9 3.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS...................................................................9 3.4 BINDING EFFECT.............................................................9 3.5 LITIGATION................................................................10 3.6 COMPLIANCE WITH LAWS......................................................10 3.7 CAPITALIZATION............................................................10 3.8 NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS.............................11 3.9 TITLE TO PROPERTIES AND ASSETS............................................11 3.10 REPORTS; FINANCIAL STATEMENTS.............................................12 3.11 TAXES.....................................................................12 3.12 NO MATERIAL ADVERSE CHANGE; ORDINARY COURSE OF BUSINESS..................................................................13 3.13 PRIVATE OFFERING..........................................................13 3.14 LABOR RELATIONS...........................................................13 3.15 EMPLOYEE BENEFIT PLANS....................................................13 3.16 LIABILITIES...............................................................14 3.17 INTELLECTUAL PROPERTY.....................................................14 3.18 NETWORK REDUNDANCY AND COMPUTER BACK-UP...................................16 3.19 PRIVACY OF CUSTOMER INFORMATION...........................................16 3.20 POTENTIAL CONFLICTS OF INTEREST...........................................16 3.21 TRADE RELATIONS...........................................................16 3.22 BROKER'S, FINDER'S OR SIMILAR FEES........................................16 3.23 STOCKHOLDER APPROVAL......................................................17 3.24 TRUE AND COMPLETE COPY OF MERGER AGREEMENT AND OTHER TRANSACTION-RELATED AGREEMENTS..................................17 3.25 REGISTRATION RIGHTS.......................................................17 3.26 OBSERVANCE OF COVENANTS...................................................17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 17
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4.1 EXISTENCE AND POWER.......................................................17 4.2 AUTHORIZATION; NO CONTRAVENTION...........................................17 4.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS..................................................................18 4.4 BINDING EFFECT............................................................18 4.5 PURCHASE FOR OWN ACCOUNT..................................................18 4.6 RESTRICTED SECURITIES.....................................................19 4.7 BROKER'S, FINDER'S OR SIMILAR FEES........................................19 4.8 ACCREDITED INVESTOR.......................................................19 ARTICLE V CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE 20 5.1 REPRESENTATIONS AND WARRANTIES............................................20 5.2 COMPLIANCE WITH THIS AGREEMENT............................................20 5.3 OFFICER'S CERTIFICATE.....................................................20 5.4 SECRETARY'S CERTIFICATE...................................................20 5.5 PURCHASED SHARES..........................................................20 5.6 OPINION OF COUNSEL........................................................21 5.7 NASD......................................................................21 5.8 STOCKHOLDER APPROVAL......................................................21 5.9 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT.................................................................21 5.10 NO MATERIAL ADVERSE CHANGE................................................21 5.11 CONSENTS AND APPROVALS....................................................21 5.12 NO MATERIAL JUDGMENT OR ORDER.............................................21 5.13 NO LITIGATION.............................................................21 5.14 SATISFACTION OF CONDITIONS; CONSUMMATION OF THE MERGER....................................................................22 ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY AND THE SELLING STOCKHOLDERS TO CLOSE 22 6.1 PAYMENT OF PURCHASE PRICE.................................................22 6.2 REPRESENTATIONS AND WARRANTIES............................................22 6.3 STOCKHOLDER APPROVAL......................................................22 6.4 SATISFACTION OF CONDITIONS................................................22 ARTICLE VII INDEMNIFICATION 22 7.1 INDEMNIFICATION...........................................................22 7.2 NOTIFICATION..............................................................23 7.3 CONTRIBUTION..............................................................24 7.4 CAP ON INDEMNIFICATION....................................................24 ARTICLE VIII COVENANTS OF THE COMPANY 24 8.1 INTERIM ACTIONS...........................................................24 8.2 STOCKHOLDER APPROVAL......................................................25
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8.3 THE ACQUISITION...........................................................26 8.4 AMENDMENT OF ACQUISITION DOCUMENTS........................................26 8.5 RESTRICTION ON TRANSFER OF SECURITIES.....................................26 8.6 WAIVER OF ANTI-DILUTION PROVISIONS........................................27 ARTICLE IX TERMINATION OF AGREEMENT 27 9.1 TERMINATION...............................................................27 9.2 SURVIVAL..................................................................28 ARTICLE X MISCELLANEOUS 28 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................28 10.2 NOTICES...................................................................29 10.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.........................31 10.4 AMENDMENT AND WAIVER......................................................32 10.5 AMENDMENT TO STOCK AND WARRANT PURCHASE AGREEMENT.................................................................32 10.6 COUNTERPARTS..............................................................32 10.7 HEADINGS..................................................................32 10.8 GOVERNING LAW.............................................................32 10.9 SEVERABILITY..............................................................32 10.10 RULES OF CONSTRUCTION.....................................................33 10.11 ENTIRE AGREEMENT..........................................................33 10.12 FEES......................................................................33 10.13 PUBLIC ANNOUNCEMENTS......................................................33 10.14 FURTHER ASSURANCES........................................................33
iii EXHIBITS A Form of Holland & Knight LLP Opinion B Form of Amended and Restated Registration Rights Agreement SCHEDULES 2.1 Purchased Shares and Purchase Price 3.1 Corporate Existence, Power 3.2 Authorization; No Contravention 3.3 Governmental Authorization; Third Party Consents 3.5 Litigation 3.6(a) Compliance with Laws 3.7(a) Capitalization 3.7(b) List of Subsidiaries and their Equity Holders 3.9 Title to Properties and Assets 3.11 Taxes 3.12 No Material Adverse Change; Ordinary Course of Business 3.17(a) Intellectual Property - Ownership 3.17(b) Intellectual Property - Infringement 3.17(d) Intellectual Property - Employee Agreements 3.17(e) Intellectual Property - Trade Secrets 3.19 Privacy of Customer Information 3.20 Conflicts of Interest 3.21 Trade Relations 3.22 Broker's, Finder's or Similar Fees iv STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT, dated December 5, 2003 (this "Agreement"), by and among ProxyMed, Inc., a Florida corporation (the "Company"), General Atlantic Partners 77, L.P., a Delaware limited partnership ("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership ("GAP Coinvestment"), GAPCO GmbH & Co. KG, a German limited partnership ("GmbH Coinvestment"), GapStar, LLC, a Delaware limited liability company ("GapStar"), PVC Funding Partners, LLC, a Delaware limited liability company ("PVC"), ComVest Venture Partners, L.P., a Delaware limited partnership ("ComVest"), Shea Ventures, LLC ("Shea"), Robert Priddy ("Priddy" and, collectively with GAP LP, GAP Coinvestment, GmbH Coinvestment, GapStar, PVC, ComVest and Shea, the "Purchasers") and, solely for the purposes set forth in Section 8.5 and Section 10.5 hereto, General Atlantic Partners 74, L.P., a Delaware limited partnership ("GAP 74"). WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue and sell to each of the Purchasers for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto the aggregate number of shares, par value $0.001 per share, of common stock of the Company (the "Common Stock"), determined by dividing the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto by the Price Per Share (as defined below). NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Acquisition Documents" has the meaning set forth in Section 3.24 of this Agreement. "Affiliate" shall mean any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. "Agreement" means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof. "Amended and Restated Registration Rights Agreement" has the meaning set forth in Section 5.9 of this Agreement. "Articles of Incorporation" means the Restated Articles of Incorporation, as amended, of the Company, as in effect on the date hereof. "Assets" has the meaning set forth in Section 3.9 of this Agreement. "Audited Financial Statements" has the meaning set forth in Section 3.10 of this Agreement. "Beneficial Ownership" has the meaning given such term in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder. "Board of Directors" means the Board of Directors of the Company. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "By-laws" means the By-laws of the Company as in effect on the date hereof. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock (including, without limitation, common stock and preferred stock) and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Claims" has the meaning set forth in Section 3.5 of this Agreement. "Closing" has the meaning set forth in Section 2.3 of this Agreement. "Closing Date" has the meaning set forth in Section 2.3 of this Agreement. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute thereto. "Commission" means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act. "Common Stock" has the meaning set forth in the preamble to this Agreement. "Commonly Controlled Entity" means any entity which is under common control with the Company within the meaning of Code Section 414(b), (c), (m), (o) or (t). "Company" has the meaning set forth in the preamble to this Agreement. 2 "Company Plans" means each Plan that the Company and each of its Subsidiaries maintains or to which the Company and each of its Subsidiaries contributes. "Condition of the Company" means the assets, business, properties, prospects, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. "Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its property is bound. "Copyrights" means any foreign or United States copyright registrations and applications for registration thereof, and any non-registered copyrights. "Effective Time" has the meaning set forth in the Merger Agreement. "Environmental Laws" means federal, state, local and foreign laws, principles of common laws, civil laws, regulations, and codes, as well as orders, decrees, judgments or injunctions, issued, promulgated, approved or entered thereunder relating to pollution, protection of the environment or public health and safety. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "Family Member" has the meaning set forth in Section 8.5(b) of this Agreement. "Financial Statements" has the meaning set forth in Section 3.10 of this Agreement. "Form 13F Filer" means any Person required under Section 13(f) of the Exchange Act to file a Form 13F or that would be a Person that would satisfy the requirements under Rule 13d-1(b)(1)(i) and (ii)(A-F, H or I) under the Exchange Act with respect to the acquisition of securities of the Company, including as a result of a transfer of Restricted Shares from the Purchaser and such Person's Permitted Transferees. "GAAP" means United States generally accepted accounting principles in effect from time to time. "GAP Coinvestment" has the meaning set forth in the preamble to this Agreement. 3 "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" has the meaning set forth in the preamble to this Agreement. "GAP 74" has the meaning set forth in the preamble to this Agreement. "GmbH Coinvestment" has the meaning set forth in the preamble to this Agreement. "GapStar" has the meaning set forth in the preamble to this Agreement. "Governmental Authority" means the government of any nation, state, city, locality or other political subdivision thereof, any entity, including, without limitation, the Nasdaq Stock Market, Inc., exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Group" has the meaning given such term in Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 7.1 of this Agreement. "Indemnifying Party" has the meaning set forth in Section 7.1 of this Agreement. "Intellectual Property" has the meaning set forth in Section 3.17 of this Agreement. "Internet Assets" means any Internet domain names and other computer user identifiers and any rights in and to sites on the worldwide web, including rights in and to any text, graphics, audio and video files and html or other code incorporated in such sites. "Liabilities" has the meaning set forth in Section 3.16 of this Agreement. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, preemptive right, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "Losses" has the meaning set forth in Section 7.1 of this Agreement. "Material Adverse Effect" has the meaning ascribed to the term "Parent Material Adverse Effect" in Section 4.01 of the Merger Agreement. 4 "Material Contractual Obligations" has the meaning set forth in Section 3.8 of this Agreement. "Merger" has the meaning set forth in the Merger Agreement. "Merger Agreement" means the Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Company, Planvista and Planet Acquisition Corp., a Delaware corporation. "Orders" has the meaning set forth in Section 3.2 of this Agreement. "Patents" means any foreign or United States patents and patent applications, including any divisions, continuations, continuations-in-part, substitutions or reissues thereof, whether or not patents are issued on such applications and whether or not such applications are modified, withdrawn or resubmitted. "Permits" has the meaning set forth in Section 3.6 of this Agreement. "Permitted Transferee" has the meaning set forth in Section 8.5(b) of this Agreement. "Person" means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Plan" means any employee benefit plan, arrangement, policy, program, agreement or commitment (whether or not an employee plan within the meaning of section 3(3) of ERISA), including, without limitation, any employment, consulting or deferred compensation agreement, executive compensation, bonus, incentive, pension, profit-sharing, savings, retirement, stock option, stock purchase or severance pay plan, any life, health, disability or accident insurance plan, whether oral or written, whether or not subject to ERISA, as to which the Company or any Commonly Controlled Entity has or in the future could have any direct or indirect, actual or contingent liability. "Planvista" means Planvista Corporation, a Delaware corporation. "Price Per Share" means $14.25. "Purchased Shares" has the meaning set forth in Section 2.1 of this Agreement. "Purchasers" has the meaning set forth in the preamble to this Agreement. "Registerable Securities" has the meaning set forth in the Amended and Restated Registration Rights Agreement. 5 "Requirement of Law" means, as to any Person, any law, Environmental Law, statute, treaty, rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. "Restricted Shares" means (a) with respect to GAP LP, GAP Coinvestment, GapStar and GMBH Coinvestment, the Purchased Shares purchased by such Purchaser and all of the shares of Common Stock beneficially owned by such Purchaser on the date hereof, (b) with respect to GAP 74, all of the shares of Common Stock beneficially owned by GAP 74 on the date hereof; provided, however, that nothwithstanding the preceding clauses (a) and (b), an aggregate of 434,568 shares of Common Stock beneficially owned by GAP 74, GAP Coinvestment, GapStar or GMBH Coinvestment on the date hereof shall not constitute "Restricted Shares" (subject to adjustment for any subdivision, combination or reclassification of shares of Common Stock, or upon any dividend or distribution payable in shares of Common Stock) and (c) with respect to PVC, ComVest, Shea and Priddy, the Purchased Shares purchased by such Purchaser and all of the shares of Common Stock issued to such Purchaser pursuant to the Merger. "Sale Transaction" means (a) (i) the merger or consolidation of the Company into or with one or more Persons, (ii) the merger or consolidation of one or more Persons into or with the Company or (iii) a tender offer or other business combination if, in the case of (i), (ii) or (iii), the stockholders of the Company prior to such merger or consolidation do not retain at least a majority of the voting power of the surviving Person or (b) the voluntary sale, conveyance, exchange or transfer to another Person of the voting Capital Stock of the Company if, after such sale, conveyance, exchange or transfer, the stockholders of the Company prior to such sale, conveyance, exchange or transfer do not retain at least a majority of the voting power of the Company. "SEC Reports" has the meaning set forth in Section 3.10 of this Agreement. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. "Secretary" has the meaning set forth in the Company's By-laws. "Software" means any computer software programs, source code, object code, data and documentation, including, without limitation, any computer software programs that incorporate and run the Company's pricing models, formulae and algorithms. "Stock and Warrant Purchase Agreement" means the Stock and Warrant Purchase Agreement, dated March 26, 2002, by and among the Company, GAP LP, GAP Coinvestment, GapStar and GmbH Coinvestment. 6 "Stock Equivalents" means any security or obligation which is by its terms convertible into or exchangeable or exercisable for shares of Common Stock or other capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to common stock or such other capital stock. "Stock Option Plans" means collectively, the Company's 2002 Stock Option Plan, 2001 Stock Option Plan, Amended 2000 1/2 Stock Option Plan, 2000 Stock Option Plan, 1999 Stock Option Plan, 1997 Stock Option Plan, 1995 Stock Option Plan, 1995 Outside Directors Stock Option Plan, 1993 Stock Option Plan and ProxyMed Employee Non-Qualified Stock Option Agreement. "Stockholder Approval" has the meaning set forth in Section 3.23 of this Agreement. "Subsidiaries" means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise requires, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. "Taxes" means any federal, state, provincial, county, local, foreign and other taxes (including, without limitation, income, profits, windfall profits, alternative, minimum, accumulated earnings, personal holding company, capital stock, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustments related to any of the foregoing. "Trade Secrets" means any trade secrets, research records, processes, procedures, manufacturing formulae, technical know-how, technology, blue prints, designs, plans, inventions (whether patentable and whether reduced to practice), invention disclosures and improvements thereto. "Trademarks" means any foreign or United States trademarks, service marks, trade dress, trade names, brand names, designs and logos, corporate names, product or service identifiers, whether registered or unregistered, and all registrations and applications for registration thereof. "Transfer" has the meaning set forth in Section 8.5(a) of this Agreement. "Unaudited Financial Statements" has the meaning set forth in Section 3.11 of this Agreement. 7 "Warrants" means, collectively, those warrants, exercisable for shares of Common Stock, issued pursuant to the Stock and Warrant Purchase Agreement, dated March 26, 2002, by and among the Company, General Atlantic Partners 74, L.P., GAP Coinvestment, GmbH Coinvestment and GapStar and those warrants issued to General Atlantic Partners 74, L.P., GAP Coinvestment, GmbH Coinvestment and GapStar on July 8, 2003. ARTICLE II PURCHASE AND SALE OF COMMON STOCK 2.1 Purchase and Sale of Common Stock. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, agrees to purchase from the Company, on the Closing Date the aggregate number of shares of Common Stock determined by dividing (x) the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto by (y) the Price Per Share (rounded up to the nearest share), for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto (all of the shares of Common Stock being purchased pursuant to this Section 2.1 being referred to herein as the "Purchased Shares"). 2.2 Use of Proceeds. The Company shall use the proceeds from the sale of the Purchased Shares to fund the acquisition by the Company of Planvista pursuant to the Merger Agreement and to fulfill the Company's obligations under the Merger Agreement. 2.3 Closing. Unless this Agreement shall have been terminated pursuant to Article IX, and subject to the satisfaction or waiver of the conditions set forth in Articles V and VI, the closing of the sale and purchase of the Purchased Shares (the "Closing") shall take place at the offices of Holland & Knight LLP, one East Broward Boulevard, Suite 1300, Fort Lauderdale, Florida 33301, at 10:00 a.m., local time, on the Effective Time of the Merger, or at such other time, place and date that the Company and the Purchasers purchasing a majority of the Purchased Shares may agree in writing (the "Closing Date"). On the Closing Date, the Company shall deliver to each of the Purchasers a certificate or certificates in definitive form and registered in the name of each such Purchaser, representing its Purchased Shares. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to each of the Purchasers on and as of the date hereof as follows: 3.1 Corporate Existence and Power. Except as set forth on Schedule 3.1, the Company and each of its Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; 8 (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is proposed to be, engaged; and (c) is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction in which its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the Condition of the Company. The Company has the corporate power and authority to execute, deliver and perform its obligations under this Agreement. 3.2 Authorization; No Contravention; FBCA Sections 607.0901 and 607.0902. Except as set forth on Schedule 3.2, the execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby (a) except for receipt of the Stockholder Approval, have been duly authorized by all necessary corporate action of the Company, including all actions, consents and approvals required by the Company's Board of Directors and stockholders; (b) do not contravene the terms of the Certificate of Incorporation or the By-laws or the organizational documents of any of the Subsidiaries; (c) do not violate, conflict with or result in any breach, default or contravention of (or with due notice or lapse of time or both would result in any breach, default or contravention of), or the creation of any Lien under, any Contractual Obligation of the Company or any of its Subsidiaries or any Requirement of Law applicable to the Company or any of its Subsidiaries; and (d) do not violate any judgment, injunction, writ, award, decree or order of any nature (collectively, "Orders") of any Governmental Authority against, or binding upon, the Company or any of its Subsidiaries. Section 607.0901 and Section 607.0902 of the Florida Business Corporation Act are not applicable to the Company or to any of the transactions contemplated by this Agreement. The Board of Directors of the Company approved this Agreement and the transactions contemplated hereby and thereby at a meeting of the Board of Directors duly convened on December 4, 2003. 3.3 Governmental Authorization; Third Party Consents. Except as set forth on Schedule 3.3, no approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the sale, issuance and delivery of the Purchased Shares) by, or enforcement against, the Company of this Agreement or the transactions contemplated hereby. 3.4 Binding Effect. This Agreement has been duly executed and delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 9 3.5 Litigation. Except as set forth on Schedule 3.5, there are no actions, suits, proceedings, claims (including, without limitation, claims involving the prior employment of any of the Company's or any of its Subsidiaries' employees, their use in connection with the Company's or any of its Subsidiaries' business of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers), complaints, disputes, arbitrations or investigations (collectively, "Claims") pending or, to the knowledge of the Company, threatened, at law, in equity, in arbitration or before any Governmental Authority against the Company or any of its Subsidiaries nor is the Company or any of its Subsidiaries aware that there is any basis for any of the foregoing that could reasonably be expected to have a material adverse effect on the Condition of the Company. No Order has been issued by any court or other Governmental Authority against the Company or any of its Subsidiaries purporting to enjoin or restrain the execution, delivery or performance of this Agreement. 3.6 Compliance with Laws. (a) Except as set forth on Schedule 3.6(a), the Company and each of its Subsidiaries is in compliance in all material respects with all Requirements of Law and all Orders issued by any court or Governmental Authority against the Company and each of its Subsidiaries. To the knowledge of the Company, there is no Requirement of Law which could reasonably be expected to prohibit or restrict the Company or any of its Subsidiaries from, or otherwise materially adversely effect the Company or any of its Subsidiaries in, conducting its business in any jurisdiction in which it now conducts its business. (b) The Company and each of its Subsidiaries has all material licenses, permits and approvals of any Governmental Authority (collectively, "Permits") that are necessary for the conduct of the business of the Company and each of its Subsidiaries; (ii) such Permits are in full force and effect; and (iii) no violations are or have been recorded in respect of any Permit. 3.7 Capitalization. (a) As of the date of this Agreement, the authorized capital stock of the Company consists of (i) 13,333,333 and 1/3 shares of Common Stock, of which 6,783,493 shares shall be issued and outstanding and (ii) 2,000,000 shares of preferred stock, par value $0.01 per share, 130,000 of which are designated as Series A Preferred Stock, 15,000 of which are designated as Series B Preferred Stock, and 300,000 of which are designated as Series C Preferred Stock of which no shares of Series A Preferred Stock, no shares of Series B Preferred Stock and 2,000 shares of Series C Preferred Stock are issued and outstanding and convertible into 13,333 shares of Common Stock and (iv) 1,555,000 shares of which are undesignated "blank check" preferred stock. As of the date of this Agreement, the aggregate number of options to purchase shares of Common Stock which may be issued under the Stock Option Plans is 1,648,482 of which 1,370,080 are outstanding. Except for the Warrants, and except as set forth on Schedule 3.7(a), there are no options (other than options granted under the Stock Option Plans), 10 warrants, conversion privileges, subscription or purchase rights or other rights currently outstanding to purchase or otherwise acquire (i) any authorized but unissued, unauthorized or treasury shares of the Company's capital stock, (ii) any Stock Equivalents or (iii) any other securities of the Company and there are no commitments, contracts, agreements, arrangements or understandings by the Company to issue any shares of the Company's capital stock or any Stock Equivalents or other securities of the Company. No anti-dilution rights of any capital stock or other securities issued by the Company shall be triggered as a result of the transactions contemplated hereby. The Purchased Shares are duly authorized, and when issued and sold to the Purchasers after payment therefor, will be validly issued, fully paid and non-assessable, will be issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws and will be free and clear of all other Liens. All of the issued and outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. (b) Schedule 3.7(b) sets forth, as of the Closing Date, a true and complete list of (x) each of the Subsidiaries of the Company and (y) the aggregate number of authorized and issued shares of capital stock of such Subsidiary. The Company owns all of the issued and outstanding capital stock of the Subsidiaries, free and clear of all Liens. All of such shares of capital stock are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. There are no options, warrants, conversion privileges, subscription or purchase rights or other rights currently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, any of the Subsidiaries, and there is no outstanding security of any kind convertible into or exchangeable for such shares or proprietary interest. 3.8 No Default or Breach; Contractual Obligations. All of the Contractual Obligations filed as exhibits or described in the SEC Reports or which are otherwise material to the Condition of the Company (collectively, the "Material Contractual Obligations") are valid, subsisting, in full force and effect and binding upon the Company or its Subsidiaries, as the case may be, and, to the knowledge of the Company, the other parties thereto, and the Company and each of its Subsidiaries has paid in full or accrued all amounts due thereunder and has satisfied in full or provided for all of its liabilities and obligations thereunder. Neither the Company nor any of its Subsidiaries has received notice of a default or is in default under, or with respect to, any Material Contractual Obligation nor does any condition exist that with notice or lapse of time or both would constitute a default thereunder. No other party to any such Material Contractual Obligation is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by such other party thereunder. 3.9 Title to Properties and Assets. Except as set forth in Schedule 3.9, the Company and each of its Subsidiaries holds interests as lessee under leases in full force and effect in all real property used in connection with its business or otherwise owned or leased by it. The Company and each of its Subsidiaries owns and has good, 11 valid, and marketable title to all of the material properties and assets used in its business and reflected as owned on the Financial Statements or so described in any Schedule hereto (collectively, the "Assets"), in each case free and clear of all Liens, except for Liens specifically described on the notes to the Financial Statements. 3.10 Reports; Financial Statements. (a) As of the respective dates of their filing with the Commission, all reports, registration statements and other filings, together with any amendments thereto, filed by the Company with the Commission since January 1, 2000 (the "SEC Reports"), complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder. The SEC Reports did not at the time they were filed with the Commission contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The audited consolidated financial statements of the Company and its Subsidiaries (balance sheet and statements of operations, cash flow and stockholders' equity, together with the notes thereto) for the fiscal year ended December 31, 2002 which contains the unqualified report of PricewaterhouseCoopers LLP (the "Audited Financial Statements") and the unaudited consolidated financial statements of the Company and its Subsidiaries (balance sheet and statements of operations) for the fiscal quarter ended September 30, 2003 (the "Unaudited Financial Statements" and, together with the Audited Financial Statements, the "Financial Statements") set forth in the SEC Reports are complete and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and with each other, except that the Unaudited Financial Statements do not contain footnotes or normal year-end adjustments. The Financial Statements fairly present in all material respects the financial condition, operating results and cash flows of the Company and its Subsidiaries as of the respective dates and for the respective periods indicated in accordance with GAAP, except that the Unaudited Financial Statements do not contain footnotes or normal year-end adjustments. 3.11 Taxes. Except as set forth in Schedule 3.11, (a) The Company and each of its Subsidiaries has paid all material Taxes which have come due and are required to be paid by it through the date hereof, and all deficiencies or other additions to Tax, interest and penalties owed by it in connection with any such Taxes, other than Taxes being disputed by the Company and each of its Subsidiaries in good faith for which adequate reserves have been made in accordance with GAAP; (b) the Company and each of its Subsidiaries has timely filed or caused to be filed all returns for Taxes that it is required to file on and through the date hereof (including all applicable extensions), and all such Tax returns are accurate and complete in all material respects; (c) with respect to all Tax returns of the Company and each of its Subsidiaries, (i) to the knowledge of the Company, there is no unassessed Tax deficiency proposed or, to the knowledge of the Company or any of its Subsidiaries, threatened against the Company or any of its Subsidiaries and (ii) no audit is in progress with respect to any return for Taxes, no 12 extension of time is in force with respect to any date on which any return for Taxes was or is to be filed and no waiver or agreement is in force for the extension of time for the assessment or payment of any Tax; (d) all provisions for Tax liabilities of the Company and each of its Subsidiaries with respect to the Financial Statements have been made in accordance with GAAP consistently applied; and (e) there are no Liens for Taxes on the assets of either the Company or any of its Subsidiaries. 3.12 No Material Adverse Change; Ordinary Course of Business. Except as set forth in Schedule 3.12 or in the SEC Reports filed prior to the date hereof, since December 31, 2002, (a) there has not been any material adverse change in the Condition of the Company, (b) the Company and each of its Subsidiaries has not participated in any transaction material to the Condition of the Company which is outside the ordinary course of business, (c) the Company and each of its Subsidiaries has not increased the compensation of any of its officers or the rate of pay of any of its employees, except as part of regular compensation increases in the ordinary course of business, (d) the Company and each of its Subsidiaries has not created or assumed any Lien on a material asset of the Company or any of its Subsidiaries, and (e) there has not occurred a material change in the Company's or any of its Subsidiaries' accounting principles or practice except as required by reason of a change in GAAP. 3.13 Private Offering. No form of general solicitation or general advertising was used by the Company or its representatives in connection with the offer or sale of the Purchased Shares. Assuming the accuracy of the representations and warranties of the Purchasers set forth in Article IV, no registration of the Purchased Shares, pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, will be required by the offer, sale or issuance of the Purchased Shares. The Company agrees that neither it, nor anyone acting on its behalf, shall offer to sell the Purchased Shares or any other securities of the Company so as to require the registration of the Purchased Shares pursuant to the provisions of the Securities Act or any state securities or "blue sky" laws, unless such Purchased Shares or other securities are so registered. 3.14 Labor Relations. Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, (a) neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice; (b) there is no strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries; and (c) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or contract. 3.15 Employee Benefit Plans. (a) The SEC Reports disclose or describe each Company Plan that is required to be disclosed or described in such SEC Reports pursuant to the Exchange Act and the Securities Act. The Company and each of its Subsidiaries has no liability under any Plans other than the Company Plans. Except as disclosed in the SEC Reports, neither the Company, its Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or has within the preceding six years maintained or contributed to, or may 13 have any liability with respect to any Plan subject to Title IV of ERISA or Section 412 of the Code or any "multiple employer plan" within the meaning of the Code or ERISA. Each Company Plan (and related trust, insurance contract or fund) has been established and administered in all material respects in accordance with its terms, and complies in form and in operation in all material respects with the applicable requirements of ERISA and the Code and other applicable Requirements of Law. (b) No Claim with respect to the administration or the investment of the assets of any Company Plan (other than routine claims for benefits) is pending. (c) Each Company Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption; and each trust created under any such Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. (d) The consummation of the transactions contemplated by this Agreement will not accelerate the time of the payment or vesting of, or increase the amount of, compensation due to any employee or former employee whether or not such payment would constitute an "excess parachute payment" under section 280G of the Code. (e) All material unfunded obligations under any Company Plan which are required to be reflected on the Financial Statements in accordance with GAAP have been reflected on the Financial Statements. 3.16 Liabilities. The Company and each of its Subsidiaries do not have any direct or indirect obligation or liability (the "Liabilities") other than (a) Liabilities fully and adequately reflected or reserved against on the Financial Statements and (b) Liabilities incurred since December 31, 2002 in the ordinary course of business. 3.17 Intellectual Property. (a) (i) Except as set forth in Schedule 3.17(a), the Company and each of its Subsidiaries is the owner of all, or has a license under all of, the material Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software and other proprietary rights (collectively, "Intellectual Property") that are used in connection with its business as presently conducted, free and clear of all Liens. (ii) None of the Intellectual Property owned by the Company or any of its Subsidiaries is subject to any outstanding Order, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to the knowledge of the Company, threatened, which challenges the validity, enforceability, use or ownership of the item. (iii) The Company and each of its Subsidiaries has substantially performed all material obligations imposed upon it under any material license, material sublicenses, material distribution agreement or other material agreement relating to any Intellectual Property not owned by the Company or any of its Subsidiaries, 14 and is not, nor to the knowledge of the Company, is any other party thereto, in material breach of any material terms or default of any material terms thereunder in any respect, nor is there any event which with notice or lapse of time or both would constitute a default thereunder. All such Intellectual Property licenses are valid, enforceable and in full force and effect, and will continue to be so on identical terms immediately following the Closing except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). (iv) Except as set forth in Schedule 3.17(a) and except as disclosed in the SEC Reports, none of the Intellectual Property currently sold or licensed by the Company or any of its Subsidiaries to any Person, or, to the knowledge of the Company, used by or licensed to the Company or any of its Subsidiaries by any Person, infringes in any material respect upon or otherwise violates in any material respect any Intellectual Property rights of others. (v) Except as disclosed in the SEC Reports, no litigation is pending and no Claim has been made against the Company or any of its Subsidiaries or, to the knowledge of the Company, is threatened, contesting the right of the Company or any of its Subsidiaries to sell or license to any Person or use the Intellectual Property presently sold or licensed to such Person or used by the Company or any of its Subsidiaries. (b) Except as set forth on Schedule 3.17(b) or as disclosed in the SEC Reports, to the knowledge of the Company, no Person is infringing upon or otherwise violating the Intellectual Property rights of the Company or any of its Subsidiaries. (c) No former employer of any employee of the Company or any of its Subsidiaries, and no client of any consultant of the Company or any of its Subsidiaries, has made a claim against the Company or any of its Subsidiaries or, to the knowledge of the Company, against any other Person, that such employee or such consultant is utilizing Intellectual Property of such former employer or client. (d) Except as set forth on Schedule 3.17(d), to the knowledge of the Company, no employee of the Company or any of its Subsidiaries is in violation of any employment agreement, patent or invention disclosure agreement or other contract or agreement setting forth the terms of employment of such employee with the Company or any of its Subsidiaries or any prior employer. (e) Except as set forth on Schedule 3.17(e), to the knowledge of the Company, none of the material Trade Secrets of the Company, wherever located, the value of which is contingent upon maintenance of confidentiality thereof, has been disclosed to any Person other than employees, representatives and agents of the Company or any of its Subsidiaries or to other Persons who have executed appropriate 15 nondisclosure agreements, except as required pursuant to the filing of a patent application by the Company or any of its Subsidiaries. (f) All present key employees of the Company and each of its Subsidiaries have executed and delivered invention agreements with the Company and each of its Subsidiaries, and are obligated under the terms thereof to assign all inventions made by them during the course of employment to the Company and each of its Subsidiaries. No such employee or present consultant of the Company or any of its Subsidiaries has excluded works or inventions used by the Company but made prior to his employment with, or work for, the Company or any of its Subsidiaries from his assignment of inventions pursuant to such proprietary invention agreements. 3.18 Network Redundancy and Computer Back-up. Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, the Company and each of its Subsidiaries has made back-ups of all material computer Software and databases utilized by it and maintain such Software and databases at a secure off-site location. 3.19 Privacy of Customer Information. Except as set forth on Schedule 3.19, neither the Company nor any of its Subsidiaries uses any of the customer information it receives through its website or otherwise in a manner violative in any material respect of the Company's or any of its Subsidiaries' privacy policy or the privacy rights of its customers under applicable law. 3.20 Potential Conflicts of Interest. Except as set forth on Schedule 3.20, or as disclosed in the SEC Reports, to the knowledge of the Company, no officer or director of the Company, no stockholder Beneficially Owning in excess of five percent of the outstanding Common Stock, and no spouse of any such officer or director (a) owns, directly or indirectly, any interest in (excepting less than one percent (1%) stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor, lessee, supplier, distributor, sales agent or customer of, or lender to or borrower from, the Company or any of its Subsidiaries; or (b) owns, directly or indirectly, in whole or in part, any tangible or intangible property material to the conduct of the business of the Company or its Subsidiaries. 3.21 Trade Relations. Except as set forth in Schedule 3.21, there exists no actual or, to the knowledge of the Company or any of its Subsidiaries, threatened termination, cancellation or limitation of, or any adverse change in, the business relationship of the Company or any of its Subsidiaries with any customer or supplier or any group of customers or suppliers whose purchases or inventories provided to the Company's and each of its Subsidiaries' business are individually or in the aggregate material to the Condition of the Company. 3.22 Broker's, Finder's or Similar Fees. Except as set forth on Schedule 3.22, there are no brokerage commissions, finder's fees or similar fees or commissions payable by the Company or any of its Subsidiaries in connection with the 16 transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any of its Subsidiaries or any action taken by any such Person. 3.23 Stockholder Approval. The approval of the holders of a majority of the outstanding shares of the Company's Common Stock, present in person or proxy at a properly convened meeting of the Company's stockholders (the "Stockholder Approval"), is the sole stockholder consent required for (i) the issuance and sale of the Purchased Shares to the Purchasers in accordance with this Agreement, (ii) the consummation of the Merger in accordance with the Merger Agreement and (iii) the consummation of the other transactions contemplated by this Agreement and the Merger Agreement. 3.24 True and Complete Copy of Merger Agreement and Other Transaction-Related Agreements. The Company has delivered to each of the Purchasers a true, correct and complete copy of the Merger Agreement and all other agreements related thereto or to the transactions contemplated thereby, including without limitation, the Merger (collectively, the "Acquisition Documents"). The Acquisition Documents (i) have been executed in the exact form as provided, (ii) have not been amended or modified and (iii) are in full force and effect. Each of the representations and warranties of the Company made in Article IV of the Merger Agreement are true and correct in all material respects. 3.25 Registration Rights. The Purchased Shares purchased by GAP LP, GAP Coinvestment, GapStar and GmbH Coinvestment shall be Registerable Securities. 3.26 Observance of Covenants. The Company has not failed to observe or perform any of the covenants set forth in Article VIII of the Stock and Warrant Purchase Agreement, except that the Board of Directors of the Company is comprised of eight members. Subject to Section 10.5 hereof, all of such covenants are in full force and effect and remain binding upon the Company. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each of the Purchasers hereby represents and warrants, severally and not jointly, to the Company as follows: 4.1 Existence and Power. Such Purchaser (a) is a limited partnership or limited liability company, as the case may be, duly organized and validly existing under the laws of the jurisdiction of its formation and (b) has the requisite partnership or limited liability company, as the case may be, power and authority to execute, deliver and perform its obligations under this Agreement. 4.2 Authorization; No Contravention. The execution, delivery and performance by such Purchaser of this Agreement and the transactions contemplated hereby (a) have been duly authorized by all necessary partnership or limited liability 17 company, as the case may be, action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof, and (c) do not violate, conflict with or result in any breach or contravention of, or the creation of any Lien under, any Contractual Obligation of such Purchaser or any Requirement of Law applicable to such Purchaser (except for the Lien created on the Purchased Shares purchased by GapStar to secure its obligations under a bona fide loan made to acquire such Purchased Shares), and (d) do not violate any Orders of any Governmental Authority against, or binding upon, such Purchaser. 4.3 Governmental Authorization; Third Party Consents. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Purchased Shares) by, or enforcement against, such Purchaser of this Agreement or the transactions contemplated hereby. 4.4 Binding Effect. This Agreement has been duly executed and delivered by such Purchaser and constitutes the legal, valid and binding obligations of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 4.5 Purchase for Own Account. The Purchased Shares to be acquired by such Purchaser pursuant to this Agreement are being acquired for its own account for investment only, and not with a view to, or for sale in connection with, any distribution of such Purchased Shares or any part thereof in any transaction that would be in violation of the securities laws of the United States of America, any state of the United States or any foreign jurisdiction. Such Purchaser understands and agrees that such Purchased Shares have not been registered under the Securities Act and are "restricted securities" within the meaning of Rule 144 under the Securities Act; and that the Purchased Shares cannot be sold, transferred or otherwise disposed of except in compliance with the Securities Act and applicable state and foreign securities laws, as then in effect. Such Purchaser agrees to the imprinting of a legend on certificates representing all of its Purchased Shares to the following effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. 18 THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS UPON TRANSFER PURSUANT TO A STOCK PURCHASE AGREEMENT DATED AS OF DECEMBER 5, 2003, AS MAY BE AMENDED FROM TIME TO TIME. A COPY OF THE STOCK PURCHASE AGREEMENT MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON THE WRITTEN REQUEST OF THE HOLDER HEREOF. 4.6 Restricted Securities. Such Purchaser understands that the Purchased Shares will not be registered at the time of their issuance under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and that the reliance of the Company on such exemption is predicated in part on such Purchaser's representations set forth herein. 4.7 Broker's, Finder's or Similar Fees. There are no brokerage commissions, finder's fees or similar fees or commissions payable by such Purchaser in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with such Purchaser or any action taken by such Purchaser. 4.8 Accredited Investor. Such Purchaser is an "Accredited Investor" within the meaning of Rule 501 of Regulation D under the Securities Act, as presently in effect. 19 ARTICLE V CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE The obligation of each of the Purchasers to purchase the Purchased Shares, to pay the purchase price therefor at the Closing and to perform any obligations hereunder shall be subject to the satisfaction as determined by, or waiver by, the Purchasers purchasing a majority of the Purchased Shares of the following conditions on or before the Closing Date. 5.1 Representations and Warranties. The representations and warranties of the Company contained in Article III hereof shall be true and correct in all material respects (except for any such representations and warranties which are qualified by their terms by a reference to materiality or material adverse effect, which representation as so qualified shall be true and correct in all respects) at and on the Closing Date as if made at and on such date, except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Material Adverse Effect, and, to the knowledge of the Company, each of the representations and warranties of Planvista contained in Article III of the Merger Agreement shall be true and correct, except where the failure of such representations or warranties to be true or correct would not have, individually or in the aggregate, a Company Material Adverse Effect (as defined in the Merger Agreement). 5.2 Compliance with this Agreement. The Company shall have performed and complied in all material respects with all of its agreements set forth herein that are required to be performed by the Company on or before the Closing Date. 5.3 Officer's Certificate. The Purchasers shall have received a certificate from the Company, in form and substance satisfactory to the Purchaser, dated the Closing Date, and signed by the Chief Executive Officer and Chief Financial Officer of the Company, certifying as to the matters set forth in Section 5.1 and 5.2. 5.4 Secretary's Certificate. The Purchasers shall have received a certificate from the Company, in form and substance satisfactory to the Purchasers purchasing a majority of the Purchased Shares, dated the Closing Date and signed by the Secretary of the Company, certifying (a) that the Company is in good standing with the Secretary of State of the State of Florida, (b) that the attached copies of the Articles of Incorporation, the By-laws, resolutions of the Board of Directors approving this Agreement and the transactions contemplated hereby and thereby, are all true, complete and correct and remain unamended and in full force and effect, and (c) as to the incumbency and specimen signature of each officer of the Company executing this Agreement and any other document delivered in connection herewith on behalf of the Company. 5.5 Purchased Shares. The Company shall have delivered to each of the Purchasers certificates in definitive form representing the number of Purchased 20 Shares set forth opposite such Purchaser's name on Schedule 2.1 hereto, registered in the name of such Purchaser. 5.6 Opinion of Counsel. The Purchasers shall have received an opinion of Holland & Knight LLP, dated the Closing Date, relating to the transactions contemplated by or referred to herein, substantially in the form attached hereto as Exhibit A. 5.7 NASD. The Purchased Shares shall have been approved for quotation on the Nasdaq Stock Market, Inc. 5.8 Stockholder Approval. The Company shall have received the Stockholder Approval and the Purchasers shall have received satisfactory evidence thereof. 5.9 Amended and Restated Registration Rights Agreement. The Company shall have duly executed and delivered to the Purchasers the Amended and Restated Registration Rights Agreement substantially in the form attached hereto as Exhibit B (the "Amended and Restated Registration Rights Agreement"). 5.10 No Material Adverse Change. Since the date hereof, there shall not have occurred any event, change or effect having, individually or in the aggregate, a Material Adverse Effect. 5.11 Consents and Approvals. All consents, exemptions, authorizations, or other actions by, or notice to, or filings with, Governmental Authorities and other Persons in respect of all Requirements of Law and with respect to those Contractual Obligations of the Company which are necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company of this Agreement shall have been obtained and be in full force and effect, and the Purchasers shall have been furnished with appropriate evidence thereof and all applicable waiting periods shall have expired without any action being taken or threatened which would have a material adverse effect on the Condition of the Company. 5.12 No Material Judgment or Order. There shall not be on the Closing Date any Order of a court of competent jurisdiction or any ruling of any Governmental Authority or any condition imposed under any Requirement of Law which would, in the reasonable judgment of the Purchasers purchasing a majority of the Purchased Shares, (a) prohibit or restrict (i) the purchase of the Purchased Shares or (ii) the consummation of the other transactions contemplated by this Agreement, (b) subject any of the Purchasers to any material penalty or onerous condition under or pursuant to any Requirement of Law if the Purchased Shares were to be purchased hereunder or (c) restrict the operation of the business of the Company as conducted on the date hereof in a manner that would have a Material Adverse Effect. 5.13 No Litigation. No action, suit, proceeding, claim or dispute shall have been brought or otherwise arisen at law, in equity, in arbitration or before any 21 Governmental Authority against the Company which would, if adversely determined (a) have a material adverse effect on the Condition of the Company or (b) have a Material Adverse Effect. 5.14 Satisfaction of Conditions; Consummation of the Merger. (a) All conditions to the obligation of each party to the Merger Agreement to effect the Merger thereunder shall have been satisfied. (b) The Merger shall have been consummated in accordance with the Merger Agreement. ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY AND THE SELLING STOCKHOLDERS TO CLOSE The obligation of the Company to issue and sell the Purchased Shares and the obligations of the Company to perform its other obligations hereunder shall be subject to the satisfaction as determined by, or waiver by, the Company of the following conditions on or before the Closing Date: 6.1 Payment of Purchase Price. Each Purchaser shall be prepared to pay, by wire transfer, the aggregate purchase price for the Purchased Shares to be purchased by such Purchaser. 6.2 Representations and Warranties. The representations and warranties of the Purchasers contained in Article IV hereof shall be true and correct in all material respects (except for any such representations and warranties which are qualified by their terms by a reference to materiality or material adverse effect, which representation as so qualified shall be true and correct in all respects) at and on the Closing Date as if made at and on such date. 6.3 Stockholder Approval. The Company shall have received the Stockholder Approval. 6.4 Satisfaction of Conditions. All conditions to the obligation of each party to the Merger Agreement to effect the Merger thereunder shall have been satisfied. ARTICLE VII INDEMNIFICATION 7.1 Indemnification. Subject to the limitations set forth in Section 7.4, the Company (the "Indemnifying Party") agrees to indemnify, defend and hold harmless each of the Purchasers and its Affiliates and their respective officers, managers, directors, agents, employees, subsidiaries, partners, members and controlling persons (each, an "Indemnified Party") to the fullest extent permitted by law from and against any and all 22 losses, Claims, or written threats thereof (including, without limitation, any Claim by a third party), damages, expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Company Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party (other than a third party who is an Affiliate of such Indemnified Party) or otherwise in the manner described in Section 7.2 below) or other liabilities (collectively, "Losses") resulting from or arising out of any breach of any representation or warranty, covenant or agreement by the Company in this Agreement. In connection with the obligation of the Indemnifying Party to indemnify for expenses as set forth above, the Indemnifying Party shall, upon presentation of appropriate invoices containing reasonable detail, reimburse each Indemnified Party for all such expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party (other than a third party who is an Affiliate of such Indemnified Party) as they are incurred by such Indemnified Party; provided, however, that if an Indemnified Party is reimbursed under this Article VII for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that such expenses resulted solely from the gross negligence or willful misconduct of such Indemnified Party. 7.2 Notification. Each Indemnified Party under this Article VII shall, promptly after the receipt of notice of the commencement of any Claim against such Indemnified Party in respect of which indemnity may be sought from the Indemnifying Party under this Article VII, notify the Indemnifying Party in writing of the commencement thereof. The omission of any Indemnified Party to so notify the Indemnifying Party of any such action shall not relieve the Indemnifying Parties from any liability which it may have to such Indemnified Party (a) other than pursuant to this Article VII or (b) under this Article VII unless, and only to the extent that, such omission results in such Indemnifying Party's forfeiture of substantive rights or defenses. In case any such Claim shall be brought against any Indemnified Party, and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to assume the defense thereof at their own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense at its own expense. Notwithstanding the foregoing, in any Claim in which both the Indemnifying Party, on the one hand, and an Indemnified Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel and to control its own defense of such Claim if, in the reasonable opinion of counsel to such Indemnified Party, either (x) one or more defenses are available to the Indemnified Party that are not available to the Indemnifying Parties or (y) a conflict or potential conflict exists between the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable; provided, however, that the Indemnifying Party (i) shall not be liable for the fees and expenses of more than one counsel to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for all of such fees and expenses of such counsel, as such fees and expenses are incurred. The Indemnifying Party agrees that it 23 will not, without the prior written consent of the Purchasers purchasing a majority of the Purchased Shares, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such Claim. The Indemnifying Party shall not be liable for any settlement of any Claim effected against an Indemnified Party without its written consent, which consent shall not be unreasonably withheld. The rights accorded to an Indemnified Party hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise; provided, however, that notwithstanding the foregoing or anything to the contrary contained in this Agreement, nothing in this Article VII shall restrict or limit any rights that any Indemnified Party may have to seek equitable relief. 7.3 Contribution. If the indemnification provided for in this Article VII from an Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Losses for which such Indemnified Party would otherwise be required to indemnify the Indemnified Party under this Article VII, then such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of such Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. 7.4 Cap on Indemnification. The amount of any payment by the Indemnifying Party to the Indemnified Parties under this Article VII in respect of Losses resulting from or arising out of any indemnification claim made pursuant to Section 7.1 shall in no event exceed the aggregate purchase price paid to the Company in consideration of the Purchased Shares. ARTICLE VIII COVENANTS OF THE COMPANY The Company hereby covenants and agrees with the Purchasers as follows: 8.1 Interim Actions. From and after the date hereof through and until the Closing, the Company shall not, except as contemplated by this Agreement, and shall 24 cause each of its Subsidiaries not to, take any action or fail to take any action that has the purpose or effect of obstructing, hindering or delaying the issuance and sale of the Purchased Shares to the Purchasers in accordance with this Agreement or any of the other transactions contemplated hereby; provided, however, that the foregoing shall not prevent the Company from terminating the Merger Agreement in accordance with its terms or otherwise exercising its rights and performing its obligations under the Merger Agreement. 8.2 Stockholder Approval. (a) As soon as practicable following the date hereof, the Company will prepare and file with the Commission a proxy statement to be distributed to the Company's stockholders in connection with the solicitation of votes in favor of the Stockholder Approval (as amended or supplemented from time to time, the "Proxy Statement"). The Company shall use its reasonable best efforts to (i) respond as promptly as practicable to any comments of the Commission with respect thereto (ii) have or cause the Proxy Statement to be cleared by the Commission as promptly as practicable and (iii) cause the Proxy Statement to be mailed to the Company's stockholders as promptly as practicable thereafter. The Company shall promptly notify each of the Purchasers upon the receipt of comments from the Commission or its staff or any request from the Commission or its staff for amendments or supplements to the Proxy Statement and shall provide each of the Purchasers with copies of all correspondence between the Company and its representatives, on the one hand, and the Commission and its staff, on the other hand. Notwithstanding the foregoing, prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the Commission with respect thereto, the Company (x) shall provide each of the Purchasers with an opportunity to review and comment on such document or response, (y) shall include in such document or response all comments reasonably proposed by the Purchasers and (z) shall not file or mail such document or respond to the Commission prior to receiving the approval of the Purchasers purchasing a majority of the Purchased Shares, which approval shall not unreasonably be withheld or delayed. The Company shall use its reasonable best efforts to cause the Proxy Statement to comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations promulgated thereunder, including without limitation, Section 14(a) thereof. (b) Following the clearance by the Commission of the Proxy Statement and upon the mailing thereof to the Company's stockholders, the Company shall call and arrange for a special meeting of the stockholders of the Company and take such other actions necessary to obtain the Stockholder Approval as promptly as practicable. Unless there has been a Parent Change of Recommendation (as such term is defined in the Merger Agreement), the Company shall, through its Board of Directors, recommend to its stockholders that they approve and authorize the issuance and sale of the Purchased Shares to the Purchasers in accordance with this Agreement. 25 8.3 The Acquisition. The Company acknowledges that the Purchasers have entered into this Agreement in reliance upon the fact that the Company shall consummate the transactions contemplated by the Merger Agreement. 8.4 Amendment of Acquisition Documents. From and after the date hereof through and until the Effective Time of the Merger, without the prior written consent of the Purchasers purchasing a majority of the Purchased Shares which shall not be unreasonably withheld or delayed, the Company shall not, and shall cause its Subsidiaries not to, amend, modify or waive any provision of the Merger Agreement or any other Acquisition Document. 8.5 Restriction on Transfer of Securities. (a) Each of the Purchasers and GAP 74 hereby agrees not to, directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act or otherwise dispose (each, a "Transfer") of, any Restricted Shares prior to the first anniversary of the Closing Date, except (i) GAP LP, GAP Coinvestment, GapStar, GMBH Coinvestment and GAP 74 may Transfer, in the aggregate, so many Restricted Shares in any three month period as would be permitted pursuant to Rule 144(e)(1)(i) promulgated by the Commission under the Securities Act (as in effect on the date hereof) whether or not Rule 144(e)(1)(i) is applicable and whether or not the other conditions set forth in Rule 144 are satisfied, (ii) PVC, ComVest, Shea and Priddy may Transfer, in the aggregate, so many Restricted Shares in any three month period as would be permitted pursuant to Rule 144(e)(1)(i) promulgated by the Commission under the Securities Act (as in effect on the date hereof) whether or not Rule 144(e)(1)(i) is applicable and whether or not the other conditions set forth in Rule 144 are satisfied, (iii) to a Permitted Transferee in accordance with clause (b) of this Section 8.5 who enters into a written joinder agreement reasonably acceptable to the Company acknowledging that such Permitted Transferee is acquiring the Restricted Shares subject to the obligations and restrictions set forth in this Agreement with respect to such Restricted Shares, (iv) in connection with a Sale Transaction and (v) any Transfer which has been approved in advance by the Board of Directors. For the avoidance of doubt, any Transfer of Restricted Shares pursuant to any of the foregoing clauses (i) through (v) shall be without duplication of any Transfer of Restricted Shares pursuant to any other of the foregoing clauses (i) through (v). The Company may neither waive the foregoing restrictions on Transfer with respect to any of GAP LP, GAP Coinvestment, GapStar, GMBH Coinvestment or GAP 74 without similarly waiving the foregoing restrictions on Transfer with respect to PVC, ComVest, Shea or Priddy (allocated among such parties as such parties shall agree) nor waive the foregoing restrictions on Transfer with respect to PVC, ComVest, Shea or Priddy without similarly waiving the foregoing restrictions on Transfer with respect to GAP LP, GAP Coinvestment, GapStar, GMBH Coinvestment or GAP 74 (allocated among such parties as such parties shall agree). (b) Notwithstanding anything to the contrary contained in this Agreement, at any time, (i) each of the Purchasers who is an individual may Transfer all or any portion of his or its Restricted Shares to or among (x) a member of such 26 Purchaser's immediate family, which shall include his spouse, siblings, children or grandchildren ("Family Members") or (y) a trust, corporation, partnership or limited liability company, all of the beneficial interests in which shall be held by such Purchaser or one or more Family Members of such Purchaser; provided, however, that during the period that any such trust, corporation, partnership or limited liability company holds any right, title or interest in any Restricted Shares, no Person other than such Purchaser or one of more Family Members of such Purchaser may be or may become beneficiaries, stockholders, limited or general partners or members thereof, (ii) (A) each of the Purchasers may Transfer all or any portion of its Restricted Shares to any of its Affiliates, (B) GapStar may pledge and grant a security interest in all or any portion of its Restricted Shares to a lender to secure its obligations under a bona fide loan made to acquire such Restricted Shares and (C) PVC may Transfer all or any portion of its Restricted Shares to its members (the Persons referred to in the preceding clauses (i) and (ii) are each referred to hereinafter as a "Permitted Transferee"). A Permitted Transferee of Restricted Shares pursuant to this Section 8.5(b) may Transfer its Restricted Shares pursuant to this Section 8.5(b) only to the transferor Purchaser or to a Person that is a Permitted Transferee of such transferor Purchaser. No Purchaser shall avoid the provisions of this Agreement by making one or more Transfers to one or more Permitted Transferees and then disposing of all or any portion of such party' s interest in any such Permitted Transferee, and any Transfer or attempted Transfer in violation of this covenant shall be null and void ab initio. 8.6 Waiver of Anti-dilution Provisions. Each of PVC, Comvest, Shea and Priddy hereby waives on its own behalf and on behalf of each of its Affiliates the operation of any anti-dilution or adjustment provisions set forth in any security or Stock Equivalent of the Company held by such Person as a result of the issuance of shares of the Common Stock by the Company in connection with the transactions contemplated by this Agreement and the Merger Agreement. ARTICLE IX TERMINATION OF AGREEMENT 9.1 Termination. This Agreement may be terminated by written notice prior to the Closing as follows: (a) at any time on or prior to the Closing Date, by mutual written consent of the Company and the Purchasers purchasing a majority of the Purchased Shares; (b) at the election of the Company or the Purchasers purchasing a majority of the Purchased Shares by written notice to the other parties hereto after 5:00 p.m., New York time, on April 30, 2004, if the Closing shall not have occurred, unless such date is extended by the mutual written consent of the Company and the Purchasers purchasing a majority of the Purchased Shares; provided, however, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party whose breach of any representation, warranty, covenant or agreement under this 27 Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; (c) at the election of the Purchasers purchasing a majority of the Purchased Shares or the Company, if there has been a material breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement, which breach has not been cured within fifteen (15) days of written notice to the Company of such breach. (d) at the election of the Company, if there has been a material breach of any representation, warranty, covenant or agreement on the part of any of the Purchasers contained in this Agreement, which breach has not been cured within fifteen (15) days of written notice to the Purchasers of such breach. (e) at the election of any of the Purchasers (with respect to such Purchaser) or the Company, if the Merger Agreement has been terminated. If this Agreement so terminates, it shall become null and void and have no further force or effect, except as provided in Section 9.2. 9.2 Survival. If this Agreement is terminated and the transactions contemplated hereby are not consummated as described above, this Agreement shall become void and of no further force and effect, except for the provisions of Article 1 and this Section 9.2; provided, however, that (a) none of the parties hereto shall have any liability in respect of a termination of this Agreement pursuant to Section 9.1(a) or Section 9.1(b) and (b) nothing shall relieve the Company from liability for actual damages resulting from a termination of this Agreement pursuant to Section 9.1(c), or Section 9.1(e) if the Merger Agreement has been terminated pursuant to Section 8.01(h) thereof, and nothing shall relieve the Purchasers from liability for actual damages resulting from a termination of this Agreement pursuant to Section 9.1(d); and provided, further, that none of the parties hereto shall have any liability for speculative, indirect, unforeseeable or consequential damages or lost profits resulting from any legal action relating to any termination of this Agreement. ARTICLE X MISCELLANEOUS 10.1 Survival of Representations and Warranties. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement until the date that is ninety (90) days after the receipt by the Purchasers of audited consolidated financial statements of the Company and its Subsidiaries for the fiscal year ending December 31, 2004 (or, if such fiscal year changes and no such audited consolidated financial statements are available, then the successor fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.13, 3.22, 3.23, 3.24, 3.25 and 3.26, which representations and warranties shall survive indefinitely and (b) Section 3.11, which shall survive until the later to occur of (i) the lapse of the statute of limitations with respect to the 28 assessment of any Tax to which such representation and warranty relates (including any extensions or waivers thereof) and (ii) sixty (60) days after the final administrative or judicial determination of the Taxes to which such representation and warranty relates, and no claim with respect to Section 3.11 may be asserted thereafter with the exception of claims arising out of any fact, circumstance, action or proceeding to which the party asserting such claim shall have given notice to the other parties to this Agreement prior to the termination of such period of reasonable belief that a tax liability will subsequently arise therefrom. 10.2 Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: if to the Company: ProxyMed, Inc. 2555 Davie Rd., Suite 110 Fort Lauderdale, FL 33317 Telecopy: (954) 473-2341 Attention: Michael K. Hoover, Chief Executive Officer Rafael G. Rodriguez, In-House Counsel with a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, FL 33131 Telecopy: (305) 789-7799 Attention: Rodney H. Bell, Esq. if to GAP LP, GAP Coinvestment or GapStar: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz Thomas J. Murphy with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. 29 if to GmbH Coinvestment: c/o General Atlantic Partners GmbH Koenigsalle 88 40212 Duesseldorf Germany Telecopy: 011-49-211-602-888-89 Attention: Matthew Nimetz Thomas J. Murphy with a copy to: General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz Thomas J. Murphy and Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. if to PVC or ComVest: c/o ComVest Investment Partners 830 Third Avenue New York, NY 10022 Telecopy: (212) 829-5978 Attention: Carl Kleidman with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex 30 if to Shea: Shea Ventures, LLC 655 Brea Canyon Road Walnut, CA 91789-3078 Telecopy: (909) 869-0840 Attention: Jackie Hodge with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex if to Priddy: Robert Priddy 3435 Kingsboro Rd NE 1601 Atlanta, GA 30326-1343 Telecopy: (404) 844-3212 with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex All such notices, demands and other communications shall be deemed to have been duly given (i) when delivered by hand, if personally delivered; (ii) one Business Day after being sent, if sent via a reputable nationwide overnight courier service guaranteeing next business day delivery; (iii) five (5) Business Days after being sent, if sent by registered or certified mail, return receipt requested, postage prepaid; and (iv) when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 10.2 designate another address or Person for receipt of notices hereunder. Any party may give any notice, request, consent or other communication under this Agreement using any other means (including, without limitation, personal delivery, messenger service, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party to whom it is given. 10.3 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted 31 assigns of the parties hereto. Subject to applicable securities laws and the terms and conditions thereof, the Purchasers may assign any of their rights under this Agreement to any of their respective Affiliates. The Company may not assign any of its rights under this Agreement without the written consent of the Purchasers purchasing a majority of the Purchased Shares. Except as provided in Article VII, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 10.4 Amendment and Waiver. (a) No failure or delay on the part of the Company or the Purchasers in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. (b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company or the Purchasers from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Company and the Purchasers purchasing a majority of the Purchased Shares, and (ii) only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 10.5 Amendment to Stock and Warrant Purchase Agreement. The Stock and Warrant Purchase Agreement is hereby amended by deleting Section 8.5 thereof in its entirety. 10.6 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 10.7 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 10.9 Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not 32 be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 10.10 Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement. 10.11 Entire Agreement. This Agreement, together with the exhibits and schedules hereto, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, supersedes all prior agreements and understandings between the parties with respect to such subject matter. 10.12 Fees. Upon the Closing, the Company shall reimburse GAP LP, GAP Coinvestment, GapStar and GMBH Coinvestment for their fees, disbursements and other charges of counsel incurred in connection with the transactions contemplated by this Agreement, provided that the amount of such reimbursement shall not exceed in the aggregate $50,000. 10.13 Public Announcements. Following the date hereof, the Company shall be permitted to issue a press release relating to this Agreement and the transactions contemplated thereby. The Purchasers shall have the opportunity to review and comment on such press release prior to its issuance, which review and comment shall be provided as expeditiously as possible and in any event within 48 hours of delivery of such press release by the Company to the Purchasers, and such press release shall be in form and substance reasonably satisfactory to the Purchasers purchasing a majority of the Purchased Shares. Except as set forth in the previous sentence, neither the Company nor the Purchasers will issue any press release or make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other parties hereto, except to the extent such party reasonably believes such press release or public statement is required by applicable law or stock market regulations; provided, however, that the Company and the Purchasers may make reasonable public statements consistent with prior public statements otherwise permitted under this Section 10.13; and provided further, that GAP LLC may disclose on its worldwide web page, www.gapartners.com, the name of the Company, the name of the Chief Executive Officer of the Company, a brief description of the business of the Company, the Company's logo and the aggregate amount of the Purchasers' investment in the Company. Notwithstanding the foregoing, the Company will not use or refer to the name of any Purchaser in any public statement or disclosure without the consent of such Purchaser except to the extent that such party reasonably believes such statement or disclosure is required by applicable law or stock market regulations. 10.14 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or 33 making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. [Remainder of page intentionally left blank] 34 IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Stock Purchase Agreement on the date first written above. PROXYMED, INC. By: ------------------------------------------- Name: Title: GENERAL ATLANTIC PARTNERS 77, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By: --------------------------------------- Name: Matthew Nimetz Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By: ------------------------------------------- Name: Matthew Nimetz Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By: --------------------------------------- Name: Matthew Nimetz Title: A Managing Member GAPCO GMBH & CO. KG By: GAPCO Management GMBH, its General Partner By: --------------------------------------- Name: Matthew Nimetz Title: A Managing Director 35 PVC FUNDING PARTNERS, LLC By: ------------------------------------------- Name: Title: COMVEST VENTURE PARTNERS, L.P. By: ------------------------------------------- Name: Title: SHEA VENTURES, LLC By: ------------------------------------------- Name: Title: ROBERT PRIDDY By: ------------------------------------------- Name: GENERAL ATLANTIC PARTNERS 74, L.P. (solely for the purpose of Section 8.5 and Section 10.5) By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By: --------------------------------------- Name: Matthew Nimetz Title: A Managing Member 36 Schedule 2.1 Purchased Shares and Purchase Price Purchaser Aggregate Purchase Price GAP LP $16,700,130.75 GAP Coinvestment $1,050,567.00 GapStar $224,993.25 GmbH Coinvestment $24,296.25 PVC $2,500,000.00 ComVest $1,600,000.00 Shea $1,000,000.00 Priddy $1,000,000.00 Total: $24,099,987.25 EX-3 5 e949280.txt EXHIBIT 3 EXHIBIT 3 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT among PROXYMED, INC. GENERAL ATLANTIC PARTNERS 74, L.P., GENERAL ATLANTIC PARTNERS 77, L.P., GAP COINVESTMENT PARTNERS II, L.P., GAP COINVESTMENTS III, LLC, GAP COINVESTMENTS IV, LLC, GAPSTAR, LLC, GAPCO GMBH & CO. KG, PVC FUNDING PARTNERS, LLC, COMVEST VENTURE PARTNERS, L.P., SHEA VENTURES, LLC AND ROBERT PRIDDY Dated: March 2, 2004 TABLE OF CONTENTS
Page 1. Definitions ..............................................................................................1 General; Securities Subject to this Agreement............................................................6 (a) Grant of Rights................................................................................6 (b) Registrable Securities.........................................................................6 (c) Holders of Registrable Securities..............................................................6 3. Demand Registration......................................................................................7 (a) Request for Demand Registration................................................................7 (b) Incidental or "Piggy-Back" Rights with Respect to a Demand Registration........................7 (c) Effective Demand Registration..................................................................8 (d) Expenses.......................................................................................8 (e) Underwriting Procedures........................................................................8 (f) Selection of Underwriters......................................................................9 4. Incidental or "Piggy-Back" Registration..................................................................9 (a) Request for Incidental Registration............................................................9 (b) Expenses......................................................................................10 5. Shelf Registration......................................................................................10 (a) Request for a Shelf Registration..............................................................10 (b) Shelf Underwriting Procedures.................................................................11 (c) Expenses......................................................................................11 (d) No Demand Registration........................................................................12 6. Holdback Agreements.....................................................................................12 (a) Restrictions on Public Sale by Designated Holders.............................................12 (b) Restrictions on Public Sale by the Company....................................................12 7. Registration Procedures.................................................................................12 (a) Obligations of the Company....................................................................12 (b) Seller Information............................................................................15 (c) Notice to Discontinue.........................................................................15 (d) Registration Expenses.........................................................................16 8. Indenmification; Contribution...........................................................................16 (a) Indemnification by the Company................................................................16 (b) Indemnification by Designated Holders.........................................................17 (c) Conduct of Indemnification Proceedings........................................................17 (d) Contribution..................................................................................18 9. Rule 144 ...............................................................................................19
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Page 10. Miscellaneous...........................................................................................19 (a) Recapitalizations, Exchanges, etc.............................................................19 (b) No Inconsistent Agreements....................................................................19 (c) Remedies......................................................................................20 (d) Amendments and Waivers........................................................................20 (e) Notices.......................................................................................20 (f) Successors and Assigns; Third Party Beneficiaries.............................................23 (g) Counterparts..................................................................................23 (h) Headings......................................................................................23 (i) GOVERNING LAW.................................................................................23 (j) Severability..................................................................................23 (k) Rules of Construction.........................................................................24 (1) Entire Agreement..............................................................................24 (m) Further Assurances............................................................................24 (n) Other Agreements..............................................................................24
ii AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated March 2, 2004 (this "Agreement"), among ProxyMed, Inc., a Florida corporation (the "Company"), General Atlantic Partners 77, L.P., a Delaware limited partnership ("GAP 77 LP"), General Atlantic Partners 74, L.P., a Delaware limited partnership ("GAP 74 LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership ("GAP Coinvestment"), GAP Coinvestments III, LLC, a Delaware limited liability company ("GAP Coinvestments Ill"), GAP Coinvestments IV, LLC, a Delaware limited liability company ("GAP Coinvestments IV"), GapStar, LLC, a Delaware limited liability company ("GapStar"), GAPCO GmbH & Co. KG, a German limited partnership ("GmbH Coinvestment"), PVC Funding Partners, LLC, a Delaware limited liability company ("PYC") ComVest Venture Partners, L.P., a Delaware limited partnership ("ComVest"), Shea Ventures, LLC ("Shea") and Robert Priddy ("Priddy"), amends and restates in its entirety the Registration Rights Agreement, dated April 5, 2002, among the Company, GAP 74 LP, GAP Coinvestment, GapStar and GmbH Coinvestment (the "Original Agreement"). WHEREAS, the Company, GAP 74 LP, GAP Coinvestment, GapStar and GmbH Coinvestment are parties to the Original Agreement and wish to amend and restate the Original Agreement in its entirety pursuant to this Agreement; and WHEREAS, pursuant to the Stock Purchase Agreement, dated December 5, 2003 (the "Stock Purchase Agreement"), among the Company, GAP 77 LP, GAP Coinvestment, GapStar, GmbH Coinvestment, PVC, ComVest, Shea and Priddy, the Company has agreed to issue and sell to each of GAP 77 LP, GAP Coinvestment, GapStar, GmbH Coinvestment, PVC, ComVest, Shea and Priddy shares of Common Stock, par value $0.001 per share, of the Company; WHEREAS, GAP 77 LP, GAP Coinvestment and GmbH Coinvestment have each assigned certain of their respective rights and obligations to purchase shares of Common Stock of the Company to GAP Coinvestments III and GAP Coinvestments IV; and WHEREAS, in order to induce each of GAP 77 LP, GAP Coinvestments III, GAP Coinvestments IV, GapStar, GmbH Coinvestment, PVC, ComVest, Shea and Priddy to purchase its shares of Common Stock, the Company, GAP 74 LP, GAP Coinvestment, GapStar and GmbH Coinvestment have agreed to amend and restate the Original Agreement in its entirety and thereby grant registration rights with respect to the Registrable Securities (as hereinafter defined) as set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Affiliate" shall mean any Person who is an "affiliate" as defined in Rule l2b-2 of the General Rules and Regulations under the Exchange Act. In addition, the following shall be deemed to be Affiliates of GAP Coinvestment, GAP Coinvestments III, GAP Coinvestments IV, GAP 74 LP, Gap 77 LP, GapStar and GmbH Coinvestment: (a) GAP LLC, the members of GAP LLC, GmbH Management, the shareholders of GmbH Management, the limited partners of each of GAP Coinvestment, GAP 74 LP, GAP 77 LP and GmbH Coinvestment, and the members of each of GAP Coinvestments II, GAP Coinvestments III and GapStar; (b) any Affiliate of GAP LLC, the members of GAP LLC, the limited partners of GAP Coinvestment or GmbH Coinvestment, or the members of GAP Coinvestments II, GAP Coinvestments III or GapStar; and (c) any limited liability company or partnership a majority of whose members or partners, as the case may be, are members or former members of GAP LLC or consultants or key employees of General Atlantic Service Corporation, a Delaware corporation and an Affiliate of GAP LLC. In addition, GAP 74 LP, GAP 77 LP, GAP Coinvestment, GAP Coinvestments II, GAP Coinvestments III, GapStar and GmbH Coinvestment shall be deemed to be Affiliates of one another. "Agreement" mean this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof. "Approved Underwriter" has the meaning set forth in Section 3(f) of this Agreement. "Board of Directors" means the Board of Directors of the Company. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "Closing Date" has the meaning ascribed to such term in the Agreement and Plan of Merger, dated as of December 5, 2003, by and among the Company, Planvista Corporation, a Delaware corporation, and Planet Acquisition Corp., a Delaware corporation. "Closing Price" means, with respect to the Registrable Securities, as of the date of determination, (a) if the Registrable Securities are listed on a national securities exchange, the closing price per share of a Registrable Security on such date published in The Wall Street Journal (National Edition) or, if no such closing price on such date is published in The Wall Street Journal (National Edition), the average of the closing bid and asked prices on such date, as officially reported on the principal national securities exchange on which the Registrable Securities are then listed or admitted to trading; or (b) if the Registrable Securities are not then listed or admitted to trading on any national securities exchange but are designated as national market system securities by the NASD, the last trading price per share of a Registrable Security on such date; or (c) if there shall have been no trading on such date or if the Registrable Securities are not designated as national market system securities by the NASD, the average of the reported closing bid and asked prices of the Registrable Securities on such date as shown by The Nasdaq Stock Market, Inc. (or its successor) and reported by any member firm of The New York Stock Exchange, Inc. selected by the Company; or (d) if none of (a), (b) or (c) is applicable, a market price per share determined in good faith by the Board of Directors or, if such determination is not satisfactory to the Designated Holder for whom such determination is being made, by a nationally recognized investment banking firm selected by the Company and such Designated Holder, the expenses for which shall be borne equally by the Company and such Designated Holder. If trading is conducted on a continuous basis on any exchange, then the closing price shall be at 4:00 P.M. New York City time. 2 "Commission" means the Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act. "Common Stock" means the Common Stock, par value $0.001 per share, of the Company or any other capital stock of the Company into which such stock is reclassified or reconstituted and any other common stock of the Company. "Commonwealth Stockholders" means PVC, ComVest, Shea, Priddy, any Subsequent Commonwealth Purchaser and any Transferee thereof to whom Registrable Securities are transferred in accordance with Section 10(f) of this Agreement. "Company" has the meaning set forth in the preamble to this Agreement. "Company Underwriter" has the meaning set forth in Section 4(a) of this Agreement. "ComVest" has the meaning set forth in the preamble of this Agreement. "Demand Registration" has the meaning set forth in Section 3(a) of this Agreement. "Designated Holder" means each of the Commonwealth Stockholders and the General Atlantic Stockholders and any transferee of any of them to whom Registrable Securities have been transferred in accordance with Section 10(f) of this Agreement, other than a transferee to whom Registrable Securities have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 or Regulation S under the Securities Act (or any successor rule thereto). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "GAP Coinvestment" has the meaning set forth in the preamble to this Agreement. "GAP Coinvestments III" has the meaning set forth in the preamble to this Agreement. 3 "GAP Coinvestments IV" has the meaning set forth in the preamble to this Agreement. "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited liability company and the general partner of GAP 74 LP and GAP 77 LP and the managing member of GapStar, and any successor to such entity. "GAP 74 LP" has the meaning set forth in the preamble to this Agreement. "GAP 77 LP" has the meaning set forth in the preamble to this Agreement. "GapStar" has the meaning set forth in the preamble to this Agreement. "General Atlantic Stockholders" means GAP 74 LP, GAP 77 LP, GAP Coinvestment, GAP Coinvestments III, GAP Coinvestments IV, GapStar, GmbH Coinvestment, any Subsequent General Atlantic Purchaser and any Transferee thereof to whom Registrable Securities are transferred in accordance with Section 10(f) of this Agreement. "GmbH Coinvestment" has the meaning set forth in the preamble to this Agreement. "GmbH Management" means GAPCO Management GmbH, a German company with limited liability and the general partner of GmbH Coinvestment, and any successor to such entity. "Holders' Counsel" has the meaning set forth in Section 7(a)(i) of this Agreement. "Incidental Registration" has the meaning set forth in Section 4(a) of this Agreement. "Indemnified Party" has the meaning set forth in Section 8(c) of this Agreement. "Indemnifying Party" has the meaning set forth in Section 8(c) of this Agreement. "Initiating Holders" has the meaning set forth in Section 3(a) of this Agreement. "Inspector" has the meaning set forth in Section 7(a)(vii) of this Agreement. "Liability" has the meaning set forth in Section 8(a) of this Agreement. 4 "Market Price" means, on any date of determination, the average of the daily Closing Price of the Registrable Securities for the immediately preceding thirty (30) days on which the national securities exchanges are open for trading. "NASD" means the National Association of Securities Dealers, Inc. "Original Agreement" has the meaning set forth in the preamble to this Agreement. "Person" means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Priddy" has the meaning set forth in the preamble to this Agreement. "PVC" has the meaning set forth in the preamble to this Agreement. "Records" has the meaning set forth in Section 7(a)(vii) of this Agreement. "Registrable Securities" means each of the following: (a) any and all shares of Common Stock owned by the Designated Holders on the date hereof or issued or issuable upon exercise of the Warrants, (b) any other shares of Common Stock hereafter acquired or owned by any of the Designated Holders if such Designated Holder is an Affiliate of the Company and (c) any shares of Common Stock issued or issuable to any of the Designated Holders with respect to the Registrable Securities by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise and any shares of Common Stock or voting common stock issuable upon conversion, exercise or exchange thereof. "Registration Expenses" has the meaning set forth in Section 7(d) of this Agreement. "Registration Statement" means a Registration Statement filed pursuant to the Securities Act. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Shea" has the meaning set forth in the preamble to this Agreement. "Shelf Initiating Holders" has the meaning set forth in Section 5(a) of this Agreement. "Shelf Registration" has the meaning set forth in Section 5(a) of this Agreement. 5 "Stock Purchase Agreement" has the meaning set forth in the recitals to this Agreement. "Subsequent Commonwealth Purchaser" means any Affiliate of PVC, ComVest, Shea or Priddy that, after the date hereof, acquires shares of Common Stock, Preferred Stock, other shares of capital stock of the Company, or any other security convertible, exchangeable or exercisable into or for shares of Common Stock, Preferred Stock or other shares of capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to any of the foregoing. "Subsequent General Atlantic Purchaser" means any Affiliate of GAP LLC that, after the date hereof, acquires shares of Common Stock, Preferred Stock, other shares of capital stock of the Company, or any other security convertible, exchangeable or exercisable into or for shares of Common Stock, Preferred Stock or other shares of capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to any of the foregoing. "Valid Business Reason" has the meaning set forth in Section 3(a) of this Agreement. "Warrants" has the meaning set forth in the Stock Purchase Agreement. 2. General: Securities Subject to this Agreement. (a) Grant of Rights. The Company hereby grants registration rights to the Designated Holders upon the terms and conditions set forth in this Agreement. (b) Registrable Securities. For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities, when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (ii) (x) the entire amount of the Registrable Securities owned by a Designated Holder may be sold in a single sale, in the opinion of counsel satisfactory to the Company and such Designated Holder, each in their reasonable judgment, without any limitation as to volume pursuant to Rule 144 (or any successor provision then in effect) under the Securities Act and (y) such Designated Holder owning such Registrable Securities owns less than one percent (1%) of the outstanding shares of Common Stock on a fully diluted basis, or (iii) the Registrable Securities are proposed to be sold or distributed by a Person not entitled to the registration rights granted by this Agreement. (c) Holders of Registrable Securities. A Person is deemed to be a holder of Registrable Securities whenever such Person owns of record Registrable Securities, or holds an option to purchase, or a security convertible into or exercisable or exchangeable for, Registrable Securities whether or not such acquisition or conversion has actually been effected. If the Company receives conflicting instructions, notices or 6 elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities. Registrable Securities issuable upon exercise of an option or upon conversion of another security shall be deemed outstanding for the purposes of this Agreement. 3. Demand Registration. (a) Request for Demand Registration. Subject to certain restrictions on transfer set forth in Section 8.5 of the Stock Purchase Agreement, at any time after the date hereof, one or more of (i) the General Atlantic Stockholders, acting through GAP LLC or their written designee, or (ii) the Commonwealth Stockholders, upon the affirmative vote of the holders of a majority of the Registrable Securities held by the Commonwealth Stockholders (each, an "Initiating Holder" and together, the "Initiating Holders"), may make a written request to the Company to register, and the Company shall register, under the Securities Act (other than pursuant to a Registration Statement on Form S-4 or S-8 or any successor thereto) (a "Demand Registration"), the number of Registrable Securities stated in such request; provided, however, that subject to Section 3(c), the Company shall not be obligated to effect (x) more than one such Demand Registration for the Commonwealth Stockholders as a group and (y) more than one such Demand Registration for the General Atlantic Stockholders as a group. For purposes of the preceding sentence, two or more Registration Statements filed in response to one demand shall be counted as one Demand Registration. If the Board of Directors, in its good faith judgment, determines that any registration of Registrable Securities should not be made or continued because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other material transaction involving the Company (a "Valid Business Reason"), the Company may (x) postpone filing a Registration Statement relating to a Demand Registration until such Valid Business Reason no longer exists, but in no event for more than one hundred and twenty (120) days, and (y) in case a Registration Statement has been filed relating to a Demand Registration, if the Valid Business Reason has not resulted from actions taken by the Company, the Company, upon the approval of a majority of the Board of Directors, may cause such Registration Statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such Registration Statement. The Company shall give written notice of its determination to postpone or withdraw a Registration Statement and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof to the Initiating Holder and any other Designated Holders exercising their piggy-back rights pursuant to clause (b) of this Section 3. Notwithstanding anything to the contrary contained herein, the Company may not postpone or withdraw a filing under this Section 3(a) more than once in any twelve month period. Each request for a Demand Registration by the Initiating Holders shall state the amount of the Registrable Securities proposed to be sold and the intended method of disposition thereof. (b) Incidental or "Piggy-Back" Rights with Respect to a Demand Registration. Each of the Designated Holders (other than Initiating Holders which have requested a registration under Section 3(a)) may offer its or his Registrable 7 Securities under any Demand Registration pursuant to this Section 3(b). Within five (5) Business Days after the receipt of a request for a Demand Registration from an Initiating Holder, the Company shall (i) give written notice thereof to all of the Designated Holders (other than Initiating Holders which have requested a registration under Section 3(a)) and (ii) subject to Section 3(e), include in such registration all of the Registrable Securities held by such Designated Holders from whom the Company has received a written request for inclusion therein within ten (10) days of the receipt by such Designated Holders of such written notice referred to in clause (i) above. Each such request by such Designated Holders shall specify the number of Registrabie Securities proposed to be registered. The failure of any Designated Holder to respond within such 10-day period referred to in clause (ii) above shall be deemed to be a waiver of such Designated Holder's rights under this Section 3 with respect to such Demand Registration. Any Designated Holder may waive its rights under this Section 3 prior to the expiration of such 10-day period by giving written notice to the Company, with a copy to the Initiating Holders. If a Designated Holder sends the Company a written request for inclusion of part or all of such Designated Holder's Registrable Securities in a registration, such Designated Holder shall not be entitled to withdraw or revoke such request without the prior written consent of the Company in its sole discretion unless, as a result of facts or circumstances arising after the date on which such request was made relating to the Company or to market conditions, such Designated Holder reasonably determines that participation in such registration would have a material adverse effect on such Designated Holder. (c) Effective Demand Registration. The Company shall use its reasonable best efforts to cause any such Demand Registration to become and remain effective not later than sixty (60) days after it receives a request under Section 3(a) hereof. A registration shall not constitute a Demand Registration until it has become effective and remains continuously effective for the lesser of (i) the period during which all Registrable Securities registered in the Demand Registration are sold and (ii) 120 days; provided, however, that a registration shall not constitute a Demand Registration if (x) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Initiating Holders and such interference is not thereafter eliminated or (y) the conditions specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holder or (z) less than 75% of the Registrable Securities requested to be included in any such Demand Registration are not so included or are not sold pursuant to such Demand Registration. (d) Expenses. The Company shall pay all Registration Expenses in connection with a Demand Registration, whether or not such Demand Registration becomes effective. (e) Underwriting Procedures. If the Company or the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders so elect, the Company shall use its reasonable best efforts to cause such Demand 8 Registration to be in the form of a firm commitment underwritten offering and the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter selected in accordance with Section 3(f). In connection with any Demand Registration under this Section 3 involving an underwritten offering, none of the Registrable Securities held by any Designated Holder making a request for inclusion of such Registrable Securities pursuant to Section 3(b) hereof shall be included in such underwritten offering unless such Designated Holder accepts the terms of the offering as agreed upon by the Company, the Initiating Holders and the Approved Underwriter, and then only in such quantity as will not, in the opinion of the Approved Underwriter, jeopardize the success of such offering by the Initiating Holders. If the Approved Underwriter advises the Company that the aggregate amount of such Registrable Securities requested to be included in such offering is sufficiently large to have a material adverse effect on the success of such offering, then the Company shall include in such registration only the aggregate amount of Registrable Securities that the Approved Underwriter believes may be sold without any such material adverse effect and shall reduce the amount of Registrable Securities to be included in such registration, first by eliminating any shares included by the Company, second as to the Designated Holders (who are not Initiating Holders and who requested to participate in such registration pursuant to Section 3(b) hereof) as a group, if any, and third as to the Initiating Holders as a group, pro rata within each group based on the number of Registrable Securities owned by each such Designated Holder or Initiating Holder, as the case may be. (f) Selection of Underwriters. If any Demand Registration or Shelf Registration, as the case may be, of Registrable Securities is in the form of an underwritten offering, the Company shall select and obtain an investment banking firm of national reputation to act as the managing underwriter of the offering (the "Approved Underwriter"); provided, however, that the Approved Underwriter shall, in any case, also be approved by the Initiating Holders or Shelf Initiating Holders, as the case may be, such approval not to be unreasonably withheld. 4. Incidental or "Piggy-Back" Registration. (a) Request for Incidental Registration. Subject to certain restrictions on transfer set forth in Section 8.5 of the Stock Purchase Agreement, if at any time after the date hereof the Company proposes to file a Registration Statement under the Securities Act with respect to an offering by the Company for its own account (other than a Registration Statement on Form S-4 or S-8 or any successor thereto) or for the account of any stockholder of the Company other than the Designated Holders, then the Company shall give written notice of such proposed filing to each of the Designated Holders at least twenty (20) days before the anticipated filing date, and such notice shall describe the proposed registration and distribution and offer such Designated Holders the opportunity to register the number of Registrable Securities as each such Designated Holder may request (an "Incidental Registration"). The Company shall use its reasonable best efforts (within twenty (20) days of the notice provided for in the preceding sentence) to cause the managing underwriter or underwriters in the case of a proposed underwritten offering (the "Company Underwriter") to permit each of the Designated Holders who have requested in writing to participate in the Incidental Registration to include its or his 9 Registrable Securities in such offering on the same terms and conditions as the securities of the Company or the account of such other stockholder, as the case may be, included therein. In connection with any Incidental Registration under this Section 4(a) involving an underwritten offering, the Company shall not be required to include any Registrable Securities in such underwritten offering unless the Designated Holders thereof accept the terms of the underwritten offering as agreed upon between the Company, such other stockholders, if any, and the Company Underwriter, and then only in such quantity as the Company Underwriter believes will not jeopardize the success of the offering by the Company. If the Company Underwriter determines that the registration of all or part of the Registrable Securities which the Designated Holders have requested to be included would materially adversely affect the success of such offering, then the Company shall be required to include in such Incidental Registration, to the extent of the amount that the Company Underwriter believes may be sold without causing such adverse effect, first, all of the securities to be offered for the account of the Company; second, the Registrable Securities to be offered for the account of the Designated Holders pursuant to this Section 4, pro rata based on the number of Registrable Securities owned by each such Designated Holder; third, the securities held by any other stockholder of the Company that the Company is contractually obligated to include in such Registration Statement pursuant to a contract entered into prior to March 26, 2002 and set forth in Schedule 1; and fourth, any other securities requested to be included in such offering. (b) Expenses. The Company shall bear all Registration Expenses in connection with any Incidental Registration pursuant to this Section 4, whether or not such Incidental Registration becomes effective. 5. Shelf Registration. (a) Request for a Shelf Registration. Subject to certain restrictions on transfer set forth in Section 8.5 of the Stock Purchase Agreement, at any time commencing after the date hereof, in the event that the Company shall receive from one or more of (i) the Commonwealth Stockholders, upon the affirmative vote of the holders of a majority of the Registrable Securities held by the Commonwealth Stockholders, or (ii) the General Atlantic Stockholders as a group, acting through GAP LLC or their written designee (each, a "Shelf Initiating Holder" and together, the "Shelf Initiating Holders"), a written request that the Company register, under the Securities Act on Form S-3 (or any successor form then in effect) (a "Shelf Registration"), all or a portion of the Registrable Securities owned by such Shelf Initiating Holders on a shelf registration to be offered on a continuous basis, then the Company shall register on Form S-3 all or such portion of the Registrable Securities owned by such Shelf Initiating Holders and requested to be registered on such shelf Registration and to be offered on a continuous basis. The Company shall give written notice of such request to all of the Designated Holders (other than Shelf Initiating Holders which have requested a Shelf Registration under this Section 5(a)) at least ten (10) days before the anticipated filing date of such Shelf Registration, and such notice shall describe the proposed registration and offer such Designated Holders the opportunity to register the number of Registrable Securities as each such Designated Holder may request in writing to the Company, given within ten (10) days after their receipt from the Company of the written notice of such 10 registration. The Shelf Registration pursuant to this Section 5(a) shall be for an offering on a continuous basis pursuant to rule 415 under the Securities Act and the Company shall, subject to the Securities Act, maintain the effectiveness of the Shelf Registration until all of the Registrable Securities included on such Shelf Registration have been disposed of or otherwise no longer constitute Registrable Securities. With respect to each Shelf Registration, the Company shall, subject to Section 5(b), (i) include in such offering the Registrable Securities of the Shelf Initiating Holders and the Designated Holders (other than Shelf Initiating Holders which have requested a Shelf Registration under this Section 5(a)) who have requested in writing to participate in such registration on the same terms and conditions as the Registrable Securities of the Shelf Initiating Holders included therein and (ii) use its reasonable best efforts to cause such registration pursuant to this Section 5(a) to become and remain effective as soon as practicable, but in any event not later than forty-five (45) days after it receives a request therefor. (b) Shelf Underwriting Procedures. If the Shelf Initiating Holders holding a majority of the Registrable Securities held by all of the Shelf Initiating Holders so elect, the Company shall use its reasonable best efforts to cause either (i) such Shelf Registration pursuant to this Section 5 to be in the form of a firm commitment underwritten offering or (ii) a supplement to an effective Shelf Registration to be filed with the Commission in accordance with the Securities Act in order to effect a firm commitment underwritten offering and in either case the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter selected in accordance with Section 3(f). In connection with any Shelf Registration under Section 5(a) involving an underwritten offering, the Company shall not be required to include any Registrable Securities in such underwritten offering unless the Designated Holders thereof accept the terms of the underwritten offering as agreed upon between the Company, the Approved Underwriter and the Shelf Initiating Holders (which in any case shall not require the Designated Holders to make any representations or warranties about the Company), and then only in such quantity as such underwriter believes will not jeopardize the success of such offering by the Shelf Initiating Holders. If the Approved Underwriter believes that the registration of all or part of the Registrable Securities which the Shelf Initiating Holders and the other Designated Holders have requested to be included would materially adversely affect the success of such public offering, then the Company shall be required to include in the underwritten offering, to the extent of the amount that the Approved Underwriter believes may be sold without causing such adverse effect, first, all of the Registrable Securities to be offered for the account of the Shelf Initiating Holders, pro rata based on the number of Registrable Securities owned by such Shelf Initiating Holders; second, the Registrable Securities to be offered for the account of the other Designated Holders who requested inclusion of their Registrable Securities pursuant to Section 5(a), pro rata based on the number of Registrable Securities owned by such Designated Holders; and third, any other securities requested to be included in such offering. (c) Expenses. The Company shall bear all Registration Expenses in connection with any Shelf Registration pursuant to this Section 5, whether or not such Shelf Registration become effective. 11 (d) No Demand Registration. No registration requested by any Shelf Initiating Holder pursuant to this Section 5 shall be deemed a Demand Registration pursuant to Section 3. 6. Holdback Agreements. (a) Restrictions on Public Sale by Designated Holders. To the extent (i) requested by the Approved Underwriter or the Company Underwriter, as the case may be, in the case of an underwritten public offering and (ii) all of the Company's officers, directors and holders in excess of one percent (1%) of its outstanding capital stock execute agreements identical to those referred to in this Section 6(a), each Designated Holder agrees (x) not to effect any public sale or distribution of any Registrable Securities or of any securities convertible into or exchangeable or exercisable for such Registrable Securities, including a sale pursuant to Rule 144 under the Securities Act, or offer to sell, contract to sell (including without limitation any short sale), grant any option to purchase or enter into any hedging or similar transaction with the same economic effect as a sale any Registrable Securities and (y) not to make any request for a Demand Registration or Shelf Registration during the ninety (90) day period or such shorter period, if any, mutually agreed upon by such Designated Holder and the requesting party beginning on the effective date of the Registration Statement (except as part of such registration) for such public offering. No Designated Holder of Registrable Securities subject to this Section 6(a) shall be released from any obligation under any agreement, arrangement or understanding entered into pursuant to this Section 6(a) unless all other Designated Holders of Registrabie Securities subject to the same obligation are also released. (b) Restrictions on Public Sale by the Company. The Company agrees not to effect any public sale or distribution of any of its securities, or any securities convertible into or exchangeable or exercisable for such securities (except pursuant to registrations on Form S-4 or S-8 or any successor thereto), during the period beginning on the effective date of any Registration Statement in which the Designated Holders of Registrable Securities are participating and ending on the earlier of (i) the date on which all Registrable Securities registered on such Registration Statement are sold and (ii) 120 days after the effective date of such Registration Statement (except as part of such registration). 7. Registration Procedures. (a) Obligations of the Company. Whenever registration of Registrable Securities has been requested pursuant to Section 3, Section 4 or Section 5 of this Agreement, the Company shall use its reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of distribution thereof as quickly as practicable, and in connection with any such request, the Company shall, as expeditiously as possible: (i) prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the 12 Company shall deem appropriate and which form shall be available for the sale of such Registrable Securities in accordance with the intended method of distribution thereof, and cause such Registration Statement to become effective; provided, however, that (x) before filing a Registration Statement or prospectus or any amendments or supplements thereto, the Company shall provide counsel selected by the Designated Holders holding a majority of the Registrable Securities being registered in such registration ("Holders' Counsel") and any other Inspector with an adequate and appropriate opportunity to review and comment on such Registration Statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the Commission, subject to such documents being under the Company's control, and (y) the Company shall notify the Holders' Counsel and each seller of Registrable Securities of any stop order issued or threatened by the Commission and take all action required to prevent the entry of such stop order or to remove it if entered; (ii) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the lesser of (x) 120 days and (y) such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold; provided, that with respect to a Shelf Registration, the Company shall keep such Registration Statement effective until all Registrable Securities covered by such Registration Statement have been sold; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement; (iii) furnish to each seller of Registrable Securities, prior to filing a Registration Statement, at least one copy of such Registration Statement as is proposed to he filed, and thereafter such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), and the prospectus included in such Registration Statement (including each preliminary prospectus) and any prospectus filed under Rule 424 under the Securities Act as each such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (iv) register or qualify such Registrable Securities under such other securities or "blue sky" laws of such jurisdictions as any seller of Registrable Securities may request, and to continue such qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller requests or until all of such Registrable Securities are sold, whichever is shortest, and do any and all other acts and things which may be reasonably necessary or advisable to enable any such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 7(a)(iv), (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction; 13 (v) notify each seller of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Company shall promptly prepare a supplement or amendment to such prospectus and furnish to each seller of Registrable Securities a reasonable number of copies of such supplement to or an amendment of such prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) enter into and perform customary agreements (including an underwriting agreement in customary form with the Approved Underwriter or Company Underwriter, if any, selected as provided in Section 3, Section 4 or Section 5, as the case may be) and take such other actions as are prudent and reasonably required in order to expedite or facilitate the disposition of such Registrable Securities, including causing its officers to participate in "road shows" and other information meetings organized by the Approved Underwriter or Company Underwriter; (vii) make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to a Registration Statement, Holders' Counsel and any attorney, accountant or other agent retained by any such seller or any managing underwriter (each, an "Inspector" and collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's and its subsidiaries' officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (x) the disclosure of such Records is necessary, in the Company's judgment, to avoid or correct a misstatement or omission in the Registration Statement, (y) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (z) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public. Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential; 14 (viii) if such sale is pursuant to an underwritten offering, obtain a "cold comfort" letters dated the effective date of the Registration Statement and the date of the closing under the underwriting agreement from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters as Holders' Counsel or the managing underwriter reasonably requests; (ix) furnish, at the request of any seller of Registrable Securities on the date such securities are delivered to the underwriters for sale pursuant to such registration or, if such securities are not being sold through underwriters, on the date the Registration Statement with respect to such securities becomes effective, an opinion, dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the seller making such request, covering such legal matters with respect to the registration in respect of which such opinion is being given as the underwriters, if any, and such seller may reasonably request and are customarily included in such opinions; (x) comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable but no later than fifteen (15) months after the effective date of the Registration Statement, an earnings statement covering a period of twelve (12) months beginning after the effective date of the Registration Statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (xi) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, provided that the applicable listing requirements are satisfied; (xii) keep Holders' Counsel advised in writing as to the initiation and progress of any registration under Section 3, Section 4 or Section 5 hereunder; (xiii) cooperate with each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; and (xiv) take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby. (b) Seller Information. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish, and such seller shall furnish, to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing. (c) Notice to Discontinue. Each Designated Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7(a)(v), such Designated Holder shall forthwith discontinue 15 disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Designated Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 7(a)(v) and, if so directed by the Company, such Designated Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Designated Holder's possession, of the prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 7(a)(ii)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 7(a)(v) to and including the date when sellers of such Registrable Securities under such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by and meeting the requirements of Section 7(a)(v). (d) Registration Expenses. The Company shall pay all expenses arising from or incident to its performance of, or compliance with, this Agreement, including, without limitation, (i) Commission, stock exchange and NASD registration and filing fees, (ii) all fees and expenses incurred in complying with securities or "blue sky" laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with "blue sky" qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing, messenger and delivery expenses, (iv) the fees, charges and expenses of counsel to the Company and of its independent public accountants and any other accounting fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any "cold comfort" letters or any special audits incident to or required by any registration or qualification) and any reasonable legal fees, charges and expenses incurred by one counsel to the Designated Holder, and (v) any liability insurance or other premiums for insurance obtained by the Company in connection with any Demand Registration or piggy-back registration thereon, Incidental Registration or Shelf Registration pursuant to the terms of this Agreement, regardless of whether such Registration Statement is declared effective. All of the expenses described in the preceding sentence of this Section 7(d) are referred to herein as "Registration Expenses." The Designated Holders of Registrable Securities sold pursuant to a Registration Statement shall bear the expense of any broker's commission or underwriter's discount or commission relating to registration and sale of such Designated Holders' Registrable Securities and, subject to clause (iv) above, shall bear the fees and expenses of their own counsel. 8. Indemnification; Contribution. (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless each Designated Holder, its partners, directors, officers, affiliates and each Person who controls (within the meaning of Section 15 of the Securities Act) such Designated Holder from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) (each, a "Liability" and collectively, "Liabilities"), arising out of or based upon any untrue, or 16 allegedly untrue, statement of a material fact contained in any Registration Statement, prospectus or preliminary prospectus or notification or offering circular (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading under the circumstances such statements were made, except insofar as such Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission contained in such Registration Statement, preliminary prospectus or final prospectus in reliance and in conformity with information concerning such Designated Holder furnished in writing to the Company by such Designated Holder expressly for use therein, including, without limitation, the information furnished to the Company pursuant to Section 8(b). The Company shall also provide customary indemnities to any underwriters of the Registrable Securities, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of the Designated Holders of Registrable Securities. (b) Indemnification by Designated Holders. In connection with any Registration Statement in which a Designated Holder is participating pursuant to Section 3, Section 4 or Section 5 hereof, each such Designated Holder shall promptly furnish to the Company in writing such information with respect to such Designated Holder as the Company may reasonably request or as may be required by law for use in connection with any such Registration Statement or prospectus and all information required to be disclosed in order to make the information previously furnished to the Company by such Designated Holder not materially misleading or necessary to cause such Registration Statement not to omit a material fact with respect to such Designated Holder necessary in order to make the statements therein not misleading. Each Designated Holder agrees to indemnify and hold harmless the Company, any underwriter retained by the Company and each Person who controls the Company or such underwriter (within the meaning of Section 15 of the Securities Act) to the same extent as the foregoing indemnity from the Company to the Designated Holders, but only if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with information with respect to such Designated Holder furnished in writing to the Company by such Designated Holder expressly for use in such Registration Statement or prospectus, including, without limitation, the information furnished to the Company pursuant to this Section 8(b); provided, however, that the total amount to be indemnified by such Designated Holder pursuant to this Section 8(b) shall be limited to the net proceeds (after deducting the underwriters' discounts and commissions) received by such Designated Holder in the offering to which the Registration Statement or prospectus relates. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder (the "Indemnified Party") agrees to give prompt written notice to the indemnifying party (the "Indemnifying Party") after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; 17 provided, however, that the failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party of any Liability that it may have to the Indemnified Party hereunder (except to the extent that the Indemnifying Party is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and such parties have been advised by such counsel that either (x) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party. In any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding. (d) Contribution. If the indemnification provided for in this Section 8 from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Liabilities referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall he determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 8(a), 8(b) and 8(c), any 18 legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided that the total amount to be contributed by such Designated Holder shall be limited to the net proceeds (after deducting the underwriters' discounts and commissions) received by such Designated Holder in the offering. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 9. Rule 144. The Company covenants that it shall (a) file any reports required to be filed by it under the Exchange Act and (b) take such further action as each Designated Holder may reasonably request (including providing any information necessary to comply with Rule 144 under the Securities Act), all to the extent required from time to time to enable such Designated Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or Regulation S under the Securities Act or (ii) any similar rules or regulations hereafter adopted by the Commission. The Company shall, upon the request of any Designated Holder, deliver to such Designated Holder a written statement as to whether it has complied with such requirements. 10. Miscellaneous. (a) Recapitalizations, Exchanges, etc. The provisions of this Agreement shall apply to the full extent set forth herein with respect to (i) the shares of Common Stock, (ii) any and all shares of voting common stock of the Company into which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or other capital reorganization by the Company and (iii) any and all equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the shares of Common Stock and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. The Company shall cause any successor or assign (whether by merger, consolidation, sale of assets or otherwise) to enter into a new registration rights agreement with the Designated Holders on terms substantially the same as this Agreement as a condition of any such transaction. (b) No Inconsistent Agreements. Except for the rights granted pursuant to the agreements set forth on Schedule 1, the Company represents and warrants that it has not granted to any Person the right to request or require the Company to register any securities issued by the Company, other than the rights granted to the 19 Designated Holders herein. The Company shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Designated Holders in this Agreement or grant any additional registration rights to any Person or with respect to any securities which are not Registrable Securities which are prior in right to or inconsistent with the rights granted in this Agreement, except that the Company may grant the registration rights held by the Commonwealth Stockholders to any Subsequent Commonwealth Stockholder and registration rights held by the General Atlantic Stockholders to any Subsequent General Atlantic Purchaser. (c) Remedies. The Designated Holders, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of their rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate. (d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless consented to in writing by (i) the Company, (ii) the Commonwealth Stockholders holding Registrable Securities representing (after giving effect to any adjustments) at least a majority of the aggregate number of Registrable Securities owned by all of the Commonwealth Stockholders and (iii) the General Atlantic Stockholders holding Registrable Securities representing (after giving effect to any adjustments) at least a majority of the aggregate number of Registrable Securities owned by all of the General Atlantic Stockholders. Any such written consent shall be binding upon the Company and all of the Designated Holders. Notwithstanding the first sentence of this Section 10(d), the Company, without the consent of any other party, may amend this Agreement to add any Subsequent Commonwealth Purchaser or Subsequent General Atlantic Purchaser as a party to this Agreement as a Subsequent Commonwealth Stockholder or General Atlantic Stockholder, as the case may be. (e) Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be made by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: (i) if to the Company: ProxyMed, Inc. 2555 Davie Rd., Suite 110 Fort Lauderdale, FL 33317 Telecopy: (954) 473-2341 Attention: Michael K Hoover, Chief Executive Officer Rafael G. Rodriguez, In-House Counsel 20 with a copy to: Holland & Knight LLP 701 Brickell Avenue, Suite 3000 Miami, FL 33131 Telecopy: (305) 789-7799 Attention:Rodney H. Bell, Esq. (ii) if to GAP 74 LP, GAP 77 LP, GapStar, GAP Coinvestment, GAP Coinvestments III or GAP Coinvestments IV: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. (iii) if to GmbH Coinvestment: c/o General Atlantic Partners GmbH Koenigsalle 88 40212 Duesseldorf Germany Telecopy: 011-49-211-602-888-89 Attention: with a copy to: General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz Thomas J. Murphy 21 and Paul, Weiss, Rilkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. (iv) if to PVC or ComVest: c/o ComVest Investment Partners 830 Third Avenue New York, NY 10022 Telecopy: (212) 829-5978 Attention: Carl Kleidman with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex (v) if to Shea: Shea Ventures, LLC 655 Brea Canyon Road Walnut, CA 91789-3078 Telecopy: (909) 869-0840 Attention: Jackie Hodge with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex (vi) if to Priddy Robert Priddy 3435 Kingsboro Road NE 1601 Atlanta, GA 30326-1343 Telecopy: (404) 844-3212 22 with a copy to: Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 Telecopy: (212) 801-6400 Attention: Alan I. Annex All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 10(e) designate another address or Person for receipt of notices hereunder. (f) Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as hereinafter provided. The Demand Registration rights and the Shelf Registration rights and related rights of the Commonwealth Stockholders and the General Atlantic Stockholders contained in Sections 3 and 5 hereof, shall be (i) with respect to any Registrable Security that is transferred to an Affiliate of a Commonwealth Stockholder or a General Atlantic Stockholder, automatically transferred to such Affiliate and (ii) with respect to any Registrable Security that is transferred in all cases to a non-Affiliate, transferred only with the consent of the Company which consent shall not be unreasonably withheld. The incidental or "piggy-back" registration rights of the Designated Holders contained in Sections 3(b), 4 and 5 hereof and the other rights of each of the Designated Holders with respect thereto shall be, with respect to any Registrable Security, automatically transferred to any Person who is the transferee of such Registrable Security. All of the obligations of the Company hereunder shall survive any such transfer. Except as provided in Section 8, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. (j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not 23 be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. (k) Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement. (l) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter contained herein, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter, including, without limitation, the Original Agreement. (m) Further Assurances. Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. (n) Other Agreements. Nothing contained in this Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under, or any restrictions on the transfer of Registrable Securities or other securities of the Company imposed by, any other agreement including, but not limited to, the Stock Purchase Agreement or the Warrants. [Remainder of page intentionally left blank] 24 IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above. PROXYMED, INC. By:/s/ Nancy J. Ham ------------------------------------------ Name: Nancy J. Ham Title: President and C.O.O. GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Member GENERAL ATLANTIC PARTNERS 77, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A General Partner Signature Page to Registration Rights Agreement GAPSTAR, LLC By GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Member GAPCO GMBH & CO. KG By: GAPCO MANAGEMENT GMBH, its General Partner By:/s/Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Director PVC FUNDING PARTNERS, LLC By:/s/ Michael Falk ------------------------------------------ Name: Michael Falk Title: Manager COMVEST VENTURE PARTNERS, L.P. By:/s/ Michael Falk ------------------------------------------ Name: Michael Falk Title: Manager SHEA VENTURES, LLC By:/s/Peter O. Shea ------------------------------------------ Name: Peter O. Shea Title: Manager Signature Page to Registration Rights Agreement ROBERT PRIDDY By:/s/Robert Priddy ----------------------------------------- Name: Robert Priddy GAP COINVESTMENTS III, LLC By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Member GAP COINVESTMENTS IV, LLC By:/s/ Matthew Nimetz ------------------------------------------ Name: Matthew Nimetz Title: A Managing Member Signature Page to Registration Rights Agreement -----END PRIVACY-ENHANCED MESSAGE-----