SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 4, 2000
PROXYMED, INC
(Exact name of registrant as specified in its charter)
FLORIDA 000-22052 65-0202059
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2555 DAVIE ROAD
SUITE 110
FT. LAUDERDALE, FLORIDA 33317
(Address of principal executive offices)
954-473-1001
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
Effective May 4, 2000, ProxyMed, Inc. (the "Company") entered into a
Redemption and Exchange Agreement (the "Redemption Agreement") with holders of
$13,000,000 of its $15,000,000 Series B Convertible Preferred Stock (the
"Preferred Stock"). Under the terms of the Redemption Agreement, the Company is
required to immediately redeem $4,000,000 of the Preferred Stock, and is
required to redeem an additional $2,500,000 of the Preferred Stock on each of
June 19, 2000, August 1, 2000, and August 31, 2000, and an additional $1,500,000
of the Preferred Stock on September 29, 2000. The Redemption Agreement provides
that the redemption of the Preferred Stock will be made at 116.5% of the
Conversion Amount (as defined in the Articles of Incorporation of the Company,
as amended) of such Preferred Stock on the date of such redemption. The
Redemption Agreement also provides that certain warrants issued to the holders
of the Preferred Stock subject to the Redemption Agreement are being exchanged
for new warrants (the "Exchanged Warrants") with an exercise price of $1.50 per
share. In addition, such holders are receiving, in the aggregate, 650,000
additional warrants (the "New Warrants") at an exercise price of $1.50 per
share. Under the terms of the Redemption Agreement, the Company has agreed to
pay the holders of Preferred Stock subject to such agreement the aggregate
amount of $4,333,333 if there is a change of control of the Company on or before
December 23, 2002. The redemptions of the Preferred Stock in accordance with the
Redemption Agreement are subject to certain closing conditions on each date of
redemption. So long as the Company remains in compliance with the terms of the
Redemption Agreement, such holders are prohibited from converting their shares
of Preferred Stock into shares of the Company's common stock, par value $0.001
per share (the "Common Stock"). Among other things, the Redemption Agreement
requires that the Company secure shareholder approval of the issuance of the
Preferred Stock and the transactions related thereto, on or before the earlier
of i) July 17, 2000 and ii) the date which is 40 days after the Company learns
that no review of its Proxy Statement for the shareholder meeting will be made
by the staff of the Securities and Exchange Commission (the "SEC") or that the
staff of the SEC has no further comments on the Proxy Statement.
The Company has not entered into an agreement to redeem the shares of
Preferred Stock held by the holder of $2,000,000 of the Preferred Stock. As of
May 8, 2000, this holder had given the Company notice of its intention to
convert 1,690 shares of the Preferred Stock into an aggregate of 1,401,516
shares of the Company's Common Stock. Following such conversions, such holder
will continue to hold 310 shares of Preferred Stock.
In order for the Company to comply with the terms of the Redemption
Agreement and continue to fund its operating requirements, the Company will be
required to raise significant amounts of additional capital. The Redemption
Agreement provides that the Company must raise at least $4,000,000 of additional
funds by June 17, 2000, an aggregate of $9,000,000 of additional funds by July
31, 2000, and an aggregate of $13,000,000 of additional funds by August 30,
2000. The Company, however, may need or elect to raise additional funds in
excess of such amounts prior to or after such dates. The Company's capital
requirements will depend on many factors, including the Company's ability to
meet the conditions under the Redemption Agreement, the problems, delays,
expenses and complications frequently encountered by other eHealth companies;
the costs associated with developing improved products and services in response
to technological changes; the costs associated with any marketing or other
arrangements; changes in economic, regulatory, or competitive conditions on the
Company's business; and the cost of retaining management personnel.
To satisfy its capital requirements, the Company may seek to raise
funds in the public or private capital markets. The Company's ability to raise
additional funds may be adversely affected if, among other things, the Company
is unable to meet the terms and conditions set
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forth in the Redemption Agreement or if the Company does not continue to improve
its operating performance and achieve increased market acceptance of its
products and services. There can be no assurance that any additional funding
will be available to the Company, or if available, that it will be available on
acceptable terms. If adequate funds are not available, the Company will not be
able to meet the conditions set forth in the Redemption Agreement and the
holders of the Preferred Stock would be entitled to exercise their conversion
and other rights under the terms of the designations for the Preferred Stock and
the Redemption Agreement. If the Company is successful in obtaining additional
financing, the terms of the financing may have the effect of significantly
diluting or adversely affecting the holdings or the rights of the holders of
Common Stock.
The foregoing summary of certain aspects of the Redemption Agreement,
the Exchanged Warrants and the New Warrants is not intended to be complete and
is qualified by such documents, which are attached as exhibits to this Report on
Form 8-K, and by the documentation entered into in connection with the original
issuance of the Preferred Stock on December 23, 1999, which are attached as
exhibits to the Company's Report on Form 8-K filed with the Securities and
Exchange Commission on December 28, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT NO. DESCRIPTION
4.1 Form of Exchanged Warrant to Purchase Common Stock of
ProxyMed, Inc., dated May 4, 2000, issued to certain holders
of the ProxyMed Series B Convertible Preferred Stock.
4.2 Form of New Warrant to Purchase Common Stock of ProxyMed,
Inc., dated May 4, 2000, issued to certain holders of the
ProxyMed Series B Convertible Preferred Stock.
4.3 Registration Rights Agreement dated as of May 4, 2000 between
ProxyMed, Inc. and certain holders of the ProxyMed Series B
Convertible Preferred Stock.
10.27 Redemption and Exchange Agreement dated as of May 4, 2000
between ProxyMed, Inc. and certain holders of ProxyMed's
Series B Convertible Preferred Stock.
99.1 Press Release issued on May 2, 2000.
99.2 Press Release issued on May 5, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROXYMED, INC.
By: /s/ Bennett Marks
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Name: Bennett Marks
Title: Executive Vice President - Finance,
Chief Financial Officer
Dated: May 8, 2000
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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4.1 Form of Exchanged Warrant to Purchase Common Stock of
ProxyMed, Inc., dated May 4, 2000, issued to certain holders
of the ProxyMed Series B Convertible Preferred Stock.
4.2 Form of New Warrant to Purchase Common Stock of ProxyMed,
Inc., dated May 4, 2000, issued to certain holders of the
ProxyMed Series B Convertible Preferred Stock.
4.3 Registration Rights Agreement dated as of May 4, 2000 between
ProxyMed, Inc. and certain holders of the ProxyMed Series B
Convertible Preferred Stock.
10.27 Redemption and Exchange Agreement dated as of May 4, 2000
between ProxyMed, Inc. and certain holders of ProxyMed's
Series B Convertible Preferred Stock.
99.1 Press Release issued on May 2, 2000.
99.2 Press Release issued on May 5, 2000.