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                                                                   EXHIBIT 10.40


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered on December
31, 2001, by and between PROXYMED, INC., a Florida corporation ("Company"), and
A. THOMAS HARDY ("Employee").

         WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company desires to employ the Employee at its wholly-owned
subsidiary Key Communications Service, Inc. ("Key"), and Employee is willing to
accept such employment.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Employee
agree as follows:

1. TERM. The term of the Agreement shall commence on January 2, 2002 (the
"Effective Date"), and shall continue for three (3) years (hereafter, the
"Term"), and shall be automatically extended from year to year thereafter unless
(i) terminated by the Company pursuant to Section 5a), b) or c); or (ii)
terminated by Employee pursuant to Section 5e) by delivery of not less than
thirty (30) days written notice to the Company, in which case the employment of
Employee shall terminate on the date which is thirty (30) days following the
date notice is received by the Company or any earlier date if the Company in its
sole discretion so elects.

2. POSITION; DUTIES; LOYALTY.

         a) POSITION. Employee will be employed by Key and shall render service
to Key as its President and to the Company as Senior Vice President, Laboratory
Services reporting to the Chief Operating Officer pursuant to the terms,
provisions and conditions hereinafter set forth.

         b) DUTIES. Employee shall be employed by Key on a full-time, exclusive
basis and shall not be required to relocate as a condition of continued
employment. Employee shall perform such duties and have such authority and
responsibilities customarily accompanying his position and as reasonably
directed by the Chief Operating Officer of the Company consistent with
Employee's position.

         c) LOYALTY. Employee shall devote the full working time required for
his position and shall give his best efforts to the business of Key and the
Company and to the performance of the duties and obligations described in this
Agreement. Except as maybe authorized in writing by the Chief Executive Officer
or Chief Operating Officer, Employee shall not, directly or indirectly, alone,
or as a partner, officer, director or shareholder of any other institution, be
engaged in any other commercial activities whatsoever, or continue or assume any
other corporate affiliations except for (a) passive investments; and (b) minimal
time utilized for business activities that do not compete with the business of
the Company or its subsidiaries.

3. COMPENSATION AND EXPENSES.

         a)       SALARY. In consideration for the services rendered by the
                  Employee under this Agreement, Key shall pay the Employee a
                  monthly base salary of $14,583.33



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         per month ("Base Salary"), plus a car allowance of $500.00 per month,
         subject to federal and state taxes, if any.

         b) BONUS OPPORTUNITY. Employee may earn bonuses as may be awarded from
time to time at the discretion of the Compensation Committee or the Board of
Directors of the Company. Within thirty (30) days after the start of his
employment, Employee is obligated to negotiate with the Chief Operating Officer
a bonus plan with objective performance criteria.

         c) EXPENSES. Company shall promptly pay or reimburse the Employee for
all reasonable business expenses actually incurred or paid by the Employee in
the performance of his services hereunder in accordance with the policies and
procedures of the Company, provided that Employee properly accounts therefor.

         d) TAX WITHHOLDING. The Company shall have the right to deduct or
withhold from the compensation due Employee hereunder any and all sums required
for Federal income, social security and Medicare taxes and all state and local
taxes now applicable or that may be enacted and become applicable in the future.

         4. BENEFITS.

         a) VACATION. Employee will receive three (3) weeks of vacation with pay
during the first year of this Agreement, and thereafter such additional time as
maybe provided the Company's then current policies.

         b) PARTICIPATION IN BENEFIT PLANS. As of the Effective Date, Employee
shall be entitled to participate in whatever benefit plans that are extended to
all other executives and employees of the Company.

         5. TERMINATION.

         a) TERMINATION WITHOUT CAUSE; DEATH; DISABILITY. Upon termination due
to death or Disability, Employee or his/his beneficiary or estate or legal
representative shall be entitled to receive the amounts payable under Section
5c). For purposes of this Agreement, "Disability" is defined to mean the
inability of Employee due to illness or physical or mental infirmity (as
determined by a physician selected by Employee and acceptable to the Company) to
perform his duties hereunder on a full-time basis for six (6) consecutive months
with reasonable accommodation by the Company. Employee shall, upon request of
the Company, furnish information and assistance to the Company, and shall make
himself available to undertake reasonable assignments consistent with the
dignity, importance and scope of his position and his physical and mental
health.

         b) TERMINATION FOR CAUSE. The Company may terminate Employee's
employment for "cause" effective immediately upon giving written notice thereof.
For purposes of this Agreement, the term "cause" shall be limited to (i)
non-appealable conviction of a felony or of any crime involving fraud or
misrepresentation that adversely affects the Company's reputation in a material
way; (ii) Employee's gross negligence or willful misconduct which is materially
injurious to the Company; (iii) excessive use of alcohol or illegal drugs
interfering with the performance of Employee's duties and the continuance
thereof after written warning; and (iv) any material breach by Employee of a
material obligation under this Agreement with




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written notice thereof, and an appropriate period to cure such breach if such
breach is curable. For purposes of this Section, no act or failure to act on
Employee's part shall be considered "gross' or "willful" unless done, or omitted
to be done, by Employee not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company. Notwithstanding any
term or provision of this Agreement to the contrary, termination shall not be
considered for cause if the termination resulted from bad judgment or negligence
on the part of Employee or an act or omission which Employee believed at the
time to be in good faith and in the interests of the Company, or not opposed to
such interests. Company shall pay Employee his full Base Salary and benefits
through the date of termination at the then current rate (including any
applicable pro rated bonus and accrued vacation pay). Company shall have no
other liabilities or obligations to Employee. All stock options, if any, which
have become vested and exercisable on or before the termination date shall
remain vested and exercisable for such period of time as specified in Employee's
stock option agreement(s).

         c) TERMINATION WITHOUT CAUSE. The Company may terminate without cause
this Agreement during the initial term or any renewal term for any or no reason.
In the event of termination by the Company without cause, Employee shall execute
a full and complete release of any and all claims against the Company in a form
satisfactory to the Company, in which event Employee shall be entitled to (i) an
amount equal to Employee's Base Salary as of the date of termination for six (6)
months commencing on the effective date of termination payable in accordance
with the Company's customary payroll practices; plus (ii) a pro rata portion of
any accrued vacation and any bonus compensation which would have been paid to
Employee under any bonus plan; plus (iii) the continuation of all benefits
including, without limitation, all insurance plans, for six (6) months
commencing on the first day following the month of Employee's termination date;
plus (iv) any unvested options shall be vested as of the date of termination.
Further, any termination pursuant to Section 1 above where the initial term or
any renewal term has expired, or pursuant to Section 5e) below regarding a
termination for Good Reason shall be deemed to be a termination without cause
under this Section 5c), and Employee shall be entitled to all payments and
benefits under this Sections 5c) and 5g) of this Agreement.

         d) RETURN OF COMPANY PROPERTY. Upon any termination, Employee shall
immediately return to the Company all property of the Company in Employee's
possession, including Confidential Information (as defined below). Employee
acknowledges that the Company may withhold any compensation and benefits owed to
Employee hereunder until all such property is returned provided that within ten
(10) days after Employee's termination Company notifies Employee in writing of
those specific items that it believes are still in the possession of Employee
and Employee returns such items immediately.

         e) TERMINATION FOR GOOD REASON. Employee may terminate this Agreement
for Good Reason by giving Company thirty (30) days' written notice. "Good
Reason" means: a) the assignment of any material duties on a permanent basis
without Employee's written consent, which may be withheld in Employee's sole
discretion, inconsistent in any respect with Employee's current or then current
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities hereunder, or any other action by the
Company which results in a material diminution in such position, authority,
duties or responsibilities; b) any reduction of Employee's Base Salary or health
and other benefits no less favorable than benefits Employee was entitled to; c)
any material breach of this Agreement by the Company; d) Employee's resignation
from the Company or any successor in interest of the




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Company, whether voluntary or not, which is initiated or requested by the
Company or any successor in interest of the Company; and e) any failure on the
part of any successor or assign of the Company to assume and timely perform all
the Company's obligations under this Agreement. Employee's termination for Good
Reason shall be deemed a termination without cause, and he shall be entitled to
all the payments as set forth in Section 5c).

         f) CHANGE IN CONTROL. If, within ninety (90) days prior to a Change in
Control, as defined in Employee's Stock Option Agreement, the Agreement
terminates for any reason, (other than pursuant to Section 5b)(i), (iii) or
(iv) above) then, (i) any unvested options shall vest as of the date of
the Change in Control (to the extent permitted by the applicable stock option
plan) and shall remain vested and exercisable as specified in Employee's Stock
Option Agreement; and (ii) Employee shall receive the separation benefits in
accordance with Section 5c) above, except subsection 5c)(iv).

         g) ACCELERATION. If the Company defaults in the payment of any amounts
owed to Employee following written notice by Employee, and fails to cure such
default within three (3) days from the date of such notice, Employee shall be
entitled to accelerate the entire amounts due hereunder, plus continuation of
health and other insurance benefits for the applicable period. The Company shall
have the opportunity to cure a monetary default one time after which time, if
another default occurs, Employee shall be entitled to accelerate the entire
amount due hereunder upon written notice by Employee without affording the
Company another opportunity to cure. If Company again fails to pay the entire
amount within three (3) days after such written notice, Employee shall be
entitled and Company shall promptly pay, as liquidated damages and not as a
penalty, the accelerated amount times two, plus any reasonable attorney fees and
costs that Employee may incur as a result of the Company's failure to cure.

6. COVENANTS OF EMPLOYEE.

         a) Employee agrees that so long as Company is in compliance with its
obligations under this Agreement during the Term and for a period of one (1)
year following a termination of employment for any reason, he will not, directly
or indirectly, engage, assist or participate in, whether as a director, officer,
executive, agent, manager, consultant partner, owner or independent contractor
or other participant, in any core line of business that is the same as the
Company or any of its subsidiaries are engaged in as of the termination of this
Agreement without the written consent of the Company, which consent shall not be
unreasonably withheld. Employee and Company agree that this clause is to protect
the interests of the Company while at the same time allowing the Employee to
pursue gainful employment with any other company Employee so chooses, so long as
such Employee does not, within the relevant time period herein, engage in any
line of business that directly competes with any line of business engaged in by
the Company or any of its subsidiaries as of the date Employee terminates his
employment with Company. Nothing contained herein shall prevent Employee from
acquiring less than 1% of any class of securities of any company that competes
with the Company that has any of its securities listed on a national securities
exchange or traded in the over-the-counter market, provided Employee remains a
passive investor.



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         b) Employee agrees so long as Company is in compliance with its
obligations under this Agreement that during the Term and for one (1) year after
the termination of employment for any reason, he will not, directly or
indirectly, without the prior written consent of the Company, induce or solicit
any person employed or hereafter employed by the Company or any of its
subsidiaries to leave the employ of the Company or any of its subsidiaries or
solicit, recruit, hire or attempt to solicit, recruit or hire any person
employed by the Company. Further, Employee agrees that for a period of one (1)
year after the termination of this Agreement, he will not, directly or
indirectly, without the prior written consent of the Company, solicit for any
business similar to that of the Company, divert away, take away, or attempt to
take away any customer of the Company who was a customer or a potential customer
at the time of termination or expiration of this Agreement.

         c) Employee agrees and acknowledges that he will disclose promptly to
the Company every discovery, improvement and invention, and its attendant
documentation, made, conceived or developed by Employee during the entire period
of employment (whether or not during working hours) which discoveries,
improvements or inventions are capable of use in any way in connection with the
business of the Company. The Company will receive all materials, including,
software programs, source code, object code, specifications, documents,
abstracts and summaries developed in connection with Employee's employment.
Employee acknowledges that the programs and documentation developed in
connection with Employee's employment with the Company shall be the exclusive
property of the Company, and that the Company shall retain all right, title and
interest in such materials, including without limitation patent and copyright
interests. Nothing herein shall be construed as a license from the Company to
make, use, sell or copy any inventions, ideas, trade secrets, trademarks,
copyrightable works or other intellectual property of the Company during the
term of this Agreement or subsequent to its termination. To the fullest extent
permitted by law, all such discoveries, inventions and improvements will be
deemed works made for hire. Employee grants and agrees to convey to Company or
its nominee the entire right, title and interest, domestic and foreign, which he
may have in such discoveries, improvements or inventions, or a lesser interest
therein, at the option of Company. Employee further agrees to promptly, upon
request, sign all applications ("Applications") for patents, copyrights,
assignments and other appropriate documents ("Documentation"), and to perform
all acts and to do all things necessary and appropriate to carry out the intent
of this Section, whether or not Employee is still an employee of the Company at
the time of such requests. Further, Employee hereby appoints ProxyMed's In-House
Counsel or its successor as it Attorney-in-Fact for the limited purpose of
prosecuting any such Applications on behalf of Employee and executing all
Documentation on behalf of Employee.

         d) Employee agrees and acknowledges that the Confidential Information
of the Company and its subsidiaries (as hereinafter defined) is valuable,
special and unique to its business, that such business depends on such
Confidential Information, and that the Company wishes to protect such
Confidential Information by keeping it confidential for the use and benefit




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of the Company. Based on the foregoing, Employee agrees to undertake the
following obligations with respect to such Confidential Information:

                  i) Employee agrees to keep any and all Confidential
Information in trust for the use and benefit of the Company;

                  ii) Employee agrees that, except as required by Employee's
duties or authorized in writing by the Company and its subsidiaries, he will not
at any time during and for a period of three (3) years after the termination of
his employment with the Company and its subsidiaries, for himself or others, use
the Confidential Information for any economic purpose or disclose, directly or
indirectly, any Confidential Information of the Company or any of its
subsidiaries; except as maybe required by applicable law or an order from a
court of competent jurisdiction, in which case Employee shall promptly notify
Company before making any disclosure, so as to allow the Company to seek a
protective order if it so elects;

                  iii) Employee agrees to take all reasonable steps necessary,
or reasonably requested by the Company or its subsidiaries, to ensure that all
Confidential Information of the Company is kept confidential for the use and
benefit of the Company and its subsidiaries; and

                  iv) Employee agrees that, upon termination of his employment
by the Company or any of its subsidiaries or at any other time the Company may
in writing so request, he will promptly deliver to the Company all materials
constituting Confidential Information (including all copies thereof) that are in
the possession of or under the control of Employee. Employee further agrees
that, if requested by the Company to return any Confidential Information
pursuant to this Subsection (iv), he will not make or retain any copy or extract
from such materials.

                  For the purposes of this Section 6d), "Confidential
Information" means any and all information developed by or for the Company or
any of its subsidiaries of which Employee gained knowledge by reason of his
employment by the Company or any of its subsidiaries prior to the date hereof or
during his employment that is not generally known in any industry in which the
Company or its subsidiaries are or may become engaged, but does not apply to
information which is generally known to the public or the trade, unless such
knowledge results from an unauthorized disclosure by Employee. Confidential
Information includes, but is not limited to, any and all information developed
by or for the Company concerning plans, marketing and sales methods, materials,
processes, business forms, procedures, devices used by the Company, its
subsidiaries, suppliers and customers with which the Company had dealt with
prior to Employee's termination of employment with the Company and its
subsidiaries, plans for development of new products, services and expansion into
new areas or markets, internal operations, and any trade secrets, proprietary
information of any type owned by the Company and its subsidiaries, together with
all written, graphic and other materials relating to all or any part of the
same.

                  Employee acknowledges that there is no general geographical
restriction contained in this Section 6d) because the Company's business is not
confined to one geographical area and is national in scope. Notwithstanding the
foregoing, if a court of competent jurisdiction were to determine that any of
the foregoing covenants would be held to be unreasonable in time or distance or
scope, the time or distance or scope may be reduced by appropriate order of the
court to that deemed reasonable.



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         e) INJUNCTIVE RELIEF.

                  i) Employee acknowledges and agrees that the covenants and
obligations contained in this Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of this Section 6
will cause the Company irreparable injury for which adequate remedies at law are
not available. Therefore, Employee agrees that the Company shall be entitled
(without having to post a bond or other surety) to an injunction, restraining
order, or other equitable relief from any court of competent jurisdiction,
restraining the Employee from committing any violation of the covenants and
obligations set forth in this Section 6.

                  ii) The Company's rights and remedies under this Section 6 are
cumulative and are in addition to any other rights and remedies the Company may
have pursuant to the specific provisions of this Agreement and at law or in
equity.

7. MISCELLANEOUS.

         a) ATTORNEY'S FEES. Except as provided in Section 5g), in the event a
proceeding is brought to enforce or interpret any part of this Agreement or the
rights or obligations of any party to this Agreement, each party shall pay their
own fees and expenses, including reasonable attorney's fees and costs, unless a
court or arbitrator determines otherwise.

         b) SUCCESSORS AND ASSIGNS. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Company and the Employee,
and the Employee's heirs and legal representatives, and the Company's successors
and assigns.

         c) GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the law of the State of Florida, without regard to the
application of principles of conflict of laws.

         d) NOTICES. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company at its then principal office, as notified to Employee, or to the
Employee at his most current address as shown in his personnel file, or to
either party hereto at such other address or addresses as he or it may from time
to time specify for such purposes in a notice similarly given.

         e) MODIFICATION; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by a duly authorized officer of the Company and is agreed to in a
writing signed by the Employee and such officer. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

         f) COMPLETE UNDERSTANDING. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.



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         g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.

         h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

         i) SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and if any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall be declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, or section or sections had not been inserted.

         j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         k) Any portion of this Agreement which by it nature survives the
termination of this Agreement, including without limitation Section 6, shall
survive the termination of this Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.

PROXYMED, INC.                         EMPLOYEE:



By: /s/ Michael K. Hoover              By: /s/ A. Thomas Hardy
    --------------------------------       ------------------------------------
    Signature                              Signature


Print Name: Michael K. Hoover          Print Name: A. Thomas Hardy
            ------------------------               -----------------------------




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