================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                         -------------------------------

                         Commission File Number 0-26816

                             IDX SYSTEMS CORPORATION
             (Exact name of registrant as specified in its charter)

              VERMONT                                   03-0222230
       (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)              Identification No.)

                               1400 SHELBURNE ROAD
                           SOUTH BURLINGTON, VT 05403

                    (Address of principal executive offices)

         Registrant's telephone number, including area code: (802-862-1022)

         Indicate  by check mark  whether the  registrant  has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports).

                             Yes   X           No
                                 -----            -----

         Indicate by check mark whether the  registrant has been subject to such
filing requirements for the past 90 days.

                             Yes   X           No
                                 -----            -----

                  The number of shares  outstanding of the  registrant's  common
stock as of May 8, 2000 was 28,019,989.

================================================================================

                        [Exhibit index begins on Page 24]


<PAGE>



                             IDX SYSTEMS CORPORATION
                                    FORM 10-Q
                  For the Quarterly Period Ended March 31, 2000

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


PART I.   FINANCIAL INFORMATION                                            PAGE
                                                                           ----
<S>       <C>                                                              <C>

   ITEM 1.   INTERIM FINANCIAL STATEMENTS..................................3
      Condensed Consolidated Balance Sheets................................3
      Consolidated Statements of Operations................................4
      Condensed Consolidated Statements of Cash Flows......................5
      Notes to Condensed Consolidated Financial Statements.................6

  ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS......................................10


PART II. OTHER INFORMATION

   ITEM 1.  LEGAL PROCEEDINGS..............................................22
   ITEM 2.  CHANGES IN SECURITIES..........................................22
   ITEM 3.  DEFAULTS UPON SENIOR SECURITIES................................22
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............22
   ITEM 5.  OTHER INFORMATION..............................................22
   ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K...............................22


SIGNATURES.................................................................23


EXHIBIT INDEX..............................................................24
</TABLE>


                                  Page 2 of 24


<PAGE>


PART I.   FINANCIAL INFORMATION

ITEM 1.   INTERIM FINANCIAL STATEMENTS

                             IDX SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                         MARCH 31,         DECEMBER 31,
                                           2000                1999
                                     -----------------    ----------------
                                       (UNAUDITED)          (AUDITED)
<S>                                  <C>                  <C>

ASSETS

Cash and marketable securities       $ 95,216             $  68,359
Accounts receivable, net              100,960               110,759
Income taxes receivable                 3,610                     -
Other current assets                    7,295                 5,352
Deferred tax asset                      7,795                 7,691
                                     -----------------    ----------------
Total current assets                  214,876               192,161

Property and equipment, net            60,920                58,265
Other assets                           12,778                17,521
Deferred tax asset                      3,173                 3,200
                                    -----------------     ----------------
Total assets                        $ 291,747             $ 271,147
                                    =================     ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
  and other liabilities             $  32,059             $  37,970
Deferred revenue                       17,765                17,459
                                    -----------------     ----------------
Total current liabilities              49,824                55,429

Minority interest                       9,050                 9,204
Stockholders' equity                  232,873               206,514
                                    -----------------     ----------------

Total liabilities and stockholders'
  equity                            $ 291,747             $ 271,147
                                    =================     ================
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements
                  Restated for Comparison Purposes - See Note 1

                                  Page 3 of 24


<PAGE>


                             IDX SYSTEMS CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED
                                                        MARCH 31,
                                                  2000            1999
                                                ----------------------------
<S>                                             <C>             <C>

REVENUES

   Systems sales                                $ 21,650        $ 22,851
   Maintenance and service fees                   55,072          46,799
                                                -------------   ------------

TOTAL REVENUES                                    76,722          69,650

OPERATING EXPENSES

   Cost of sales                                  55,160          48,803
   Selling, general and administrative            18,345          19,989
   Research and development                       12,186          13,765
   Write off of goodwill                           5,810               -
                                                -------------   ------------
TOTAL OPERATING EXPENSES                          91,501          82,557
                                                -------------   ------------
OPERATING LOSS                                   (14,779)        (12,907)

Other income                                      (1,123)           (471)
Loss on impairment of investment                       -           1,642
                                                -------------   ------------

Loss before taxes                                (13,656)        (14,078)

Income tax benefit                                (3,157)         (5,500)
                                                -------------   ------------

NET LOSS                                       $ (10,499)       $ (8,578)
                                               ==============   ============

BASIC AND DILUTED NET LOSS PER SHARE           $   (0.38)       $  (0.31)
                                               ==============   ============
Basic and diluted weighted average
  shares outstanding                              27,957          27,654
                                               ==============   ============
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements
                  Restated for Comparison Purposes - See Note 1

                                  Page 4 of 24


<PAGE>


                             IDX SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                             MARCH 31,
                                                    2000              1999
                                                    -------           -------
<S>                                                 <C>               <C>

OPERATING ACTIVITIES
Net loss                                            $ (10,499)        $ (8,578)
Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation                                        3,734            3,285
    Amortization                                          137               65
    Deferred tax benefit, net of business
      acquisitions                                        (77)               -
    Increase in allowance for doubtful accounts           328              356
    Write-off of goodwill                               5,810                -
    Minority interest                                     246              271
    Loss on impairment of investment                        -            1,642
    Changes in operating assets and liabilities,
      net of business acquisitions:
       Accounts receivable                              9,471           11,951
       Prepaid expenses and other assets               (2,143)          (4,990)
       Accounts payable and accrued expenses           (6,075)            (888)
       Federal and state taxes payable                 (3,411)          (5,429)
       Deferred revenue                                   306           (2,181)
                                                     ---------        ---------

          Net cash used in operating activities        (2,173)          (4,496)

INVESTING ACTIVITIES
Purchase of property and equipment, net                (6,440)          (7,351)
Purchase of securities available-for-sale              (5,095)         (59,179)
Sale of securities available-for-sale                   6,668           78,659
Other assets                                             (916)          (4,200)
                                                     ---------        ---------

          Net cash (used in) provided by
            investing activities                       (5,783)           7,929

FINANCING ACTIVITIES
Proceeds from sale of common stock                      4,667            2,327
Proceeds from debt issuances                                -            3,501
Distribution from affiliates, net                        (400)               -
Principal repayments of debt                                -              374
Proceeds from sale of preferred stock                  32,089                -
                                                     ---------        ---------
          Net cash provided by financing
            activities                                 36,356            6,202
                                                     ---------        ---------

Increase in cash and cash equivalents                  28,400            9,635

Cash and cash equivalents at beginning of period       18,487           11,558
                                                     ---------        ---------
Cash and cash equivalents at end of period             46,887           21,193
Short term investments at end of period                48,329           94,036
                                                     ---------        ---------
Cash and short term investments at end of period     $ 95,216         $115,229
                                                     =========        =========
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements
                  Restated for Comparison Purposes - See Note 1

                                  Page 5 of 24


<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

All  financial  information  for  previously  reported  periods  included in the
accompanying  interim unaudited condensed  consolidated  financial statements of
IDX Systems  Corporation  ("Company"  or "IDX") has been restated to reflect the
combined  operations  of IDX and EDiX  Corporation  ("EDiX")  as a result of the
merger,  more fully described in Note 3, which was accounted for as a pooling of
interests  during the quarter ended June 30, 1999. No adjustments  were required
to  conform  the  financial  reporting  policies  of IDX and  EDiX  for  periods
presented.

The interim unaudited  consolidated  financial  statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission and in accordance with accounting  principles  generally  accepted in
the United States.  Accordingly,  certain  information and footnote  disclosures
normally included in annual financial statements have been omitted or condensed.
In the  opinion  of  management,  all  necessary  adjustments  have been made to
provide a fair  presentation.  The operating  results for the three months ended
March  31,  2000  are not  necessarily  indicative  of the  results  that may be
expected for the year ending December 31, 2000. For further  information,  refer
to the consolidated financial statements and footnotes included in the Company's
latest annual report on Form 10-K.

Note 2 - New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging  Activities" ("SFAS No. 133") as amended
by SFAS No. 137,  which  establishes  accounting  and  reporting  standards  for
derivative  instruments,  including  derivative  instruments  embedded  in other
contracts, (collectively referred to as derivatives) and for hedging activities.
SFAS No. 133 is  effective  for all fiscal  quarters of fiscal  years  beginning
after June 15, 2000. The Company is presently analyzing the impact, if any, that
the adoption of SFAS No. 133 will have on its financial  condition or results of
operations.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) No. 101 "Revenue  Recognition in Financial  Statements."  The SAB
formalizes  positions the staff has  expressed in speeches and comment  letters.
SAB 101 is effective no later than the second fiscal  quarter of the fiscal year
beginning  after  December 15,  1999.  The Company is  presently  analyzing  the
impact,  if any,  that  the  adherence  to the SAB  will  have on its  financial
condition or results of operations.

Note 3 - Business Acquisitions and Related Matters

On April 23,  1999,  the Company  completed  a Merger  with EDiX,  a provider of
medical  transcription  services,  which became a wholly owned subsidiary of the
Company.  The  transaction  was  accounted  for  as a  pooling-of-interests  and
accordingly,  the accompanying financial statements include the accounts of EDiX
for all periods  presented.  In connection with the merger, the Company incurred
approximately $4.0 million of merger and related costs consisting principally of
transaction  costs of $2.4 million,  write-offs  and  adjustments  of long-lived
assets,  principally  noncompatible computer equipment of $1.4 million and other
merger related costs of $0.2 million,  principally  related to integration costs
incurred during the period,  and the termination of leases and other contractual
obligations.

                                  Page 6 of 24

<PAGE>

On April 1, 1999, the Company acquired an 80% interest in Channelhealth, Inc., a
Massachusetts  corporation,  for $6.5 million. The acquisition was accounted for
under the purchase method.

On June 23, 1999, the Company acquired all of the assets of  DietSite.com,  Inc.
for $1.5  million.  DietSite.com  is a website  that  includes  disease-oriented
dietary    information   with   extensive    proprietary   content   on   diets,
vitamins,herbals and nutritionals.  Channelhealth, Inc. and DietSite.com will be
managed and operated with the Company's  other web  technology  initiatives in a
separate  majority-owned  subsidiary.  Channelhealth  will offer three  Internet
channels  that  integrate the core practice  management  systems with  extensive
Internet-based services and clinically valid content.

Channelhealth   Incorporated  has  determined  that  there  has  been  an  asset
impairment  related to  goodwill  acquired in the  purchase  of a  Massachusetts
corporation Channelhealth Inc. in April, 1999. In January 2000, the Company made
the  decision  to seek a  primary  provider  of  content  and  transactions  for
ChannelHealth,  and no longer utilize  certain assets acquired with the purchase
of Channelhealth The Company  recognizes  impairment losses on long-lived assets
when indicators of impairment are present and future undiscounted cash flows are
insufficient to support the assets' recovery.  The amount of the impairment loss
is  recognized  based on an analysis of  discounted  cash flows  estimated to be
derived  from the impaired  asset.  This asset  impairment  has been written off
during the first quarter of 2000 and is reflected as a pre-tax  one-time loss on
impairment of assets of approximately $5.8 million.

Note 4 - Income Taxes

The tax benefit in 2000 is lower than that expected  based on the statutory rate
principally  due to the  non-deductible  nature  of the  write  off of  goodwill
related  to  ChannelHealth.  The 1999 tax  benefit is  slightly  lower than that
expected  based on the  statutory  rate due to the  inclusion  in the  financial
statements,  of the net loss of EDiX  Corporation,  for which no tax benefit was
recognized.

Note 5- Segment Information

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 131,
"Disclosures  about  Segments of an  Enterprise  and Related  Information."  The
Company  adopted SFAS No. 131 effective  with the fiscal year ended December 31,
1998. SFAS No. 131  establishes  standards for reporting  information  regarding
operating  segments  in  annual  financial   statements  and  requires  selected
information  for those  segments to be  presented in interim  financial  reports
issued to  stockholders.  SFAS No. 131 also  establishes  standards  for related
disclosures about major customers,  products and services, and geographic areas.
Operating  segments are  identified as  components of an enterprise  about which
separate discrete financial information is available for evaluation by the chief
operating  decision maker, or decision making group, in making  decisions how to
allocate resources and assess performance. Up to and including the first quarter
of 1999,  the  Company  viewed  its  operations  and  managed  its  business  as
principally one segment, healthcare information solutions that include software,
hardware and related  services.  During the second  quarter of 1999, the Company
acquired two companies that have separate and distinct financial information and
operating  characteristics.  When applicable, the information for the reportable
segments  has been  restated  for the prior year in order to conform to the 2000
presentation.

The  Company's  three  business  units  have  separate   management   teams  and
infrastructures that offer different products and services.  Accordingly,  these
business units have been classified as three  reportable  segments  (information
systems and services,  Internet services and content, and medical  transcription
services).

                                  Page 7 of 24


<PAGE>

Information  Systems  and  Services:  This  reportable  segment  consists of IDX
Systems  Corporation's  healthcare  information solutions that include software,
hardware and related services. IDX solutions enable healthcare  organizations to
redesign  patient  care  and  other  workflow  processes  in  order  to  improve
efficiency and quality.The  principal markets for this segment include physician
groups,  management service  organizations,  hospitals,  and integrated delivery
networks primarily located in the United States.

Internet  Services and Content:  Channelhealth  Incorporated,  a majority  owned
subsidiary,  will  offer  three  Internet  channels  that  integrate  IDX's core
practice   management  systems  with  extensive   Internet-based   services  and
clinically  valid  content.  ChannelHealth  services are available to physicians
through group practices,  hospitals,  integrated  delivery  networks and managed
care organizations.

Medical Dictation and Transcription  Services:  This reportable segment contains
EDiX, a provider of medical transcription  outsourcing  services.  The principal
markets for this segment  include  hospitals and large physician group practices
primarily located in the United States.

The  accounting  policies  of the  reportable  segments  are the  same as  those
described in Note 1 of the Notes to Consolidated  Financial  Statements included
in the company's  annual report.  The Company  evaluates the  performance of its
operating segments based on revenue and operating income.  Intersegment revenues
are immaterial. No one customer accounts for greater than 10% of revenue for any
reportable  segment,  with the exception of EDiX. EDiX's revenues from one major
customer  amounted to 10.0% and 0.0% of EDiX's  total  revenue  during the three
months ended March 31, 2000 and March 31, 1999, respectively.

Summarized financial information concerning the Company's reportable segments is
shown in the following table (in thousands):
<TABLE>
<CAPTION>

                               IDX
                               HEALTHCARE
                               INFORMATION
                               SYSTEMS AND  CHANNELHEALTH
                               SERVICES     INCORPORATED     EDIX      TOTAL
                               -------------------------------------------------
<S>                            <C>          <C>              <C>       <C>

FOR THE THREE MONTHS
  ENDED MARCH 31, 2000

Net operating revenues         $ 58,825      $ 1,219         $ 16,678  $ 76,722
Operating income (loss)          (4,836)     (10,793)             850   (14,779)
Identifiable operating assets   234,200       37,374           20,173   291,747

FOR THE THREE MONTHS
   ENDED MARCH 31, 1999

Net operating revenues         $ 60,181           -          $ 9,469   $ 69,650
Operating loss                  (11,866)          -           (1,041)   (12,907)
Identifiable operating assets   267,600           -           10,962    278,562
</TABLE>


Corporate headquarters assets are included in IDX Healthcare Information Systems
and Services.  Substantially  all of the Company's  operations are in the United
States.  The  financial  information  disclosed  herein  represents  all  of the
material  financial  information  related to the Company's  principal  operating
segments.

                                  Page 8 of 24

<PAGE>

Note 6 - Earnings Per Share Information

The  following  sets forth the  computation  of basic and diluted  earnings  per
share:
<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                            MARCH 31,
                                                     2000             1999
                                                   ---------------------------
   <S>                                              <C>               <C>

   Numerator:
     Net loss                                        $ (10,499)       $ (8,578)
                                                     ----------       ----------
   Numerator for basic and diluted loss per share    $ (10,499)       $ (8,578)

   Denominator:
     Denominator for basic loss per share
     Weighted-average shares                            27,957          27,654
     Effect of employee stock options                       -                -
                                                     ----------       ----------

   Denominator for diluted loss per share               27,957          27,654
                                                     ----------       ----------
   Basic and diluted loss per share                  $   (0.38)       $  (0.31)
                                                     ==========       ==========
</TABLE>



                                  Page 9 of 24

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

The Company reported a net loss of $10.5 million,  or ($0.38) per diluted share,
for the first  quarter  of 2000 as  compared  to a net loss of $8.6  million  or
($0.31) per diluted share, for the first quarter of 1999.

Excluding  nonrecurring  expenses for the write-off of goodwill  associated with
Channelhealth, Inc., the Company reported a net loss of $4.9 million, or ($0.17)
per share, for the first three months of 2000. Excluding  nonrecurring  expenses
in the prior year related to the  impairment  of an  investment of $1.6 million,
the net loss for the three  months  ended  March 31,  1999 was $7.7  million  or
($0.28) per diluted share.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

REVENUES
The Company's total revenues  increased to $76.7 million during the three months
ended March 31, 2000 from $69.6 million in the corresponding  period in 1999, an
increase of $7.1  million or 10.2%.  Revenues  from systems  sales  decreased to
$21.7  million  during the three  months  ended  March 31,  2000 (28.2% of total
revenues)   compared  to  $22.9  million  (32.8%  of  total   revenues)  in  the
corresponding period in 1999, a decrease of $1.2 million or (5.3%). The decrease
was  primarily  due to a reduction  in hardware  sales  related to IDX  systems.
Revenues from maintenance and service fees increased to $55.1 million during the
three months ended March 31, 2000 (71.8% of total  revenues)  from $46.8 million
(67.2% of total  revenues) in the  corresponding  period in 1999, an increase of
$8.3 million or 17.7%.  The increase in revenues  from  maintenance  and service
fees is primarily due to increased  transcription  service fee revenue from EDiX
combined  with an  increase  due to  maintenance  revenue  resulting  from price
increases  and  annualization  of  1998  growth  in the  Company's  IDX  systems
installed client base.

During  1999,  certain of the  Company's  customers  delayed  making  purchasing
decisions with respect to certain of the Company's software systems comprised of
multiple products resulting in longer sales cycles for such systems.  Management
believes  such  delays  are  due to a  number  of  factors,  including  customer
organizational  changes,  government  approvals,  pressures to reduce  expenses,
product complexity,  competition,  and customer preoccupation with internal Year
2000 issues.  In February  2000,  the Company  announced that weakness in system
sales experienced in the fourth quarter of 1999 was expected to continue through
the first half of 2000. The Company expects that the factors described above and
especially the healthcare  industry's  Year 2000 focus will cause  reductions or
delays in  spending  for new  systems  and  services  in the first half of 2000.
Accordingly,  the Company expects that it will experience deferrals or delays in
sales of software  and related  services,  professional  services,  and hardware
during the first half of 2000.

COST OF SALES
The cost of sales and  services  increased  to $55.2  million  during  the three
months ended March 31, 2000 from $48.8  million in the  corresponding  period in
1999,  an increase of $6.4  million or 13.0%.  The increase in cost of sales and
services  resulted from growth in client services  expenses,  including  medical
transcription costs, maintenance, installation, and consulting staff. The gross

                                  Page 10 of 24

<PAGE>

profit  margin on systems  sales and  services  decreased to 28.1% in during the
first  quarter of 2000 from 29.9% in the same  period in 1999.  The  decrease in
gross profit margin as a percentage of sales was due to the decrease in software
license  revenues,  which  provide a higher  gross profit  margin,  offset by an
increase in maintenance  and service  revenue which provide a lower gross profit
margin.  IDX's core  business,  information  systems and services,  gross profit
margin as a  percentage  of sales  declined  to 32.3% in 2000 from 33.6% for the
same period  in1999 due to the effect of the revenue mix  described  above.  The
gross  profit  margin for the  Company's  medical  dictation  and  transcription
business segment (EDiX) increased as a percentage of sales to 18.0% in 2000 from
6.7% in 1999 due to an increase in utilization of a new transcription processing
system,  which provides a higher margin, as compared to the prior year, combined
with  other  efficiencies  in  editing  and  telecommunications.   Channelhealth
experienced  a negative  gross margin of 34.6% during the first  quarter of 2000
primarily due to higher fixed costs relative to sales volume.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses decreased to $18.3 million during
the  three  months  ended  March  31,  2000  from  $20.0   million   during  the
corresponding  period  in  1999,  a  decrease  of $1.6  million  or  8.2%.  As a
percentage  of total  revenues,  selling,  general and  administrative  expenses
decreased  to 23.9%  during the three months ended March 31, 2000 from 28.7% for
the  same  period  in  1999.  The  decrease  in  total   selling,   general  and
administrative  expenses  during  the three  months  ended  March  31,  2000 was
primarily due to a reduction in outside consulting services expense.  IDX's core
business selling,  general and  administrative  expenses  decreased $5.1 million
primarily due to the transfer of expenses to the new subsidiary Channelhealth of
approximately $3.1 million. EDiX's selling,  general and administrative expenses
increased  $414,000 or 28.6% during the first quarter of 2000 as compared to the
same period in the prior year primarily due to increased  costs to support sales
growth.  Channelhealth's  selling, general and administrative expenses were $3.1
million  during the first  quarter of 2000 which  includes  sales and  marketing
expenses and administrative start up expenses.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  decreased to $12.2 million during the three
months ended March 31, 2000 from $13.8  million in the  corresponding  period in
1999,  a decrease of $1.6 million or 11.5%.  The decrease is primarily  due to a
reduction in the costs of efforts to address  Year 2000 issues.  As a percentage
of total  revenues,  research  and  development  expenses  decreased to 15.9% of
revenue  for the first  quarter  of 2000  compared  to 19.8% for the  comparable
period in 1999. IDX's core business research and development  expenses decreased
$3.2 million due to the transfer of  approximately  $1.5 million of research and
development  costs  to  the  Internet  services  and  content  business  segment
(ChannelHealth),  combined  with the  reduction  in costs to  address  Year 2000
issues.   Research  and   development   costs  in  the  medical   dictation  and
transcription  business  segment (EDiX)  increased from $217 thousand in 1999 to
$277 thousand in 2000.

WRITE-OFF OF GOODWILL
Channelhealth   Incorporated  has  determined  that  there  has  been  an  asset
impairment  related to  goodwill  acquired in the  purchase  of a  Massachusetts
corporation Channelhealth Inc. in April, 1999. In January 2000, the Company made
the  decision  to seek a  primary  provider  of  content  and  transactions  for
ChannelHealth,  and no longer utilize  certain assets acquired with the purchase
of  Channelhealth.  This asset  impairment has been written off during the first
quarter of 2000 and is reflected as a pre-tax  one-time  loss on  impairment  of
assets of approximately $5.8 million.

                                  Page 11 of 24

<PAGE>

INTEREST AND OTHER INCOME
Interest income was approximately  $1.4 million during the first quarter of 2000
and 1999.  Interest expense  decreased  approximately  $637,000 during the first
quarter  of 2000 as  compared  to the same  period in the prior  year due to the
payment of all outstanding debt of EDiX during the second quarter of 1999.

LOSS ON IMPAIRMENT OF INVESTMENT
Other  expense  included the  write-off of an  investment of $1.6 million in the
quarter ended March 31, 1999 due to the investee's inability to raise additional
equity and a decision to dissolve the business.

INCOME TAXES
Income  taxes for the quarter  ended March 31, 2000 were  benefited at 23.2% The
tax  benefit in 2000 is lower than that  expected  based on the  statutory  rate
principally  due to the  non-deductible  nature  of the  write  off of  goodwill
related to ChannelHealth. Income taxes for the quarter ended March 31, 1999 were
benefited  at 39.1% The 1999 tax  benefit is lower than the  expected  statutory
rate due to the inclusion in the financial  statements,  of the net loss of EDiX
Corporation,  for which no tax benefit was  recognized.  Excluding the impact of
the write-off of goodwill that is  non-deductible  for income tax purposes,  the
Company  anticipates  an  effective  tax  rate of  approximately  38.0%  for the
remainder  of the year ending  December  31,  2000.  Net  deferred tax assets of
approximately  $11 million are expected to be realized  principally  by reducing
future taxable income.

LIQUIDITY AND CAPITAL RESOURCES
Since its inception in 1969, the Company  principally has funded its operations,
working capital needs and capital  expenditures  primarily from operations.  The
proceeds from its initial public  offering were (i)  distributed to stockholders
of the Company in connection with the Company's prior status as an S corporation
under the Internal  Revenue Code of 1986, as amended,  and (ii) used for general
corporate  purposes,  including working capital purposes as needed and strategic
transactions, including acquisitions of businesses, products and technologies.

Cash flows from  operations are  principally  comprised of net income (loss) and
depreciation  and are  primarily  affected  by the net  effect of the  change in
accounts receivable, accounts payable and accrued expenses. Due to the nature of
the  Company's  business,  accounts  receivable,  deferred  revenue and accounts
payable  fluctuate  considerably  due to, among other things,  the length of the
sales cycle and  installation  efforts which are dependent  upon the size of the
transaction,  the changing business plans of the customer,  the effectiveness of
customers'  management and general economic  conditions.  During the first three
months of 2000 accounts  receivable  from  customers  were  collected on average
within 120 days which is consistent  with the 1999 average of 119 days. The 1999
average  represented  an  increase  of 13 days from the  prior  year in terms of
average days to collect  receivables  from customers.  The increase is partially
attributable to unbilled  receivables  related to contracts  accounted for using
long term contract  accounting  combined with a lengthening of customer  payment
patterns.

Cash flows related to investing activities have historically been related to the
purchase of  computer  and office  equipment,  leasehold  improvements,  and the
purchase and sale of investment grade marketable securities. The Company expects
these activities to continue. Investing activities may also include purchases of
interests in, loans to and acquisitions of complementary products,  technologies
and  businesses.  There can be no  assurance  that the  Company  will be able to
successfully complete any such purchases or acquisitions in the future.

Cash flows from financing activities  historically relate to purchases of common
stock through the exercise of employee stock options and in connection  with the
employee  stock  purchase  plan.  During  1999,  all  outstanding  debt  of EDiX
Corporation was paid.

                                  Page 12 of 24


<PAGE>

Cash, cash  equivalents  and marketable  securities at March 31, 2000 were $95.2
million,  an increase of $26.9 million from December 31, 1999.  The increase was
primarily due to the issuance of preferred stock of Channelhealth  Incorporated,
a majority owned  subsidiary  incorporated  in Delaware to Pequot Private Equity
for $30 million for an equity interest in Channelhealth of approximately 9%. The
Company  has a  revolving  line of credit  with a bank  allowing  the Company to
borrow up to $5.0 million bearing interest at the prime rate that will expire on
June 30, 2000. There were no borrowings as of March 31, 2000.

The Company expects that its requirements for office facilities and other office
equipment will grow as staffing  requirements  dictate.  The Company's operating
lease  commitments  consist  primarily  of  office  leasing  for  the  Company's
operating  facilities.  In April 2000, the Company  entered into a new operating
lease for office space in Seattle Washington  commencing in 2003 for a period of
12  years.  The  Company  plans  to  continue   increasing  the  number  of  its
professional  staff during 2000 to meet anticipated  sales volume and to support
research and development  efforts.  To the extent necessary to support increases
in staffing, the Company may obtain additional office space.

The Company is currently  negotiating to acquire the Company's  headquarters  in
South  Burlington,  Vermont for  approximately  $15 million  from BDP Realty,  a
related  entity  which  is  included  in the  Company's  consolidated  financial
statements.  The Company  started  construction on an expansion of its corporate
headquarters  facility in South  Burlington,  Vermont,  in November 1999, and is
considering  various options for financing  including a construction  loan, sale
lease-back arrangement or funding from operations.  The Company anticipates that
it will spend  approximately $16 million on construction to expand its Corporate
Headquarters facility.  From time to time, based on the Company's  requirements,
the Company may consider other purchases of additional land or the  construction
of additional office space.

The Company believes that current  operating funds will be sufficient to finance
its operating  requirements  at least through the next twelve  months.  To date,
inflation has not had a material impact on the Company's revenues or income.

YEAR 2000
In prior years,  the Company  discussed  the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company  completed its remediation and
testing of its internal use systems  (both  information  technology  related and
non-information  technology  related)  and its products  (including  third party
products   included  in  its  products)  and  also  completed  and   implemented
contingency  planning.  As a result of those efforts, the Company experienced no
significant disruptions in its products (including third party products included
in its products),  internal use information technology systems, and internal use
non-information  technology  systems,  and the  Company  believes  all of  those
systems successfully  responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues,  either with its
products,  its internal systems,  or the products and services of third parties.
In the first  quarter  to this  year,  the  Company  expensed  most of its total
remaining project costs of approximately  $2.1 million,  which related primarily
to contingency plans and remediation  efforts for internal systems.  The Company
will continue to monitor its products  (including third party products  included
in its  products),  mission  critical  computer  applications,  and those of its
suppliers  and vendors  throughout  the Year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly.

FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING FUTURE PERFORMANCE

This  Management  Discussion and Analysis of Financial  Condition and Results of
Operations  contains  "forward-looking  statements" as defined in Section 21E of
the Securities and Exchange Commission Act of 1934. For this

                                  Page 13 of 24

<PAGE>

purpose,  any  statements  contained  in  this  Quarterly  Report  that  are not
statements of historical  fact may be deemed to be  forward-looking  statements.
Words such as "believes,"  "anticipates," "plans," "expects," "will" and similar
expressions  are intended to identify  forward-looking  statements.  There are a
number of  important  factors  that  could  cause  the  results  of IDX  Systems
Corporation to differ  materially from those indicated by these  forward-looking
statements  including among others,  the factors set forth below. If any risk or
uncertainty identified in the following factors actually occurs, IDX's business,
financial  condition and operating  results would likely suffer.  In that event,
the market price of IDX's  common stock could  decline and you could lose all or
part of the money you paid to buy IDX's common stock.

The following  important factors affect IDX's business and operations  generally
or affect more than one segment of our business and operations:

IDX STOCK PRICES MAY CONTINUE TO BE VOLATILE.  IDX has experienced,  and expects
to continue to  experience  fluctuations  in its stock price due to a variety of
factors including:

o        delay in customers purchasing decisions due to a variety of factors
         such as consolidation, management changes and regulatory
         developments;
o        market prices of competitors;
o        announcements of technological innovations, including Internet delivery
         of information and use of application service
         provider technology;
o        new product introductions by IDX or its competitors;
o        market conditions particularly in the computer software and Internet
         industries; and
o        healthcare reform measures and healthcare regulation.

These  fluctuations  have had a  significant  impact on the market  price of our
common stock,  and may have a  significant  impact on the future market price of
our common stock.

THESE FLUCTUATIONS MAY AFFECT OPERATING RESULTS AS FOLLOWS:

o        ability to transact stock acquisitions ; and
o        ability to retain and incent key employees.

ADVERSE FINANCIAL TRENDS INCLUDING DECLINING NET INCOME AND CASH FROM OPERATIONS
HAVE AND MAY CONTINUE.  Year over year net income and cash from  operations have
generally  declined  since  1998.  In 1999,  and the first  quarter  of 2000 IDX
generated  a  net  loss  of  approximately   $7.9  million  and  $10.5  million,
respectively.  If  these  negative  trends  continue,  IDX may  have  difficulty
financing  future growth and funding  operating  initiatives,  including  future
acquisitions.

IDX EXPECTS ITS QUARTERLY  OPERATING RESULTS TO FLUCTUATE AND ITS CUSTOMER SALES
AND INSTALLATION  REQUIREMENTS TO CHANGE.  IDX expects its quarterly  results of
operations to continue to fluctuate.  Because a significant  percentage of IDX's
expenses  are  relatively   fixed,  the  following  factors  could  cause  these
fluctuations:

o delay in customers  purchasing  decisions  due to a variety of factors such as
consolidation and management changes; o delay in customers' purchasing decisions
due to customers'  year 2000 problems;  o the volume and timing of systems sales
and  installations;   o  recognizing   revenue  at  various  points  during  the
installation  process; o the timing of new product and service introductions and
product upgrade  releases;  and o the sales and  implementation  cycles of IDX's
customers.

                                  Page 14 of 24
<PAGE>

In light of the above,  IDX  believes  that its  results of  operations  for any
particular  quarter or fiscal year are not  necessarily  meaningful  or reliable
indicators of future performance.

IDX MAY NOT BE SUCCESSFUL IN IMPLEMENTING ITS ACQUISITION STRATEGY.  IDX intends
to  continue  to grow in  part  through  either  acquisitions  of  complementary
products,   technologies   and  businesses  or  alliances   with   complementary
businesses.  IDX may not be successful in these acquisitions or alliances, or in
integrating  any such acquired or aligned  products,  technologies or businesses
into its current business and operations. Factors which may affect IDX's ability
to expand successfully include:

o    the generation of sufficient financing to fund potential  acquisitions  and
     alliances;

o    the  successful  identification  and acquisition of products, technologies
     or businesses;

o    effective integration and operation of the  acquired  or aligned  products,
     technologies  or  businesses despite technical difficulties, geographic
     limitations and personnel issues; and

o    overcoming   significant   competition   for   acquisition   and   alliance
     opportunities from companies that have s ignificantly greater financial and
     management resources.

IDX'S SUCCESS  DEPENDS ON NEW PRODUCT  DEVELOPMENT AND ITS ABILITY TO RESPOND TO
RAPIDLY  CHANGING  TECHNOLOGY.  To be successful,  IDX must enhance its existing
products,  respond  effectively to technology changes and help its clients adopt
new technologies.  In addition, IDX must introduce new products and technologies
to meet the evolving needs of its clients in the healthcare  information systems
market. IDX may have difficulty in accomplishing this because of:

o        the continuing evolution of industry standards, for example,
         transaction standards pursuant to the Health Insurance
         Portability and Accountability Act of 1996 (HIPAA); and
o        the creation of new technological developments, for example, Internet
        and application service provider technology.

IDX is  currently  devoting  significant  resources  toward the  development  of
enhancements   to  its   existing   products,   particularly   in  the  area  of
Internet-based  functionality  and the  migration  of  existing  products to new
hardware and  software  platforms,  including  relational  database  technology,
object-oriented   programming  and  application  service  provider   technology.
However,  IDX may not  successfully  complete these product  developments or the
adaptation in a timely  fashion,  and IDX's  current or future  products may not
satisfy the needs of the healthcare  information  systems  market.  Any of these
developments  may  adversely  affect  IDX's  competitive  position or render its
products or technologies noncompetitive or obsolete.

POLITICAL,  ECONOMIC AND REGULATORY  CHANGES AND CONSOLIDATION IN THE HEALTHCARE
INDUSTRY  MAY  CAUSE  IDX  TO  SUFFER   FINANCIALLY.   IDX   currently   derives
substantially  all of its revenues from sales of financial,  administrative  and
clinical  healthcare   information  systems  and  related  services  within  the
healthcare industry. As a result, the success of IDX is dependent in part on the
political and economic conditions in the healthcare industry.

Virtually  all of IDX's  customers  and the other  entities with which IDX has a
business  relationship  operate in the healthcare industry and, as a result, are
subject to governmental regulation,  including Medicare and Medicaid regulation.
Accordingly,  IDX's  customers  and the  other  entities  with  which  IDX has a
business   relationship   are  affected  by  changes  in  such  regulations  and
limitations in governmental spending for Medicare and Medicaid programs.  Recent
actions by Congress  have  limited  governmental  spending  for the Medicare and
Medicaid programs,  limited payments to hospitals and other providers under such
programs,  and  increased  emphasis  on  competition  and  other  programs  that
potentially  could  have an  adverse  effect  on IDX's  customers  and the other
entities with which IDX has a business  relationship.  In addition,  Federal and
state legislatures have considered

                                  Page 15 of 24
<PAGE>

proposals  to reform the U.S.  healthcare  system at both the  federal and state
level.  If enacted,  these proposals  could increase  government  involvement in
healthcare,   lower  reimbursement  rates  and  otherwise  change  the  business
environment  of IDX's  customers  and the other  entities  with  which IDX has a
business relationship. IDX's customers and the other entities with which IDX has
a business  relationship  could  react to these  proposals  and the  uncertainty
surrounding  these proposals by curtailing or deferring  investments,  including
those for IDX's products and services.

In addition,  many healthcare  providers are  consolidating to create integrated
healthcare  delivery systems with greater market power.  These providers may try
to use their market power to negotiate  price  reductions for IDX's products and
services.  If IDX were forced to reduce its prices,  its operating margins would
decrease.  As the healthcare  industry  consolidates,  competition for customers
will become more intense and the  importance  of acquiring  each  customer  will
become greater.

THERE IS INTENSE  COMPETITION IN THE MARKET FOR HEALTHCARE  INFORMATION  SYSTEMS
AND IF IDX FAILS TO COMPETE SUCCESSFULLY, IT WILL SUFFER FINANCIALLY. The market
for healthcare  information systems is intensely  competitive,  rapidly evolving
and subject to rapid  technological  change.  IDX  believes  that the  principal
competitive factors in this market include the breadth and quality of system and
product  offerings,  the features and capabilities of the systems,  the price of
system and product  offerings,  the ongoing  support  for the  systems,  and the
potential for enhancements and future compatible products.

Some  of the  IDX's  competitors  have  greater  financial,  technical,  product
development, marketing and other resources than IDX, and some of its competitors
offer  products  that  it does  not  offer.  The  Company's  principal  existing
competitors include Cerner  Corporation,  Eclipsys  Corporation,  McKesson HBOC,
Inc. and Shared  Medical  Systems  Corporation,  each of which offers a suite of
products that compete with many of IDX's products.  There are other  competitors
that  offer  a  more  limited  number  of  competing  products.  Many  of  IDX's
competitors  have also  announced or introduced  Internet  strategies  that will
compete with IDX's  Internet  applications  and  services.  IDX may be unable to
compete successfully against these organizations.  In addition, IDX expects that
major software  information  systems  companies,  large  information  technology
consulting  service providers and system  integrators,  Internet-based  start-up
companies  and  others   specializing  in  the  healthcare  industry  may  offer
competitive products or services.

IDX MAY BE FACED WITH PRODUCT LIABILITY CLAIMS EXCEEDING ITS INSURANCE COVERAGE.
Any failure by IDX's  products  that  provide  applications  relating to patient
medical  histories  and  treatment  plans could expose IDX to product  liability
claims.  These  potential  claims may exceed IDX's current  insurance  coverage.
Unsuccessful  claims  could be costly to defend and divert  management  time and
resources.  In  addition,  IDX cannot  assure you that it will  continue to have
appropriate  insurance available to it in the future at commercially  reasonable
rates.

IDX'S SUCCESS IS SIGNIFICANTLY DEPENDENT ON KEY PERSONNEL. The success of IDX is
dependent to a significant degree on its key management,  sales, marketing,  and
technical  personnel.  To be successful  IDX must  attract,  motivate and retain
highly skilled managerial, sales, marketing, consulting and technical personnel,
including programmers,  consultants, systems architects skilled in the technical
environments in which IDX's products operate.  Competition for such personnel in
the  software  and  information  services  industries  is intense.  IDX does not
maintain "key man" life insurance policies on any of its executives. Not all IDX
personnel have executed noncompetition agreements.

GOVERNMENT REGULATION MAY IMPOSE BURDENS AND COSTS ON IDX'S OPERATIONS.
Virtually  all of IDX's  customers  and the other  entities with which IDX has a
business  relationship  operate in the healthcare industry and, as a result, are
subject to  governmental  regulation.  Because  IDX's  products and services are
designed  to function  within the  structure  of the  healthcare  financing  and
reimbursement systems currently in place in the

                                  Page 16 of 24

<PAGE>

United  States,  and  because  IDX is  pursuing a  strategy  of  developing  and
marketing  products and  services  that support its  customers'  regulatory  and
compliance efforts, IDX may become subject to the reach of, and liability under,
these regulations.

The Federal  Anti-Kickback  Law,  among other  things,  prohibits  the direct or
indirect  payment or receipt of any  remuneration  for  Medicare,  Medicaid  and
certain  other  Federal  or  state  healthcare  program  patient  referrals,  or
arranging for or  recommending  referrals or other business paid for in whole or
in  part  by the  federal  health  care  programs.  Violations  of  the  Federal
Anti-Kickback  Law may  result in civil and  criminal  sanction  and  liability,
including the temporary or permanent  exclusion of the violator from  government
health  programs,  treble damages and imprisonment for up to five years for each
violation. If the activities of a customer of IDX or other entity with which IDX
has a business  relationship were found to constitute a violation of the Federal
Anti-Kickback  Law and IDX, as a result of the provision of products or services
to such customer or entity,  was found to have  knowingly  participated  in such
activities,  IDX could be  subject to  sanction  or  liability  under such laws,
including the exclusion of IDX from government  health programs.  As a result of
exclusion from government health programs,  IDX customers would not be permitted
to make any payments to IDX.

The  Federal  Civil  False  Claims  Act and the  Medicare/Medicaid  Civil  Money
Penalties  regulations  prohibit,  among other things,  the filing of claims for
services  that were not provided as claimed,  which were for services  that were
not medically necessary, or which were otherwise false or fraudulent. Violations
of these laws may result in civil damages,  including treble and civil penalties
up to $11,000 for each false claim filed. In addition the  Medicare/Medicaid and
other  Federal  statutes  provide for criminal  penalties for such false claims,
including  fines of up to  $25,000  and  imprisonment  up to five years for each
offense.  If, as a result of the provision by IDX of products or services to its
customers  or other  entities  with which IDX has a business  relationship,  IDX
provides  assistance with the provision of inaccurate  financial  reports to the
government under these  regulations,  or IDX is found to have knowingly recorded
or  reported  data  relating  to  inappropriate  payments  made to a  healthcare
provider, IDX could be subject to liability under these laws.

HIPAA contains provisions  regarding  standardization,  privacy,  security,  and
administrative  simplification  in healthcare.  As a result of  regulations  now
proposed under HIPAA, IDX will make  investments to support customer  operations
in areas, such as:

o        electronic data transactions;
o        computer system security; and
o        patient privacy.

Although it is not possible to anticipate  the final form of  regulations  under
HIPAA,  IDX has made and  expects to  continue  to make  investments  in product
enhancements  to  support  customer  operations  that are  regulated  by  HIPAA.
Responding to HIPAA's impact may require IDX to make investments in new products
or charge  higher  prices.  It may be expensive  to implement  security or other
measures designed to comply with any new legislation or regulation.

The United States Food and Drug  Administration  has  promulgated a draft policy
for the regulation of computer  software  products as medical  devices under the
1976 Medical  Device  Amendments to the Federal Food,  Drug and Cosmetic Act. To
the extent that computer software is a medical device under the policy,  IDX, as
a manufacturer  of such products,  could be required,  depending on the product,
to:

o       register and list its products with the FDA;
o       notify the FDA and  demonstrate  substantial  equivalence to other
        products on the  market  before  marketing  such  products;  or
o       obtain  FDA  approval  by demonstrating safety and effectiveness before
        marketing a product.

                                  Page 17 of 24
<PAGE>

Depending on the intended use of a device,  the FDA could  require IDX to obtain
extensive data from clinical studies to demonstrate safety or effectiveness,  or
substantial equivalence. If the FDA requires this data, IDX would be required to
obtain  approval  of an  investigational  device  exemption  before  undertaking
clinical trials.  Clinical trials can take extended periods of time to complete.
IDX cannot provide  assurances that the FDA will approve or clear a device after
the completion of such trials.  In addition,  these products would be subject to
the Federal Food,  Drug and Cosmetic  Act's general  controls,  including  those
relating  to good  manufacturing  practices  and adverse  experience  reporting.
Although it is not  possible to  anticipate  the final form of the FDA's  policy
with regard to computer  software,  IDX expects that the FDA is likely to become
increasingly  active  in  regulating  computer  software  intended  for  use  in
healthcare settings regardless of whether the draft is finalized or changed. The
FDA can impose extensive  requirements governing pre- and post-market conditions
like service investigation,  approval, labeling and manufacturing.  In addition,
the FDA can impose extensive  requirements  governing  development  controls and
quality assurance processes.

SYSTEM ERRORS IN IDX'S  HEALTHCARE  INFORMATION  SYSTEMS COULD CAUSE  UNFORESEEN
LIABILITIES.  IDX's  healthcare  information  systems are very complex.  As with
complex  systems offered by others,  IDX's  healthcare  information  systems may
contain errors,  especially when first introduced.  IDX's healthcare information
systems are intended to provide  information to healthcare  providers for use in
the diagnosis and treatment of patients.  Therefore, users of IDX's products may
have a greater  sensitivity  to  system  errors  than the  market  for  software
products generally. Failure of an IDX customer's system to perform in accordance
with its documentation  could constitute a breach of warranty and require IDX to
incur  additional   expense  in  order  to  make  the  system  comply  with  the
documentation.  If such failure is not timely  remedied,  it could  constitute a
material breach under a contract  allowing the client to cancel the contract and
subject IDX to liability.

CLAIMS BY OTHER COMPANIES THAT IDX'S PRODUCTS INFRINGE THEIR PROPRIETARY  RIGHTS
COULD  HINDER  OR BLOCK  IDX'S  ABILITY  TO SELL ITS  PRODUCTS,  SUBJECT  IDX TO
SIGNIFICANT  MONETARY  LIABILITY  AND  DIVERT  THE  TIME  AND  ATTENTION  OF ITS
MANAGEMENT. If any of IDX's products violate third party proprietary rights, IDX
may be required to reengineer its products or seek to obtain licenses from third
parties to continue offering its products without substantial reengineering. Any
efforts to reengineer  IDX's products or obtain  licenses from third parties may
not be  successful,  in  which  case  IDX  may be  forced  to stop  selling  the
infringing  product or remove the infringing  functionality or feature.  IDX may
also become subject to damage awards as a result of infringing  the  proprietary
rights of others,  which could cause IDX to incur additional  losses and have an
adverse  impact on its financial  position.  IDX does not conduct  comprehensive
patent  searches to  determine  whether the  technologies  used in its  products
infringe patents held by others. In addition,  product development is inherently
uncertain in a rapidly evolving technological  environment in which there may be
numerous patent applications pending, many of which are confidential when filed,
with regard to similar technologies.

IDX'S  COMPETITIVE  POSITION  WOULD BE  ADVERSELY  AFFECTED IF IT WERE UNABLE TO
PROTECT  ITS  PROPRIETARY  TECHNOLOGY.  IDX's  success and  competitiveness  are
dependent  to  a  significant  degree  on  the  protection  of  its  proprietary
technology.  IDX relies  primarily on a combination of copyrights,  trade secret
laws and  restrictions  on  disclosure  to protect its  proprietary  technology.
Despite  these  precautions,  others  may be able to  copy or  reverse  engineer
aspects of IDX's  products,  to obtain and use  information  that IDX regards as
proprietary or to independently  develop similar  technology.  Litigation may be
necessary in the future to enforce or defend IDX's proprietary  technology or to
determine  the  validity  and scope of the  proprietary  rights of others.  This
litigation,  whether  successful or  unsuccessful,  could result in  substantial
costs and diversion of management and technical resources.

IDX MAY HAVE  CONFLICTS OF  INTERESTS  WITH SOME OF ITS  EXECUTIVES.  Richard E.
Tarrant,  President,  Chief Executive Officer and Director, and Robert H. Hoehl,
Chairman of the Board of Directors,  indirectly own,  through various  entities,
real estate which IDX leases in connection with its operations. During 1999, IDX
paid an

                                  Page 18 of 24

<PAGE>

aggregate of approximately  $2.1 million in connection with these leases. IDX is
currently  negotiating  to contract to purchase its  headquarters  facilities in
South Burlington,  Vermont from a real estate entity owned by Richard E. Tarrant
and Robert H. Hoehl for a purchase price of approximately $15.0 million. IDX has
commenced a $16 million  construction project to expand its office facilities at
that location. In connection with these arrangements,  the economic interests of
these executives and directors and IDX may diverge.

The  following  important  factors  affect our  Internet  services  and  content
business segment or "ChannelHealth" business:

CHANNELHEALTH'S  LIMITED  OPERATING  HISTORY MAY MAKE IT  DIFFICULT TO VALUE AND
EVALUATE ITS BUSINESS AND FUTURE PROSPECTS.  ChannelHealth  commenced operations
October  1999 and only  recently  commercially  released its first  product.  An
evaluation of the risks and  uncertainties of  ChannelHealth's  business will be
difficult because of  ChannelHealth's  limited operating  history.  In addition,
ChannelHealth's  limited  operating  history means that it has less insight into
how  technological and market trends may affect its business as evidenced by the
writeoff  of  goodwill  of $5.8  million  in the first  quarter of 2000 due to a
change  in  its  content   strategy.   The  revenue  and  income   potential  of
ChannelHealth's  business and market are  unproven,  and its  business  model is
emerging and unproven. ChannelHealth's business and prospects must be considered
in light of the risks and  difficulties  typically  encountered by businesses in
their  early  stages  of  development,  particularly  those  in new and  rapidly
evolving markets such as the Internet healthcare information industry.

CHANNELHEALTH  HAS  INCURRED  SUBSTANTIAL  LOSSES TO DATE AND MAY NOT BE ABLE TO
ACHIEVE OR MAINTAIN  PROFITABILITY.  ChannelHealth  has incurred losses since it
began operations. ChannelHealth incurred a net loss of $8.7 million in the first
quarter of 2000 and a net loss of $5.5  million for the year ended  December 31,
1999, and its accumulated  deficit  through  December 31, 1999 was $5.5 million.
ChannelHealth   cannot  be  certain  if  or  when  it  will  become  profitable.
ChannelHealth's  failure to become profitable  within the timeframe  expected by
IDX  investors  or at all may  adversely  affect the market  price of IDX Common
Stock.  ChannelHealth  expects to continue to increase its expenses in an effort
to develop  its  business  and, as a result,  will need to generate  significant
revenue  to  achieve   profitability.   Even  if   ChannelHealth   does  achieve
profitability,  there can be no  assurance  that  ChannelHealth  can  sustain or
increase profitability on a quarterly or annual basis in the future.

CURRENTLY,  CHANNELHEALTH'S  BUSINESS  DEPENDS ON  INTEGRATING  INTERNET-RELATED
TECHNOLOGY INTO ITS CUSTOMERS'  BUSINESSES,  AND, AS A RESULT, ITS BUSINESS WILL
SUFFER IF USE OF THE INTERNET AS A MEANS FOR COMMERCE  DECLINES.  If commerce on
the Internet does not continue to grow or grows slower than  expected,  the need
for ChannelHealth's  Internet healthcare information products and services could
decline,  resulting  in fewer  projects  and  reduced  revenues.  Consumers  and
businesses may reject the Internet as a viable commercial medium for a number of
reasons, including:

o        actual or perceived lack of security of information;
o        lack of access and ease of use;
o        congestion of Internet traffic or other usage delays;
o        inconsistent quality of service;
o        increase in access costs to the Internet;
o        evolving government regulation;
o        uncertainty regarding intellectual property ownership;
o        costs associated with the obsolescence of existing infrastructure; and
o        economic viability of the Internet commerce model.



                                  Page 19 of 24
<PAGE>

Because of these and other  factors,  past financial  performance  should not be
considered  an  indicator  of  future  performance.  Investors  should  not  use
historical trends to anticipate future results.

The adoption of Internet  solutions by healthcare  participants will require the
acceptance of a new way of conducting business and exchanging  information.  The
healthcare industry, in particular,  relies on legacy systems that may be unable
to benefit from ChannelHealth's  Internet healthcare  information  services.  To
maximize the benefits of ChannelHealth's services,  healthcare participants must
be  willing  to allow  sensitive  information  to be stored  in  ChannelHealth's
databases.  ChannelHealth can process  transactions for healthcare  participants
that maintain  information  on their own  proprietary  databases.  However,  the
benefits of ChannelHealth's  connectivity and sophisticated services are limited
under these circumstances.  Customers using legacy and client-server systems may
refuse  to adopt  new  systems  when they  have  made  extensive  investment  in
hardware, software and training for older systems.

GOVERNMENT   REGULATION   COULD  ADVERSELY  AFFECT   CHANNELHEALTH'S   BUSINESS.
ChannelHealth's  business will be subject to government regulation.  Existing as
well as new laws and regulations  could adversely affect its business.  Laws and
regulations  may be  adopted  with  respect  to the  Internet  or other  on-line
services covering issues such as:

o   user privacy;
o   system security;
o   pricing;
o   content;
o   copyrights;
o   distribution; and
o   characteristics and quality of products and services.

The  applicability  to the  Internet of existing  laws in various  jurisdictions
governing issues such as property  ownership,  sales and other taxes,  libel and
personal  privacy  is  uncertain  and may take  years  to  resolve.  Demand  for
ChannelHealth's   applications  and  services  may  be  adversely   affected  by
additional regulation of the Internet.

IF CHANNELHEALTH SYSTEMS EXPERIENCE SECURITY BREACHES OR ARE OTHERWISE PERCEIVED
TO BE INSECURE,  CHANNELHEALTH'S REPUTATION AND BUSINESS WILL SUFFER. A material
security  breach could damage  ChannelHealth's  reputation,  cause users to lose
confidence in ChannelHealth's systems or result in liability. ChannelHealth will
retain confidential  customer and patient information in its processing centers.
ChannelHealth may be required to spend  significant  capital and other resources
to  protect  against  security  breaches  or to  alleviate  problems  caused  by
breaches. Any well-publicized compromise of Internet security could deter people
from  using  the  Internet  or  from   conducting   transactions   that  involve
transmitting   confidential   information,   including  confidential  healthcare
information.  Therefore, it is critical that these facilities and infrastructure
remain secure and are  perceived by the  marketplace  to be secure.  Despite the
implementation of security  measures,  this  infrastructure may be vulnerable to
physical  break-ins,  computer  viruses,  programming  errors,  attacks by third
parties or similar disruptive problems. Any damage to ChannelHealth's reputation
or loss of user  confidence  as a result of a security  breach  could reduce the
willingness  of patients  and  physicians  to use  ChannelHealth's  products and
services and as a result, adversely affect ChannelHealth's business.

CHANNELHEALTH DEPENDS UPON A SINGLE TRANSACTION SERVICE PROVIDER TO PROVIDE MOST
OF  CHANNELHEALTH'S  TRANSACTION  SERVICES  AND IF THAT  PROVIDER  IS  UNABLE OR
UNWILLING TO PROVIDE  SUCH  SERVICES,  CHANNELHEALTH  MAY NOT BE ABLE TO PROVIDE
SERVICE TO ITS CUSTOMERS. ChannelHealth currently relies on ProxyMed for most of
its  electronic  transaction  services.  ChannelHealth's  reliance  on a  single
provider  of these  services  exposes  ChannelHealth,  and IDX as a reseller  of
ChannelHealth's products and services, to a number of risks, including the

                                  Page 20 of 24


<PAGE>

loss of customer goodwill and possible  liability,  if ProxyMed fails to provide
transaction  services.  If  ProxyMed  is unable or  unwilling  to  provide  such
services to  ChannelHealth  on a timely  basis,  ChannelHealth  may be forced to
engage  additional or  replacement  providers,  which could result in additional
expenses and delays and disruptions in ChannelHealth's service.

PERFORMANCE  PROBLEMS WITH THE SYSTEMS OF CHANNELHEALTH'S  TRANSACTION,  SERVICE
AND CONTENT PROVIDERS COULD HARM  CHANNELHEALTH'S  BUSINESS.  ChannelHealth will
depend on service and content providers to provide  transactions and information
on a timely basis.  ChannelHealth's  Web sites could  experience  disruptions or
interruptions  in service  due to the  failure or delay in the  transmission  or
receipt of this information. In addition,  ChannelHealth's customers will depend
on Internet  service  providers,  online  service  providers  and other Web site
operators for access to our Web sites.  All of these providers have  experienced
significant outages in the past and could experience  outages,  delays and other
difficulties in the future due to system failures  unrelated to  ChannelHealth's
systems. Any significant  interruptions in ChannelHealth's services or increases
in response  time could  result in a loss of  potential  or existing  customers,
strategic partners, advertisers or sponsors and, if sustained or repeated, would
likely reduce the attractiveness of ChannelHealth's services.

                                  Page 21 of 24
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The  Company  is from  time  to time  involved  in  routine  litigation
         incidental to the conduct of its business. The Company believes that no
         such  currently  pending  routine  litigation to which it is party will
         have a material adverse effect on its financial condition or results of
         operations.

ITEM 2.  CHANGES IN SECURITIES

                  None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                  None.

ITEM 5.  OTHER INFORMATION

                  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  The  exhibits  filed as part of this  Form 10-Q are  listed on the  Exhibit
     Index  immediately   preceding  such  exhibits,   which  Exhibit  Index  is
     incorporated herein by reference.

                                  Page 22 of 24

<PAGE>

                                   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 thereunto duly authorized.

                                         IDX SYSTEMS CORPORATION




Date: May 15, 2000                       By:  /S/ JOHN A. KANE
                                              ____________________________
                                              John A. Kane,
                                              Vice President, Finance and
                                              Administration, Chief Financial
                                              Officer and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)
































                                  Page 23 of 24

<PAGE>

                                 EXHIBIT INDEX

         The following  exhibits are filed as part of this  Quarterly  Report on
Form 10-Q:
<TABLE>
<CAPTION>

Exhibit No.    Description                                                 Page
-----------    -----------                                                 ----
<S>            <C>                                                         <C>

10             Series  A  Convertible   Preferred   Stock   Purchase       25
               Agreement by   and   between    Channelhealth
               Incorporated , IDX Systems Corporation and Purchasers
               named on Schedule I dated as of January 10, 2000.

27             Financial Data Schedule                                     151
</TABLE>

                                  Page 24 of 24


<PAGE>

                                                                    EXHIBIT 10


                                                              Draft of 01/06/99

                           CHANNELHEALTH INCORPORATED

                         SERIES A CONVERTIBLE PREFERRED

                            STOCK PURCHASE AGREEMENT

                          Dated as of January 10, 2000


<PAGE>
<TABLE>
<CAPTION>


                                TABLE OF CONTENTS
                                                                          Page
<S>  <C>                                                                  <C>

SECTION 1 AUTHORIZATION AND SALE OF THE SECURITIES........................5
     1.1   Authorization..................................................5
     1.2.  Amended and Restated Certificate of Incorporation..............5
     1.3.  Sale of Securities.............................................5
     1.4.  Use of cash Proceeds...........................................5
SECTION 2 CLOSING DATES; DELIVERIES.......................................5
     2.1.  Closing........................................................5
     2.2.  Deliveries.....................................................6
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................7
     3.1.  Organization and Qualification.................................7
     3.2.  Certificate of Incorporation and Bylaws........................7
     3.3.  Corporate Power................................................7
     3.4.  Subsidiaries...................................................7
     3.5.  Capitalization.................................................7
     3.6.  Authorization..................................................8
     3.7.  Financial Statements...........................................8
     3.8.  Title to Properties and Assets; Insurance......................8
     3.9.  Related-Party Transactions.....................................8
     3.10. Permits; Compliance and with Applicable law....................8
     3.11. Proprietary Rights.............................................9
     3.12. Contracts......................................................9
     3.13. [Reserved].....................................................10
     3.14. Absence of Conflicts...........................................10
     3.15. Litigation.....................................................10
     3.16. Governmental Consent...........................................10
     3.17. Employees......................................................10
     3.18. Tax Returns, Payments, and Elections...........................10
     3.19. Brokers or Finders.............................................10
     3.20. Employee Benefit Plans; Labor..................................10
     3.21. Company Status.................................................11
     3.22. Offering Exemption.............................................11
     3.23. Use of Proceeds................................................11
     3.24. Environmental Matters..........................................11
     3.25. [Reserved].....................................................12
     3.26. Y2K Compliance.................................................12
     3.27. Disclosure.....................................................12
SECTION 4 REPRESENTATIOINS AND WARRANTIES OF IDX..........................12
     4.1.  Organization and Qualification.................................12
     4.2.  Corporate Power; Authorization; Enforceability.................12
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................12
     5.1.  Experience.....................................................13
     5.2.  Investment.....................................................13
     5.3.  Rule 144.......................................................13
     5.4.  No Public Market...............................................13
     5.5.  Access to Data.................................................13
     5.6.  Authorization..................................................13
     5.7.  Brokers or Finders.............................................13
     5.8.  Investor Qualification.........................................13

                                        2

<PAGE>


SECTION 6 RESERVED........................................................14
SECTION 7 RESERVED........................................................14
SECTION 8 POST CLOSING COVENANTS..........................................14
     8.1.  Basic Information Rights.......................................14
     8.2.  Access and Additional Information Rights.......................14
     8.3.  Director and Officer Insurance.................................14
     8.4.  Agreements with Employees......................................14
     8.5.  Board Meetings.................................................14
     8.6.  Use of Proceeds................................................15
     8.7.  Books and Records..............................................15
     8.8   Reservation of Common Stock....................................15
     8.9.  Board of Directors.............................................15
     8.10. ERISA Covenant.................................................15
     8.11. Pequot's Put to IDX............................................15
     8.12. Covenant to Cooperate in Providing Financial Statements........16
     8.13. Opening Balance Sheet..........................................16
     8.14. Documentation of Asset and other Transfers.....................16
     8.15. Settlement and Release of Patent Infringement Suit.............16
     8.16. Termination of Covenants.......................................16
SECTION 9 GENERAL PROVISIONS..............................................16
     9.1.  Governing Law..................................................16
     9.2.  Successors and Assigns; Third Party Beneficiaries..............16
     9.3.  Entire Agreement; Amendment and Waiver.........................16
     9.4.  Survival of Representations, Warranties and Agreements.........16
     9.5.  Notices, etc...................................................17
     9.6.  Delays or Omissions............................................17
     9.7.  References.....................................................17
     9.8.  Severability...................................................17
     9.9.  Pronouns.......................................................17
     9.10. Counterparts; Facsimile Execution..............................17
     9.11. Remedies.......................................................17
     9.12. Certain Definitions............................................17
     9.13. Restrictive Legends............................................18
     9.14  Expenses.......................................................18

</TABLE>
                                        3

<PAGE>


SCHEDULES

Schedule I - Schedule of Purchasers
Disclosure Schedule

EXHIBITS

Exhibit A - Amended and Restated Certificate of Incorporation
Exhibit B - Stockholders' Agreement
Exhibit C - Registration  Rights  Agreement
Exhibit D - Employment,  Non-Competition  and Non-Disclosure  Agreement
Exhibit E - Cross-License and Software Maintenance  Agreement
Exhibit F - Administrative Services Agreement
Exhibit G - Marketing,  Development and Service  Agreement
Exhibit H - Opinion of Corporate Counsel to the Company

                                        4
<PAGE>
                           CHANNELHEALTH INCORPORATED

                              SERIES A CONVERTIBLE

                       PREFERRED STOCK PURCHASE AGREEMENT

         SERIES A CONVERTIBLE  PREFERRED STOCK PURCHASE  AGREEMENT,  dated as of
January  10,  2000,  by  and  between  CHANNELHEALTH  INCORPORATED,  a  Delaware
corporation (the "Company"),  IDX SYSTEMS CORPORATION ("IDX") and the Purchasers
named on Schedule I hereto (the "Purchasers").

         WHEREAS, the Company is a wholly owned subsidiary of IDX; and

         WHEREAS,  the  Company  desires  to  sell  to the  Purchasers,  and the
Purchasers  desire  to buy from the  Company  the  number  of shares of Series A
Convertible  Preferred Stock of the Company set forth opposite such  Purchasers'
name on Schedule I hereto for a purchase price per share as set forth herein.

         In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:

                                    SECTION 1

                    AUTHORIZATION AND SALE OF THE SECURITIES
                    ----------------------------------------
1.1 Authorization.
    -------------
The Company has  authorized  the issuance and sale  hereunder of up to 3,000,000
shares of its Series A Convertible  Preferred  Stock,  $.001 par value per share
("Series A Preferred Stock"), at the Closing (the "Shares").

1.2 Amended and Restated  Certificate of Incorporation.
    --------------------------------------------------
The Company  shall  adoptand  file with the  Secretary  of State of the State of
Delaware  on or before the  Closing (as  defined  below)  Amended  and  Restated
Certificate  of  Incorporation  in the form  attached  hereto as  EXHIBIT A (the
"Restated Certificate").

1.3 Sale of the  Securities.
    -----------------------
At the  Closing,  and subject to the terms and  conditions  hereof,  the Company
shall sell and issue to each  Purchaser,  and such Purchaser shall purchase from
the Company,  the number of Shares  specified  opposite such Purchaser's name on
Schedule I attached hereto (the "Schedule of Purchasers"), at the purchase price
of Eleven Dollars and Eighty Cents  ($11.80) per share,  payable as set forth in
Section 2.2 of this Agreement.

1.4 Use of Cash  Proceeds.
    ---------------------
The  Company  shall use the net  proceeds  from the sale of the  Shares  for (a)
funding of the development of the Company's organizational  infrastructure,  (b)
working capital for the Company's current businesses and (c) acquisitions by the
Company (collectively, the "Permitted Purposes").

                                    SECTION 2

                            CLOSING DATES; DELIVERIES
                            -------------------------
2.1 Closing.
    -------
(a) The initial  closing of the purchase and sale of the Shares  hereunder  (the
"Closing") is taking place at the offices of Dewey Ballantine LLP at 1301 Avenue
of the Americas, New York, New York, at 10:00 a.m. on the date hereof or at such
other place and time as the parties may mutually agree.  The date of the Closing
is referred to as the "Closing Date."

<PAGE>

(b) To the extent that any of the  authorized  Shares are not issued and sold at
the Closing,  the Company may sell some or all of such Shares to the  Purchasers
listed on the Schedule of Purchasers; provided, however, that (i) any such sales
hereunder  shall take place on or before January 31, 2000,  (ii) such Shares are
issued and sold at a price equal to $11.80 per share and otherwise in accordance
with the  provisions of this  Agreement,  (iii) the  aggregate  number of Shares

                                       5

issued pursuant to this Agreement  shall not exceed  3,000,000 and (iv) at terms
no more  favorable  that those at any  previous  closing  of Series A  Preferred
Stock. In the event of any such sales:  (x) the Schedule of Purchasers  shall be
supplemented to add the address of each such Purchaser,  the number of Shares to
be purchased by each such  Purchaser  and the purchase  price to be paid by each
such  Purchaser and the Company shall provide each  Purchaser with a copy of the
Schedule of Purchasers as so supplemented, (y) each such Purchaser shall execute
and deliver this  Agreement by executing and  delivering to the Company and each
other  Purchaser  counterpart  signature  pages  hereto and (z) the sale of such
Shares  shall not be  subject  to the  pre-emptive  rights  of  Section 8 of the
Stockholders' Agreement (as hereinafter defined).

2.2  Deliveries.
     ----------
At the Closing, the parties are making the following deliveries:

(a) Certificates and Purchase Price.
    -------------------------------
The Company is  delivering  to each  Purchaser  the  appropriate  certificate(s)
representing  the number of Shares set forth opposite such  Purchasers'  name on
the  Schedule of  Purchasers,  which shall be delivered  against  payment of the
purchase price  therefor in the amount  specified on the Schedule of Purchasers,
by certified check payable to the order of the Company, or wire transfer of same
day  funds to an  account  designated  at least  one  business  day prior to the
Closing by the Company (or any  combination  thereof) in the respective  amounts
specified on the Schedule of Purchasers.

(b) Restated Certificate.
    --------------------
The Company is  delivering  to the  Purchasers a certified  copy of the Restated
Certificate, certified by the Secretary of State of the State of Delaware.

(c) Stockholders' Agreement.
    -----------------------
The Company and IDX are executing and  delivering a  Stockholders'  Agreement in
substantially the form of EXHIBIT B hereto (the "Stockholders' Agreement").

(d) Registration Rights Agreement.
    -----------------------------
The Company and IDX are executing and delivering a Registration Rights Agreement
in  substantially  the  form of  EXHIBIT  C  hereto  (the  "Registration  Rights
Agreement").

(e) Employment Agreements.
    ---------------------
The Company is delivering as attached to Section 3.12 of the disclosure schedule
to each Purchaser a copy of the employment  agreements with substantially all of
the  employees of the Company and attached  hereto as EXHIBIT D is a copy of the
form of Employment,  Noncompetition and Nondisclosure Agreement that the Company
requires each new employee to execute.

(f) Cross License;  Service  Agreement and Marketing  Agreement.
    -----------------------------------------------------------
The Company is delivering to each  Purchaser a copy of each of the Cross License
and Software Maintenance  Agreement,  the Administrative  Services Agreement and
the Marketing,  Development and Service Agreement, in substantially the forms of
EXHIBIT  E,  EXHIBIT F, and  EXHIBIT G,  respectively,  hereto  executed  by the
Company and IDX (collectively,  the "Service Agreement").

<PAGE>

g) Opinion of Company Counsel.
   --------------------------
Robert W. Baker,  Jr.,  corporate  counsel to the Company,  is delivering to the
Pequot Private Equity Fund II, L.P.  ("Pequot") his opinion in substantially the
form of EXHIBIT H hereto.

(h) Board of  Directors  of the  Company.
    ------------------------------------
The  Company  is  delivering  to each  Purchaser  evidence  that the  number  of
directors  comprising the Company's board of directors has been initially set at
five and that Gerald A. Poch has been  elected to the board of  directors of the
Company.

(i) Secretary's  Certificate.
    ------------------------
The  Company is  delivering  to each  Purchaser  a  certificate  executed by the
Secretary of the Company,  certifying  (i)  resolutions  adopted by the Board of
Directors  of the Company  authorizing  the  transactions  contemplated  by this
Agreement, (ii) the Restated Certificate,  (iii) the Bylaws of the Company, (iv)
incumbency matters and (v) such other proceedings relating to the authorization,
execution  and  delivery of this  Agreement  and the Restated  Certificate,  the
Stockholders'  Agreement,  the  Registration  Rights  Agreement  and the Service
Agreement (together,  the "Ancillary Agreements") as may be reasonably requested
by the Purchasers.

(j) Employees.
    ---------
The  Company is  delivering  to each  Purchaser a list of the  employees  of the
Company as of the Closing Date.

(k) Consents and Approvals.
    ----------------------
The Company is delivering to each Purchaser  copies of all consents  required to

                                       6

effect the transactions contemplated hereby, including,  without limitation, any
consents  or  notices  required  to by  filed  by  applicable  federal  or state
securities laws on or before the Closing Date.

                                    SECTION 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                  ---------------------------------------------

The Company hereby represents and warrants to each Purchaser that, except as set
forth on the Disclosure  Schedule  attached hereto (the "Disclosure  Schedule"),
specifically identifying the relevant Sections hereof, which Disclosure Schedule
shall be  deemed to be part of the  representations  and  warranties  as if made
hereunder:

3.1 Organization and Qualification.
    ------------------------------
The  Company is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and  authority  to own,  lease and  operate  its  assets,  properties  and
business and to carry on its  business as it is now being  conducted or proposed
to be  conducted.  The Company is duly  qualified  as a foreign  corporation  to
transact business,  and is in good standing,  in each jurisdiction where it owns
or leases  real  property  or  maintains  employees  or where the  nature of its
activities make such qualification necessary.

3.2 Certificate of  Incorporation  and Bylaws.
    -----------------------------------------
The Company has delivered to the Purchasers true,  correct,  and complete copies
of the Restated  certificate  and the Company's  Bylaws,  as amended through the
date hereof.

<PAGE>

3.3 Corporate Power.
    ---------------
The Company has all requisite legal and corporate power and authority to execute
and deliver this Agreement and the Ancillary  Agreements,  to sell and issue the
Shares  hereunder,  and to carry out and perform its obligations under the terms
of this Agreement and each of the Ancillary Agreements.

3.4 Subsidiaries.
    ------------
The Company has no direct or indirect Subsidiaries (as defined in Section 9.12).
The Company does not, directly or indirectly, own or control or have any capital
or other equity interest or participation  in (or any interest  convertible into
or  exchangeable  or  exercisable  for, any capital or other equity  interest or
participation  in) any Person (as defined in Section  9.12) nor is the  Company,
directly or  indirectly,  subject to any  obligation or  requirement  to provide
funds to or invest in any Person.

3.5 Capitalization.
    --------------
(a) General.
    -------
The  authorized  capital  stock  of  the  Company  consists,   or  will  consist
immediately  prior to the Closing,  of 103,000,000  shares, of which 100,000,000
are designated as Common Stock, $.001 par value per share ("Common Stock"),  and
of which 3,000,000 are designated as Series A Preferred Stock. Upon consummation
of the transactions  contemplated by this Agreement,  the  capitalization of the
Company shall be as set forth in Section 3.5 of the Disclosure  Schedule.  Three
Million (3,000,000) shares of the authorized Common Stock have been reserved for
issuance upon conversion of the Series A Preferred Stock. As of the Closing, all
issued and outstanding shares of the Company's capital stock will have been duly
authorized and validly issued,  will be fully paid and nonassessable and will be
owned  of  record,  and  to  the  Company's  knowledge,   beneficially,  by  the
stockholders  and in the  amounts  set forth in  Section  3.5 of the  Disclosure
Schedule.  As of the  Closing,  the Shares will be free of any liens,  claims or
encumbrances  of the Company and free of  restrictions on transfer other than as
set forth in this  Agreement,  the Bylaws,  the stock option  agreements  issued
pursuant to the Option Plan (if  applicable)  and the Ancillary  Agreements  and
under applicable  state and federal  securities laws. All issued and outstanding
Shares of the  Company's  capital stock and all other  securities  issued by the
Company have been issued in accordance  with the applicable  securities laws and
regulations. Except as set forth in Section 3.5 of the Disclosure Schedule or as
provided in the Ancillary Agreements, there are no options, warrants, conversion
privileges, or preemptive or other rights or agreements presently outstanding to
purchase or otherwise  acquire any authorized but unissued shares of the capital
stock  or  other  securities  of  the  Company.   Except  as  aforesaid  and  as
contemplated  herein,  the Company is not a party or subject to any agreement or
understanding  that  affects  or  relates  to the  voting or  giving of  written
consents  with  respect to any  security,  or the voting by a  director,  of the
Company.  Except as aforesaid and as set forth in Section 3.5 of the  Disclosure
Schedule, the Company is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise to acquire or retire any shares of its capital stock.
The Company has not declared or paid any dividend or made any other distribution
of cash, stock or other property to its stockholders.

                                       7

<PAGE>
(b) Common Stock.
    ------------
Immediately prior to the consummation of the transactions  contemplated  hereby,
25,422,425  shares of Common  Stock are  issued and  outstanding  as of the date
hereof.

3.6  Authorization.
     -------------
All corporate action on the part of the Company,  its officers,  directors,  and
its  stockholders  necessary  for the  authorization,  execution,  delivery  and
performance  of this Agreement and all other  agreements  executed in connection
with the transactions  contemplated  hereby by the Company,  the  authorization,
sale,  issuance  and  delivery of the Shares and the  performance  of all of the
Company's  obligations  hereunder and under the Ancillary  Agreements  have been
taken or will be taken  prior to the  Closing.  This  Agreement  and each of the
Ancillary  Agreements,   when  executed  and  delivered  by  the  Company,  will
constitute a valid and legally  binding  obligation of the Company,  enforceable
against the Company in accordance with its respective terms, subject to (i) laws
of general  application  relating to bankruptcy,  insolvency,  and the relief of
debtors,  and  (ii)  rules of law  governing  specific  performance,  injunctive
relief, or other equitable remedies.

3.7 Financial Statements.
    --------------------
Attached to Section  3.7 of the  Disclosure  Schedule is a complete  and correct
copy of the  unaudited  pro forma  statement  of assets and  liabilities  of the
Company as at December 31, 1999 ( the  "Financial  Statement").  Such  Financial
Statement has been prepared in accordance  with  generally  accepted  accounting
principles  consistently  applied (except for the omission of any notes thereto)
and fairly  presents the assets and  liabilities of the Company for such period.
Since December 31, 1999,  there has not been any material  adverse change to the
assets,  properties,   prospects,   operating  results,  business  or  financial
condition of the Company as set forth in the Financial  Statement.  There are no
material liabilities not disclosed in the Financial Statement,  other than those
incurred in the ordinary  course of business  since December 31, 1999 and as set
forth in the Disclosure Schedule.

3.8  Title to Properties and Assets; Insurance.
     -----------------------------------------
(a) Except as set forth in Section 3.8 of the Disclosure  Schedule,  the Company
currently owns no real property,  and since its inception it has never owned any
real property.  The Company has good title to or a valid  leasehold  interest in
all of the  property  or assets used by it or located on its  premises  that are
material to the business or  operations  of the  Company,  free and clear of all
liens,  restrictions and encumbrances other than liens for current taxes not yet
due and payable,  and liens and  encumbrances  which have arisen in the ordinary
course of business and which do not,  individually or in the aggregate,  detract
in any material respect from the value of the property subject thereto or impair
in any material respect the operations of the Company.

(b) Except as set forth in Section 3.8 of the Disclosure Schedule, the assets of
the Company include all leases, contracts,  furniture,  fixtures,  inventory and
equipment (for purposes of this clause (b), the  "Equipment")  necessary for the
Company to conduct its business as presently conducted.

(c) The Company is a named  insured  under IDX's  insurance  policies  which are
maintained  in such  amounts  (to the extent  available  in the public  market),
including (as applicable) self-insurance, retainage and deductible arrangements,
and of such a character as is reasonable  for  companies  engaged in the same or
similar business similarly situated. Section 3.8 of the Disclosure Schedule sets
forth a list of all insurance  coverage  carried by IDX that name the Company as
an insured, identifying the carrier and the amount of coverage.

<PAGE>

3.9  Related-Party  Transactions.
     ---------------------------
Except as set forth in Section  3.9 of the  Disclosure  Schedule,  no  employee,
officer, stockholder,  director or consultant of the Company or member of his or
her  immediate   family  (defined  as  parents,   spouse,   siblings  or  lineal
descendants)  is indebted to the  Company,  and the Company is not  indebted (or
committed  to make loans or extend or guarantee  credit) to any of them.  To the
knowledge  of the  Company,  no  employee,  officer,  stockholder,  director  or
consultant of the Company has any direct or indirect  ownership  interest in any
firm or  corporation  with  which the  Company is  affiliated  or with which the
Company has a business  relationship,  or any firm or corporation  that competes
with the Company, except stock ownership by employees, officers, stockholders or
directors  of the Company and  members of their  immediate  families in publicly
traded  companies.  No officer,  stockholder  or director or any member of their
immediate families is, directly or indirectly, interested in any contract (other
than this Agreement or the Ancillary Agreements) with the Company.

3.10  Permits;  Compliance  with  Applicable  Law.
      -------------------------------------------
The Company has all  material  franchises,  permits,  licenses,  authorizations,
approvals and any similar authority ("Permits") necessary for the conduct of its
business as now being  conducted  by it. The Company is not in  violation in any
material respect of, or default in any material respect under, any such Permits.

                                       8

All such Permits are in full force and effect,  and to the Company's  knowledge,
no violations  have been recorded in respect of any such permits;  no proceeding
is pending or, to the  knowledge of the Company,  threatened  to revoke or limit
any such Permit;  and no such Permit will be  suspended,  cancelled or adversely
modified as a result of the  execution  and  delivery of this  Agreement  or the
Ancillary  Agreements  and the  consummation  of the  transactions  contemplated
hereby or thereby.

3.11  Proprietary Rights.
      ------------------
(a)  Except as set forth in Section  3.11 of the  Disclosure  Schedule:  (i) the
Company is the owner,  free and clear of any lien or  encumbrance,  of, or has a
valid  license,  without  the  payment of any  royalty  except  with  respect to
off-the-shelf  software and otherwise on commercially  reasonable terms, to, all
U.S.  and foreign  trademarks,  service  marks,  logos,  designs,  trade  names,
internet  domain  names and  corporate  names,  and the goodwill of the business
connected  therewith  and  symbolized  thereby,  patents,   registered  designs,
copyrights,  computer  software and databases,  whether or not  registered,  web
sites  and web  pages and  related  items  (and all  intellectual  property  and
proprietary rights incorporated  therein) and all other trade secrets,  research
and  development,  formulae,  know-how,  proprietary and  intellectual  property
rights and  information,  including all grants,  registrations  and applications
relating thereto which are material to the business or operations of the Company
(collectively,  the  "Proprietary  Rights") and necessary for the conduct of its
business as now conducted or as contemplated  to be conducted (such  Proprietary
Rights owned by or licensed to the Company, collectively, the "Company Rights");
(ii) the Company has taken all actions  which are  necessary in order to protect
the Company Rights, and to acquire Proprietary  Rights,  consistent with prudent
commercial  practices  in the  Company's  industry;  (iii)  to the  best  of its
knowledge, the Company's rights in the Company Rights are valid and enforceable;
(iv) the  Company  has  received no demand,  claim,  notice or inquiry  from any
Person in respect of the Company Rights which challenges, threatens to challenge
or inquires as to whether there is any basis to  challenge,  the validity of, or
the rights of the Company in, any such Company Rights,  and the Company knows of
no  basis  for any  such  challenge;  (v) the  Company  is not in  violation  or
infringement  of, and has not violated or infringed,  any Proprietary  Rights of
any other Person;  (vi) to the knowledge of the Company, no Person is infringing
any Company  Rights;  and (vii)  except on an  arm's-length  basis for value and
other  commercially  reasonable  terms,  the Company has not granted any license
with respect to any Company Rights to any Person.

<PAGE>

(b) Section  3.11 of the  Disclosure  Schedule  contains a complete and accurate
list of the  Company  Rights  and all  license  and  other  agreements  relating
thereto,  in each case which are material to the business or  operations  of the
Company.

3.12 Contracts.
     ---------
Set forth in Section 3.12 of the Disclosure  Schedule is a list
of all  agreements  to which the Company is a party or  agreements  by which the
Company  is bound  which are  material  to the  business  or  operations  of the
Company,   including  without  limitation  (a)  any  employment  and  consulting
agreements,  employee benefit,  bonus,  pension,  profit-sharing,  stock option,
stock  purchase and similar plans and  arrangements,  (b) any agreement with any
current  or former  stockholder,  officer or  director  of the  Company,  or any
"affiliate"  or  "associate"  of such  persons (as such terms are defined in the
rules and regulations  promulgated  under the Securities Act of 1933, as amended
(the "Securities  Act")),  including  without  limitation any agreement or other
arrangement  providing  for the  furnishing  of services  by,  rental of real or
personal property from, or otherwise  requiring  payments to, any such person or
entity  and (c) any  agreement  relating  to the  intellectual  property  rights
necessary for the conduct of the Company's business as presently conducted or as
contemplated to be conducted on the Closing Date.

(b) Assuming the due execution and delivery by the other parties  thereto,  each
of such Contracts is as of the date hereof legal, valid and binding, and in full
force and effect,  and enforceable in accordance with its terms,  subject to (i)
laws of general application relating to bankruptcy,  insolvency,  and the relief
of debtors,  and (ii) rules of law governing  specific  performance,  injunctive
relief, or other equitable remedies.  Except as set forth in Section 3.12 of the
Disclosure  Schedule,  there is no breach,  violation  or default by the Company
(or, to the knowledge of the Company,  any other party) under any such Contract,
and no event (including,  without limitation,  the transactions  contemplated by
this Agreement) has occurred which,  with notice or lapse of time or both, would
(A)  constitute  a breach,  violation  or default  by the  Company  (or,  to the
knowledge of the Company, any other party) under any such Contract,  or (B) give
rise  to  any  lien  or  right  of  termination,   modification,   cancellation,
prepayment,  suspension,  limitation,  revocation  or  acceleration  against the
Company  under any such  Contract.  Except us set forth in  Section  3.12 of the
Disclosure Schedule, the Company is not and, to the knowledge of the Company, no
other party to any of such Contracts is in arrears in respect of the performance
or  satisfaction of any material terms or conditions on its part to be performed
or satisfied  under any of such  Contracts,  and the Company has not and, to the
knowledge of the Company, no other party thereto has granted or been granted any
waiver or indulgence  under any of such  Contracts or  repudiated  any provision
thereof.

                                       9

3.13  [Reserved].
       --------

3.14  Absence of Conflicts.
      --------------------
The execution,  delivery, and performance of, and compliance with this Agreement
and the Ancillary Agreements, the issuance of the Shares and the consummation of
the  transactions  contemplated  hereby and thereby,  have not and will not: (i)
violate, conflict with or result in a breach of any provision of or constitute a
default  (or an event  which,  with  notice  or  lapse  of time or  both,  would
constitute a default)  under, or result in the termination of, or accelerate the
performance  required  by, or result in the creation of any lien upon any of the
assets,  properties  or  business  of the  Company  under,  any  of  the  terms,
conditions or provisions  of (x) the Restated  Certificate  or the Bylaws of the

<PAGE>

Company,  or (y) any  indenture,  mortgage,  guaranty,  lease,  license or other
contract, agreement or understanding to which the Company is a party or by which
any of its assets or properties are bound,  which would have a Material  Adverse
Effect (as defined below); or (ii) violate any judgment,  ruling,  order,  writ,
injunction,  award,  decree,  or any law or  regulation of any court or federal,
state,  county or local  government  or any other  governmental,  regulatory  or
administrative  agency or authority which is applicable to the Company or any of
its  assets,  properties  or  businesses,  which  would have a Material  Adverse
Effect.

3.15 Litigation.
     ----------
Except as set forth in  Section  3.15 of the  Disclosure  Schedule,  there is no
action, suit or proceeding,  or governmental inquiry or investigation,  pending,
or, to the Company's knowledge,  any threat thereof,  against the Company, which
questions  the  validity of this  Agreement or the right of the Company to enter
into it, or which  might  result in a material  adverse  effect on the  business
assets, properties,  operations, results of operations or financial condition of
the  Company  (a  "Material  Adverse  Effect"),  either  individually  or in the
aggregate,  nor is there any litigation pending, or, to the Company's knowledge,
any threat thereof,  against the Company by reason of the proposed activities of
the  Company or  negotiations  by the Company  with  possible  investors  in the
Company.  The  Company is not  subject  to any  outstanding  judgment,  order or
decree.

3.16  Governmental  Consent.
      ---------------------
No  consent,  approval,  or  authorization  of,  or  designation,   declaration,
notification,  or  filing  with any  governmental  authority  on the part of the
Company  is  required  in  connection  with the valid  execution,  delivery  and
performance  of this  Agreement or any of the Ancillary  Agreements,  the offer,
sale,  or issuance of the Shares or the  consummation  of any other  transaction
contemplated   hereby  or  by  the   Ancillary   Agreements   (other  than  such
notifications or filings  required under applicable  federal or state securities
laws,  if any,  and  the  filing  required  by the  Hart-Scott-Rodino  Antitrust
Improvements Act of 1976, as amended (the "HSR Act")).

3.17  Employees.
      ---------
Set forth in Section 3.17 of the Disclosure  Schedule is a list of substantially
all of the employees who are employed by the Company on the Closing Date.

3.18  Tax Returns,  Payments, and Elections.
      -------------------------------------
The Company has not been required to file any federal,  state,  county, local or
foreign tax  returns,  and any returns  prepared by it or on its behalf are true
and correct and all taxes have been timely paid.  Neither the Company nor any of
its stockholders has ever filed (a) an election  pursuant to Section 1362 of the
Internal  Revenue  Code of 1986,  as amended (the  "Code"),  that the Company be
taxed as an S Corporation or (b) consent  pursuant to Section 341(f) of the Code
relating  to  collapsible  corporations.  With  respect  to any tax  periods  or
portions  thereof ending on or prior to the Closing Date, the Company is, and at
all times  has  been,  a member of the IDX  affiliated  group  (the  "Affiliated
Group") for Federal  income tax  purposes,  and the Company has no liability for
any  Federal,  state or other tax  liability  asserted by the  Internal  Revenue
Service or any other competent taxing  authority or jurisdiction  resulting from
membership in the Affiliated Group or the preparation of the Affiliated  Group's
consolidated Federal income tax returns or otherwise.

3.19  Brokers or  Finders.
      -------------------
The Company has not incurred,  and will not incur, directly or indirectly,  as a
result of any action  taken by the  Company,  any  liability  for  brokerage  or
finders' fees or agents'  commissions or any similar  charges in connection with
this  Agreement or the  Ancillary  Agreements  or any  transaction  contemplated
hereby or thereby.

<PAGE>

3.20  Employee Benefit Plans; Labor.
      -----------------------------
(a) Section 3.20 of the Disclosure Schedule contains a true and complete list of
all material employee benefit,  savings,  retirement,  pension,  fringe benefit,
severance,  compensation and similar plans which are currently maintained by the
Company or its ERISA  Affiliates,  and which  currently  covers  any  present or
former  employees,  officers,  or directors of the Company with respect to their

                                       10

employment  with the  Company  ("Company  Personnel")  and to which the  Company
contributes  or is  required  to  contribute  or for which the  Company  has any
liability for Company  Personnel as of the Closing,  including,  but not limited
to,  "employee  benefit  plans"  within the  meaning  of Section  3(3) of ERISA,
pension, savings, stock purchase, stock option, restricted stock, phantom stock,
stock appreciation  rights,  severance,  employment,  change in control,  fringe
benefit,  bonus,  incentive,  cost of living and  deferred  compensation  plans,
agreement,  programs and policies  (collectively,  the  "Employee  Plans").  All
contributions  or payments  owed by the Company,  with respect to  employment of
Company Personnel,  for any periods prior to the Closing under any Employee Plan
have been made or appropriately  accrued. Any government agency filings that are
required to be filed by the Company for any  Employee  Plan prior to the Closing
have been made on a timely basis.

(b) All Employee  Plans comply in all material  respects  with  applicable  laws
(including,  but not limited to, ERISA, the Code, and the Age  Discrimination in
Employment  Act of 1967,  as amended) and comply in form and in operation in all
material  respects with the  applicable  requirements  of ERISA,  the Code,  the
regulations and published authorities thereunder and other applicable laws as of
the Closing.

(c)  Neither  the  Company  nor  any of its  ERISA  Affiliates  has at any  time
maintained  prior to the closing,  contributed to or been required to contribute
to, or had any liability  with respect to, any plan which is subject to Title IV
of  ERISA  or  Section  412 of the  Code  (including,  without  limitation,  any
multiemployer plan (within the meaning of Section 3(37) of ERISA)).  Neither the
Company nor any other "disqualified person" or "party-in-interest"  with respect
to an Employee Plan has engaged in any "prohibited  transaction" (as those terms
are  defined in Section  4975 of the Code or  Sections  3(14) and 406 of ERISA),
which could subject the Company, or any person who the Company has an obligation
to indemnify,  to any material tax or penalty  imposed under Section 4975 of the
Code or Section 502 of ERISA. The events  contemplated by this Agreement (either
alone or  together  with any  other  event)  will not (w)  entitle  any  Company
Personnel to severance pay, unemployment compensation, or other similar payments
under any Employee Plan or law, (x) accelerate the time of payment or vesting or
increase the amount of compensation or benefits due under any Employee Plan, (y)
result in any  payments  (including  parachute  payments  within the  meaning of
Section 280G of the Code) under any Employee Plan.

(d) The Company and each of its  subsidiaries  is in  compliance in all material
respects  with all laws and  orders  relating  to the  employment  of labor  and
classification of persons as employees,  including, without limitation, all such
laws and orders relating to wages, hours,  discrimination,  civil rights, safety
and the collection and payment of withholding  and/or Social  Security taxes and
similar taxes and provision of employee benefits as of the Closing.

3.21 Company Status.
     --------------
The Company is not (i) a "public utility holding company" or a "holding company"
as defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a
"public  utility" as defined in the Federal  Power Act, as amended,  or (iii) an
"investment  company"  as  defined in the  Investment  Company  Act of 1940,  as
amended.

<PAGE>

3.22 Offering Exemption.
     ------------------
Assuming the truth and accuracy of the representations and warranties  contained
in Section 5, the offer and sale of the Series A Preferred Stock as contemplated
hereby and the  issuance and  delivery to the  Purchasers  of the Shares and the
shares of Common Stock  issuable  upon the  conversion  of the Shares are exempt
from  registration   under  the  Securities  Act,  and  under  applicable  state
securities and "blue sky" laws, as currently in effect.

3.23  Use of Proceeds.
      ---------------
The Company shall use the cash proceeds of the sale of the Shares for the
Permitted Purposes.


3.24  Environmental Matters.
      ---------------------
(a) To the Company's  knowledge,  there are, with respect to the Company, or any
predecessor  thereof,  no past or present  violations of  Environmental  Law (as
defined below), nor any actions, activities, circumstances,  conditions, events,
incidents,  or  contractual  obligations  which may give  rise to any  liability
pursuant to any Environmental  Law, and the Company has not received any written
notice with respect to any of the foregoing.  There is no is any civil, criminal
or administrative action, suit, claim, notice, hearing,  inquiry,  proceeding or
investigation at law or in equity by or before any court,  arbitrator or similar
panel,  governmental  instrumentality  or other  agency now  pending  or, to the
knowledge  of the Company,  threatened  against the Company or the assets of the
Company in connection with any of the foregoing.

(b) For purposes of this Section 3.24,  capitalized terms used herein shall have
the following meanings:

                                       11

         "Environmental  Laws"  shall  mean,  at any  date,  all  provisions  of
federal,  state, local or foreign law (including applicable principles of common
and civil law), statutes,  ordinances,  rules, regulations,  published standards
and  directives  that  have the  force and  effect  of law,  permits,  licenses,
judgments, writs, injunctions, decrees and orders enacted, promulgated or issued
by any Public  Authority,  and all indemnity  agreements  and other  contractual
obligations,  as in effect at such date,  relating to (i) the  protection of the
environment,  including the air, surface and subsurface  soils,  surface waters,
groundwaters and natural resources,  and (ii) occupational health and safety and
exposure of persons to Hazardous Materials. Environmental Laws shall include the
Comprehensive Environmental Response,  Compensation and Liability Act, 42 U.S.C.
ss.ss.9601  et seq.,  and any other laws  imposing  or creating  liability  with
respect to Hazardous Materials.

         "Hazardous   Material"  shall  mean  any  substance  regulated  by  any
Environmental Law.

         "Public  Authority" shall mean any supranational,  national,  regional,
state or local government court, governmental agency, authority,  board, bureau,
instrumentality or regulatory body.

3.25  [Reserved].
      ----------

3.26 Y2K Compliance.
     --------------
All information technology used by the Company, including without limitation, in
all products and  services  (i) provided by the Company to third  parties,  (ii)
used by the Company internally or (iii) to the best of the Company's  knowledge,
used in combination with any information  technology of its clients,  customers,
suppliers  or vendors,  accurately  processes or will process date and time data

<PAGE>


(including, but not limited to calculating, comparing and sequencing) from, into
and  between  the  years  1999  and  2000  and  the  twentieth  century  and the
twenty-first  century,  including leap year calculations and neither performance
nor  functionality of such technology will be affected by dates prior to, during
and after the year 2000.

3.27  Disclosure.
      ----------
Neither this  Agreement nor any  certificate,  instrument  or written  statement
furnished or made to the  Purchasers by or on behalf of the Company  pursuant to
this Agreement or the Ancillary  Agreements  contains any untrue  statement of a
material fact or omits to state a material  fact  necessary in order to make the
statements  contained  herein and  therein in light of the  circumstances  under
which they were made not misleading.

                                    SECTION 4

                      REPRESENTATIONS AND WARRANTIES OF IDX
                      -------------------------------------
    IDX hereby  represents  and  warrants  to the Purchasers as follows:

4.1 Organization and Qualification.
    ------------------------------
IDX is a corporation duly organized, validly existing and in good standing under
the laws of the  State of  Vermont  and has the  requisite  corporate  power and
authority to own,  lease and operate its assets,  properties and business and to
carry on its business as it is now being  conducted or proposed to be conducted.
IDX is duly qualified as a foreign  corporation to transact business,  and is in
good  standing,  in each  jurisdiction  where it owns or leases real property or
maintains   employees  or  where  the  nature  of  its   activities   make  such
qualification necessary.

4.2 Corporate Power; Authorization;  Enforceablity.
    ----------------------------------------------
IDX has all  requisite  legal and  corporate  power and authority to execute and
deliver this  Agreement and to carry out and perform its  obligations  under the
terms of this Agreement.  This Agreement has been duly authorized,  executed and
delivered by IDX and constitutes the valid and binding  obligation of IDX and is
enforceable against IDX in accordance with its terms.

                                    SECTION 5

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
                ------------------------------------------------

         Each  Purchaser,  severally as to itself and not jointly and severally,
hereby  represents  and  warrants to the Company with respect to the purchase of
the Shares and the shares of Common Stock issuable upon conversion of the Shares
(the "Conversion Shares") as follows:

                                       12

5.1  Experience.
     ----------
Such Purchaser has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so that
such Purchaser is capable of evaluating the merits and risks of such Purchaser's
investment in the Company and has the capacity to protect such  Purchaser's  own
interests.  Such  Purchaser  represents  and  warrants to the Company that it is
aware that its purchase of Shares and any Conversion  Shares hereunder  involves
substantial risk and that its financial  condition and investments are such that
it is in a financial  position to hold the Shares and any Conversion  Shares for
an  indefinite  period of time and to bear the economic  risk of and withstand a
complete loss of such investment.

<PAGE>

5.2 Investment.
    ----------
Such Purchaser is acquiring the Shares and any Conversion  Shares for investment
for such  Purchaser's own account,  not as a nominee or agent,  and not with the
view to, or for  resale in  connection  with,  any  distribution  thereof.  Such
Purchaser  understands that the Shares and any Conversion  Shares have not been,
and will  not be  (except  as  otherwise  provided  in the  Registration  Rights
Agreement),  registered  under the Securities Act or the securities  laws of any
state by reason of exemptions from the registration provisions of the Securities
Act and such laws which depend upon, among other things, the bona fide nature of
the  investment   intent  and  the  truth  and  accuracy  of  such   Purchaser's
representations as expressed herein.

5.3 Rule 144.
    --------
Such Purchaser  acknowledges  that the Shares and any Conversion  Shares must be
held indefinitely  unless  subsequently  registered under the Securities Act and
any applicable state  securities laws or an exemption from such  registration is
available.  Such  Purchaser is aware of the  provisions of Rule 144  promulgated
under the Securities Act which permit the limited resale of shares  purchased in
a  private  placement  subject  to  the  satisfaction  of  certain   conditions,
including,  among other  things,  (i) the  existence of a public  market for the
shares,  (ii) the availability of certain current public  information  about the
Company, (iii) the resale occurring not less than a certain period of time after
a party has  purchased  and fully paid for the shares to be sold,  (iv) the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" (as provided by Rule 144(f)) and (v) the number of shares being
sold during any three-month period not exceeding specified limitations.

5.4 No Public  Market.
    -----------------
Such  Purchaser  understands  that no public  market  now  exists for any of the
securities  issued by the Company and that there is no  assurance  that a public
market will ever exist for the Shares or the Conversion Shares.

5.5  Access to Data.
     --------------
Such  Purchaser  has had an  opportunity  to  discuss  the  Company's  business,
management,  and  financial  affairs  with  the  Company's  management  and  the
opportunity  to review the Company's  facilities  and the Financial  Statements.
Such  Purchaser has also had an  opportunity to ask questions of officers of the
Company,  which  questions  were answered to its  satisfaction.  Such  Purchaser
acknowledges  that it has had an opportunity to conduct its own  independent due
diligence  investigation of the Company.

5.6 Authorization.
    -------------
This Agreement and the Ancillary  Agreements to which such Purchaser is a party,
when executed and delivered by such Purchaser, will constitute valid and legally
binding  obligations of such  Purchaser,  enforceable  in accordance  with their
respective  terms,  subject  to (i)  laws of  general  application  relating  to
bankruptcy,  insolvency,  and the  relief  of  debtors,  and  (ii)  rules of law
governing specific performance,  injunctive relief, or other equitable remedies.
Such Purchaser,  if not a natural person,  has full power and authority to enter
into and to perform  its  obligations  under this  Agreement  and the  Ancillary
Agreements to which it is a party in  accordance  with their  respective  terms.
Such  Purchaser  represents  that  it has not  been  organized,  reorganized  or
recapitalized specifically for the purpose of investing in the Company.

<PAGE>

5.7 Brokers or Finders.
    ------------------
Such Purchaser has not incurred, and will not incur, directly or indirectly,  as
a result of any action taken by such  Purchaser,  any liability for brokerage or
finders' fees or agents'  commissions or any similar  charges in connection with
this Agreement or any transaction contemplated hereby.

5.8 Investor  Qualification.
    -----------------------
Such  Purchaser  (i) is an  "accredited  investor"  as  defined  in Rule  501 of
Regulation  D adopted  under the  Securities  Act,  (ii) has  adequate  means of
providing  for its  current  needs,  (iii)  has no  need  for  liquidity  in its
investment in the Shares or any Conversion  Shares, and (iv) is able to bear the
economic  risk of losing its  entire  investment  in Shares  and any  Conversion
Shares. Such Purchaser has its principal office or residence, as applicable,  in
the state set forth on the Schedule of Purchasers.

                                       13

                                    SECTION 6

                                   [RESERVED]
                                   ----------

                                    SECTION 7

                                   [RESERVED]
                                   ----------

                                    SECTION 8

                             POST CLOSING COVENANTS
                             ----------------------

         The  parties  hereto  agree  as  follows  with  respect  to the  period
following the Closing:

8.1  Basic Information Rights.
     ------------------------
The Company shall furnish to the Purchasers:

(a) within  ninety (90) days after the end of each fiscal year of the Company an
audited  balance  sheet of the Company as of the end of such fiscal year and the
related audited  statements of income,  stockholders'  equity and cash flows for
the fiscal  year then ended,  prepared in  accordance  with  generally  accepted
accounting   principles  and  certified  by  a  nationally  recognized  firm  of
independent  public  accountants  selected  by the  Board  of  Directors  of the
Company;

(b)  within  forty-five  (45) days after the end of each  fiscal  quarter of the
Company an unaudited  balance  sheet of the Company as of the end of such fiscal
quarter and the related unaudited statements of income, stockholders' equity and
cash flows for the fiscal  quarter  then  ended,  prepared  in  accordance  with
generally accepted  accounting  principles and certified by the President of the
Company;

(c) thirty  (30) days after the end of each month in each  fiscal  year  monthly
financial  statements  of the  Company  in the form  prepared  for the  Board of
Directors of the Company;  and no later than thirty (30) days prior to the start
of each fiscal year,  an annual budget for the Company in respect of such fiscal
year.

<PAGE>

8.2 Access and  Additional  Information  Rights.
    -------------------------------------------
The  Company  will  permit the  Purchasers,  its  employees,  counsel  and other
authorized  representatives,  to visit and inspect any of the  properties of the
Company,  including  its books of account  and other  records  (and make  copies
thereof and take extracts therefrom),  and to discuss its affairs,  finances and
accounts with the Company's officers and its independent public accountants, all
at such  reasonable  times  during  normal  business  hours and as often as such
Person may reasonably request, upon reasonable notice to the Company.

8.3 Director and Officer  Insurance.
    -------------------------------
On or prior to the date 60 days  following the Closing  Date,  the Company shall
procure and shall  thereafter  maintain  liability  insurance  coverage  for the
directors and officers of the Company with respect to any liabilities reasonably
incurred in  connection  with their  services  for or on behalf of the  Company,
including (in the case of  directors)  liabilities  for monetary  damages to the
Company or its stockholders arising out of breaches of such directors' fiduciary
duties,  except where such  liabilities  arise because such  directors  violated
their duty of loyalty to the Company and its  stockholders,  acted in bad faith,
knowingly or intentionally  violated the law,  authorized  illegal  dividends or
redemptions  or derived  an  improper  personal  benefit  from  their  action as
directors.

8.4  Agreements  with  Employees.
     ---------------------------
The Company shall use reasonable efforts to require all persons now employed and
shall  require  all persons  hereafter  employed by the Company to enter into an
Employment, Noncompetition and Nondisclosure Agreement in substantially the form
attached  hereto as  Exhibit D, or such other  forms as may be  approved  by the
Board of Directors of the Company.

8.5  Board Meetings.
     --------------
A meeting of the  Company's  Board of Directors  shall be held at least once per
month,  unless otherwise agreed by a majority of directors who are not employees
of the Company.

                                       14

8.6  Use of Proceeds.
     ---------------
The Company shall use the cash proceeds of the sale of the Shares for the
Permitted Purposes.


8.7  Books and Records.
     -----------------
The books of account and other  financial and  corporate  records of the Company
shall be maintained in accordance with good business and accounting practices.

8.8  Reservation  of Common Stock.
     ----------------------------
     From and after the Closing Date, the Company shall at all times reserve and
keep  available out of its  authorized  shares of Common  Stock,  solely for the
purpose of issue or delivery upon  conversion  of the Series A Preferred  Stock,
the maximum number of shares of Common Stock that may be issuable or deliverable
upon such conversion. Such shares of Common Stock are or will be duly authorized
and, when issued or delivered in accordance  with the Restated  Certificate  and
against   payment   therefor,   shall  be   validly   issued,   fully  paid  and
non-assessable.  The  Company  shall  issue  such  shares  of  Common  Stock  in
accordance with the terms of the Restated  Certificate and otherwise comply with
the terms hereof and thereof.

<PAGE>

8.9  Board of Directors.
     ------------------
     The Company agrees that Pequot shall have the right to designate one member
of the Company's Board of Directors. If the size of its Board of Directors shall
be increased, Pequot shall be entitled to designate one additional member of the
Board.  In no event shall the size of the Board be  increased  to more than nine
members without the prior written consent of Pequot.

8.10 ERISA Covenant.
     --------------
(a) The  Company and each  subsidiary  shall  maintain  each  Employee  Plan and
employment  agreement to which it is a party in accordance with its terms and in
compliance with all applicable,  laws, statutes,  orders, rules and regulations,
including  but not limited to ERISA and the Code.  With respect to each Employee
Plan, the Company and each subsidiary will make all contributions and filings on
a timely  basis.  Without the written  consent of the Pequot,  the Company shall
not, and shall assure that any ERISA Affiliate does not,  maintain,  contribute,
or incur any liability  with respect to any plan which is subject to Title IV of
ERISA or Section 412 of the Code.

(b) Except as provided  below,  on and after the  Closing,  with respect to each
Employee Plan that is sponsored and  controlled by IDX ("IDX  Employee  Plans"),
the Company shall continue its  participation  in the IDX Employee Plans for the
benefit  of Company  Personnel  and all of its other  employees,  subject to the
right of the  Company  to  withdraw  from  and  terminate  participation  in any
Employee Plan at any time.

(c) Notwithstanding  the foregoing,  IDX shall be under no obligation to provide
or offer continued  participation  by the Company in any IDX Employee Plan after
the Closing Date,  and IDX may, in its sole  discretion,  amend or terminate any
IDX Employee Plan, in whole or in part, and may modify any provision thereof for
all  or any  designated  portion  of  employees  participating  in  such  plans,
including any provision dealing with  eligibility,  levels or types of benefits,
deductibles  or  co-payment   obligations,   or  any  other  right,  feature  or
characteristic;  provided  however,  that IDX shall give the  Company six months
prior written notice of any such amendment, termination, or modification.

(d) Notwithstanding any provision of this Section 8.10, this Agreement will not,
in any way or at any time, create any third party  beneficiary  rights for or on
behalf of any  individual,  including any employee or former  employee of either
IDX or the Company.

8.11 Pequot's Put to IDX.
     -------------------
If the  Company  shall  have  the  opportunity  to  complete  a firm  commitment
underwritten  initial public  offering with a nationally  recognized  investment
banking firm as a result of which the market capitalization of the Company would
be not less than  $750,000,000  and (a) any members of the Board of Directors of
the Company that are  employees or designees of IDX do not vote in favor of such
initial public offering in their capacity as members of the pricing committee of
the Board of Directors after the registration statement relating to such initial
public offering has become  effective and (b) the Company or its shareholders do
not  simultaneously  approve an alternative  transaction  such as a disposition,
merger or similar transaction with respect to the Company, then the Pequot shall
have the option to sell all,  but not less than all,  of the Shares to IDX for a
purchase  price equal to  $29,998,467.40  plus an  annualized  internal  rate of
return on such amount equal to 100%. Pequot shall exercise such option by giving
written  notice of such  exercise  to IDX  within 60 days  following  the events
described in clause (a) and (b) above.  If Pequot shall fail to give such notice
within such period, Pequot shall be deemed to have waived such option. If Pequot
exercises  such  option,  IDX  shall  pay  such  purchase  price  to  Pequot  in
immediately  available  funds within 10 business days following the date of such
notice.
                                       15
<PAGE>

8.12  Covenant to  Cooperate in Providing  Financial  Statements.
      ----------------------------------------------------------
IDX agrees to cooperate with the Company in connection  with the  preparation of
any and all financial statements necessary in connection with the initial public
offering of the equity securities of the Company.  In such connection,  IDX will
make  available to the Company such books,  records,  work papers and personnel,
including  IDX's  independent  accountants,  as may be necessary to prepare such
financial statements in a timely manner.

8.13  Opening Balance Sheet.
      ---------------------
Within 30 days  following  the Closing  Date,  the Company  will  deliver to the
Purchasers  an  opening  balance  of  the  Company  as at the  time  immediately
following the Closing.

8.14  Documentation  of Asset and other  Transfers.
      --------------------------------------------
IDX will cooperate with the Company to take any and all such further  actions as
may be  necessary  or  desirable  to  transfer  and  assign to the  Company,  by
instrument of  assignment,  bill of sale or other  appropriate  means all of the
assets used by the  Company on the  Closing  Date and owned by IDX or its agents
and contractors,  including, without limitation, all of the furniture, fixtures,
office  equipment,  contracts,  agreements  and  Proprietary  Rights used by the
Company.  Within 60 days  following the Closing  Date,  IDX will sublease to the
Company,  at cost,  all of the office and other space used by the Company on the
Closing Date.

8.15 Settlement and Release of Patent  Infringement Suit.
     ---------------------------------------------------
Provided IDX controls the Company  within the meaning of Rule 12b-2  promulgated
under the  Securities  and Exchange Act of 1934,  (i) IDX shall not enter into a
settlement and release in connection with the litigation entitled Allcare Health
Management System, Inc. v. Cerner Corporation, et. al unless such settlement and
release also releases the Company from patent  infringement prior to the date of
such  release,  and (ii) if in  connection  with any such  settlement  IDX shall
obtain a license  from  Allcare  Health  Management  System,  Inc. to the patent
claimed by it in such litigation,  IDX shall exercise its best efforts to obtain
terms of license applicable to the Company that are reasonably equivalent to the
terms applicable to IDX.

8.16  Termination  of  Covenants.
      --------------------------
The  covenants  of the Company  contained  in Sections 8.1 through 8.10 and 8.12
shall terminate,  and be of no further force or effect,  upon the closing of the
Company's   first  public   offering  of  Common  Stock  in  a  firm  commitment
underwriting  pursuant  to  an  effective   registration   statement  under  the
Securities Act, resulting in net proceeds to the Company of at least $35,000,000
and a  market  capitalization  of the  Company  of at  least  $500,000,000  (the
"Qualified Initial Public Offering").

                                   SECTION 9

                               GENERAL PROVISIONS
                               ------------------

9.1  Governing Law.
     -------------
This Agreement  shall be governed by and construed  according to the laws of the
State of New York without regard to the conflicts of law principles thereof.

9.2  Successors  and  Assigns;  Third Party  Beneficiaries.
     -----------------------------------------------------
Except as otherwise  expressly limited herein, the provisions hereof shall inure
to the benefit of, and be binding  upon,  the  successors  (including  successor
trustees,  in  the  case  of  a  trustee),   assigns,  heirs,   executors,   and

<PAGE>

administrators  of the parties hereto.  Nothing in this Agreement,  expressed or
implied,  is intended to confer upon any party other than the parties hereto and
their  respective  successors and assigns any rights,  remedies,  obligations or
liabilities under or by reason of this Agreement.

9.3 Entire  Agreement;  Amendment and Waiver.
    ----------------------------------------
This  Agreement  and the  Ancillary  Agreements  constitute  the full and entire
understanding  and  agreement  between  the  parties  with regard to the subject
matter hereof and thereof and supersede all prior  agreements  among the parties
with  respect  thereto.  Any  term of this  Agreement  may be  amended,  and the
observance of any term hereof may be waived (either generally or in a particular
instance),  only with the  written  consent of a  majority  in  interest  of the
Purchasers  and the written  consent of the  Company.  Any  amendment  or waiver
effected in  accordance  with this Section 9.3 shall be binding upon each of the
parties hereto.

9.4 Survival of Representations, Warranties and Agreements.
    ------------------------------------------------------
The representations, warranties and agreements contained in this Agreement shall
survive the closing  hereunder and any investigation  made by Pequot,  but in no

                                       16

event later than  December 31, 2001 or  following  any transfer of the shares by
Pequot except transfers to affiliates of Pequot.

9.5  Notices,  etc.
     -------------
All notices and other communications required or permitted hereunder shall be in
writing  and shall be (i)  mailed  by  registered  or  certified  mail,  postage
prepaid,  (ii)  delivered  by  reliable  overnight  courier  service,  or  (iii)
otherwise delivered by hand or by messenger, addressed (A) if to a Purchaser, to
such  Purchaser's  address set forth on the Schedule of  Purchasers,  or at such
other address as such Purchaser  shall have furnished to the Company in writing,
or (B) if to the Company, to Channelhealth Incorporated,  Attention:  President,
25 Green Mountain  Drive,  South  Burlington,  Vermont  05403,  or at such other
address as the Company shall have  furnished to the  Purchasers in writing.  All
such notices and communications shall be effective upon receipt.

9.6 Delays or Omissions.
    -------------------
No delay or omission to exercise  any right,  power,  or remedy  accruing to any
party upon any breach or default under this Agreement,  shall be deemed a waiver
of any other breach or default theretofore or thereafter occurring.  Any waiver,
permit,  consent,  or approval of any kind or character on the part of any party
of any breach or default under this Agreement,  or any waiver on the part of any
party of any provisions or conditions of this Agreement,  must be in writing and
shall be effective  only to the extent  specifically  set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to any
of the parties, shall be cumulative and not alternative.

9.7  References.
     ----------
Unless the context otherwise requires,  any reference to a "Section" refers to a
section of this  Agreement.  Any reference to "this Section" refers to the whole
number section in which such reference is contained.

9.8  Severability.
     ------------
If  any  provision  of  this  Agreement  is  held  to  be  invalid,  illegal  or
unenforceable,  in  whole or in  part,  such  invalidity  will  not  affect  any
otherwise valid  provision,  and all other valid  provisions will remain in full
force and effect and this  Agreement  shall be enforced to the  greatest  extent
possible to carry out the intentions of the parties hereto.

<PAGE>

9.9  Pronouns.
     --------
All pronouns and any  variations  thereof  refer to the  masculine,  feminine or
neuter,  singular  or plural,  as the  identity  of the  person or  persons  may
require.

9.10 Counterparts;  Facsimile  Execution.
     -----------------------------------
This  Agreement  may be  executed in any number of  counterparts,  each of which
shall be deemed  an  original  and  enforceable  against  the  parties  actually
executing  such  counterpart,  and all of  which,  when  taken  together,  shall
constitute one  instrument.  Facsimile  execution and delivery of this Agreement
shall be legal, valid and binding execution and delivery for all purposes.

9.11 Remedies.
     --------
The parties to this Agreement  acknowledge and agree that a breach of any of the
covenants of the Company or the  Purchasers  set forth in this Agreement may not
be compensable by payment of money damages and, therefore, that the covenants of
the foregoing parties set forth in this Agreement may be enforced in equity by a
decree requiring specific performance.

9.12 Certain Definitions.
     -------------------
As used in this Agreement, the following terms shall have the following meanings
unless the context otherwise required:

(i) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

(ii) "ERISA  Affiliates" means with respect to the Company,  each other trade or
business  (whether  or not  incorporated)  that is a member  of the  "controlled
group"  of which the  Company  is a member or under  "common  control"  with the
Company  within the meaning of Section  414(b),  (c), (m) and (o) of the Code or
Section 4001 of ERISA.

(iii) "IDX Employee Plans" has the meaning set forth in Section 8.10.

(iv) "Pequot" means Pequot Private Equity Fund II, L.P.

(v) "Person" means any individual,  corporation, general or limited partnership,
limited liability company,  limited liability partnership,  firm, joint venture,
association,   enterprise,   joint  stock  company,   trust,   business   trust,
unincorporated organization or other entity.

                                       17

(vi)  "Subsidiary"  means  any  Person  as to which  the  Company,  directly  or
indirectly,  owns or has  the  power  to  vote,  or to  exercise  a  controlling
influence  with respect to, fifty percent (50%) or more of the securities of any
class of such  Person,  the holders of which class are  entitled to vote for the
election of directors (or persons performing similar functions) of such Person.

9.13 Restrictive Legends.
     -------------------
(a) Each  certificate  representing (i) Shares,  (ii) any Conversion  Shares and
(iii) any other  securities  issued or  issuable,  directly  or  indirectly,  in
respect  of  any  of  the  Shares  upon  any  stock   split,   stock   dividend,
recapitalization,  merger, consolidation, share exchange or similar event, shall
(unless  otherwise  permitted by the provisions of this Section 9.13) be stamped
or otherwise  imprinted with legends in substantially  the following form to the
extent  applicable  (in addition to any legend(s)  required  under any Ancillary
Agreements or applicable state securities laws):

<PAGE>

         THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
"ACT"),  OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER  JURISDICTION.  THESE
SECURITIES  HAVE  BEEN  ACQUIRED  FOR  INVESTMENT  AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE DISTRIBUTION THEREOF.  THESE SECURITIES MAY NOT BE OFFERED,
SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION  STATEMENT UNDER THE ACT
IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS
IN COMPLIANCE WITH APPLICABLE  SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION
OR (II)  THERE IS AN  OPINION OF  COUNSEL  OR OTHER  EVIDENCE,  IN EITHER  CASE,
SATISFACTORY TO THE  CORPORATION,  THAT AN EXEMPTION  THEREFROM IS AVAILABLE AND
THAT SUCH OFFER,  SALE,  PLEDGE,  OR TRANSFER IS IN COMPLIANCE  WITH  APPLICABLE
SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.  THE SECURITIES  EVIDENCED BY
THIS  CERTIFICATE  ARE  ENTITLED  TO  CERTAIN  RIGHTS  AND  SUBJECT  TO  CERTAIN
RESTRICTIONS SET FORTH IN A SERIES A PREFERRED STOCK PURCHASE  AGREEMENT,  DATED
AS OF THE DATE THAT THIS  CERTIFICATE WAS ORIGINALLY  ISSUED,  AMONG THE COMPANY
AND THE PURCHASERS WHO ARE PARTIES  THERETO.  THE COMPANY SHALL FURNISH  WITHOUT
CHARGE  TO  EACH  SECURITY  HOLDER  WHO SO  REQUESTS  A COPY  OF  SUCH  PURCHASE
AGREEMENT.

         Each  Purchaser and any  subsequent  holder of the Shares or Conversion
Shares  consents  to the  Company's  making a notation on its records and giving
instructions  to any transfer agent of the Shares or Conversion  Shares in order
to implement the restrictions on transfer described in this Section 9.13.

(b) The Company shall be obligated to reissue promptly  certificates without the
foregoing  legend at the request of any holder  thereof if the holder shall have
obtained an opinion of counsel  (which  counsel  may be counsel to the  Company)
reasonably  acceptable to the Company to the effect that the securities proposed
to  be  disposed  of  may  lawfully  be so  disposed  of  without  registration,
qualification  or legend.  Any legend  endorsed  on an  instrument  pursuant  to
applicable state securities laws and the stop-transfer instructions with respect
to such  securities  shall be removed upon receipt by the Company of an order of
the  appropriate  state or blue sky  authority  authorizing  such  removal or an
opinion of counsel reasonably satisfactory to the Company to the effect that any
such applicable state securities  legends or stop-transfer  instructions are not
required and may be removed.

9.14  Expenses.
      --------
The  Company  shall pay the legal fees and  expenses  of Dewey  Ballantine  LLP,
counsel to Pequot,  in an aggregate amount not to exceed $35,000,  in connection
with the  preparation  of this Agreement and the other  agreements  contemplated
hereby and the closing of the transactions contemplated hereby.

                            [signature page follows]

                                       18
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
         have caused  this  Agreement  to be  executed by their duly  authorized
         officers, as of the date first set forth above.

                                         CHANNELHEALTH INCORPORATED


                                         By:/S/ RICHARD E. TARRANT
                                            _________________________
                                            Name:  Richard E. Tarrant,
                                                   President


                                         IDX Systems Corporation executes this
                                         Agreement for the sole purpose of
                                         making the representations in Section 4
                                         confirming the representations in
                                         Section 3.8(a) and becoming obligated
                                         to perform the covenants set forth in
                                         Sections 8.11, 8.12, 8.14 and 8.15.



                                        IDX SYSTEMS CORPORATION

                                        By:/s/ ROBERT W. BAKER, JR.
                                           __________________________
                                           Name: Robert W. Baker, Jr.,
                                                 Vice President



                                       PEQUOT PRIVATE EQUITY FUND II, L.P.

                                       By: Pequot Capital Management, Inc.,
                                           as Investment Manager

                                       By:/S/ DAVID J. MALAT
                                          _____________________________
                                          David J. Malat,
                                          Chief Financial Officer


                                       19

<PAGE>


                                   SCHEDULE I

                             SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>

================================================================================
                                  Number of Shares to  Purchase price for
Name and Address of Purchaser     be Purchased         shares to be purchased
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<S>                               <C>                  <C>

Pequot Private Equity Fund II,    2,542,243 Shares     $29,998,467.40
L.P.

500 Nyala Farm Road
Westport, CT 06880
Attention:  David J. Malat
Tel:  (203) 429-2284
Fax:  (203) 429-2420

--------------------------------------------------------------------------------
Henry M. Tufo                       15,000             $   177,000

--------------------------------------------------------------------------------
Frank T. Sample                      1,000             $    11,800

--------------------------------------------------------------------------------
Mark Wheeler                        20,000             $   236,000

--------------------------------------------------------------------------------
Allen Martin                        21,186             $   249,994.80

--------------------------------------------------------------------------------
Stuart H. Altman                    10,000             $   118,000

--------------------------------------------------------------------------------
Robert H. Hoehl                    105,000             $ 1,239,000

--------------------------------------------------------------------------------
Steven M. Lash and Cia               5,000             $    59,000
Colobella Lash, Trustees of
the Lash Family Trust U/A
dated 12/15/99

================================================================================

</TABLE>

<PAGE>



                                    EXHIBIT A



                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                           CHANNELHEALTH INCORPORATED

                  Channelhealth    Incorporated    (hereinafter    called    the
"Corporation"),  organized  and  existing  under and by  virtue  of the  General
Corporation Law of the State of Delaware, does hereby certify as follows:

                  1.  The   Corporation   filed  its  original   Certificate  of
Incorporation with the Secretary of the State of Delaware on September 24, 1999.

                  2. By unanimous  written  consent of the Board of Directors of
the Corporation, a resolution was duly adopted, pursuant to Sections 141(f), 242
and 245 of the General  Corporation Law of the State of Delaware,  setting forth
an Amended and Restated  Certificate of  Incorporation  of the  Corporation  and
declaring said Amended and Restated Certificate of Incorporation  advisable. The
stockholders of the Corporation duly approved said proposed Amended and Restated
Certificate of Incorporation by written consent in accordance with Sections 228,
242 and  245 of the  General  Corporation  Law of the  State  of  Delaware.  The
resolution  setting forth the Amended and Restated  Certificate of Incorporation
is as follows:

RESOLVED:  That the  Certificate of  Incorporation  of the  Corporation,  be and
hereby is amended and  restated  in its  entirety so that the same shall read as
follows:

                  FIRST.            The name of the Corporation is:

                                    Channelhealth Incorporated

                  SECOND.  The address of its registered  office in the State of
Delaware  is  Corporation  Service  Company,  1013 Centre  Road,  in the City of
Wilmington,  County  of New  Castle.  The name of its  registered  agent at such
address is The Corporation Service Company.

                  THIRD. The nature of the business or purposes to be conducted
or promoted by the Corporation is as follows:

                  To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.

                  FOURTH.  The total  number of shares of all  classes  of stock
which the Corporation shall have authority to issue is (i) 100,000,000 shares of

<PAGE>

Common Stock,  $.001 par value per share  ("Common  Stock"),  and (ii) 3,000,000
shares  of  Series A  Convertible  Preferred  Stock,  $.001  par value per share
("Series A Preferred Stock").

                  The  following  is a  statement  of the  designations  and the
powers,   privileges  and  rights,  and  the   qualifications,   limitations  or
restrictions  thereof  in  respect  of  each  class  of  capital  stock  of  the
Corporation.

1. COMMON STOCK.
   ------------

         1. General.  The voting,  dividend and liquidation rights of the
holders of the Common  Stock are subject to and  qualified  by the rights of the
holders of the  Preferred  Stock of any series as may be  designated by the
Board of Directors upon any issuance of the Preferred  Stock of any series.

         2.  Voting.  The holders of the Common  Stock are  entitled to one vote
for each share held at all meetings of stockholders (and written actions in lieu
of meetings).  There shall be no cumulative voting.

         3.  Number.  The  number of  authorized  shares of Common  Stock may be
increased  or  decreased  (but not below  the  number  of  shares  thereof  then
outstanding) by the  affirmative  vote of the holders of a majority of the stock
of the Corporation  entitled to vote,  irrespective of the provisions of Section
242(b)(2) of the General Corporation Law of Delaware.

         4.  Dividends.  Dividends may be declared and paid on the Common Stock
from funds lawfully  available therefor as and when determined by the Board
of Directors and subject to any  preferential  dividend  rights of any then
outstanding Preferred Stock.

         5.  Liquidation.  Upon the dissolution or liquidation of the
Corporation,  whether  voluntary or involuntary,  holders of Common Stock will
be entitled to receive all assets of the Corporation  available for distribution
to its stockholders,  subject to any preferential and participation rights of
any then outstanding Preferred Stock.

2.  SERIES A CONVERTIBLE PREFERRED STOCK.
    ------------------------------------

         1.  Dividends.  The  Corporation  shall  not  declare  or pay any  cash
dividends or other  distributions on shares of Common Stock until the holders of
the Series A Preferred  Stock then  outstanding  shall have first  received,  or
simultaneously  receive,  a cash dividend on each outstanding  share of Series A
Preferred  Stock in an amount at least equal to the product of (i) the per share
amount, if any, of the dividends or other distributions to be declared,  paid or
set aside for the Common Stock, multiplied by (ii) the number of whole shares of
Common  Stock  into  which  such  share  of  Series  A  Preferred  Stock is then
convertible.

                                       2
<PAGE>
         2.  Voting.

                  (a) Each  holder of  outstanding  shares of Series A Preferred
Stock  shall be  entitled  to the  number of votes  equal to the number of whole
shares of Common Stock into which the shares of Series A Preferred Stock held by
such holder are then  convertible  (as  adjusted  from time to time  pursuant to
Section 4 below),  at each  meeting  of  stockholders  of the  Corporation  (and
written actions of stockholders in lieu of meetings) with respect to any and all
matters  presented to the  stockholders  of the  Corporation for their action or
consideration.  Except as provided by law, by the provisions of subsections 2(b)
and (c) below or by the  provisions  establishing  any other series of Preferred
Stock,  holders of Series A Preferred Stock and of any other outstanding  series
of  Preferred  Stock shall vote  together  with the holders of Common Stock as a
single class.

                  (b) The  Corporation  shall not  amend,  alter or  repeal  the
preferences,  special rights or other powers of the Series A Preferred  Stock so
as to affect adversely the Series A Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding  shares
of  Series  A  Preferred  Stock,  given  in  writing  or by vote  at a  meeting,
consenting  or  voting  (as the case  may be)  separately  as a class.  For this
purpose,  without limiting the generality of the foregoing, the authorization of
any  shares of capital  stock  with  preference  or  priority  over the Series A
Preferred  Stock  as to  the  right  to  receive  either  dividends  or  amounts
distributable  upon  liquidation,  dissolution or winding up of the  Corporation
shall be  deemed to affect  adversely  the  Series A  Preferred  Stock,  and the
authorization of any shares of capital stock on a parity with Series A Preferred
Stock as to the right to receive either dividends or amounts  distributable upon
liquidation,  dissolution or winding up of the Corporation  shall also be deemed
to affect adversely the Series A Preferred Stock.

                  (c) At any time  when at least 50% of the  original  number of
Series A  Preferred  shares of Series A  Preferred  Stock  are  outstanding  (as
adjusted for any stock  dividends,  combinations  or splits with respect to such
shares),  except  where the vote or written  consent of the holders of a greater
number of shares of the  Corporation is required by law or by the Certificate of
Incorporation of the Corporation,  and in addition to any other vote required by
law or the Certificate of Incorporation of the Corporation, without the approval
of the  holders  of  two-thirds  of the  then  outstanding  shares  of  Series A
Preferred Stock, given in writing or by vote at a meeting,  consenting or voting
(as the  case  may be)  separately  from any  other  class of the  Corporation's
capital stock, but together as a single group, the Corporation will not:

                           (i) Effect any sale,  lease,  assignment,  transfer,
or  other  conveyance  of all or  substantially  all of the  assets  of the
Corporation or any of its subsidiaries, or any consolidation or merger involving
the Corporation or any of its subsidiaries;

                           (ii) Amend the  Certificate  of  Incorporation  of
the Corporation to authorize additional shares of the Corporation's capital
stock senior in rights or preferences to the Series A Preferred Stock;

                                       3
<PAGE>
                           (iii)  Issue or sell shares of the capital stock of
     the Corporation to any of the employees, officers, directors or consultants
of the  Corporation,  or its parents,  subsidiaries,  or  affiliates  other than
pursuant  to the  exercise  of stock  options  granted  under the  Corporation's
existing stock option plan or such other stock option plan as may be approved by
a  majority  of the  non-employee  members  of the  Board  of  Directors  of the
Corporation  or  pursuant  to rights  under any  stock  purchase  plan as may be
approved by a majority of the non-employee members of the Board of Directors;

                           (iv) Pay any  dividend or make any  distribution  on
     any  shares of stock  other than the Series A  Preferred  Stock,  except in
connection with the purchase of shares of Common Stock from former  employees of
the Corporation who acquired such shares directly from the Corporation,  if each
such purchase is made  pursuant to  contractual  rights held by the  Corporation
relating to the termination of employment of such former  employee;  (v) Consent
to any liquidation, dissolution or winding up of the Corporation;

                           (vi) Consent to termination of the Corporation's
corporate existence.

3.  Liquidation Preference.
    ----------------------
The holders of Series A Preferred Stock shall have the following rights upon
liquidation:


                           (a) Generally.  In the event of a liquidation,
     dissolution, or winding up of the Corporation,  the holders of the Series A
Preferred  Stock  shall be entitled to receive  prior and in  preference  to any
distribution  of any assets or surplus  funds of the  Corporation  to the Common
Stock,  out of the assets of the Corporation  available for  distribution to its
stockholders  (whether  from  capital  or  surplus),  at the option of each such
holder,  either (i) a sum equal to the consideration  paid per share of Series A
Preferred  Stock plus all dividends  which have been declared on such shares and
have  theretofore   accrued  but  not  been  paid  (the  "Series  A  Liquidation
Preference")  prior to any  payment to the  holders of the Common  Stock or (ii)
participation in the entire remaining assets of the Corporation,  and any assets
available for  distribution  shall be  distributed  to the holders of the Common
Stock and such holders of Series A Preferred  Stock in  proportion to the number
of shares of Common  Stock  then held by them and the number of shares of Common
Stock which they then have the right to acquire upon conversion of the shares of
Series A Preferred Stock then held by them.

                           (b)  Non-Cash  Distributions.  For  purposes of this
Section 3, if any assets  distributed to stockholders  upon  liquidation of
the  Corporation  consist  of  property  other  than  cash,  the  amount of such
distribution  shall be deemed to be the fair market value thereof at the time of
such distribution,  as determined in good faith by the Board of Directors of the
Corporation.

4. Conversion.
   ----------
The holders of Series A Preferred Stock shall have conversion rights as follows:

                                       4
<PAGE>
                           (a) Right to Convert.  The holder of any share or
shares of Series A Preferred Stock shall have the right, at its option,  at
any  time  and  from  time to  time,  and  without  the  payment  of  additional
consideration  by the holder  thereof,  to convert  any such  shares of Series A
Preferred  Stock  into such  number of fully  paid and  nonassessable  shares of
Common  Stock as  obtained by (i)  multiplying  the number of shares of Series A
Preferred  Stock so to be converted by Eleven  Dollars and Eighty Cents ($11.80)
and (ii)  dividing  the result by the  conversion  price of Eleven  Dollars  and
Eighty  Cents  ($11.80)  per share or, in case an  adjustment  of such price has
taken place pursuant to the further provisions of this subsection 4, then by the
conversion  price as last adjusted and in effect at the date any share or shares
of Series A Preferred Stock are surrendered for conversion  (such price, or such
price as last adjusted, being referred to as the "Conversion Price").

                           (b)  Mechanics  of  Conversion.  Before any holder of
Series A  Preferred  Stock  shall be entitled to convert the same into full
shares  of  Common  Stock,   the  holder  shall  surrender  the  certificate  or
certificates  therefor,  duly  endorsed  for  transfer,  at  the  office  of the
Corporation  or any  transfer  agent of the  Corporation  and shall give written
notice to the  Corporation  at such  office  that he elects to convert the same,
such notice to state the name or names in which  certificates  for Common  Stock
will be issued and the addresses to which such  certificates  should be sent. No
fractional  shares of Common Stock shall be issued upon  conversion  of Series A
Preferred  Stock.  In lieu of any  fractional  shares to which the holder  would
otherwise be entitled,  the  Corporation  shall pay cash equal to such  fraction
multiplied by the original purchase price for such stock,  subject to adjustment
as provided below. The Corporation  shall, as soon as practicable  after receipt
of any written  notice of  conversion,  issue and deliver at such office to such
holder  of  Series A  Preferred  Stock,  or to a third  party  such  holder  may
designate in writing,  a certificate or certificates for the number of shares of
Common Stock to which he shall be entitled as aforesaid,  and a check payable to
the holder in the amount of any cash amounts payable as the result of conversion
into  fractional  shares of Common Stock and any declared but unpaid  dividends,
and if less than all the shares of the Series A Preferred  Stock  represented by
such certificates are converted, a certificate representing the shares of Series
A Preferred Stock not converted.  Such  conversion  shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the  shares of  Series A  Preferred  Stock to be  converted,  and the  person or
persons  entitled  to receive  the  shares of Common  Stock  issuable  upon such
conversion  shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.  If the  conversion  is in  connection
with  an  underwritten   offering  of  securities  registered  pursuant  to  the
Securities Act of 1933, as amended (the  "Securities  Act"), the conversion may,
at  the  option  of  any  holder  surrendering  Series  A  Preferred  Stock  for
conversion,  be conditioned upon the closing with the underwriter of the sale of
securities  pursuant to such offering,  in which event the person(s) entitled to
receive the Common Stock or other property  issuable upon such conversion of the
Series A Preferred  Stock shall not be deemed to have converted into such Series
A  Preferred  Stock  until  immediately  prior to the  closing  of such  sale of
securities.  Notice  of such  conversion  in  connection  with  an  underwritten
offering  of  securities  shall  be given by the  Corporation  by mail,  postage
pre-paid,  to the  holders of the Series A  Preferred  Stock at their  addresses
shown in the Corporation's  records, at least ten (10) days prior to the closing
date of the sale of such  securities.  On or after the closing date as specified
in such  notice,  each holder of Series A Preferred  Stock shall  surrender  his

                                       5
<PAGE>

certificate or certificates  representing  such Series A Preferred Stock for the
number of shares of Common  Stock to which he is  entitled  at the office of the
Corporation or any transfer agent for the Common Stock.  The Corporation  shall,
as soon as  practicable  thereafter,  issue and  deliver at such  office to such
holder of Series A Preferred Stock, a certificate or certificates for the number
of shares of Common  Stock to which he shall be  entitled  as  aforesaid,  and a
check  payable to the holder in the  amount of any cash  amounts  payable as the
result of a conversion into  fractional  shares of Common Stock and any declared
but unpaid dividends.  The conversion shall be deemed to have occurred as of the
close of business on the actual  closing  date with  respect to the sale of such
securities,  and, notwithstanding that any certificate representing the Series A
Preferred Stock to be converted shall not have been surrendered,  each holder of
such Series A Preferred  Stock shall  thereafter  be treated for all purposes as
the  record  holder of the  number of shares of Common  Stock  issuable  to such
holder upon such conversion.

                           (c)  Adjustments to Conversion Ratio.

                           (i)  Adjustments  of  Conversion  Price Upon
Issuance of Common Stock.  Except as provided in subsection 4(c)(ii) below,
if and whenever the  Corporation  shall issue or sell, or is, in accordance with
subsections  4(c)(i)(A)  through (G) below,  deemed to have issued or sold,  any
shares of Common Stock for a  consideration  per share less than the  Conversion
Price in  effect  immediately  prior to the  time of such  issue or sale,  then,
forthwith upon such issue or sale, the Conversion  Price shall be reduced to the
price determined by dividing (x) an amount equal to the sum of (a) the number of
shares of  Common  Stock  outstanding  immediately  prior to such  issue or sale
multiplied by the then existing  Conversion Price and (b) the consideration,  if
any,  received  by the  Corporation  upon such  issue or sale,  by (y) the total
number of shares of Common  Stock  outstanding  immediately  after such issue or
sale.  For  purposes  of  determining  the  number of  shares  of  Common  Stock
outstanding  as provided  in clauses (x) and (y) above,  the number of shares of
Common Stock  issuable upon  conversion of all  outstanding  shares of Preferred
Stock shall be deemed to be outstanding.

                           For  purposes  of this  subsection  4(c)(i),  the
following  subsections  4(c)(i)(A)  to (G) shall  also be applicable:

                           (A)  Issuance of Rights or Options.  In case at any
time the  Corporation  shall in any manner  grant  (whether  directly or by
assumption in a merger or  otherwise)  any warrants or other rights to subscribe
for or to  purchase,  or any options for the  purchase  of,  Common Stock or any
stock or  security  convertible  into or  exchangeable  for Common  Stock  (such
warrants,  rights or options  being called  "Options"  and such  convertible  or
exchangeable stock or securities being called "Convertible  Securities") whether
or not such  Options or the right to convert or  exchange  any such  Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable  upon the exercise of such Options or upon the  conversion  or
exchange of such  Convertible  Securities  (determined by dividing (i) the total
amount,  if any,  received or receivable by the Corporation as consideration for
the granting of such Options,  plus the minimum  aggregate  amount of additional
consideration  payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to  Convertible  Securities,  the
minimum aggregate amount of additional  consideration,  if any, payable upon the

                                       6

<PAGE>
issue or sale of such Convertible Securities and upon the conversion or exchange
thereof,  by (ii) the total  maximum  number of shares of Common Stock  issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than  the  Conversion  Price  in  effect  immediately  prior  to the time of the
granting  of such  Options,  then the total  maximum  number of shares of Common
Stock issuable upon the exercise of such Options or upon  conversion or exchange
of the total maximum  amount of such  Convertible  Securities  issuable upon the
exercise of such Options  shall be deemed to have been issued for such price per
share as of the date of granting of such Options and thereafter  shall be deemed
to be outstanding.  Except as otherwise  provided in subsection  4(c)(i)(C),  no
adjustment of the  Conversion  Price shall be made upon the actual issue of such
Common Stock or of such Convertible  Securities upon exercise of such Options or
upon the actual issue of such Common Stock upon  conversion  or exchange of such
Convertible Securities.

                           (B)  Issuance  of  Convertible  Securities.  In case
the  Corporation  shall  in  any  manner  issue  (whether  directly  or  by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the rights to  exchange or convert any such  Convertible  Securities  are
immediately  exercisable,  and the price per  share  for which  Common  Stock is
issuable upon such conversion or exchange  (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration  for the issue
or sale of such  Convertible  Securities,  plus the minimum  aggregate amount of
additional consideration, if any, payable to the Corporation upon the conversion
or exchange thereof,  by (ii) the total maximum number of shares of Common Stock
issuable  upon the  conversion or exchange of all such  Convertible  Securities)
shall be less than the Conversion Price in effect  immediately prior to the time
of such issue or sale,  then the total maximum  number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been  issued for such price per share as of the date of the issue
or sale of such  Convertible  Securities  and  thereafter  shall be deemed to be
outstanding,  provided  that (a)  except as  otherwise  provided  in  subsection
4(c)(i)(C),  no adjustment of the Conversion Price shall be made upon the actual
issue of such Common  Stock upon  conversion  or  exchange  of such  Convertible
Securities and (b) if any such issue or sale of such  Convertible  Securities is
made upon  exercise of any Options to purchase any such  Convertible  Securities
for  which  adjustments  of the  Conversion  Price  have  been or are to be made
pursuant to other provisions of this subsection  4(c)(i),  no further adjustment
of the Conversion Price shall be made by reason of such issue or sale.

                           (C)  Change in Option Price or Conversion Rate. Upon
the happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subsection 4(c)(i)(A),  the additional
consideration,   if  any,  payable  upon  the  conversion  or  exchange  of  any
Convertible  Securities referred to in subsection 4(c)(i)(A) or (B), or the rate
at which Convertible  Securities referred to in subsection 4(c)(i)(A) or (B) are
convertible  into or  exchangeable  for Common  Stock  shall  change at any time
(including,  but not  limited  to,  changes  under or by  reason  of  provisions
designed to protect  against  dilution),  the Conversion  Price in effect at the
time of such event shall  forthwith be readjusted to the Conversion  Price which
would  have  been in  effect  at such  time  had  such  Options  or  Convertible
Securities  still   outstanding   provided  for  such  changed  purchase  price,

                                       7
<PAGE>

additional  consideration  or  conversion  rate, as the case may be, at the time
initially  granted,  issued or sold, but only if as a result of such  adjustment
the Conversion  Price then in effect  hereunder is thereby  reduced;  and on the
termination  of any such  Option or any such right to convert or  exchange  such
Convertible  Securities,  the Conversion  Price then in effect  hereunder  shall
forthwith be increased to the  Conversion  Price which would have been in effect
at the time of such  termination had such Option or Convertible  Securities,  to
the extent outstanding immediately prior to such termination, never been issued.

                           (D)  Stock  Dividends.  In case the Corporation shall
declare a  dividend  or make any other  distribution  upon any stock of the
Corporation  (other  than  Common  Stock)  payable in Common  Stock,  Options or
Convertible   Securities,   then  any  Common  Stock,   Options  or  Convertible
Securities,  as the  case  may be,  issuable  in  payment  of such  dividend  or
distribution shall be deemed to have been issued or sold without consideration.

                           (E)  Consideration  for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or sold for
cash,  the  consideration  received  therefor  shall be deemed to be the  amount
received  by  the  Corporation  therefor,  without  deduction  therefrom  of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith.  In case any shares of Common Stock,
Options or Convertible  Securities  shall be issued or sold for a  consideration
other than cash, the amount of the consideration other than cash received by the
Corporation  shall be  deemed  to be the fair  value  of such  consideration  as
determined in good faith by the Board of Directors of the  Corporation,  without
deduction  of  any  expenses   incurred  or  any  underwriting   commissions  or
concessions paid or allowed by the Corporation in connection therewith.  In case
any  Options  shall be  issued  in  connection  with the issue and sale of other
securities of the Corporation,  together comprising one integral  transaction in
which no specific  consideration  is  allocated  to such  Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.

                           (F)  Record  Date.  In case the  Corporation  shall
take a record  of the  holders  of its  Common  Stock  for the  purpose  of
entitling them (i) to receive a dividend or other distribution payable in Common
Stock,  Options or  Convertible  Securities or (ii) to subscribe for or purchase
Common Stock, Options or Convertible Securities,  then such record date shall be
deemed to be the date of the issue or sale of the shares of Common  Stock deemed
to have been issued or sold upon the  declaration of such dividend or the making
of such  other  distribution  or the  date of the  granting  of  such  right  of
subscription or purchase, as the case may be.

                           (G)  Treasury  Shares.  The number of shares of
Common Stock  outstanding  at any given time shall not include shares owned
or held by or for the account of the  Corporation,  and the  disposition  of any
such shares shall be considered an issue or sale of Common Stock for the purpose
of this subsection 4(c)(i).

                                       8
<PAGE>
                           (ii)  Certain  Issues  of Common  Stock  Excepted.
Anything herein to the contrary notwithstanding,  the Corporation shall not
be required to make any  adjustment of the  Conversion  Price in the case of the
issuance  from and  after  the date of  filing  of these  terms of the  Series A
Preferred  Stock of (a) shares not  exceeding in the aggregate ten percent (10%)
of the issued and outstanding shares of common stock, on a fully-diluted  basis,
to  employees,  directors  or  consultants  of the  Corporation  or its parents,
subsidiaries  and  affiliates  pursuant to employee  stock plans  approved on or
before the date hereof or hereafter  approved by a majority of the  non-employee
members of the Board of Directors of the  Corporation;  (b) any shares of Common
Stock upon the conversion of shares of Series A Preferred  Stock; (c) any shares
of  Common  Stock  pursuant  to which the  Conversion  Price is  adjusted  under
subsection  4(c)(iii),  (iv) or (v);  or (d) any shares of Common  Stock  issued
pursuant to the exchange,  conversion or exercise of any Options or  Convertible
Securities that have previously been incorporated into computations hereunder on
the date when such Options or  Convertible  Securities  were issued;  or (e) any
shares issued as a dividend on the Series A Preferred Stock.

                           (iii)  Adjustments for  Subdivisions,  Common Stock
Dividends, Combinations or Consolidations of Common Stock. In the event the
outstanding  shares of Common Stock shall be subdivided  or increased,  by stock
split or stock  dividend,  into a greater number of shares of Common Stock,  the
number of shares of Common  Stock into which such  Series A  Preferred  Stock is
convertible  shall  concurrently  with the  effectiveness of such subdivision or
payment of such stock dividend, be proportionately  increased.  In the event the
outstanding  shares  of Common  Stock  shall be  combined  or  consolidated,  by
reclassification  or otherwise,  into a lesser number of shares of Common Stock,
the number of shares of Common Stock into which such Series A Preferred Stock is
convertible  shall,  concurrently  with the effectiveness of such combination or
consolidation, be proportionately decreased.

                           (iv)  Adjustments  for  Reclassification,  Exchange
and  Substitution.  If the Common Stock  issuable  upon  conversion  of the
Series A Preferred Stock shall be changed into the same or a different number of
shares  of  any  other   class  or   classes   of  stock,   whether  by  capital
reorganization,  reclassification  or  otherwise  (other than a  subdivision  or
combination of shares provided for above),  the number of shares of Common Stock
into which such Series A Preferred Stock is convertible shall, concurrently with
the effectiveness of such reorganization or reclassification, be proportionately
adjusted such that the Series A Preferred  Stock shall be  convertible  into, in
lieu of the number of shares of Common Stock which the holders  would  otherwise
have been entitled to receive, a number of shares of such other class or classes
of stock equivalent to the number of shares of Common Stock that would have been
subject to receipt by the  holders  upon  conversion  of the Series A  Preferred
Stock immediately before that change.

                           (v) Adjustments for Merger,  Sale, Lease or
Conveyance.  In case of any consolidation with or merger of the Corporation
with or into another corporation, or in case of any sale, lease or conveyance to
another  Corporation  of  the  assets  of  the  Corporation  as an  entirety  or
substantially as an entirety,  the Series A Preferred Stock shall after the date
of such consolidation, merger, sale, lease or conveyance be convertible into the
number of shares of stock or other  securities or property  (including  cash) to

                                       9

<PAGE>

which the Common  Stock  issuable  (at the time of such  consolidation,  merger,
sale, lease or conveyance) upon conversion of the Series A Preferred Stock would
have been entitled upon such consolidation,  merger,  sale, lease or conveyance;
and in any such case, if necessary, the provisions set forth herein with respect
to the rights and interests  thereafter of the holders of the Series A Preferred
Stock shall be appropriately  adjusted so as to be applicable,  as nearly as may
reasonably be, to any shares of stock or other securities or property thereafter
deliverable on the conversion of the shares of Series A Preferred Stock.

                           (d)  Mandatory Conversion.

                           (i) Initial Public  Offering.  Each share of Series A
Preferred  Stock shall  automatically  be converted into one (1) fully paid
and  nonassessable  share of Common Stock  (subject to adjustment as provided in
subsection  4(c) above) upon the occurrence of the closing of the sale of shares
of Common  Stock in a firm  commitment  underwriting  pursuant  to an  effective
registration   statement   under  the  Securities  Act  resulting  in  at  least
$35,000,000 of net proceeds to the  Corporation and a market  capitalization  of
the Corporation of at least $500,000,000.

                           (ii)  Procedures.  All  holders  of record of shares
of Series A Preferred  Stock will be given at least twenty (20) days' prior
written notice of the date fixed and place  designated for mandatory  conversion
of the Series A Preferred  Stock and the event which  resulted in the  mandatory
conversion of the Series A Preferred Stock into Common Stock.  Such notice shall
be sent by first class mail,  postage  prepaid,  to each holder of record of the
Series A Preferred Stock at such holder's address as shown in the records of the
Corporation.  On or before  the date so fixed  for  conversion,  each  holder of
shares of the Series A Preferred Stock shall surrender his or its certificate or
certificates  for all such shares to the Corporation at the place  designated in
such notice and shall thereafter  receive  certificates for the number of shares
of Common Stock to which such holder is entitled.  The mechanics for  conversion
and other  provisions  relating to conversion  of Series A Preferred  Stock into
Common Stock set forth  elsewhere in this  Amended and Restated  Certificate  of
Incorporation shall apply to the mandatory  conversion of the Series A Preferred
Stock.
                           (e)  Certificate  as to  Adjustments.  Upon  the
occurrence  of each  adjustment or  readjustment  of the  conversion  ratio
pursuant to this  subsection 4, the  Corporation  at its expense shall  promptly
compute such  adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series A Preferred  Stock a certificate  setting forth
such  adjustment or readjustment in accordance with the terms hereof and showing
in detail the facts upon which such  adjustment or  readjustment  is based.  The
Corporation  shall, upon the written request at any time of any holder of Series
A  Preferred  Stock,  furnish  or cause to be  furnished  to such  holder a like
certificate  setting forth (i) such adjustments and  readjustments  and (ii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series A Preferred Stock.

                           (f)  Notices of Record Date.  In the event that the
Corporation shall propose at any time:

                                       10
<PAGE>
                           (i) to declare any dividend or distribution  (other
than by purchase  of Common  Stock of  employees,  officers  and  directors
pursuant to the  termination  of such  persons or pursuant to the  Corporation's
exercise of rights of first  refusal  with  respect to Common Stock held by such
persons)  upon its  Common  Stock,  whether  in cash,  property,  stock or other
securities,  whether or not a regular  cash  dividend  and whether or not out of
earnings or earned surplus;

                           (ii) to effect any  reclassification or
recapitalization of its Common Stock shares outstanding  involving a change
in the Common Stock; or

                           (iii) to  merge or  consolidate  with or into  any
other  Corporation,  or sell, lease or convey all or substantially  all its
property or business, or to liquidate,  dissolve or wind up; then, in connection
with each such event, the Corporation  shall send to the holders of the Series A
Preferred Stock:

                           (1) at least twenty (20) days' prior  written  notice
of the  date on  which a  record  shall  be  taken  for  such  dividend  or
distribution (and specifying the date on which the holders of Common Stock shall
be entitled thereto) or for determining rights to vote in respect of the matters
referred to in (i) and (ii) above; and

                           (2) in the case of the  matters  referred  to in (ii)
and (iii)  above,  at least twenty (20) days' prior  written  notice of the
date  when the same  shall  take  place  (and  specifying  the date on which the
holders of Common  Stock shall be entitled  to exchange  their  shares of Common
Stock for securities or other property  deliverable  upon the occurrence of such
event).

                           Each  such  written  notice  shall  be given by first
     class mail, postage prepaid, addressed to the holders of Series A Preferred
Stock  at the  address  for  each  such  holder  as  shown  on the  books of the
Corporation.

                           (g) No Impairment.  The Corporation  will not, by
amendment   of  its   Certificate   of   Incorporation   or   through   any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of  securities or any other  voluntary  action (other than actions taken in
good  faith),  avoid the  observance  or  performance  of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in good
faith  assist in carrying out all the  provisions  of this Article and in taking
all such  action as may be  necessary  or  appropriate  in order to protect  the
conversion  rights  of the  holders  of the  Series A  Preferred  Stock  against
impairment.

                           (h)  Reservation of Common Stock.  The  Corporation
shall, at all times when the Series A Preferred Stock shall be outstanding,
reserve and keep  available out of its authorized  but unissued  stock,  for the
purpose of effecting the conversion of the Series A Preferred Stock, such number
of its duly  authorized  shares  of Common  Stock as shall  from time to time be
sufficient to effect the conversion of all outstanding Series A Preferred Stock.

                                       11
<PAGE>
                           (i) No  Adjustment.  Except as otherwise  provided
herein,  upon any voluntary  conversion of the Series A Preferred Stock, no
adjustment  to the  conversion  rights  shall be made for  declared  but  unpaid
dividends on the Series A Preferred  Stock  surrendered for conversion or on the
Common Stock delivered.

                           (j)  Cancellation of Series A Preferred  Stock.  All
shares of the Series A Preferred  Stock  which shall have been  surrendered
for  conversion as herein  provided  shall no longer be deemed to be outstanding
and all rights with respect to such  shares,  including  the rights,  if any, to
receive notices and to vote, shall forthwith cease and terminate except only the
right of the  holders  thereof to  receive  shares of Common  Stock in  exchange
therefor and to receive  payment of any declared but unpaid  dividends  thereon.
Any shares of the Series A  Preferred  Stock so  converted  shall be retired and
canceled and shall not be reissued,  and the  Corporation  may from time to time
take such appropriate action as may be necessary to reduce the authorized Series
A Preferred Stock.

         5.       Redemption. The Series A Preferred Stock shall be redeemed by
the Corporation as follows:


                           (a) At the  individual  option  of each  holder  of
shares of the Series A Preferred Stock exercisable  commencing on the fifth
(5th)  anniversary of the date of issuance  thereof and  continuing  annually on
each anniversary of the date of issuance  thereafter (each a "Redemption Date"),
the  Corporation  shall  redeem,  from any  source  of funds  legally  available
therefor,  the number of shares of Series A Preferred  Stock held by such holder
that  is  specified  in a  written  request  for  redemption  delivered  to  the
Corporation by such holder at least thirty (30) days prior to a Redemption  Date
at a redemption price (the "Redemption  Price") equal to $11.80 per share,  plus
any declared but unpaid dividends,  payable in three (3) equal installments over
three (3) years.
                           (b) Redemption  Notice.  At least fifteen (15),  but
no more than thirty (30) days prior to each  Redemption Date written notice
shall be mailed,  first class postage prepaid,  to each holder of record (at the
close of business on the business day next  preceding the day on which notice is
given) of the Series A  Preferred  Stock which may be  redeemed,  at the address
last shown on the records of the  Corporation  for such holder,  notifying  such
holder of the redemption which may be effected, specifying the maximum number of
shares  which may be  redeemed  from  such  holder,  the  Redemption  Date,  the
Redemption  Price,  the place at which  payment may be obtained and calling upon
such holder,  at such holders option,  to surrender to the  Corporation,  in the
manner and at the place designated, the certificate or certificates representing
the shares to be  redeemed  (the  "Redemption  Notice").  Except as  provided in
subsection (c) below,  on or after the Redemption  Date, each holder of Series A
Preferred  Stock who  elects to have  shares  redeemed  shall  surrender  to the
Corporation  the certificate or certificates  representing  such shares,  in the
manner and at the place designated in the Redemption  Notice,  and thereupon the
Redemption  Price of such  shares  shall be  payable  to the order of the person
whose name appears on such  certificate or certificates as the owner thereof and
each  surrendered  certificate  shall be cancelled.  If less than all the shares
represented by any such  certificate are redeemed,  a new  certificate  shall be
issued representing the unredeemed shares.

                                       12
<PAGE>
                           (c) Rights of Holder of Series A Preferred  Stock
After the Redemption  Date. From and after the applicable  Redemption Date,
unless there shall have been a default in payment of the Redemption  Price,  all
rights of each  holder of shares of Series A  Preferred  Stock  surrendered  for
redemption  as holders of Series A Preferred  Stock (except the right to receive
the Redemption  Price without  interest upon  surrender of their  certificate or
certificates),  for that number of shares  that would be  redeemed  based on the
amount of the Redemption Price paid to such holder, shall cease, and such shares
shall not thereafter be transferred on the books of the Corporation or be deemed
to be outstanding  for any purpose  whatsoever.  If the funds of the Corporation
legally  available for  redemption of shares of Series A Preferred  Stock on any
Redemption Date are  insufficient to redeem the total number of shares of Series
A Preferred Stock  requested to be redeemed on such date,  those funds which are
legally  available  will be used to redeem the maximum  possible  number of such
shares  ratably among the holders of such shares to be redeemed based upon their
holdings of Series A Preferred Stock. The shares of Series A Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. At any time thereafter when additional funds of the Corporation
are legally available for the redemption of Series A Preferred Stock, such funds
will  immediately  be used  to  redeem  the  balance  of the  shares  which  the
Corporation has become  obligated to redeem on any Redemption Date, but which it
has not redeemed.

        6.       Amendments.  No provision of these terms of the Series A
Preferred  Stock may be  amended,  modified  or waived  without the written
consent or  affirmative  vote of the holders of at least  two-thirds of the then
outstanding shares of Series A Preferred Stock.

         FIFTH.   The Corporation shall have a perpetual existence.

         SIXTH.   In furtherance of and not in limitation of powers conferred by
                  statute, it is further provided:

                           1.       Election of directors need not be by written
ballot, except as and to the extent provided in the By-laws of the Corporation.

                           2.       The Board of Directors is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation, except
as and to the extent provided in the By-laws of the Corporation.

         SEVENTH.  Except to the extent that the General  Corporation Law of the
State of Delaware  prohibits  the  elimination  or  limitation  of  liability of
directors for breaches of fiduciary duty, no director of the  Corporation  shall
be personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty as a director, notwithstanding any provision of
law imposing such  liability.  No amendment to or repeal of this provision shall
apply to or have  any  effect  on the  liability  or  alleged  liability  of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.

         EIGHTH.

                           1.       Actions, Suits and Proceedings Other than by
or in the Right of the  Corporation.  The Corporation  shall indemnify each

                                       13
<PAGE>

person  who  was or is a  party  or is  threatened  to be  made a  party  to any
threatened,  pending or completed  action,  suit or  proceeding,  whether civil,
criminal,  administrative  or  investigative  (other than an action by or in the
right of the  Corporation),  by  reason  of the fact  that he is or was,  or has
agreed to  become,  a  director  or  officer  of the  Corporation,  or is or was
serving,  or has  agreed to  serve,  at the  request  of the  Corporation,  as a
director,  officer  or  trustee  of,  or in a  similar  capacity  with,  another
corporation,  partnership,  joint venture,  trust or other enterprise (including
any employee  benefit plan) (all such persons being  referred to hereafter as an
"Indemnitee"),  or by reason of any action alleged to have been taken or omitted
in such capacity,  against all expenses (including attorneys' fees),  judgments,
fines and amounts paid in settlement  actually and reasonably incurred by him or
on his behalf in connection with such action,  suit or proceeding and any appeal
therefrom,  if he acted in good faith and in a manner he reasonably  believed to
be in, or not opposed  to, the best  interests  of the  Corporation,  and,  with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.  The termination of any action,  suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent,  shall not, of itself,  create a presumption that the person did not
act in good faith and in a manner which he reasonably  believed to be in, or not
opposed to, the best  interests  of the  Corporation,  and,  with respect to any
criminal action or proceeding,  had reasonable cause to believe that his conduct
was unlawful.  Notwithstanding  anything to the contrary in this Article, except
as set  forth in  Section  7 below,  the  Corporation  shall  not  indemnify  an
Indemnitee  seeking  indemnification  in connection  with a proceeding  (or part
thereof)  initiated by the Indemnitee unless the initiation thereof was approved
by the Board of Directors of the  Corporation.  Notwithstanding  anything to the
contrary in this Article,  the Corporation  shall not indemnify an Indemnitee to
the extent such Indemnitee is reimbursed from the proceeds of insurance,  and in
the event the Corporation  makes any  indemnification  payments to an Indemnitee
and such Indemnitee is  subsequently  reimbursed from the proceeds of insurance,
such  Indemnitee  shall  promptly  refund such  indemnification  payments to the
Corporation to the extent of such insurance reimbursement.

                           2.       Actions or Suits by or in the Right of the
Corporation. The Corporation shall indemnify any Indemnitee who was or is a
party  or is  threatened  to be  made a  party  to any  threatened,  pending  or
completed  action or suit by or in the  right of the  Corporation  to  procure a
judgment  in its favor by reason of the fact that he is or was, or has agreed to
become, a director or officer of the Corporation,  or is or was serving,  or has
agreed to serve, at the request of the  Corporation,  as a director,  officer or
trustee of, or in a similar  capacity with,  another  corporation,  partnership,
joint venture,  trust or other enterprise (including any employee benefit plan),
or by  reason  of any  action  alleged  to have been  taken or  omitted  in such
capacity,  against all expenses  (including  attorneys' fees) and, to the extent
permitted by law, amounts paid in settlement actually and reasonably incurred by
him or on his behalf in connection with such action,  suit or proceeding and any
appeal  therefrom,  if he acted in good  faith  and in a  manner  he  reasonably
believed  to be in, or not opposed to, the best  interests  of the  Corporation,
except that no  indemnification  shall be made in respect of any claim, issue or
matter as to which  such  person  shall have been  adjudged  to be liable to the
Corporation unless and only to the extent that the Court of Chancery of Delaware
shall  determine  upon  application  that,  despite  the  adjudication  of  such
liability  but in view of all the  circumstances  of the  case,  such  person is

                                       14
<PAGE>
fairly  and  reasonably  entitled  to  indemnity  for such  expenses  (including
attorneys' fees) which the Court of Chancery of Delaware shall deem proper.

                           3.       Indemnification for Expenses of Successful
Party.  Notwithstanding the other provisions of this Article, to the extent
that an Indemnitee has been successful,  on the merits or otherwise,  in defense
of any  action,  suit or  proceeding  referred  to in  Sections  1 and 2 of this
Article,  or in defense of any claim, issue or matter therein, or on appeal from
any  such  action,  suit or  proceeding,  he shall be  indemnified  against  all
expenses (including  attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection  therewith.  Without limiting the foregoing,  if any
action, suit or proceeding is disposed of, on the merits or otherwise (including
a disposition without  prejudice),  without (i) the disposition being adverse to
the  Indemnitee,  (ii) an  adjudication  that the  Indemnitee  was liable to the
Corporation,  (iii) a plea of guilty or nolo contendere by the Indemnitee,  (iv)
an adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably  believed  to be in or not  opposed  to  the  best  interests  of the
Corporation,  and (v) with respect to any criminal  proceeding,  an adjudication
that the Indemnitee  had  reasonable  cause to believe his conduct was unlawful,
the Indemnitee  shall be considered for the purposes  hereof to have been wholly
successful with respect thereto.

                           4.       Notification and Defense of Claim.  As a
condition  precedent to his right to be  indemnified,  the Indemnitee  must
notify the  Corporation in writing as soon as  practicable of any action,  suit,
proceeding or  investigation  involving him for which indemnity will or could be
sought. With respect to any action,  suit,  proceeding or investigation of which
the Corporation is so notified,  the Corporation will be entitled to participate
therein  at its own  expense  and/or to assume  the  defense  thereof at its own
expense,  with legal  counsel  reasonably  acceptable to the  Indemnitee.  After
notice from the  Corporation to the Indemnitee of its election so to assume such
defense,  the Corporation shall not be liable to the Indemnitee for any legal or
other expenses  subsequently  incurred by the Indemnitee in connection with such
claim, other than as provided below in this Section 4. The Indemnitee shall have
the right to employ his own counsel in connection with such claim,  but the fees
and expenses of such counsel  incurred after notice from the  Corporation of its
assumption  of the defense  thereof  shall be at the  expense of the  Indemnitee
unless (i) the employment of counsel by the  Indemnitee  has been  authorized by
the Corporation,  (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest  or position on any  significant  issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the  Corporation  shall not in fact  have  employed  counsel  to
assume the defense of such action,  in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise  expressly  provided by this Article.  The Corporation shall not be
entitled,  without the consent of the  Indemnitee,  to assume the defense of any
claim brought by or in the right of the  Corporation  or as to which counsel for
the Indemnitee shall have reasonably made the conclusion  provided for in clause
(ii) above.

                           5.       Advance of Expenses.  Subject to the
provisions of Section 6 below, in the event that the  Corporation  does not
assume the defense  pursuant to Section 4 of this  Article of any action,  suit,
proceeding or investigation of which the Corporation  receives notice under this
Article,  any expenses (including  attorneys' fees) incurred by an Indemnitee in

                                       15
<PAGE>
defending a civil or criminal action,  suit,  proceeding or investigation or any
appeal  therefrom  shall be paid by the  Corporation  in  advance  of the  final
disposition of such matter; provided, however, that the payment of such expenses
incurred by an  Indemnitee  in advance of the final  disposition  of such matter
shall be made  only  upon  receipt  of an  undertaking  by or on  behalf  of the
Indemnitee  to  repay  all  amounts  so  advanced  in the  event  that it  shall
ultimately be determined  that the  Indemnitee is not entitled to be indemnified
by the  Corporation  as authorized in this Article.  Such  undertaking  shall be
accepted  without  reference to the financial  ability of the Indemnitee to make
such repayment.

                           6.       Procedure for Indemnification.  In order to
obtain indemnification or advancement of expenses pursuant to Section 1, 2,
3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written
request,  including in such request such  documentation  and  information  as is
reasonably  available to the Indemnitee and is reasonably necessary to determine
whether and to what extent the  Indemnitee  is  entitled to  indemnification  or
advancement  of expenses.  Any such  indemnification  or advancement of expenses
shall be made  promptly,  and in any event  within 60 days after  receipt by the
Corporation  of the written  request of the  Indemnitee,  unless with respect to
requests under Section 1, 2 or 5 the Corporation  determines  within such 60-day
period that the Indemnitee  did not meet the applicable  standard of conduct set
forth in Section 1 or 2, as the case may be. Such  determination  shall be made,
with  respect  to a person  who is a  director  or  officer  at the time of such
determination,  (a) by a  majority  vote  of the  directors  of the  Corporation
consisting  of persons who are not at that time  parties to the action,  suit or
proceeding in question ("disinterested directors"), whether or not a quorum, (b)
by a committee of disinterested  directors designated by a majority vote of such
disinterested  directors,  whether or not a quorum,  (c) by a majority vote of a
quorum of the  outstanding  shares of stock of all classes  entitled to vote for
directors,  voting as a single class, which quorum shall consist of stockholders
who are not at that time parties to the action,  suit or proceeding in question,
(d) if there are no disinterested  directors, or if such disinterested directors
so direct,  by  independent  legal counsel (who may, to the extent  permitted by
law, be regular legal counsel to the  Corporation),  or (e) a court of competent
jurisdiction.

                           7.       Remedies.  The right to indemnification or
advances as granted by this Article shall be  enforceable by the Indemnitee
in any court of competent  jurisdiction if the Corporation  denies such request,
in whole or in part,  or if no  disposition  thereof  is made  within the 60-day
period  referred to above in Section 6. Unless  otherwise  required by law,  the
burden of proving  that the  Indemnitee  is not entitled to  indemnification  or
advancement of expenses under this Article shall be on the Corporation.  Neither
the  failure  of the  Corporation  to have  made a  determination  prior  to the
commencement of such action that  indemnification is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct, nor an actual
determination  by the Corporation  pursuant to Section 6 that the Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable  standard of
conduct.  The  Indemnitee's  expenses  (including  attorneys'  fees) incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.

                                       16
<PAGE>
                           8.       Subsequent Amendment.  No amendment,
termination or repeal of this Article or of the relevant  provisions of the
General Corporation Law of Delaware or any other applicable laws shall affect or
diminish in any way the rights of any  Indemnitee to  indemnification  under the
provisions hereof with respect to any action, suit,  proceeding or investigation
arising out of or relating to any actions, transactions or facts occurring prior
to the final adoption of such amendment, termination or repeal.

                           9.       Other Rights.  The indemnification and
advancement  of  expenses  provided  by this  Article  shall  not be deemed
exclusive of any other rights to which an Indemnitee seeking  indemnification or
advancement  of expenses  may be entitled  under any law (common or  statutory),
agreement or vote of stockholders or disinterested directors or otherwise,  both
as to action in his  official  capacity  and as to action in any other  capacity
while holding office for the Corporation, and shall continue as to an Indemnitee
who has ceased to be a director  or  officer,  and shall inure to the benefit of
the estate,  heirs,  executors and  administrators  of the  Indemnitee.  Nothing
contained in this Article shall be deemed to prohibit,  and the  Corporation  is
specifically  authorized to enter into,  agreements  with officers and directors
providing  indemnification  rights and procedures different from those set forth
in this Article. In addition, the Corporation may, to the extent authorized from
time to time by its Board of Directors,  grant  indemnification  rights to other
employees or agents of the  Corporation or other persons serving the Corporation
and such rights may be equivalent  to, or greater or less than,  those set forth
in this Article.

                           10.      Partial Indemnification.  If an Indemnitee
is entitled under any provision of this Article to  indemnification  by the
Corporation for some or a portion of the expenses  (including  attorneys' fees),
judgments,  fines or amounts paid in settlement actually and reasonably incurred
by him or on his behalf in  connection  with any  action,  suit,  proceeding  or
investigation  and any appeal therefrom but not,  however,  for the total amount
thereof,  the Corporation  shall  nevertheless  indemnify the Indemnitee for the
portion  of such  expenses  (including  attorneys'  fees),  judgments,  fines or
amounts paid in settlement to which the Indemnitee is entitled.

                           11.      Insurance.  The Corporation may purchase and
maintain  insurance,  at its expense,  to protect  itself and any director,
officer,   employee  or  agent  of  the  Corporation  or  another   corporation,
partnership,  joint venture,  trust or other enterprise  (including any employee
benefit plan) against any expense, liability or loss incurred by him in any such
capacity,  or arising out of his status as such,  whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the General Corporation Law of the State of Delaware.

                           12.      Merger or Consolidation.  If the Corporation
is merged into or consolidated with another corporation and the Corporation
is not the surviving  corporation,  the surviving  corporation  shall assume the
obligations  of the  Corporation  under this Article with respect to any action,
suit,  proceeding  or  investigation  arising out of or relating to any actions,
transactions   or  facts   occurring  prior  to  the  date  of  such  merger  or
consolidation.

                           13.      Savings Clause.  If this Article or any

                                       17
<PAGE>
portion hereof shall be invalidated on any ground by any court of competent
jurisdiction,  then the Corporation shall nevertheless indemnify each Indemnitee
as to any expenses  (including  attorneys' fees),  judgments,  fines and amounts
paid  in  settlement  in  connection  with  any  action,  suit,   proceeding  or
investigation, whether civil, criminal or administrative, including an action by
or in the right of the  Corporation,  to the  fullest  extent  permitted  by any
applicable  portion of this Article that shall not have been  invalidated and to
the fullest  extent  permitted by applicable  law.

                           14.  Definitions.  Terms used herein and defined in
Section  145(h) and Section  145(i) of the General  Corporation  Law of the
State of Delaware shall have the respective  meanings  assigned to such terms in
such Section 145(h) and Section 145(i).

                           15.      Subsequent Legislation.  If the General
Corporation  Law of the State of Delaware is amended after adoption of this
Article to expand further the indemnification permitted to Indemnitees, then the
Corporation  shall indemnify such persons to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.

         NINTH. The Corporation  reserves the right to amend,  alter,  change or
repeal any provision  contained in this  Certificate  of  Incorporation,  in the
manner  now  or  hereafter   prescribed  by  statute  and  this  Certificate  of
Incorporation.

                  [Remainder of page intentionally left blank.]

                                       18
<PAGE>




              IN WITNESS  WHEREOF,  the  Corporation has caused this Amended and
  Restated  Certificate of Incorporation to be signed by its Vice President this
  7th day of January, 2000.

                                        CHANNELHEALTH INCORPORATED

                                        By:/S/ ROBERT W. BAKER, JR.
                                           ___________________________
                                           Robert W. Baker, Jr.,
                                           Vice President

STATE OF VERMONT           )
COUNTY OF CHITTENDEN SS.   )

         At South Burlington,  in said County, on this 7th day of January, 2000,
personally  appeared  Robert W. Baker,  Jr.,  Vice  President  of  Channelhealth
Incorporated,  and he  acknowledged  the  foregoing  instrument  to be true  and
accurate and his execution  therefo to be his free act and deed and the free act
and deed of Channelhealth Incorporated.

                                       Before me,
                                       /S/ JEFFREY MCMAHAN
                                       -----------------------------------
                                       Notary Public


<PAGE>
                                   EXHIBIT B


                           CHANNNELHEALTH INCORPORATED

                             STOCKHOLDERS' AGREEMENT

                  STOCKHOLDERS'  AGREEMENT,  dated as of January  10, 2000 (this
"Agreement"),  by and among CHANNELHEALTH  INCORPORATED,  a Delaware corporation
with its principal place of business at 25 Green Mountain Drive, So. Burlington,
VT 05403 (the  "Corporation")  and the  stockholders  of the Corporation who are
executing  this  Agreement  on the  date  hereof  and who  have  the  respective
addresses set forth on the signature page hereto.

                                   BACKGROUND

                  Pursuant to a Series A  Preferred  Stock  Purchase  Agreement,
dated as of even date  herewith  (the  "Stock  Purchase  Agreement"),  among the
Corporation and Pequot (both as defined  below),  the Corporation is issuing and
selling to Pequot shares of its Series A Convertible  Preferred Stock, $.001 par
value per share (the "Series A Preferred Stock").

                  The Corporation,  IDX Systems  Corporation  ("IDX") and Pequot
desire to promote their mutual  interests by imposing  certain  restrictions and
obligations on the Corporation,  IDX, Pequot and future Stockholders (as defined
below) with respect to the Stock (as defined below).

                  NOW, THEREFORE,  in consideration of the mutual agreements and
covenants contained herein, the parties hereby agree as follows:

1.       Definitions

                  For the  purposes of this  Agreement,  the terms  listed below
shall be defined as follows:

                  "Affiliate"   means,  as  to  any  Person,  any  entity  which
controls,  is controlled by, or is under common control with, such Person or any
entity formed as a result of a reorganization of such Person.

                  "Board" has the meaning set forth in Section 6(a) hereof.

                  "Board  Designees"  has  the  meaning  set  forth  in  Section
6(b)(iv) hereof.

                  "Common  Stock"  means the common  stock,  $.001 par value per
share, of the Corporation.

                  "Employee" means an employee of the Corporation.

                  "Immediate  Family"  means any  spouse,  parent or  descendant
(adopted or natural) or sibling of a  Stockholder,  or any  custodian or trustee
for the account or benefit of such person.
<PAGE>

                  "Notice of  Acceptance"  has the  meaning set forth in Section
8(a) hereof.

                  "Offer" has the meaning set forth in Section 8(a) hereof.

                  "Offered Securities" has the meaning set forth in Section 8(a)
hereof.

                  "Offered Stock" means the shares of Stock that are the subject
of a  proposed  transfer,  whether  as a result of death or other  circumstances
described in this Agreement.

                  "Pequot" means Pequot Private Equity Fund II, L.P. and each of
its transferees that execute and deliver this Agreement.

                  "Pequot  Designee"  has  the  meaning  set  forth  in  Section
6(b)(ii) hereof.

                  "Person"  means  any  corporation,   partnership   (including,
without limitation,  a limited partnership),  limited liability company, limited
liability  partnership,   business  trust,  individual,   trust,  estate,  legal
representative or other entity.

                  "Plan" has the meaning set forth in Section 7 hereof.

                  "Reserve  Option  Pool" has the meaning set forth in Section 7
hereof.

                  "Rightholder" means Pequot.

                  "Series A  Preferred  Stock" has the  meaning set forth in the
recitals to this Agreement.

                  "Significant  Issuer Transaction" means any (i) sale of all or
substantially  all of the  assets  of the  Corporation,  or (ii)  merger  of the
Corporation  with or into any other Person  (other than a mere  re-incorporation
transaction) in which outstanding shares of the capital stock of the Corporation
are exchanged for securities or other  consideration,  or (iii) a transaction in
which  the   Corporation  is  the  surviving   entity  but  the  shares  of  the
Corporation's capital stock outstanding immediately prior to the transaction are
changed or converted by virtue of the transaction  into other property,  whether
in the form of securities, cash, a combination thereof or otherwise.

                  "Stock"  means the  authorized,  issued  and  outstanding  (i)
common stock,  $.001 par value per share,  of the  Corporation and (ii) Series A
Convertible Preferred Stock, $.001 par value per share, of the Corporation.

                  "Stockholder"  means any Person which owns any Stock and which
is a party to this Agreement, including without limitation, IDX and Pequot.

                  "Stock  Purchase  Agreement"  has the meaning set forth in the
recitals to this Agreement.

                  "Transfer" means the transfer, sale, gift, bequest,  exchange,
assignment,  mortgage,  pledge,  encumbrance or any other  disposition,  whether
voluntary or involuntary, of any nature whatsoever, affecting title to the Stock
or any interest therein.

                                       2
<PAGE>
                  "Transfer  Notice"  has the  meaning  set  forth in  Section 3
hereof.

                  "Transferring  Stockholder"  means the Stockholder  (or, where
applicable,  such  Stockholder's  estate or legal  representative)  initiating a
Transfer,  whether as a result of death or other circumstances described in this
Agreement.

                  "Unrestricted Transfer" has the meaning set forth in Section 5
hereof.

2.       Transfers of Stock - General

                  (a) No  Transfer of any shares of Stock made in  violation  of
this Agreement shall be effective, and no such Transfer shall be recorded on the
stock record books of the Corporation.

                  (b) Any  Transfer  by a  Stockholder  of  shares of Stock to a
Person who is not a party to this  Agreement  shall be made only pursuant to the
terms of this  Agreement  and on the  condition  that such Person shall become a
party to this Agreement, agreeing in writing to be bound by all of its terms.

                  (c) Any  Stockholder  making a Transfer shall promptly  notify
the   Corporation,   and  the  Corporation   shall  promptly  notify  the  other
Stockholders,  if  any,  of the  name of each  transferee  and the  date of such
Transfer.

3.       Right of First Refusal on Sales of Shares of Stock

                  (a)  Except in the case of an  Unrestricted  Transfer,  if IDX
shall  desire  or  shall be  ordered  by a court of  competent  jurisdiction  to
Transfer any of its shares of Stock,  IDX shall give the  Corporation and Pequot
notice of the terms of the proposed  bona fide  transaction,  including  (i) the
number of shares that are proposed to be Transferred,  (ii) the anticipated date
of the proposed Transfer,  (iii) the name and address of each Person to whom the
Transfer  is  proposed to be made and (iv) the  material  terms of the  proposed
Transfer,  including  the cash  and/or  other  consideration  to be  received in
respect of such Transfer,  at least  twenty-five (25) days prior to any proposed
Transfer  (a  "Transfer  Notice").  Such  Transfer  Notice  shall be  deemed  an
irrevocable bona fide offer to sell such shares on such terms as hereinafter set
forth.

                  (b)  Upon  the  receipt  of  any  such  Transfer  Notice,  the
Corporation  shall have the first  option to purchase all or any portion of such
shares of Offered  Stock,  at a purchase price equal to the price quoted in said
Transfer  Notice.  The  Corporation  may exercise  its option by giving  written
notice to the  Transferring  Stockholder  and Pequot not more than  fifteen (15)
days after receipt by the Corporation of the Transfer Notice.

                  (c)  Any  shares  of  Offered   Stock  not  purchased  by  the
Corporation  pursuant to  subparagraph  (b) above shall be offered in writing by
the Transferring  Stockholder to Pequot,  at the price set forth in the Transfer
Notice.  Pequot (or its designee) shall have the right and option,  for a period
of ten  (10)  days  after  receipt  of the  written  offer  of the  Transferring
Stockholder,  (i) to accept all or any of its pro rata share (on a fully diluted
basis) of the Offered Stock at the purchase price and on the terms stated in the
Transfer  Notice and (ii) to offer,  in any  written  notice of  acceptance,  to
purchase any Offered Stock not accepted by the other offeree,  in which case the

                                       3
<PAGE>
Offered  Stock not  accepted  by the other  offeree  shall be deemed on the same
terms and conditions to be reoffered from time to time during such 10-day period
to and accepted by the offeree who exercised its option under this clause (ii).

                  (d)  If all  the  Offered  Stock  is  not  so  purchased,  the
Transferring  Stockholder  shall be free for a period of thirty  (30) days after
expiration of the ten (10) day period referred to in  subparagraph  (c) above to
consummate  the  proposed  transaction  upon the terms set forth in the Transfer
Notice. Promptly upon the consummation of any such transaction, the Transferring
Stockholder  shall confirm in writing to the Corporation and Pequot the terms of
the transaction as so consummated,  including the number of shares involved, the
consideration  received, and the name of the party with whom the transaction was
made.  After  the  expiration  of said  thirty  (30)  day sale  period,  if such
Transferring  Stockholder  again  wishes to Transfer  any shares of Stock,  such
Transferring  Stockholder  shall again offer the shares in  accordance  with the
provisions of this Section 3.

4.       Co-Sale Rights

                  Except  with  respect to an  Unrestricted  Transfer,  at least
twenty-five  (25) days prior to any  proposed  Transfer by IDX, IDX shall give a
Transfer Notice to Pequot (which Transfer Notice may be the same Transfer Notice
as that  described in Section 3 above).  Upon receipt of a Transfer  Notice,  if
Pequot (or its designee) has not exercised its rights of first refusal  pursuant
to Section 3(a) hereof, Pequot may elect to participate in the proposed Transfer
by  delivering  written  notice  to  the  Transferring   Stockholder(s)   within
twenty-five  (25) days of the date of receipt of such  Transfer  Notice.  Pequot
shall have the right to sell to the  proposed  transferee(s),  as a condition to
such Transfer by the Transferring Stockholder(s), at the same price per share of
Stock and on the same terms and  conditions  as are  specified  in the  Transfer
Notice,  one share of Stock (on a fully diluted  basis) owned by Pequot for each
share of Stock of the Corporation  transferred by the Transferring  Stockholder.
The Transferring  Stockholder will be entitled to sell in the proposed  Transfer
the balance of the Offered  Stock  proposed to be so sold.  If Pequot  elects to
participate in such Transfer, the Transferring Stockholder shall use his, her or
its commercially  reasonable  efforts to obtain the agreement of the prospective
transferee(s) to the  participation of Pequot in any proposed Transfer and shall
not  Transfer  any  shares  of the  capital  stock  of the  Corporation  to such
prospective  transferee(s)  unless such prospective  transferee(s)  allow(s) the
participation of Pequot on the terms specified in the Transfer  Notice.  Subject
to the foregoing,  the Transferring  Stockholder(s) may, within thirty (30) days
after the  expiration  of the  twenty-five  (25) day period  referred  to above,
Transfer  the  Offered  Stock  (reduced  by the  number of shares of Stock  with
respect to which Pequot has elected to participate, if any) to the transferee(s)
identified in the Transfer  Notice at a price and on the terms no more favorable
to the  Transferring  Stockholder(s)  than  specified  in the  Transfer  Notice;
provided, that, prior to any Transfer such transferee(s) shall first execute and
deliver  to the  Corporation  a  written  agreement  to be  bound  by all of the
provisions of this Agreement  applicable to the transferor(s).  However, if such
Transfer is not consummated within such thirty (30) day period, the Transferring
Stockholder(s)  shall not Transfer  any shares of the Offered  Stock as have not
been  purchased  within  such period  without  again  complying  with all of the
provisions of Sections 3 and 4 hereof. Any attempt by a Transferring Stockholder
to Transfer  shares of Stock in violation of Section 3 or 4 hereof shall be void

                                       4
<PAGE>
and the  Corporation  agrees that it will not effect such a Transfer nor will it
treat any alleged  transferee  as the holder of such shares of Stock without the
consent of Pequot.

5.       Unrestricted Transfers

                  The  following   Transfers   ("Unrestricted   Transfers")  are
excepted from the operation of the restrictions provided for in Sections 3 and 4
of this Agreement; provided that in the event of such Transfer all references to
the  shares  of Stock of a  Stockholder  in this  Agreement  shall be  deemed to
include all shares of Stock so  Transferred  and all references to a Stockholder
in this  Agreement  shall be deemed to include  any and all Persons to whom such
shares of Stock are transferred:

                  (a)      Transfers to the Corporation and

                  (b)      Transfers by Pequot.

                  (c)      Transfers to affiliates of the Corporation who agree
                           to be bound by this Agreement.

6.       Election of Directors

                  (a) Pursuant to the By-Laws of the Corporation,  the number of
directors comprising the Corporation's Board of Directors (the "Board") has been
initially set by resolution  of the Board at five (5) and the  affirmative  vote
required  for action by the Board has been fixed at a majority of the members of
the Board. In no event shall the size of the Board exceed nine members.

                  (b) During the term of this  Agreement,  subject to subsection
(c)  below,  all of the Stock  held by the  Stockholders,  whether  now owned or
hereafter acquired,  shall be voted to elect to the Board, one member designated
by Pequot and if the size of the Board is increased,  two members  designated by
Pequot (the  "Pequot  Designees").  Pequot  shall  notify the  Secretary  of the
Corporation of their designee within five (5) business days of receipt of notice
of the  meeting.  The initial  Pequot  Designee  is Gerald A. Poch.  Such Pequot
Designees may be removed only upon being  designated for removal by Pequot,  and
the Board shall act promptly to remove any such Pequot  Designee so  designated.
If any such Pequot Designee dies,  resigns,  is removed,  or otherwise ceases to
serve as a member of the Board, the Corporation shall give notice to Pequot, and
Pequot shall promptly designate a successor in accordance with this subparagraph
and notify the Board of their  selection,  and the Board  shall act  promptly to
fill the vacancy with such designee.

                  (c) Each Stockholder  agrees (A) to be present in person or by
proxy at any  meeting  of  Stockholders  to elect  directors,  for  purposes  of
establishing  a quorum,  (B) to vote his,  her or its shares of Stock for, or to
give his, her or its written  consent to the election of the Pequot Designee and
(C) to vote his,  her or its  shares of Stock  for,  or to give his,  her or its
written consent to the removal of any Pequot Designee  designated for removal in
accordance with the provisions of this Section 6.

                                       5
<PAGE>
                  (d) The Board shall hold regular  meetings no less  frequently
than monthly unless otherwise approved by a majority of the members of the Board
who are not employees of the Corporation.

7.       Allocation of Employee Stock Option Pool

                  The Corporation  shall reserve ten percent (10%) of the shares
of its Common Stock,  on a fully  diluted basis (the "Reserve  Option Pool") for
issuance  to  its  employees,   officers,   directors  and  consultants  of  the
Corporation,  or its parents,  subsidiaries  or  affiliates in the form of stock
options granted  pursuant to the  Corporation's  Stock Option Plan (the "Plan");
provided, however, that the shares that constitute the Reserve Option Pool shall
not be issued at a pre-money valuation of less than $250,000,000.

8.       Pre-emptive Rights

                  (a) Subject to Section 8(e), the Corporation  shall not issue,
sell or exchange,  agree to issue, sell or exchange, or reserve or set aside for
issuance,  sale or exchange,  (i) any shares of its Stock, (ii) any other equity
securities  of the  Corporation,  (iii) any  option,  warrant or other  right to
subscribe  for,  purchase  or  otherwise  acquire any equity  securities  of the
Corporation,  or (iv) any debt securities  convertible into capital stock of the
Corporation (collectively,  the "Offered Securities"),  unless in each such case
the  Corporation  shall have first complied with this Section 8. The Corporation
shall deliver to the  Rightholder  a written  notice of any proposed or intended
issuance,  sale or exchange of Offered  Securities  (the  "Offer"),  which Offer
shall (A) identify and describe the Offered  Securities,  (B) describe the price
and other terms upon which the  Offered  Securities  are to be offered,  issued,
sold or  exchanged,  and (C)  offer to issue  and sell to or  exchange  with the
Rightholder up to their respective pro rata portion of such Offered  Securities.
The Rightholder's pro rata portion of the Offered Securities shall be determined
by multiplying the aggregate amount of the Offered Securities by a fraction, the
numerator  of which is the  number of shares of Common  Stock  then held by such
Rightholder on a fully-diluted  basis and the denominator of which is the number
of shares of Common Stock then outstanding, determined on a fully-diluted basis.
The Rightholder shall have the right, for a period of twenty (20) days following
delivery  of the Offer,  to  purchase  or acquire  such  Rightholder's  pro rata
portion  of the  Offered  Securities  at the  price  and  upon the  other  terms
specified  in the  Offer.  The  Offer,  by its  terms,  shall  remain  open  and
irrevocable for such twenty (20) day period.  To accept an Offer, in whole or in
part (provided, however, that the Rightholder may only elect to purchase part of
the Offered  Securities if the Offer is not contingent on the sale of all of the
Offered Securities),  such Rightholder must deliver a written notice ("Notice of
Acceptance") to the  Corporation  prior to the end of the twenty (20) day period
of the Offer, setting forth the portion (or all, if the Offer is contingent upon
the  sale of all of the  Offered  Securities)  of such  Rightholder's  pro  rata
portion of the Offered Securities that such Rightholder elects to purchase.

                  (b) If a Notice of Acceptance is not given by the  Rightholder
in respect of such Rightholder's pro rata portion of the Offered Securities, the
Corporation  shall have ninety (90) days from the  expiration of the twenty (20)
day period to issue, sell or exchange all or any part of such Offered Securities
as to which a Notice of Acceptance has not been given,  but only to the offerees
or  purchasers  described  in the  Offer  and only  upon  terms  and  conditions

                                       6
<PAGE>

(including,  without limitation,  price per share) which are not more favorable,
in the  aggregate,  to the acquiring  Person or Persons or less favorable to the
Corporation than those set forth in the Offer.

                  (c) Upon the closing of the issuance,  sale or exchange of the
Offered  Securities  that  are  not  subject  to a  Notice  of  Acceptance,  the
Rightholders shall acquire from the Corporation, and the Corporation shall issue
to the Rightholder,  the number of Offered Securities specified in the Notice of
Acceptance,  upon the terms and conditions  specified in the Offer. The purchase
by the  Rightholder  of any  Offered  Securities  is subject in all cases to the
preparation,  execution and delivery by the Corporation and the Rightholder of a
purchase  agreement  relating  to such  Offered  Securities  that is  reasonably
satisfactory  in form and substance to the  Rightholder and their counsel and in
compliance with all applicable securities laws.

                  (d)  Any  Offered  Securities  that  are not  acquired  by the
Rightholder  or the offerees or purchasers  described in the Offer in accordance
with this Section 8 may not be issued,  sold or  exchanged  until they are again
offered to the Rightholder under the procedures specified in this Section 8.

                  (e) Notwithstanding  the foregoing,  the pre-emptive rights of
the Rightholder arising under this Section 8 shall not apply to (A) the issuance
by the Corporation of Offered Securities (i) to employees,  officers,  directors
or consultants of the  Corporation  or its parents,  subsidiaries  or affiliates
pursuant to the Corporation's employee benefit, option or other equity incentive
plans, in connection  with an employment or consulting  agreement or arrangement
with the  Corporation  or its parent or  subsidiaries,  or in exchange for other
securities of the Corporation (including,  without limitation,  options) held by
any such employees,  directors or consultants,  provided, however, that any such
plan,  agreement or arrangement or exchange shall have been approved on or prior
to the date hereof or is hereafter  approved by a majority of the members of the
Board who are not employees of the  Corporation,  or (ii) in connection with the
acquisition of the business of another entity, whether by the purchase of equity
securities,  assets or otherwise;  or (B) Offered  Securities  issued as a stock
dividend to holders of capital stock of the  Corporation or upon any subdivision
or combination of shares of Stock; or (C) Offered  Securities issued pursuant to
the Stock Purchase Agreement or any Ancillary Agreement (as defined in the Stock
Purchase  Agreement);  or (D) Offered  Securities  sold by the Corporation in an
underwritten  public offering  pursuant to an effective  registration  statement
under the Securities Act of 1933, as amended;  or (E) any shares of Common Stock
issued  upon  exercise of options  outstanding  on the date  hereof;  or (F) any
performance-based  equity issued in  connection  with  strategic  relationships,
provided, however, that any such issuance shall have been approved by a majority
of the members of the Board who are not employees of the Corporation.

                  (f) The  failure of any  Rightholder  to  exercise  its rights
under this Section 8 shall not be deemed to be a waiver of its rights  hereunder
in connection with any subsequent  issuance,  sale or exchange,  or agreement to
issue, sell or exchange,  or reservation or setting aside for issuance,  sale or
exchange, of Offered Securities.

9.       [Reserved]

                                       7
<PAGE>
10.      Notation on Certificates

                  The  certificates  which have been  issued for shares of Stock
held by the Stockholder(s)  shall be endorsed with appropriate legends referring
to the federal securities laws and any applicable state securities laws and they
shall also be endorsed with a legend that is to read substantially as follows:

                 "THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH
                  THE PROVISIONS AND TRANSFER RESTRICTIONS OF A STOCKHOLDERS'
                  AGREEMENT, BETWEEN THE ISSUER OF THIS CERTIFICATE AND ITS
                  STOCKHOLDERS, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE
                  SECRETARY OF THE ISSUER OF THIS CERTIFICATE. THE SECURITIES
                  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SIGNIFICANT
                  RESTRICTIONS, INCLUDING, WITHOUT LIMITATION, CERTAIN RIGHTS OF
                  FIRST REFUSAL AND CO-SALE RIGHTS THAT ARE SET FORTH IN SUCH
                  STOCKHOLDERS' AGREEMENT."

11.      Waiver and Modification

                  The  Corporation  by majority  vote of its  directors,  or any
Stockholder by written consent, may waive its respective rights hereunder either
generally  or with  respect to one or more  specific  Transfers  which have been
proposed,  attempted or made.  This  Agreement  may be modified or terminated by
majority vote of the  directors of the  Corporation  and the written  consent of
Pequot and a majority in interest of the other  Stockholders;  provided that any
such change shall become effective only when reduced to writing,  signed by such
Stockholders, Pequot and the Corporation.

12.      Additional Stock

                  This  Agreement  shall  include  and  apply to any  additional
shares of capital stock of the Corporation hereafter acquired by any Stockholder
or any subsequent party to this Agreement.

13.      Binding Effect; Further Assurances

                  This  Agreement  shall be binding  upon and shall inure to the
benefit  of  the  parties  hereto  and  their   respective   heirs,   executors,
administrators,  successors, permitted assigns and other transferees,  including
Persons who  purchase  or receive  shares of Stock from a  Stockholder,  and the
parties  hereto agree for  themselves  and their  respective  heirs,  executors,
administrators,  successors,  permitted assigns and other transferees to execute
any  instruments  which may be necessary or proper to carry out the purposes and
intent of this Agreement. Without limiting the generality of the foregoing, this
Agreement and the rights and obligations of Pequot hereunder may be assigned, in
whole or in part,  to (i) any  partner  or  stockholder  of  Pequot  or (ii) any
venture capital fund,  investment entity or investment  account for which Pequot

                                       8
<PAGE>
Capital Management,  Inc. or its successors or assigns is the investment manager
or  investment  advisor,  and such assignee  shall become  subject to all of the
rights and obligations of Pequot hereunder.

14.      Notices

                  All  notices  hereunder  shall be in writing and shall be hand
delivered or sent by express,  registered or certified  mail,  postage  prepaid,
return  receipt  requested,  or  reputable  overnight  courier  service,  to the
Corporation at its address at 25 Green Mountain Drive, So. Burlington, VT 05403,
Attn:  President,  to Pequot,  at its address  specified on the  signature  page
hereto, with a copy to E. Ann Gill, Esq. at Dewey Ballantine LLP, 1301 Avenue of
the Americas, New York, New York 10019, or such other address as may be given by
Pequot by notice to the Corporation and the other Stockholders party hereto, and
to the other  Stockholders  at their last addresses  shown on the records of the
Corporation.  All such  notices  shall be deemed to have been duly  given (i) if
delivered  by  hand,  when  delivered,  (ii) if  delivered  by  express  mail or
reputable  overnight  courier  service,  when  delivered,  and  (iii) if sent by
registered or certified mail, five (5) days after being deposited in the mail.

15.      Term

                  Unless earlier  terminated  pursuant to the provisions hereof,
this Agreement  shall  terminate on the date of the closing of a firm commitment
underwritten  initial public  offering with a nationally  recognized  investment
banking firm  resulting in net proceeds to the  Corporation  equal to or greater
than  $35,000,000  and  as a  result  of  which  the  Corporation  has a  market
capitalization of at least $500,000,000.

16.      Governing Law

                  This  Agreement  shall be construed  under and governed by the
laws of the State of New York,  without  giving  effect to its conflicts of laws
principles.

17.      Entire Agreement; Severability

                  This  Agreement  constitutes  the entire  agreement  among the
parties and supersedes any prior agreements  among the parties,  whether written
or oral,  relating  to the  subject  matter  hereof.  If any  provision  of this
Agreement is held to be invalid, illegal or unenforceable,  in whole or in part,
such  invalidity will not affect any otherwise  valid  provision,  and all other
valid  provisions  will remain in full force and effect and this Agreement shall
be enforced to the greatest  extent  possible to carry out the intentions of the
parties hereto.

18.      Counterparts; Facsimile Execution

                  This  Agreement  may be executed  in one or more  counterparts
each of which  shall be  deemed  an  original  and all of which  together  shall
constitute  a  single  instrument.  Facsimile  execution  and  delivery  of this
Agreement  shall be legal,  valid and binding  execution  and  delivery  for all
purposes.

                                       9
<PAGE>
19.      Specific Performance

                  Each of the  parties  acknowledges  and agrees  that the other
parties would be damaged  irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are  breached.  Accordingly,  each of the parties  agrees that the other parties
shall be entitled to an injunction  or  injunctions  to prevent  breaches of the
provisions of this Agreement and to enforce  specifically this Agreement and the
terms and provisions  hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the matter,
in  addition  to any other  remedy to which they may be  entitled,  at law or in
equity.

                            [signature page follows]

                                       10

<PAGE>


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


                                    CHANNELHEALTH INCORPORATED

                                     By:/S/ RICHARD E. TARRANT
                                        _______________________________
                                        Richard E. Tarrant, President

                                     STOCKHOLDERS:



                                     IDX SYSTEMS CORPORATION

                                     By:/S/ ROBERT W. BAKER, JR.
                                        ________________________________
                                        Name: Robert W. Baker, Jr.
                                        Title:Vice President


                                     PEQUOT PRIVATE EQUITY FUND II, L.P.

                                     By: PEQUOT CAPITAL MANAGEMENT, INC.,
                                         as Investment Manager

                                     By:/S/ DAVID J. MALAT
                                        _______________________________________
                                        David J. Malat, Chief Financial Officer
                                        500 Nyala Farm Road
                                        Westport, CT  06880


                                       11

<PAGE>
                                    EXHIBIT C


                           CHANNELHEALTH INCORPORATED

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of January 10,
2000,  by and among  Channelhealth  Incorporated,  a Delaware  corporation  (the
"Company"),  IDX Systems  Corporation,  a Vermont corporation ("IDX") and Pequot
Private Equity Fund II, L.P., a Delaware limited partnership ("Pequot").

                              Preliminary Statement

         The  Company  and  Pequot  have  entered  into a Series  A  Convertible
Preferred Stock Purchase Agreement dated as of even date herewith (the "Purchase
Agreement").  The Company and Pequot desire to provide for certain  arrangements
with  respect  the  registration  of  capital  stock of the  Company  under  the
Securities Act of 1933.

                              Terms and Conditions

         In consideration  of the mutual  covenants and agreements  contained in
this  Agreement and the Purchase  Agreement,  and intending to be legally bound,
the parties hereto agree as follows:

         Section 1.  Definitions.
         ---------   -----------
As used in this Agreement, the following terms have the meanings indicated
below or in the referenced sections of this Agreement:

         "Common Stock."  The Company's Common Stock, $.001 par value per share,
as the same may be constituted from time to time.

         "Conversion Shares." The shares of Common Stock that each party has the
right to acquire, or does acquire,  pursuant to conversion of: (a) the shares of
Series A Preferred Stock of the Company which are issued to them pursuant to the
Purchase  Agreement;  (b) any shares of Series A Preferred  Stock  issued to the
parties in connection with a stock split or similar issuance of shares of Series
A Preferred  Stock; and (c) any shares of Series A Preferred Stock issued to the
parties  in  replacement  of or upon  partial  exercise  of any of the shares of
Series A Preferred Stock described in the preceding clauses (a) and (b).

         "Demand Registration."  As defined in Section 3(a) hereof.

         "Exchange Act."  The Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

         "Initial  Public  Offering." The initial firm  commitment  underwritten
public offering of shares of Common Stock pursuant to an effective  Registration

<PAGE>
Statement  under the Securities Act which results in net proceeds to the Company
of at least $35,000,000 and resulting in a market  capitalization of the Company
of at least $500,000,000.

         "NASD."  The National Association of Securities Dealers, Inc.

         "Person."  An  individual,  a  partnership,  a  corporation,  a limited
liability  company or  partnership,  an  association,  a joint stock company,  a
trust, a business trust, a joint venture,  an  unincorporated  organization or a
government entity or any department, agency, or political subdivision thereof.

         "Piggyback Registration."  As defined in Section 4(a) hereof.

         "Registrable  Securities."  The  Conversion  Shares  and any  shares of
Common Stock of the Company held by IDX or Pequot;  provided, that a Registrable
Security ceases to be a Registrable Security when (i) it is registered under the
Securities  Act and disposed of in accordance  with the  registration  statement
covering  it  or  (ii)  it  is  sold  or  transferred  in  accordance  with  the
requirements of Rule 144 (or similar  provisions then in effect)  promulgated by
the SEC under the Securities Act ("Rule 144").

         "Registration Expenses."  As defined in Section 7(a) hereof.

         "SEC."  The United States Securities and Exchange Commission.

         "Securities Act."  The Securities Act of 1933, as amended, and the
rules and regulations thereunder.

         "Series  A  Preferred   Stock."  The  Company's  Series  A  Convertible
Preferred Stock,  $.001 par value per share, as the same may be constituted from
time to time.

         Section 2.  Securities Subject to this Agreement.
         ---------   ------------------------------------

         (a)  Holders  of  Registrable  Securities.  A Person  is deemed to be a
holder  of  Registrable  Securities  whenever  that  Person  owns,  directly  or
beneficially,  or has the right to acquire Registrable Securities,  disregarding
any legal restrictions upon the exercise of that right.

         (b) Majority of Registrable Securities.  As used in this Agreement, the
term  "majority  of  the  Registrable  Securities"  means  51%  or  more  of the
Registrable  Securities being registered unless the context indicates that it is
51% or more of the Registrable Securities then issued and outstanding.

         Section 3.  Demand Registration.
         ---------   -------------------

         (a)  Request for  Registration.  Subject to the  provisions  of Section
3(b), at any time after the closing of the Initial  Public  Offering,  Pequot or
IDX may  demand  that  the  Company  register  all or  part  of its  Registrable
Securities  under the Securities Act (a "Demand  Registration")  on Forms S-1 or
S-3, as  applicable  (or similar  forms then in effect or such other form as the
Company  and  the  holder  requesting  the  Demand   Registration  shall  agree)

                                       2
<PAGE>
promulgated by the SEC under the Securities  Act.  Within ten (10) business days
after  receipt of a demand,  the  Company  will notify in writing all holders of
Registrable Securities of the demand. Any holder who wants to include his or its
Registrable Securities in the Demand Registration must notify the Company within
ten (10)  business  days of  receiving  the notice of the  Demand  Registration.
Except as provided in this  Section 3, the  Company  will  include in all Demand
Registrations  all  Registrable  Securities  for which the Company  receives the
timely written demands for inclusion.  All demands made pursuant to this Section
3(a) must specify the number of Registrable  Securities to be registered and the
intended method of disposing of the Registrable Securities.

         (b) Form of Registration.  The Demand  Registration will be on Form S-3
whenever the Company is permitted to use such form, unless the holder requesting
the Demand Registration or the underwriter reasonably request registration on an
expanded form. The Company will use commercially  reasonable  efforts to qualify
for registration on Form S-3.  Notwithstanding the foregoing  provisions of this
Section  3, each of Pequot  and IDX shall  have the right to (i) two (2)  Demand
Registrations  on Form S-1 (or a similar  form then in  effect) in each 12 month
period;  and (ii) two (2) Demand  Registrations  on Form S-3 (or a similar  form
then in effect) in each 12 month period.

         (c)      [Reserved]
                   --------

         (d) Selection of Underwriters.  The Company shall select the investment
banker(s) and manager(s) that will administer the offering;  provided,  that the
holder  requesting  the Demand  Registration  shall have given its prior written
consent to such selection which consent shall not be unreasonably  withheld. The
Company  and the  holders  of  Registrable  Securities  whose  shares  are being
registered  shall  enter  into a  customary  underwriting  agreement  with  such
investment banker(s) and manager(s).

         (e) Priority on Demand Restrictions.  If the managing underwriter gives
the Company and the holders of the  Registrable  Securities  being  registered a
written  opinion  that the  number of  Registrable  Securities  requested  to be
included in the Demand Registration exceeds the number of securities that can be
sold,  the  Company  will  include  in  the  registration  only  the  number  of
Registrable  Securities that the managing  underwriter believes can be sold. The
number of securities  registered shall be allocated,  first to Pequot and IDX in
equal  amounts,  and  then pro rata  among  the  other  holders  of  Registrable
Securities,  if  any,  in  each  case,  on the  basis  of the  total  number  of
Registrable  Securities  requested  to  be  included  in  the  registration.  In
addition,  if the managing  underwriter shall advise the Company,  in writing or
otherwise, that an underwriters'  over-allotment option, not in excess of 15% of
the  total  offering  to be so  effected,  is  necessary  or  desirable  for the
marketing of such offering,  all Registrable Securities which are to be included
in such  offering  pursuant to this Section 3(e) shall be allocated  pro rata to
the  primary  portion  of such  offering  and the  underwriters'  over-allotment
portion on the basis of the total number of Registrable  Securities requested to
be included in the registration.

         (f) Delay in Filing.  Notwithstanding  the  foregoing,  the Company may
delay  in  filing  a  registration   statement  in  connection   with  a  Demand

                                       3
<PAGE>
Registration  and may withhold  efforts to cause the  registration  statement to
become effective, if the Company determines in good faith that such registration
might  (1)  interfere  with or  affect  the  negotiation  or  completion  of any
transaction  that is being  contemplated by the Company  (whether or not a final
decision has been made to undertake such  transaction)  at the time the right to
delay is exercised,  or (2) involve initial or continuing disclosure obligations
that  might  not be in the best  interest  of the  Company's  stockholders.  The
Company may exercise such right to delay or withhold efforts not more than twice
in any twelve  (12) month  period  and for not more than  ninety  (90) days at a
time. If, after a registration statement becomes effective,  the Company advises
the holders of registered  shares that the Company  considers it appropriate for
the  registration  statement  to be amended,  the  holders of such shares  shall
suspend any further sales of their  registered  shares until the Company advises
them that the registration  statement has been amended.  The 180-day time period
referred to in Section 6(a)(3) during which the  registration  statement must be
kept current after its effective date shall be extended for an additional number
of business  days equal to the number of business days during which the right to
sell shares was suspended pursuant to the preceding sentence.

         (g) Effective Demand Registration.  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 or (ii) 180 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 SEC or other  governmental  agency or court for any
reason  not  attributable  to Pequot  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  of Pequot,  or (z) the number of
Registrable  Securities sold by Pequot in such Demand  Registration is less than
fifty  percent  (50%) of the number of  Registrable  Securities  requested to be
included in such Demand Registration by Pequot.

         Section 4.  Piggyback Registrations.
         ---------   -----------------------

         (a) Right to Piggyback.  Whenever the Company  proposes to register any
of its  securities  under the  Securities  Act (except for the  registration  of
securities  to be offered  pursuant  to an  employee  benefit  plan on Form S-8,
pursuant  to a  registration  made on Form S-4 or any  successor  forms  then in
effect)  at any  time  other  than  pursuant  to a Demand  Registration  and the
registration form to be used may be used for the registration of the Registrable
Securities  (a  "Piggyback  Registration"),  it will so  notify in  writing  all
holders of Registrable  Securities no later than the earlier to occur of (i) the
tenth (10th) business day following the Company's  receipt of notice of exercise
of other demand  registration  rights, or (ii) forty-five (45) days prior to the
anticipated  filing date. Subject to the provisions of Section 4(c), the Company
will include in the Piggyback Registration all Registrable Securities,  on a pro
rata basis based upon the total number of Registrable Securities with respect to
which the Company has received  written  requests for inclusion  within  fifteen
(15)  business  days after the  applicable  holder's  receipt  of the  Company's
notice.  Such  Registrable  Securities  may be made subject to an  underwriters'

                                       4
<PAGE>
over-allotment option, if so requested by the managing underwriter.  The holders
of  Registrable  Securities  may  withdraw  all or any  part of the  Registrable
Securities  from a Piggyback  Registration  at any time before ten (10) business
days prior to the effective date of the Piggyback Registration. The Company, the
holders of Registrable  Securities and any Person who hereafter  become entitled
to register its securities in a registration  initiated by the Company must sell
their securities on the same terms and conditions. A registration of Registrable
Securities  pursuant  to  this  Section  4  shall  not be  counted  as a  Demand
Registration under Section 3.

         (b)      [Reserved]
                   --------

         (c) Priority on Piggyback  Registrations.  If the managing  underwriter
gives the Company its written  opinion that the total number or dollar amount of
securities  requested to be included in the  registration  exceeds the number or
dollar  amount of  securities  that can be sold,  the Company  will  include the
securities in the  registration in the following  order of priority:  (i) first,
all securities the Company proposes to sell; (ii) second,  up to the full number
or dollar  amount of  Registrable  Securities  requested  to be  included in the
registration  by  Pequot  and  (iii)  third,  pro  rata  among  the  holders  of
Registrable  Securities other than Pequot, if any, in each case, on the basis of
the dollar amount or number of Registrable  Securities requested to be included,
as the case may be. In the  event  that the  managing  underwriter  advises  the
Company that an underwriters'  over-allotment  option is necessary or advisable,
the preceding  priority shall apply to the determination of which securities are
to be included in the primary portion of such registration.

         (d)  Selection of  Underwriters.  If any Piggyback  Registration  is an
underwritten  offering,  the Company will select the  investment  banker(s)  and
manager(s)  that will  administer  the  offering,  which  shall be a  nationally
recognized    investment    banker(s)   and   manager(s)    with    demonstrable
industry-specific  expertise  and  experience.  The  Company  and the holders of
Registrable  Securities  whose  shares are being  registered  shall enter into a
customary underwriting agreement with such investment banker(s) and manager(s).

         (e)  Other  Registrations.  The  Company  agrees  that  after  filing a
registration  statement  with  respect to  Registrable  Securities  pursuant  to
Section  3 or this  Section  4 that has not been  withdrawn  or  abandoned,  the
Company will not register any of its equity securities or securities convertible
or  exchangeable  into  or  exercisable  for its  equity  securities  under  the
Securities  Act,  whether on its own  behalf or at the  request of any holder of
those securities until at least three (3) months have elapsed from the effective
date of the previous registration, and the parties hereto agree that the Company
will not be required to effect any such registration  notwithstanding  the other
provisions  of this  Agreement.  This  three-month  hiatus  does  not  apply  to
registrations of securities (i) to be issued in connection with employee benefit
plans,  (ii) to permit  exercise or  conversions of previously  issued  options,
warrants,  or other  convertible  securities,  (iii) in connection with a Demand
Registration or (iv) made on Form S-4 (or any successor form).

         Section 5.  Holdback Agreements.
         ---------   -------------------

         (a) Restrictions on Public Sale by Securities  Holders.  Each holder of
Registrable Securities whose securities are included in a registration statement

                                       5
<PAGE>

agrees not to make any public sale or distribution  of equity  securities of the
Company  (except  as  part  of the  underwritten  registration  or  pursuant  to
registration  on Form S-8 or any successor  form),  including a sale pursuant to
Rule  144,  during  the  seven  (7) days  prior to and the 180  days  after  the
effective  date of any  underwritten  Demand  Registration  or any  underwritten
Piggyback  Registration  unless the managing  underwriter(s)  agrees  otherwise;
provided,  however,  that all officers and directors of the Company, all holders
of at least 2.5% of the Company's equity  securities  purchased from the Company
(other than securities  purchased from the Company at any time after the date of
this  Agreement  in a registered  public  offering)  and all other  persons with
registration rights (whether or not pursuant to this Agreement) are bound by and
have entered into a similar  agreement and the restrictions on transfer have not
been waived with respect to any such officers, directors, holders or persons.

         (b) Restrictions on Public Sale by the Company and Others.  The Company
agrees not to make any public sale or distribution of its equity securities,  or
any securities  convertible  into or  exchangeable or exercisable for its equity
securities,  including a sale under  Regulation  D under the  Securities  Act or
under  any  other  exemption  of the  Securities  Act  (except  as  part  of the
underwritten  registration or pursuant to  registrations  on Forms S-8 or S-4 or
any successor  form),  during the seven (7) days prior to and the 180 days after
the effective date of any underwritten  Demand  Registration or any underwritten
Piggyback Registration unless the managing underwriter(s) agrees otherwise,  and
the parties  hereto  agree that the  Company  will not be required to effect any
such  registration  or  sale   notwithstanding  the  other  provisions  of  this
Agreement.  The  Company  also  agrees to use  reasonable  efforts to cause each
holder of at least  2.5% (on a  fully-diluted  basis) of its  equity  securities
(other  than  Registrable  Securities)  or any  securities  convertible  into or
exchangeable or exercisable for its equity  securities  (other than  Registrable
Securities), purchased from the Company at any time on or after the date of this
Agreement (other than in a registered public offering), to agree not to make any
public sale or  distribution of those  securities,  including a sale pursuant to
Rule 144 (except as part of the underwritten registration, if permitted), during
the seven (7) days  prior to and the 180 days  after the  effective  date of the
registration unless the managing underwriter(s) agrees otherwise.

         Section 6.  Registration Procedures.
         ---------   -----------------------

         (a)  Obligations  of the Company.  Whenever the holders of  Registrable
Securities  request the registration of any Registrable  Securities  pursuant to
this Agreement, the Company shall use its best efforts to register and to permit
the sale of the Registrable Securities in accordance with the intended method of
disposition. To carry out this obligation, the Company shall as expeditiously as
practicable:

                  (1) prepare and file with the SEC a registration  statement on
the  appropriate  form and use  commercially  reasonable  efforts  to cause  the
registration statement to become effective. At least ten (10) days before filing
a  registration  statement or  prospectus  or at least three (3)  business  days
before filing any amendments or supplements thereto, the Company will furnish to
the  counsel of the holders of a majority of the  Registrable  Securities  being
registered  copies of all  documents  proposed  to be filed  for that  counsel's

                                       6
<PAGE>
review and  approval,  which  approval  shall not be  unreasonably  withheld  or
delayed;

                  (2) immediately  notify each seller of Registrable  Securities
of any  stop  order  threatened  or  issued  by the SEC  and  take  all  actions
reasonably  required  to prevent the entry of a stop order or if entered to have
it rescinded or otherwise removed;

                  (3)  prepare  and  file  with  the  SEC  such  amendments  and
supplements  to the  registration  statement  and the  corresponding  prospectus
necessary  to keep the  registration  statement  effective  for 180 days or such
shorter period as may be required to sell all Registrable  Securities covered by
the registration statement; and comply with the provisions of the Securities Act
with respect to the  disposition of all securities  covered by the  registration
statement during each period in accordance with the sellers' intended methods of
disposition as set forth in the registration statement;

                  (4)  furnish  to  each  seller  of  Registrable  Securities  a
sufficient  number of copies of the registration  statement,  each amendment and
supplement  thereto (in each case  including all  exhibits),  the  corresponding
prospectus (including each preliminary prospectus),  and such other documents as
a seller may reasonably  request to facilitate  the  disposition of the seller's
Registrable Securities;

                  (5)  use  its  best   efforts  to   register  or  qualify  the
Registrable Securities under securities or blue sky laws of jurisdictions in the
United  States  of  America  as any  seller  requests  and do any and all  other
reasonable  acts and things that may be  necessary  or  advisable  to enable the
seller to consummate the disposition of the seller's  Registrable  Securities in
such jurisdiction; provided, however, that the Company shall not be obligated to
qualify  as a  foreign  corporation  to  do  business  under  the  laws  of  any
jurisdiction in which it is not then qualified or to file any general consent to
service of process;

                  (6) notify each seller of Registrable Securities,  at any time
when a prospectus is required to be delivered  under the Securities  Act, of any
event as a result of which the prospectus or any document  incorporated  therein
by reference  contains an untrue  statement of a material fact or omits to state
any material fact  necessary to make the  statements  therein not  misleading in
light of the circumstances  under which such statements were made, and prepare a
supplement  or amendment to the  prospectus  or any such  document  incorporated
therein so that thereafter the prospectus  will not contain an untrue  statement
of a material  fact or omit to state any  material  fact  necessary  to make the
statements therein not misleading in light of the circumstances under which such
statements were made;

                  (7) cause all registered  Registrable  Securities to be listed
on each securities  exchange,  if any, on which similar securities issued by the
Company are then listed;

                  (8)      provide an institutional transfer agent and registrar
and a CUSIP number for all Registrable Securities on or before the effective
date of the registration statement;

                                       7
<PAGE>
                  (9)  enter  into  such  customary  agreements   (including  an
underwriting  agreement  in  customary  form)  and take  all  other  actions  in
connection with those  agreements as the holders of the  Registrable  Securities
being registered or the underwriters,  if any, reasonably request to expedite or
facilitate the disposition of the Registrable Securities;

                  (10)  make   available   for   inspection  by  any  seller  of
Registrable  Securities,   any  underwriter  participating  in  any  disposition
pursuant to the registration statement, and any attorney,  accountant,  or other
agent of any seller or underwriter,  all financial and other records,  pertinent
corporate  documents,  and  properties  of the Company,  and cause the Company's
officers,  directors  and employees to supply all  information  requested by any
seller, underwriter, attorney, accountant, or other agent in connection with the
registration statement;  provided that an appropriate  confidentiality agreement
is executed  by any such  seller,  underwriter,  attorney,  accountant  or other
agent;

                  (11) in connection with any  underwritten  offering,  obtain a
"comfort" letter from the Company's  independent public accountants in customary
form and covering those matters  customarily covered by "comfort" letters as the
holders of Registrable  Securities being registered or the managing  underwriter
reasonably  requests  (and,  if the  Company  is able after  using  commercially
reasonable efforts,  the letter shall be addressed to holders of the Registrable
Securities, the Company and the underwriters);

                  (12) in connection with any underwritten offering, furnish, at
the  request  of any  holder  of  Registrable  Securities  being  registered  or
underwriter(s) of the offering,  an opinion of counsel  representing the Company
for the  purposes of the  registration,  in the form and  substance  customarily
given  to  underwriters  in  an  underwritten  public  offering  and  reasonably
satisfactory to counsel representing the holders of Registrable Securities being
registered and the underwriter(s) of the offering, addressed to the underwriters
and to the holders of the Registrable Securities being registered;

                  (13) use its best efforts to comply with all applicable  rules
and regulations of the SEC, and make available to its security holders,  as soon
as reasonably  practicable,  an earnings statement complying with the provisions
of  Section  11(a) of the  Securities  Act and  covering  the period of at least
twelve (12) months,  but not more than eighteen (18) months,  beginning with the
first month after the effective date of the Registration Statement;

                  (14) 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

                  (15)     take all other steps reasonably necessary to effect
the registration of the Registrable Securities contemplated hereby.

         (b)  Seller  Information.  In  the  event  of any  registration  by the
Company,  from time to time,  the Company may require each seller of Registrable

                                       8
<PAGE>
Securities  subject to the  registration  to furnish to the Company  information
regarding  such seller and the  distribution  of the  securities  subject to the
registration,  and such seller shall furnish all such  information  requested by
the Company.

         (c) Notice to Discontinue. Each holder of Registrable Securities agrees
by  acquisition  of such  securities  that,  upon receipt of any notice from the
Company of any event of the kind described in Section  6(a)(6),  the holder will
discontinue  disposition of  Registrable  Securities  until the holder  receives
copies  of the  supplemented  or  amended  prospectus  contemplated  by  Section
6(a)(6).  In addition,  if the Company requests,  the holder will deliver to the
Company (at the Company's expense) all copies,  other than permanent file copies
then in the holder's  possession,  of the  prospectus  covering the  Registrable
Securities  current at the time of receipt of the notice.  If the Company  gives
any such notice,  the time period mentioned in Section 6(a)(3) shall be extended
by the number of days elapsing between the date of notice and the date that each
seller  receives  the  copies  of  the   supplemented   or  amended   prospectus
contemplated in Section 6(a)(6).

         (d) Notice by Holders.  Whenever the holders of Registrable  Securities
have requested that any  Registrable  Securities be registered  pursuant to this
Agreement, those holders shall notify the Company, at any time when a prospectus
relating  thereto is required to be delivered  under the Securities  Act, of the
happening of any event, which as to any holder of Registrable  Securities is (i)
to his or its  respective  knowledge,  (ii) solely within his or its  respective
knowledge  and  (iii)  solely  as to  matters  concerning  that  holder  of  the
Registrable  Securities,  as a result of which the  prospectus  included  in the
registration  statement contains an untrue statement of a material fact or omits
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.

         Section 7.  Registration Expenses.
         ---------   ---------------------

         (a) Generally.  The Company shall pay all Registration Expenses for the
first  four  demand   registrations  on  Form  S-1  or  Form  S-3  and  for  all
registrations  pursuant to Section 4. The term "Registration  Expenses" includes
without limitation all registration  filing fees,  reasonable  professional fees
and other reasonable  expenses of the Company's  compliance with federal,  state
and other  securities laws (including fees and  disbursements of counsel for the
underwriters in connection with state or other securities law qualifications and
registrations),  printing expenses, messenger,  telephone and delivery expenses;
reasonable fees and disbursements of counsel for the Company and for one counsel
for the sellers of the  Registrable  Securities  (subject to the  provisions  of
Section 7(b));  reasonable fees and  disbursement  of all independent  certified
public  accountants  (including  the expenses of any audit or "comfort"  letters
required by or incidental to performance of the obligations contemplated by this
Agreement);  fees and expenses of the  underwriters  (other than  discounts  and
commissions  with respect to the Registrable  Securities  which shall be paid by
the holder requesting  registration  thereof);  fees and expenses of any special
experts  retained by the Company at the request of the managing  underwriters in
connection  with  the  registration;  and  applicable  stock  exchange  and NASD
registration and filing fees.

                                       9
<PAGE>
         (b) Counsel for Holders. In connection with each registration for which
the  Company is  required  to pay the  Registration  Expenses  of the holders of
Registrable  Securities,  the Company will promptly  reimburse those holders for
the reasonable fees and  disbursements of one law firm,  selected by the holders
of a majority of the Registrable  Securities  included in such registration,  to
serve as counsel to all the holders.

         Section 8.  Indemnification.
         ---------   ---------------

         (a)  Indemnification  by Company.  In the event of any  registration of
Registrable  Securities under the Securities Act pursuant to this Agreement,  to
the full extent permitted by law, the Company agrees to indemnify each holder of
Registrable  Securities  so  registered,  its  officers,  directors,   trustees,
partners,  employees,  advisors  and agents,  and each Person who  controls  the
holder  (within the meaning of the  Securities Act and the Exchange Act) against
all losses,  claims,  damages,  liabilities and expenses caused by any untrue or
allegedly  untrue  statement  of material  fact  contained  in any  registration
statement under which such  Registrable  Securities  were  registered  under the
Securities Act, any prospectus or preliminary  prospectus  contained  therein or
any omission or alleged  omission to state a material fact required to be stated
therein or necessary to make the  statements  therein not misleading in light of
the  circumstances  under which such statements were made,  except to the extent
the untrue  statement  or omission  resulted  from  information  that the holder
furnished in writing to the Company  expressly  for use therein.  In  connection
with a firm or best efforts  underwritten  offering,  to the extent  customarily
required  by  the  managing   underwriter,   the  Company  will   indemnify  the
underwriters,  their  officers  and  directors  and each Person who controls the
underwriters (within the meaning of the Securities Act and the Exchange Act), to
the extent customary in such agreements.

         (b)  Indemnification  by Holders of Securities.  In connection with any
registration statement, each participating holder of Registrable Securities will
furnish to the Company in writing such information and affidavits as the Company
reasonably  requests for use in connection  with any  registration  statement or
prospectus and each holder agrees to indemnify,  to the extent permitted by law,
the Company, its directors,  officers, trustees, partners,  employees,  advisors
and agents,  and each Person who controls the Company (within the meaning of the
Securities  Act and the  Exchange  Act)  against  any losses,  claims,  damages,
liabilities and expenses resulting from any untrue or allegedly untrue statement
of a material fact or any omission or alleged  omission to state a material fact
required  to be  stated  in the  registration  statement  or  prospectus  or any
amendment thereof or supplement thereto necessary to make the statements therein
not misleading in light of the  circumstances  under which such  statements were
made, but only to the extent that the untrue  statement or omission is contained
in or omitted from any information or affidavit the holder  furnished in writing
to the Company expressly for use therein and only in an amount not exceeding the
net proceeds  received by the holder with respect to securities sold pursuant to
such  registration  statement.  In  connection  with  a  firm  or  best  efforts
underwritten  offering,  to the  extent  customarily  required  by the  managing
underwriter,  each participating holder of Registrable Securities will indemnify
the underwriters,  their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act and the Exchange Act), to
the extent customary in such agreements.

                                       10
<PAGE>
         (c) Indemnification Proceedings. Any Person entitled to indemnification
under this  Agreement will (i) give prompt notice to the  indemnifying  party of
any claim with respect to which it seeks  indemnification and (ii) unless in the
indemnified party's reasonable judgment a conflict of interest may exist between
the indemnified and indemnifying  parties with respect to the claim,  permit the
indemnifying  party to assume the defense of the claim with  counsel  reasonably
satisfactory to the indemnified party. If the indemnifying party does not assume
the defense,  the indemnifying  party will not be liable for any settlement made
without its consent  (but that  consent may not be  unreasonably  withheld).  No
indemnifying  party will consent to entry of any judgment or will enter into any
settlement that does not include as an unconditional term thereof the claimant's
or plaintiff's  release of the indemnified  party from all liability  concerning
the claim or litigation.  An indemnifying party who is not entitled to or elects
not to assume the defense of a claim will not be under an  obligation to pay the
fees and  expenses of more than one counsel for all parties  indemnified  by the
indemnifying party with respect to the claim,  unless in the reasonable judgment
of  any  indemnified  party  a  conflict  of  interest  may  exist  between  the
indemnified  party and any other indemnified party with respect to the claim, in
which  event  the  indemnifying  party  shall be  obligated  to pay the fees and
expenses of no more than one additional counsel for the indemnified parties.

         (d) Contribution.  If the indemnification  provided for in Section 8(a)
or (b) is unavailable to an indemnified party in respect of any losses,  claims,
damages,  liabilities or expenses  referred to therein,  then each  indemnifying
party  thereunder  shall  contribute  to the  amount  paid  or  payable  by such
indemnified party as a result of such losses,  claims,  damages,  liabilities or
expenses in such  proportion as is  appropriate to reflect the relative fault of
the  Company  and  the  participating  holders  of  Registrable   Securities  in
connection  with the  statements  or  omissions  that  resulted in such  losses,
claims,  damages,  liabilities  or  expenses,  as  well  as any  other  relevant
equitable   considerations.   The   relative   fault  of  the  Company  and  the
participating holders of Registrable Securities shall be determined by reference
to,  among other  things,  whether the untrue or alleged  untrue  statement of a
material  fact or the  omission  or alleged  omission  to state a material  fact
relates to information  supplied by the Company or by the participating  holders
of Registrable Securities and the parties' relative intent and knowledge.

         The parties  hereto  agree that it would not be just and  equitable  if
contribution  pursuant this Section 8(d) were  determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations   referred   to   in   the   immediately   preceding   paragraph.
Notwithstanding  anything  herein to the contrary,  no  participating  holder of
Registrable  Securities  shall be required to contribute any amount in excess of
the amount by which the net proceeds of the offering (before deducting expenses,
if any) received by such participating  holder exceeds the amount of any damages
that such  participating  holder has otherwise been required to pay by reason of
such untrue or alleged  untrue  statement  or omission or alleged  omission.  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.

         Section 9. Rule 144 and Rule 144A.
         ---------  ----------------------

If the Company files a registration  statement pursuant to the requirements
of the Securities Act or Section 12 or Exchange Act, the Company  covenants that

                                       11
<PAGE>
it will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and  regulations  adopted by the SEC  thereunder,
and it will take such  further  action as any holder of  Registrable  Securities
reasonably may request,  all to the extent required from time to time, to enable
such  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, or (ii) any  similar  rule or  regulation  hereafter
adopted by the SEC.  Upon the request of any holder of  Registrable  Securities,
the Company will deliver to such holder a written statement as to whether it has
complied with Rule 144's or any successor rule's requirements.  The Company also
covenants  that in such event it will provide all such  information  and it will
take such further action as any holder of Registrable  Securities reasonably may
request  to  enable  such  holder  to  sell   Registrable   Securities   without
registration  under the  Securities Act within the limitation of Rule 144A under
the Securities Act or any successor rule requirements.

         Section 10. Participation in Underwritten  Registration.
         ----------  -------------------------------------------

No Person may  participate  in any  underwritten  registration  without (a)
agreeing to sell securities on the basis provided in  underwriting  arrangements
approved by the Persons  entitled  hereunder to approve such  arrangements  (the
holders of the  Registrable  Securities  in a Demand  Registration  pursuant  to
Section  3(d) and the  Company in a piggyback  registration  pursuant to Section
4(d)), and (b) completing and executing all questionnaires,  powers of attorney,
indemnities,  underwriting  agreements  and  other  documents  required  by  the
underwriting arrangements.

         Section 11.  Termination.
         ----------   -----------

This Agreement shall terminate three (3) years after the date of the Initial
Public Offering.

         Section 12.  Miscellaneous.
         ----------   -------------

         (a) Recapitalizations, Exchanges, etc. The provisions of this Agreement
shall  apply to the  full  extent  set  forth  herein  with  respect  to (i) the
Conversion  Shares  and the shares of Common  Stock,  (ii) any and all shares of
voting common stock of the Company into which the  Conversion  Shares and/or 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  Conversion  Shares  and/or 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 use its best efforts to cause any successor or assign (whether
by sale, merger or otherwise) to enter into a new registration  rights agreement
with Pequot on terms  substantially the same as this Agreement as a condition of
any such transaction.

         (b)      Amendment.  This Agreement may be amended or modified only by
a written agreement executed by the Company and Pequot.

         (c)  Attorneys'  Fees.  In any legal  action or  proceeding  brought to
enforce any provision of this Agreement,  the prevailing party shall be entitled

                                       12
<PAGE>
to recover all reasonable expenses,  charges, court costs and attorneys' fees in
addition to any other available remedy at law or in equity.

         (d) Benefit of Parties;  Assignment. All of the terms and provisions of
this  Agreement  shall be binding on and inure to the benefit of the parties and
their  respective  successors  and assigns,  including  without  limitation  all
subsequent holders of securities  entitled to the benefits of this Agreement who
agree in writing to become bound by the terms of this Agreement.

         (e)  Captions.  The captions of the sections  and  subsections  of this
Agreement are solely for convenient  reference and shall not be deemed to affect
the meaning or interpretation of any provision of this Agreement.

         (f)  Cooperation.  The  parties  agree  that  after  execution  of this
Agreement  they will from time to time,  upon the request of any other party and
without further consideration,  execute,  acknowledge and deliver in proper form
any  further  instruments  and take such  other  action  as any other  party may
reasonably require to carry out effectively the intent of this Agreement.

         (g) Counterparts;  Facsimile Execution.  This Agreement may be executed
simultaneously  in two or more  counterparts,  each of which  shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Facsimile  execution and delivery of this  Agreement  shall be legal,  valid and
binding execution and delivery for all purposes.

         (h) Entire Agreement.  This Agreement contains the entire understanding
of the  parties  with  respect  to the  subject  matter  of this  Agreement  and
supersedes  all prior  agreements  and  understandings  between the parties with
respect  thereto.  There are no promises,  covenants or undertakings  other than
those expressly set forth or provided for in this Agreement.

         (i)  Governing Law.  The internal law of the State of New York will
govern the interpretation, construction, and enforcement of this Agreement and
all transactions and agreements contemplated hereby, notwithstanding any state's
choice of law rules to the contrary.

         (j) No  Inconsistent  Agreements.  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
contained herein.  Except with the prior written consent of Pequot,  the Company
will not enter into any  agreement  with  respect to its  securities  that shall
grant to any Person  registration  rights that in any way  conflict  with or are
prior in right to the rights provided under this Agreement.

         (k) Notices.  All notices,  requests,  demands, or other communications
that are required or may be given pursuant to the terms of this Agreement  shall
be in writing and  delivery  shall be deemed  sufficient  in all respects and to
have been duly given on the date of service if delivered personally to the party
to whom  notice is to be given,  or upon  receipt if mailed by first class mail,
return  receipt  requested,  postage  prepaid,  and  properly  addressed  to the
addresses  of the parties set forth in the  Purchase  Agreement or to such other
address(es) as the  respective  parties hereto shall from time to time designate
to the other(s) in writing.

                                       13
<PAGE>
         (l) Specific Performance. Each of the parties agrees that damages for a
breach of or  default  under  this  Agreement  would be  inadequate  and that in
addition to all other  remedies  available  at law or in equity that the parties
and their  successors  and assigns shall be entitled to specific  performance or
injunctive  relief,  or both, in the event of a breach or a threatened breach of
this Agreement.

         (m) Entire  Agreement;  Severability.  This Agreement  constitutes  the
entire agreement among the parties and supersedes any prior agreements among the
parties,  whether written or oral, relating to the subject matter hereof. If any
provision of this Agreement is held to be invalid, illegal or unenforceable,  in
whole or in part, such invalidity will not affect any otherwise valid provision,
and all other  valid  provisions  will  remain in full force and effect and this
Agreement  shall be enforced to the  greatest  extent  possible to carry out the
intentions of the parties hereto.

                            [signature page follows]

                                       14
<PAGE>


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

                                  CHANNELHEALTH INCORPORATED

                                  By:/S/ RICHARD E. TARRANT
                                     ______________________________________
                                     Richard E. Tarrant, President




                                  PEQUOT PRIVATE EQUITY FUND II, L.P.,

                                  By:  PEQUOT CAPITAL MANAGEMENT, INC., as
                                       Investment Manager


                                  By:/S/ DAVID J. MALAT
                                     ______________________________________
                                     David J. Malat, Chief Financial Officer


                                  IDX SYSTEMS CORPORATION


                                  By:/S/ ROBERT W. BAKER, JR.
                                     _____________________________________
                                       Name:Robert W. Baker, Jr.,
                                            Vice President


                                       15

<PAGE>


                                    EXHIBIT D


             EMPLOYMENT, NONCOMPETITION AND NONDISCLOSURE AGREEMENT

     THIS  AGREEMENT  is  made  by and  between  Channelhealth  Incorporated,  a
subsidiary of IDX Systems Corporation, ("the Company"), and the undersigned (the
"Employee") as of the date of acceptance hereof by the Company,  and it shall be
effective as of the first date of Employee's  employment by the Company,  unless
the context requires  otherwise.  References to the Employee using the masculine
gender in this Agreement shall be deemed to include the feminine gender and vice
versa.

                                   BACKGROUND

               The  Employee  is  employed  by or  desires to become
         employed by the  Company.  The  Company  desires to employ the
         Employee,   and  the   Employee  is  willing  to  accept  such
         employment,  upon the terms  and  conditions  hereinafter  set
         forth.

                The  Employee  acknowledges  that  in the  course  of
          rendering  services to the  Company,  he/she may have and will
          become  acquainted  with  information  about the  business and
          financial affairs of the Company,  and may have contributed or
          may in the future contribute to such information. The Employee
          recognizes  that in order to protect the legitimate  interests
          of the Company it is necessary  for the Company to protect all
          such information by keeping it secret or confidential.

     IN CONSIDERATION  of the premises,  the mutual covenants and conditions set
forth  herein,  and for other good and valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1. EMPLOYMENT
   ----------
1.1 Employment at Will.
    ------------------
The Company hereby offers the Employee, and Employee hereby accepts,  employment
or continued  employment  upon the terms and conditions  hereinafter  set forth.
Employment by the Company is terminable at any time, for any reason, at the will
of either the  Employee or the Company.  No  statement  of policy or  procedure,
whether written or oral, or set forth in any manual or guide, shall be a promise
by the Company to continue  employment for any definite term, nor shall any such
statement,  policy or  procedure  require  the  Company  to follow  any  special
procedure,  such  as  progressive  discipline,  before  terminating  employment.
Employee expressly  acknowledges that Employee is not accepting  employment with
the Company based on any prior or contemporaneous  representations,  statements,
or promises by the Company or by any other person, business or entity affiliated
with the Company, oral or written,  including without any limitation any promise
to grant or pay to  Employee  an equity  interest  in the  Company  or any other
company or business  affiliated  with the Company or options to receive any such
equity interest.

1.2 Exclusive  Employment.
    ---------------------
The Employee shall devote his/her full-time efforts  exclusively for the benefit
of the Company as required  hereunder,  and shall  perform no services  for, and
shall not become  employed or engaged by any other person,  firm or entity while
employed  by  the  Company.  The  foregoing  shall  not  prevent  Employee  from
participating  in activities in association  with  professional  associations as
approved by the Company.

1.3 Duties.
    ------
The Employee's duties shall be as assigned by the Company in its discretion, and
at all times  he/she  shall be  subject  to the  direction  and  control  of the

                                  Page 1 of 7
<PAGE>
officers and the Board of  Directors of the Company.  The duties of the Employee
as of the date of this  Agreement  shall be as set  forth  on the  official  job
description for the position  indicated  below the Employee's  signature line at
the end of this Agreement.

2. COMPENSATION
   ------------
As the only and the full  compensation for all of the services to be provided by
the Employee to the Company,  the Company agrees to pay, and the Employee agrees
to and does accept, the following:

2.1 Salary.
    ------
If the Agreement is for initial  employment of the Employee by the Company,
salary  shall be paid at the annual  rate  offered to  Employee  in the  written
letter  addressed to Employee prior to the commencement of work for the Company.
If this  Agreement is for  continued  employment of the Employee by the Company,
salary shall be paid at the rate in effect as of the time of execution hereof by
the Employee. Salary may be increased or decreased by the Company prospectively,
at any  time  and for any  reason.  Salary  shall  be paid  semi-monthly  on the
fifteenth (15th) and last days of each month, in arrears, or on such other legal
basis as the Company shall generally  follow from time to time, net of all taxes
and other legally permissible withholdings.  In this regard, the Employee hereby
authorizes the Company to withhold from salary  payments any amounts owed to the
Company  by  Employee  hereunder  or any  other  amounts  as may  be  agreed  to
subsequently,  including but not limited to over payments, 401(k) contributions,
and loan payments.

2.2 Benefits.
    --------
The Employee shall be entitled to the benefits, such as health,  insurance,
vacation,  paid and unpaid  leave as the  Company may from time to time offer to
employees as a standard benefit. Benefits are subject to change at any time with
such notice to employees as may be required by applicable employee benefit plans
and laws governing  them. No special or different  terms shall apply to Employee
unless set forth in writing and signed by an authorized executive officer of the
Company.

2.3  Bonuses.
     -------
The  Employee  shall  not  be  entitled  to  receive  any  bonus  or  other
compensation  other  than  standard  benefits  and  salary,  unless set forth in
writing and signed by an authorized executive officer of the Company. Bonuses of
any kind or nature are not payable  unless the Employee is actually  employed by
the Company,  is in good  standing,  and is not on leave,  on the date of actual
distribution.

2.4  Authorization  to Deduct from Wages.
     -----------------------------------
If at separation  of employment  (a) the Company has advanced paid leave to
the Employee  before the  Employee has accrued such leave,  (b) the Employee has
failed to repay any money the  Company  has  loaned to the  Employee  during the
course of  employment,  or (c) the  Employee is  required  pursuant to a written
agreement to reimburse the Company for relocation and moving costs, the Employee
authorizes the Company to deduct from the Employee's  wages  sufficient funds to
repay such advances,  loans, or  relocation/moving  costs, subject to applicable
federal and state wage laws.

3.  DEFINITION OF PROPRIETARY INFORMATION
    -------------------------------------
For purposes of this Agreement the term "Proprietary Information" means all
of the following  materials and  information in whatever form or medium (even if
not  patentable,  or not  protectable or protected by copyright  laws) which the
Employee receives access to, creates,  authors or develops, in whole or in part,
in the course of and within the scope of his/her  employment with the Company or
through the use of any of the Company's facilities or resources:

3.1 Computer Software.
    -----------------
Computer  programs,  in any form, and all elements  thereof,  including all
source and object codes,  flow charts,  algorithms,  coding  sheets,  compilers,
assemblers, programmer notes, design documents, and routines.

                                  Page 2 of 7
<PAGE>
3.2  Research.
     --------
Discoveries,  concepts and ideas,  whether or not patentable or protectable
by copyright,  including, without limitation, the nature and results of research
and  development  activities,   technical  information  on  product  or  program
performance and reliability, processes, formulas, techniques, and "know-how."

3.3  Marketing  and Customer  Information.
     ------------------------------------
Price lists, pricing policies,  quoting procedures,  financial information,
customer and prospect  names and  requirements,  customer  data,  customer  site
information, prospect and call lists, telephone directories and calendars.

3.4  Business  Information.
     ---------------------
Production  development  processes,  marketing  techniques,  mailing lists,
purchasing  information,  financial statements,  management reports and business
plans.

3.5  Other.
     -----
Any other materials or information related to the business or activities of
the Company which are not generally known to others engaged in similar  business
or activities.

Failure to mark any of the Proprietary  Information as  confidential  shall not
affect its status as part of the Proprietary Information under the terms of this
Agreement.

4.  DISCLOSURE OF INFORMATION, WORKS AND MATERIALS
    ----------------------------------------------
The  Employee  recognizes  that  he/she  will be exposed  to the  Company's
confidential  information  including  without  limitation  the  Company's  trade
secrets, and confidential business information.  The Employee is hereby notified
that such information  includes all computer  programs  developed by the Company
and the documentation  for them.  Further,  this includes business  information,
such as price  lists,  customer  lists and data  bases,  business  plans,  sales
projections and product  development  plans. The Employee  further  acknowledges
that any  information  and  materials  received  by the  Company  and from third
parties in confidence  must be treated  confidentially.  This  includes  patient
information.  Employee  covenants and agrees that he/she shall not,  except with
the prior written consent of the Company, or unless the Employee is acting as an
employee of the Company solely for the benefit of the Company in connection with
the Company's  business and in accordance with the Company's  business practices
and  employee  policies,  at any time  during or  following  the term of his/her
employment with the Company,  directly or indirectly  divulge,  reveal,  report,
publish,  transfer  or  disclose,  for  any  purpose  whatsoever,  any  of  such
confidential information which has been obtained by or disclosed to him/her as a
result of his/her employment with the Company,  including,  without  limitation,
any Proprietary Information, as defined in Section 3 hereof.

5.  OWNERSHIP OF INFORMATION, WORKS AND RIGHTS THEREIN
    --------------------------------------------------

5.1 Title.
    -----
The Employee  hereby  assigns and  transfers to the Company and agrees that
the Company shall be the owner of all inventions,  discoveries,  work,  computer
software program or other computer-related  equipment or technology,  conceived,
developed, or made by the Employee,  either alone or with others, in whole or in
part, during the Employee's  employment by the Company,  which are useful in, or
directly or indirectly  related to the Company's business or which relate to, or
are conceived, developed, or made in the course of, the Employee's employment or
which are  developed or made from, or by reason of knowledge  gained from,  such
employment . If any one or more of the  aforementioned are deemed to fall within
the  definition of "work made for hire," within the meaning of the Copyright Act
of 1976,  as amended,  such work shall be  considered  "work made for hire," the
copyright of which shall be exclusively  owned by and vested in the Company.  If
any  of the  aforementioned  are  considered  to be  work  not  included  in the
categories of work covered by the "work made for hire"  definition  contained in
the Copyright Act, such work shall be, and it hereby is, assigned or transferred
completely and  exclusively to the Company.  The Employee  agrees to execute any
instruments and to do all other things reasonably requested by the Company (both
during and after the Employee's  employment  with the Company) in order to fully
vest and  perfect in the  Company all  ownership  rights in those  items  hereby

                                  Page 3 of 7
<PAGE>
transferred  by the Employee to the  Company.  The  Employee  further  agrees to
disclose  immediately to the Company all  Proprietary  Information  conceived or
developed in whole or in part by him/her  during the term of his/her  employment
with the  Company  and to assign to the  Company  any right,  title or  interest
he/she may have in such Proprietary Information.

5.2 Employee's  Works.
    -----------------
The Employee  hereby  represents  and warrants  that the Employee has fully
disclosed  to the Company and  attached  hereto a  description  of any  computer
program or other  computer-related  technology  not covered in Section 5.1 above
which, prior to his/her  employment with the Company,  the Employee conceived of
or developed,  wholly or in part, but which has not been published or filed with
the United States Patent or Copyright Offices.

5.3 Works and Interests of Others.
    -----------------------------
Employee hereby represents and warrants that employment by the Company will
not violate any agreement or promise of employee to any other  person,  and that
Employee  will not use any  property or  confidential  information  of others in
his/her work for the Company.

6. RECORDS AND TANGIBLE MATERIALS
   ------------------------------
All notes, data, tapes, reference materials,  sketches, drawings, memoranda
and records in any way relating to any of the information referred to in Section
3, 4 and 5 hereof (including,  without limitation,  any Proprietary Information)
or otherwise prepared by Employee in the course of his/her  employment,  and all
copies thereof, shall belong exclusively to the Company, and the Employee agrees
to deliver to the  Company on request  all copies of such  materials  in his/her
possession  or then under  his/her  control.  In the  absence of such a request,
Employee  shall deliver such items to the Company upon the  termination  for any
reason of the Employee's employment with the Company.

7. PROTECTION OF INFORMATION AND GOODWILL
   --------------------------------------

7.1 Nature of Business.
    ------------------
Employee and the Company  recognize that Employee will acquire knowledge as
a result of  working  for the  Company,  and that such  knowledge  will  include
specific knowledge of the Company's business,  secrets,  products and customers,
including Confidential Information. Employee and the Company recognize that upon
termination  of  employment  by the Company,  Employee  could use such  specific
knowledge  and  information  to the detriment of the Company by disclosing it to
competitors,  customers and  prospects,  and using it to obtain or win business.
Employee  and the  Company  recognize  that  proof of such  disclosure  would be
difficult,  yet the harm caused  thereby  could be  significant  to the Company.
Therefore,  Employee  and the  Company  are  willing to agree that  Confidential
Information  will be  disclosed to  Employee,  and, to protect the Company,  its
relationship  with its customers,  its competitive  position,  and its goodwill,
Employee  will not engage in a competitive  venture for a reasonable  time after
employment by the Company, as set forth below.

7.2  Competitive Ventures.
     --------------------
The Company is engaged throughout the United States and the rest of the world
in providing internet-based communication and services for healthcare providers,
pharmacies, and patients,  including but not limited to providing internet-based
software   applications  for  physician   desktops  that  incorporate   practice
management, patient communication,  medical reference, and clinical transactions
information  for use by  physicians  and patients and  providing  internet-based
software applications that facilitate healthcare information between pharmacies,
provider  groups and patients  (such  activities  and services being referred to
herein as the "Internet-Based Healthcare Information Business"). In the event of
the termination of Employee's  employment hereunder for any reason, the Employee
agrees that for a period of twelve (12) months from the date of such termination
(the "Prohibition Period"), he/she will not:

7.2.1 Engage directly for  himself/herself,  or jointly with or on behalf of any
person,  entity  or  venture  involved  in  the  Internet-Based  Healthcare
Information  Business, or any other business in which the Company was engaged at
the time of such termination of employment, and

7.2.2 Work for or become employed by or associated with any person,  entity

                                  Page 4 of 7
<PAGE>
or venture engaged in the Internet-Based  Healthcare  Information Business where
either (i) the Employee's  duties will be substantially  similar to those he/she
has performed for the Company hereunder,  or (ii) the Employee's duties would be
likely to involve, or require, or would involve or require, disclosure or use of
Proprietary Information. For example, and without limiting the generality of the
foregoing,  if Employee  is  employed  by the  Company as a computer  programmer
working on internet-based medical information communications,  he/she shall not,
during the Prohibition  Period,  work as a computer programmer on internet-based
medical information communications.

7.3  Geographical  Limitations.
     -------------------------
The  Employee's  obligations  under  this  Section  7 shall  extend  to all
geographical  areas in which the Company,  or any of its related  companies,  is
offering its products' services,  either directly or indirectly through licenses
or otherwise, during the Prohibition Period.

7.4  Non-Solicitation.
     ----------------
The  Employee  further  agrees that for a period of twelve (12) months from
the date of  termination  of his/her  employment,  he/she will not, on behalf of
himself/herself  or any person or entity of the  Company,  (i)  compete  for, or
engage in  competitive  solicitation  of, any  customer of the  Company,  or any
person or entity  that he/she  has,  during the twelve  (12) months  immediately
preceding  such  termination,  solicited or serviced on behalf of the Company or
that has been so solicited or serviced,  during such period, by any person under
the Employee's supervision,  or (ii) hire or engage or attempt to hire or engage
any  individual who was an employee of the Company at any time during the twelve
(12) months immediately prior to such termination.

THE  EMPLOYEE  REPRESENTS  AND  WARRANTS  THAT THE  KNOWLEDGE,  SKILLS  AND
ABILITIES  HE/SHE  POSSESSES ARE SUFFICIENT TO PERMIT  HIM/HER,  IN THE EVENT OF
TERMINATION OF HIS/HER EMPLOYMENT HEREUNDER FOR ANY REASON, TO EARN A LIVELIHOOD
SATISFACTORY TO HIM/HER WITHOUT VIOLATING ANY PROVISION OF SECTION 7 HEREOF.

8.  INJUNCTIVE RELIEF
    -----------------
The Employee  understands  and agrees that the Company will probably suffer
irreparable  harm if  Proprietary  Information  is disclosed,  and that monetary
damages will be inadequate as  compensation  for such breach.  Accordingly,  the
Employee  agrees  that,  in the  event of a breach or  threatened  breach by the
Employee of any of the provisions of this Agreement, the Company, in addition to
and not in limitation of any other rights,  remedies or damages available to the
Company at law or in equity,  will be entitled to, and Employee  hereby consents
to, a permanent injunction in order to prevent or to restrain any such breach by
the Employee, or by the Employee's partners, agents, representatives,  servants,
employers,  employees and/or any and all persons  directly or indirectly  acting
for or with him/her.

9.  ACCOUNTING FOR PROFITS
    ----------------------
The  Employee  covenants  and agrees that,  if he/she shall  violate any of
his/her  covenants or  agreements  under this  Agreement,  the Company  shall be
entitled  to  an  accounting   and  repayment  of  all  profits,   compensation,
commissions,  enumerations or benefits which the Employee directly or indirectly
has realized  and/or may realize as a result of, growing out of or in connection
with  any  such  violation;  such  remedy  shall  be in  addition  to and not in
limitation  of any  injunctive  relief or other  rights or remedies to which the
Company is or may be entitled at law, in equity or under this Agreement.

10. REASONABLENESS OF RESTRICTIONS
    ------------------------------
The Employee has carefully read and considered the provisions of Sections 1
through 9 hereof and,  having done so,  agrees that the  restrictions  set forth
therein are fair and reasonable  and are reasonably  required for the protection

                                  Page 5 of 7
<PAGE>
of the  interests of the Company,  its  officers,  directors,  stockholders  and
employees.

11. SUCCESSORS AND ASSIGNS
    ----------------------
This  Agreement  shall  inure to the  benefit  of and be  binding  upon the
Employee,  his/her  legal  representative  or  representatives  and  testate  or
intestate distributees,  and this Agreement shall inure to the benefit of and be
binding upon the Company,  and their successors and assigns.  The term "Company"
as used herein shall include such  successors and assigns and also shall include
any corporation  which is at any time the parent or a subsidiary of the Company,
or any  corporation  or entity which is an affiliate of the Company by virtue of
common  (although  not  identical)  ownership,  and for  which the  Employee  is
providing services in any form during his/her employment with the Company or any
such other corporation or entity. The term successors and assigns as used herein
shall include a corporation or other entity acquiring all or  substantially  all
of the assets and business of the Company  (including this Agreement) whether by
operation of law or otherwise.

12. NOTICES
    -------
Any  notice  required  or  permitted  by this  Agreement  shall be given by
registered or certified mail, return receipt requested, addressed to the Company
at its then principal office, or to the Employee at his/her then current address
set forth in the payroll  records of the  Company,  or to either party hereto at
such other  address or  addresses  as he/she or it may from time to time specify
for the purpose in a notice similarly given.

13. ENFORCEABILITY AND SCOPE
    ------------------------
If any  provision of this  Agreement is  subsequently  determined  by a court of
competent  jurisdiction  to be  void  or  unenforceable  for  any  reason,  that
provision  shall be deemed stricken and the remainder of the Agreement shall not
be affected  thereby and shall be binding upon the parties  hereto insofar as it
remains a workable  instrument  to  accomplish  the intent and  purposes  of the
parties.  The parties shall  negotiate  the severed  provision to bring the same
within the applicable legal requirements to the extent possible. Employee agrees
to  take  any and all  actions,  including  without  limitation,  execution  and
delivery of any and all  instruments  and  documents  necessary  or advisable to
complete,  perfect,  evidence or otherwise  confirm any of the matters set forth
herein.

14. TERM AND OTHER CONDITIONS
    -------------------------
This  Agreement  shall  remain in full  force and  effect  until the  Employee's
employment by the Company  terminates,  or until  superseded by another  written
employment  agreement based upon good and proper  consideration  and executed by
the  Employee and the  Company,  whichever  first  occurs.  Notwithstanding  the
foregoing,  in the event of the  termination  of this Agreement by reason of the
termination of the Employee's employment, those provisions hereof which by their
terms  extend in  accordance  with such terms shall  survive.  No  amendment  or
modification  of the terms and conditions  hereof shall be effective  unless set
forth in a written  document signed by the Employee and the Company.  As used in
the Agreement,  words of the masculine shall, as the context  required,  include
the feminine.

15.  ARBITRATION
     -----------
Any dispute between the Company and the Employee arising out of or in any manner
connected with employment or employment practices,  including but not limited to
claims  of  discrimination  of any kind and  wrongful  discharge,  under  state,
federal or local law,  shall be submitted to binding  arbitration  in accordance
with the rules of the  American  Arbitration  Association,  to be  conducted  in
Burlington,  Vermont, except however, any dispute arising under Sections 4, 5, 6
and 7 of the Agreement,  which, at the Company's option, may be litigated as set
forth in Section 16 below.

                                  Page 6 of 7
<PAGE>
16. GOVERNING LAW AND FORUM; LEGAL FEES
    -----------------------------------
Employee  acknowledges that the Company has employees located in various states,
and that it is  important  to have  consistent  policies  and laws apply to them
insofar as matters relating to employment are concerned.  Employee  acknowledges
that  consistency  in employment  policy is beneficial  because  results will be
predictable and all employees will be treated equally.  Therefore,  Employee and
the Company  agree that this  Agreement  shall be governed by and  construed  in
accordance  with the  internal  laws of the  State  of  Vermont,  and any  legal
proceeding  regarding the  interpretation or enforcement of this Agreement shall
be instituted in a court of competent  jurisdiction  located within the State of
Vermont.  In the event of any litigation to enforce the terms of this Agreement,
the  non-prevailing  party  shall pay, as  additional  damages,  all  reasonable
attorney's fees of the prevailing party.

17. ENTIRE AGREEMENT
    ----------------
This  instrument  contains the entire  agreement of the parties  relating to the
subject matter hereof,  and it supersedes any prior or  contemporaneous  oral or
written understandings of any kind or nature. Employee represents that he/she is
not  relying on any  agreement,  representation  or warranty  pertaining  to the
subject  matter hereof that is not  expressly  set forth  herein.  The waiver or
breach  of any term or  condition  of this  Agreement  shall  not be  deemed  to
constitute  a waiver of any  subsequent  breach of the same or any other term or
condition.

                    EXECUTED on the date(s) indicated below.

WITNESS/ATTEST:                             CHANNELHEALTH INCORPORATED


                                             By:
------------------------                        -------------------------------
(SEAL)
                                             Date:
                                                  -----------------------------


                                             By:
------------------------                        --------------------------------
                                                 [EMPLOYEE NAME]

                                             Date:------------------------------



EMPLOYEE'S JOB TITLE:

                                  Page 7 of 7
<PAGE>
                                    EXHIBIT E


                                  CROSS LICENSE
                                       AND
                         SOFTWARE MAINTENANCE AGREEMENT

         THIS  AGREEMENT is made and entered into as of the first day of January
2000,  by and between  IDX  SYSTEMS  CORPORATION,  a Vermont  corporation,  with
offices at 1400 Shelburne Road,  South  Burlington,  Vermont 05403 ("IDX"),  and
CHANNELHEALTH  INCORPORATED,  a Delaware  corporation  with  offices at 25 Green
Mountain Drive, South Burlington, Vermont 05403 ("ChannelHealth").

         WHEREAS,  concurrently herewith IDX and ChannelHealth have entered into
agreements   entitled   "Marketing   Agreement"  and   "Administrative   Service
Agreement," and

         WHEREAS,  the execution and delivery of this Agreement by ChannelHealth
and IDX are conditioned upon the execution and delivery by IDX and ChannelHealth
of the, the Administrative Service Agreement and the Marketing Agreement; and

         WHEREAS, ChannelHealth was formed as a corporation to engage in certain
healthcare   communications,   information  systems,  and  publication  business
activities,  and  IDX  is  a  developer  and  supplier  of  certain  information
technology that ChannelHealth  intends to incorporate into, and make an integral
part of products and services of ChannelHealth; and

         WHEREAS,  certain  activities  to be carried on by  ChannelHealth  were
carried on by a division within IDX known as its ChannelHealth Division; and

         WHEREAS,  ChannelHealth  intends  to  improve,  enhance,  and  maintain
certain  information  technology  of IDX and license to IDX the right to use and
market  such  technology  and  any  improvements,   enhancements  and  resulting
products; and

         WHEREAS,  the  obligations  of the Marketing  Agreement with respect to
development  and support of the enhanced and improved  technology  and resulting
products and  services  shall be in addition to the  obligations  to license and
maintain such technology, products and services set forth in this Agreement.

         NOW, THEREFORE,  in consideration of the premises, the mutual covenants
contained herein, the execution and delivery of the Marketing  Agreement and the
Administrative Service Agreement and for other good and valuable  consideration,
the receipt and sufficiency of which are hereby acknowledged,  ChannelHealth and
IDX hereby agree as follows:

                                       1
<PAGE>



1.  DEFINITIONS  The  capitalized  terms used in this  Agreement  shall have the
meanings ascribed to them on Schedule 1 attached hereto.

2.       IDX LICENSE GRANTS.  Subject to and conditioned upon the performance
and observance of all of the terms and conditions of this Agreement, IDX grants
to ChannelHealth licenses as set forth in this Section 2.

2.1      In General.  IDX hereby grants to ChannelHealth a perpetual  (except as
         set  forth  in  Section  2.3),  non-exclusive,  non-cancellable,  fully
         paid-up license:  (i) to copy, use, display,  perform,  adapt,  modify,
         create derivative works of, and maintain the IDX Software,  in whole or
         in part,  solely  for the  purpose  of Merging  the IDX  Software  into
         ChannelHealth  Products,  (ii)  to  market  and  sublicense  (including
         through one or more Distribution Partners), and in connection therewith
         to copy, use, transmit, perform, and display the IDX Software, in whole
         or in part,  only as the IDX Software may be Merged into  ChannelHealth
         Products,  and (iii) to use and practice the IDX Licensed Technology to
         accomplish the purposes set forth in clauses (i) and (ii).

2.2      CMS. In addition to the rights  granted  under  Section 2.1, IDX hereby
         grants to  ChannelHealth a perpetual,  non-exclusive,  non-cancellable,
         fully paid-up license to copy, use, display,  perform,  adapt,  modify,
         and create derivative works of, maintain, market, sublicense, transmit,
         and distribute  (including  through one or more Distribution  Partners)
         all or any portion of CMS as a stand alone product (i.e., not as Merged
         into another  ChannelHealth  Product).  Subject to Section  2.4.3,  IDX
         shall  not  grant a license  to CMS to any  Person  not a party to this
         Agreement.  Such restriction shall not limit IDX from making any use of
         any part of, or any technology contained in, CMS.

2.3      New Enabling  Technologies.  Upon the  termination  of IDX's  exclusive
         marketing  rights under Section 3.2 of the Marketing  Agreement,  or if
         IDX markets ChannelHealth Products  nonexclusively  pursuant to Section
         3.3  of  the  Marketing  Agreement,   the  license  herein  granted  to
         ChannelHealth   shall  terminate  with  respect  to  all  New  Enabling
         Technologies,  except for New Enabling Technologies embodied in the Web
         FrameWork  and  ConnectR,  but  ChannelHealth  shall  not use  such New
         Enabling  Technologies for any purpose other than to create or maintain
         compatibility or connectivity between ChannelHealth  Products and other
         products.

24.      Ownership.

         2.4.1    Except   for  the   rights   expressly   granted   herein   to
                  ChannelHealth,  IDX reserves and retains all right,  title and
                  interest (including without limitation patents and copyrights)
                  and  shall  be  the  exclusive   owner  of  the  IDX  Licensed
                  Technology and all customizations,  additions,  modifications,
                  changes, enhancements,  improvements, or derivative works made

                                       2

<PAGE>
                  by IDX or on behalf of IDX,  with the  exception of derivative
                  works created by ChannelHealth under Sections 2.1 and 2.2.

         2.4.2    To the extent  ChannelHealth  shall have any  interest  in any
                  items  owned  by  IDX  pursuant  to  the  foregoing   Section,
                  including  without  limitation any joint works,  ChannelHealth
                  hereby  conveys  and shall  convey  good  title and  ownership
                  thereof to IDX.  ChannelHealth  shall execute an assignment in
                  the form attached  hereto as Exhibit  2.4.2 to effectuate  and
                  confirm such assignment.

         2.4.3    IDX reserves and retains all right, title and interest to any
                  and  all patentable inventions made,  conceived,  or reduced
                  to practice by IDX, including  without  limitation by IDX
                  personnel,  employees or contractors, whether  in whole or in
                  part,  both  before and after the  Effective  Date.
                  ChannelHealth  agrees to  cooperate  in every  reasonable  way
                  with IDX, at IDX's cost, to prosecute  patent  applications
                  for such  inventions and to perfect  IDX's  right,  title and
                  interest in and to such  inventions  and patent  applications.
                  The  parties  agree  and  acknowledge  that  certain
                  ChannelHealth  personnel were IDX employees,  or were
                  otherwise  associated with IDX, before the Effective Date, and
                  ChannelHealth  agrees to cooperate in every reasonable way
                  with IDX to prosecute patent  applications for such
                  inventions  and to perfect  IDX's right,  title and interest
                  in and to such inventions and patent applications.

         2.4.4    Subject  to  Section  2.4.3,  IDX  shall  make no claim to any
                  derivative  works  developed by or on behalf of  ChannelHealth
                  pursuant to Sections 2.1 and 2.2.

2.5      Limitations, Restrictions, and Conditions.  The licenses granted to
         ChannelHealth hereunder are subject to all of the terms and conditions
         of this Agreement, including without limitation the following
         limitations, restrictions, and conditions:

         2.5.1    Distribution  Pursuant  to  Marketing  Agreement.  During  the
                  Initial Term of the Marketing  Agreement,  ChannelHealth shall
                  not market or  distribute  the IDX Licensed  Technology or any
                  part thereof, including as Merged into ChannelHealth Products,
                  through the use of any  Distribution  Partner that is a Direct
                  Competitor  of IDX.  This  restriction  shall not apply to any
                  ChannelHealth  Products that IDX does not distribute and shall
                  not apply following the Initial Term or the termination of the
                  Marketing Agreement.

         2.5.2    ChannelHealth  shall not use the IDX  Licensed  Technology  to
                  develop any  products  that  compete  with the Web  FrameWork,
                  ConnectR,  orEnterprise Index, as marketed by IDX from time to
                  time.

         2.5.3    ChannelHealth shall have the right to use internally IDX
                  Database Information only in connection with the Integration
                  Methods, so long as such use does not induce disclosure of IDX
                  Database Information to any Person not a party to this

                                       3
<PAGE>
                  Agreement.  At no time shall ChannelHealth license or
                  authorize any Person to use any Integration Method or to use
                  any IDX Database Information to exchange data between any IDX
                  products and any products of any Person not a party to this
                  Agreement.  The foregoing shall not prohibit or restrict
                  ChannelHealth from (i) providing any ChannelHealth Product to
                  any ChannelHealth Customer using any Integration Method to
                  provide installation services with respect to such
                  ChannelHealth Customer or using IDX Database Information, in
                  each case solely for the benefit of such Customer in using
                  ChannelHealth Products, or (ii) using contractors as set forth
                  in Section 2.5.4.

         2.5.4    ChannelHealth   may  permit   third   parties  to  provide  to
                  ChannelHealth or ChannelHealth Customers maintenance, disaster
                  recovery, facilities management, outsourcing or other services
                  involving  access to the IDX Licensed  Technology only if such
                  third   parties  in  each  instance   shall  execute   written
                  nondisclosure and non-use  agreements with  ChannelHealth,  in
                  form  and  substance   reasonably   satisfactory  to  IDX  and
                  ChannelHealth,  prior to using or  gaining  access  to the IDX
                  Licensed Technology.

         2.5.5    ChannelHealth may adapt,  modify,  merge, and maintain the IDX
                  Licensed  Technology as permitted under this Agreement through
                  its own employees or through independent contractors, provided
                  each  such  independent  contractor  shall  in  each  instance
                  execute a written  nondisclosure  and non-use  agreement  with
                  ChannelHealth,  in form and substance reasonably  satisfactory
                  to IDX and  ChannelHealth,  prior  to  gaining  access  to the
                  Source Code.

         2.5.6    ChannelHealth  may not  indicate  that any  portion of the IDX
                  Licensed  Technology  originated  from IDX,  except with IDX's
                  prior  written  consent  or as  set  forth  in  the  Marketing
                  Agreement.

         2.5.7    ChannelHealth  (i) shall use the IDX Licensed  Technology only
                  in locations  physically within the Territory,  (ii) must keep
                  all physical copies (including those stored electronically) in
                  locations  within the  Territory  and (iii) shall permit third
                  parties as  described  in Section  2.5.4 to use and access the
                  IDX  Licensed   Technology   only  in  locations   within  the
                  Territory.

2.6      Certain Terms of Third Party  Agreements  for IDX Licensed  Technology.
         ChannelHealth  shall not allow the use of or access to the IDX Licensed
         Technology by any third party (including a Distribution Partner) unless
         such party has signed  and  delivered  to  ChannelHealth  an  agreement
         restricting use of such IDX Licensed  Technology in a manner consistent
         with this Agreement,  and ChannelHealth shall use reasonable efforts to
         include  language  substantially  similar to the  following in any such
         third party agreements:

                                       4
<PAGE>
         IN NO EVENT SHALL COMPANY'S  [ChannelHealth's]  SUPPLIERS AND LICENSORS
         BE LIABLE  FOR ANY  DAMAGES OF ANY KIND OR  NATURE,  INCLUDING  DIRECT,
         INDIRECT,  INCIDENTAL,  SPECIAL, PUNITIVE,  EXEMPLARY OR CONSEQUENTIAL,
         ARISING  OUT  OF THE  USE OF ANY  SOFTWARE  SUPPLIED  BY  COMPANY,  ITS
         SUPPLIERS OR LICENSORS.  THE LICENSEE  UNDERSTANDS  AND AGREES THAT THE
         SOFTWARE  PROVIDED  BY COMPANY  [ChannelHealth]  TO  LICENSEE  CONTAINS
         SOFTWARE THAT IS THE COPYRIGHTED  PRODUCT AND A TRADE SECRET OF COMPANY
         [ChannelHealth] OR ITS SUPPLIERS AND LICENSORS,  AND THAT LICENSEE WILL
         NOT USE ANY SUCH SOFTWARE IN VIOLATION OF THE RESTRICTIONS CONTAINED IN
         THIS  AGREEMENT AND WILL NOT DISCLOSE THE SOFTWARE TO ANYONE OTHER THAN
         ITS EMPLOYEES OR AGENTS AS REASONABLY NECESSARY FOR THE PURPOSE OF THIS
         AGREEMENT AND ON THE CONDITION THAT IT ACCEPTS FULL  RESPONSIBILITY FOR
         ANY BREACH HEREOF BY ANY SUCH INDIVIDUAL.  THE FOREGOING AGREEMENTS ARE
         FOR THE EXPRESS BENEFIT OF COMPANY  [ChannelHealth],  ITS SUPPLIERS AND
         LICENSORS,  AND MAY BE  ENFORCED  BY COMPANY  [ChannelHealth],  AND ITS
         SUPPLIERS AND LICENSORS.

2.7      Delivery.  As of the Effective Date, IDX has delivered one copy (in
         both object code and Source Code forms) of each component of the IDX
         Licensed Technology.

2.8      Additional Countries.  ChannelHealth shall have the right to notify IDX
         in  writing  of its  intent  to  expand  the  Territory  to  Additional
         Countries.  Within thirty (30) business days of receipt of such notice,
         IDX shall respond in writing  indicating  either that (a) the Territory
         has been deemed to be expanded to include the Additional Country or (b)
         the inclusion of such  Additional  Country in the Territory at the time
         of  such  request  would  cause  IDX to be in  breach  of  pre-existing
         contractual  commitments  (and  subject to  applicable  confidentiality
         restrictions,  IDX shall inform  ChannelHealth as to the nature of such
         commitments).  If IDX  fails  to give  such  response,  the  Additional
         Country shall be deemed to be added to the Territory.  If the Territory
         is expanded to include Additional Countries,  IDX shall have the option
         to eliminate any Additional Country from the Territory twenty-four (24)
         months  from the date  such  Additional  Country  was  included  in the
         Territory if ChannelHealth fails to enter into a written agreement with
         another  party to deliver IDX Licensed  Technology  in such  Additional
         Country during such twenty-four (24) month period.

                                       5
<PAGE>
2.9      IDX Names and Marks.  ChannelHealth  may not use any IDX Names or Marks
         in connection with ChannelHealth's Business or otherwise, except as set
         forth in the Marketing Agreement.

2.10     Section  365(n).  All rights and licenses  granted under or pursuant to
         this  Agreement by IDX to  ChannelHealth  are,  and shall  otherwise be
         deemed to be,  for  purposes  of Section  365(n) of the  United  States
         Bankruptcy  Code (the  "Code"),  licenses  to  rights to  "intellectual
         property" as defined in the Code. The parties agree that ChannelHealth,
         as licensee of such rights under this  Agreement,  shall retain and may
         fully  exercise  all of its rights and  elections  under the Code.  The
         parties  further  agree  that,  in the  event  of the  commencement  of
         bankruptcy  proceeding by or against IDX under the Code,  ChannelHealth
         shall be entitled to retain all of its rights under this Agreement.

3.  LIMITED  WARRANTIES  OF IDX.  This  Section 3  contains  all of and the only
warranties of IDX made in connection  with the subject matter of this Agreement,
and  except  for  such  warranties,  there  are  NO  WARRANTIES  made  by IDX in
connection with the subject matter of this Agreement.  The warranties of IDX set
forth below are made only to ChannelHealth and shall be true as of the Effective
Date.

3.1      Performance.  IDX makes NO  WARRANTIES  as to the  nature or quality of
         performance  or  reliability  of the  IDX  Licensed  Technology  in any
         respect whatsoever, and ChannelHealth acknowledges that, except for the
         express  warranties  set forth in this  Section 3, it has  accepted the
         license and  delivery of the IDX Licensed  Technology  and shall accept
         all IDX  Software  Updates  and all  services  "AS  IS" and  "WITH  ALL
         FAULTS."

3.2      Encumbrances.  The IDX  Licensed  Technology  is and  shall be free and
         clear of all liens, restrictions,  claims, charges, security interests,
         or other  encumbrances of any nature  whatsoever  which might affect or
         adversely impact on ChannelHealth's use of the IDX Licensed Technology.

3.3      Ownership;  Right to License.  Except as  referred  to on Schedule  3.3
         attached hereto,  IDX owns or otherwise has adequate rights to make the
         grants of the licenses to the IDX Licensed  Technology to ChannelHealth
         hereunder  and  possesses  all rights and interests in the IDX Licensed
         Technology necessary to enter into this Agreement.

3.4      Required Consents/No Conflicts.  No approval,  authorization,  consent,
         permission, or waiver to or from, or notice, filing, or recording to or
         with, any person, entity or governmental authority is necessary for the
         execution and delivery of this Agreement, and neither the execution and
         delivery of this  Agreement,  nor the grant of licenses  hereunder will
         conflict  with or  violate  any other  license,  instrument,  contract,
         agreement,  or other  commitment or arrangement to which IDX is a party
         or by which IDX is bound.

                                       6
<PAGE>
3.5      No Infringement. Except as referred to on Schedule 3.3 the IDX Licensed
         Technology  and  all  components  thereof  do  not  infringe  upon  the
         intellectual property rights,  including without limitation the patent,
         copyright,  trademark or trade secret rights, of any third parties. The
         sole and exclusive  remedy for breach of this warranty  shall be as set
         forth in Section 7.1.

3.6      Litigation.  Except as referred to on Schedule 3.3 attached hereto,  no
         claim,  action,  suit,  proceeding,   inquiry,  hearing,   arbitration,
         administrative    proceeding,    or    investigation     (collectively,
         "Litigation")  is pending or  threatened  against  IDX,  its present or
         former directors,  officers,  or employees,  affecting,  involving,  or
         relating to the IDX Licensed Technology,  which if resolved against IDX
         would,  individually  or in the  aggregate,  materially  and  adversely
         affect IDX's ability to perform this Agreement or the rights granted to
         ChannelHealth under this Agreement.

4.       CHANNELHEALTH LICENSE GRANTS.  Subject to and conditioned upon the
         performance and observance of all of the terms and conditions of this
         Agreement, ChannelHealth grants to IDX licenses as set forth in this
         Section 4.

4.1      In  General.   ChannelHealth   hereby   grants  to  IDX  a   perpetual,
         non-exclusive,  non-cancellable,  fully paid-up  license:  (i) to copy,
         use, display,  perform,  adapt, modify, create derivative works of, and
         maintain the ChannelHealth Products, in whole or in part, (ii) to Merge
         all or any portion of the ChannelHealth Products into IDX Products, and
         (iii) to market, sublicense (including through one or more Distribution
         Partners), and in connection therewith to copy, use, transmit,  perform
         and display the ChannelHealth  Products, in whole or in part, as Merged
         into IDX Products,  (iv) to use and practice the ChannelHealth Licensed
         Technology  to  accomplish  the  purposes  set forth in clauses (i) and
         (ii).  For the purposes of this  Section  4.1, the term  "ChannelHealth
         Products" shall only include such ChannelHealth Products that have been
         delivered  as  of  the  Effective  Date  and  subsequently  during  the
         ChannelHealth  Support Term,  whether pursuant to this Agreement or the
         Marketing   Agreement.   During  the  Initial  Term  of  the  Marketing
         Agreement,  IDX shall not use the ChannelHealth  Licensed Technology to
         develop products that compete with ChannelHealth  Products  distributed
         by IDX under the Marketing  Agreement.  The foregoing  shall not in any
         way limit or restrict IDX from using the IDX Licensed Technology.

4.2      Ownership.

         4.2.1    Except  for  the  rights  expressly  granted  herein  to  IDX,
                  ChannelHealth  reserves  and  retains  all  right,  title  and
                  interest (including without limitation patents and copyrights)
                  and shall be the exclusive owner of the ChannelHealth Products
                  and all  customizations,  additions,  modifications,  changes,
                  enhancements,  improvements, or derivative works made by or on
                  behalf of  ChannelHealth,  with the  exception  of  derivative
                  works created by IDX under Section 4.1.

                                       7
<PAGE>
         4.2.2    To the  extent  IDX  shall  have  any  interest  in any  items
                  described  in  the  foregoing   Section,   including   without
                  limitation  any joint  works,  IDX  hereby  conveys  and shall
                  convey good title and ownership thereof to ChannelHealth.  IDX
                  shall execute an  assignment  in the form  attached  hereto as
                  Exhibit 2.4.2 to effectuate and confirm such assignment.

         4.2.3    ChannelHealth reserves and retains all right, title and
                  interest to any and all patentable inventions conceived by
                  ChannelHealth, including without limitation by ChannelHealth
                  personnel, employees or contractors, whether in whole or in
                  part, after the Effective Date.  IDX agrees to cooperate in
                  every reasonable way with ChannelHealth to prosecute patent
                  applications for such inventions and to perfect
                  ChannelHealth's right, title and interest in and to such
                  inventions and patent applications.  ChannelHealth agrees and
                  acknowledges that certain patentable inventions may have been
                  conceived before the Effective Date by persons who are now
                  ChannelHealth employees or are otherwise associated with
                  ChannelHealth, and that nothing herein is to be construed to
                  limit in any way IDX's ownership of, or other interest in,
                  such inventions and patents for the same.

         4.2.4    Subject to Section 4.2.3, ChannelHealth shall make no claim to
                  any derivative works developed by or on behalf of IDX pursuant
                  to Section 4.1.

4.3      Limitations, Restrictions, and Conditions.  The licenses granted
         hereunder are subject to all of the terms and conditions of
         this Agreement, including without limitation the following limitations,
         restrictions, and conditions:

         4.3.1    Distribution Pursuant to Marketing Agreement.  During the
                  Initial Term of the Marketing Agreement, IDX shall be
                  entitled  to  market  and  distribute  ChannelHealth  Products
                  pursuant to the license granted in this  Agreement,  and shall
                  not do so except  in a manner  consistent  with the  Marketing
                  Agreement.  This section shall not apply following the Initial
                  Term of the Marketing Agreement.

         4.3.2    IDX may not  indicate  that any  portion of the  ChannelHealth
                  Products originated from ChannelHealth,  nor shall IDX use any
                  of    ChannelHealth's    Names   and   Marks,    except   with
                  ChannelHealth's  prior written  consent or except as set forth
                  in the Marketing Agreement.

         4.3.3    IDX  may  permit  third  parties  to  provide  to  IDX  or its
                  customers   maintenance,    disaster   recovery,    facilities
                  management,  outsourcing or other services involving access to
                  the ChannelHealth Products only if such third parties shall in
                  each  instance  execute  written   nondisclosure  and  non-use
                  agreements   with  IDX,  in  form  and  substance   reasonably
                  satisfactory  to  ChannelHealth,  prior to  using  or  gaining
                  access to the ChannelHealth Products.

                                       8
<PAGE>
         4.3.4    IDX may adapt,  modify,  merge, and maintain the ChannelHealth
                  Products as  permitted  under this  Agreement  through its own
                  employees or through  independent  contractors,  provided each
                  such  independent  contractor shall in each instance execute a
                  written  nondisclosure and non-use agreement with IDX, in form
                  and substance reasonably satisfactory to ChannelHealth,  prior
                  to gaining access to the Source Code.

         4.3.5    IDX (i) shall use the ChannelHealth Products only in locations
                  physically  within the Territory,  (ii) must keep all physical
                  copies  (including those stored  electronically)  in locations
                  within the  Territory  and (iii) shall permit third parties as
                  described in Section 4.3.4 to use and access the ChannelHealth
                  Products only in locations within the Territory.

         4.3.6    Certain  Terms of Third  Party  Agreements  for  ChannelHealth
                  Products.  IDX  shall  not  allow  the use of or access to the
                  ChannelHealth   Products  by  any  third  party  (including  a
                  Distribution  Partner)  unless such party has in each instance
                  signed and  delivered to IDX a written  agreement  restricting
                  use of such ChannelHealth Products in a manner consistent with
                  this  Agreement,  and IDX  shall  use  reasonable  efforts  to
                  include language substantially similar to the following in any
                  such third party agreements:

                  IN NO EVENT SHALL COMPANY'S  [IDX's]  SUPPLIERS AND LICENSORS,
                  BE LIABLE FOR ANY  DAMAGES  OF ANY KIND OR  NATURE,  INCLUDING
                  DIRECT, INDIRECT, INCIDENTAL,  SPECIAL, PUNITIVE, EXEMPLARY OR
                  CONSEQUENTIAL, ARISING OUT OF THE USE OF ANY SOFTWARE SUPPLIED
                  BY COMPANY  [IDX],  ITS SUPPLIERS OR  LICENSORS.  THE LICENSEE
                  UNDERSTANDS  AND AGREES THAT THE  SOFTWARE  PROVIDED BY IDX TO
                  LICENSEE CONTAINS SOFTWARE THAT IS THE COPYRIGHTED PRODUCT AND
                  A  TRADE  SECRET  OF  COMPANY  [IDX]  AND  ITS  SUPPLIERS  AND
                  LICENSORS, AND THAT LICENSEE WILL NOT USE ANY SUCH SOFTWARE IN
                  VIOLATION OF THE RESTRICTIONS  CONTAINED IN THIS AGREEMENT AND
                  WILL NOT  DISCLOSE  THE  SOFTWARE  TO  ANYONE  OTHER  THAN ITS
                  EMPLOYEES OR AGENTS AS REASONABLY NECESSARY FOR THE PURPOSE OF
                  THIS  AGREEMENT  AND ON THE  CONDITION  THAT IT  ACCEPTS  FULL
                  RESPONSIBILITY  FOR ANY BREACH HEREOF BY ANY SUCH  INDIVIDUAL.
                  THE  FOREGOING  AGREEMENTS  ARE FOR  THE  EXPRESS  BENEFIT  OF
                  COMPANY  [IDX],  ITS  SUPPLIERS  AND  LICENSORS,  AND  MAY  BE
                  ENFORCED BY COMPANY [IDX], AND ITS SUPPLIERS AND LICENSORS.

4.4      Additional Countries.  IDX shall have the right to notify ChannelHealth
         in  writing  of its  intent  to  expand  the  Territory  to  Additional

                                       9
<PAGE>
         Countries.  Within thirty (30) business days of receipt of such notice,
         ChannelHealth  shall respond in writing  indicating either that (a) the
         Territory  has been deemed to be  expanded  to include  the  Additional
         Country  or  (b)  the  inclusion  of  such  Additional  Country  in the
         Territory at the time of such request would cause  ChannelHealth  to be
         in breach of  pre-existing  contractual  commitments  (and  subject  to
         applicable confidentiality restrictions, ChannelHealth shall inform IDX
         as to the nature of such commitments).  If ChannelHealth  fails to give
         such response,  the  Additional  Country shall be deemed to be added to
         the  Territory.  If the  Territory  is expanded  to include  Additional
         Countries,  ChannelHealth  shall  have  the  option  to  eliminate  any
         Additional Country from the Territory  twenty-four (24) months from the
         date such Additional Country was included in the Territory if IDX fails
         to enter  into a  written  agreement  with  another  party  to  deliver
         ChannelHealth   Products  in  such   Additional   Country  during  such
         twenty-four (24) month period.

4.5      Section  365(n).  All rights and licenses  granted under or pursuant to
         this  Agreement by  ChannelHealth  to IDX are,  and shall  otherwise be
         deemed to be,  for  purposes  of Section  365(n) of the  United  States
         Bankruptcy  Code (the  "Code"),  licenses  to  rights to  "intellectual
         property"  as  defined in the Code.  The  parties  agree  that IDX,  as
         licensee  of such rights  under this  Agreement,  shall  retain and may
         fully  exercise  all of its rights and  elections  under the Code.  The
         parties  further  agree  that,  in the  event  of the  commencement  of
         bankruptcy  proceeding by or against  ChannelHealth under the Code, IDX
         shall be entitled to retain all of its rights under this Agreement.

5. LIMITED  WARRANTIES OF CHANNELHEALTH.  This Section 5 contains all of and the
only  warranties  of  ChannelHealth  made in or in  connection  with the subject
matter of this  Agreement.  Such warranties are made to IDX and shall be true as
of the  Effective  Date  and as of each  and  every  delivery  of  ChannelHealth
Products  thereafter,  including without  limitation  ChannelHealth  Updates and
ChannelHealth  Development  Updates  (as  defined in the  Marketing  Agreement).
Except for the  warranties  set forth in this Section 5 of this Agreement and as
set  forth  in  the  Marketing  Agreement,  there  are  NO  WARRANTIES  made  by
ChannelHealth   in   connection   with  the   ChannelHealth   Products  and  the
ChannelHealth Products.

5.1      Performance.  During the ChannelHealth  Support Term, all ChannelHealth
         Products  shall  perform  substantially  as set forth in the  standard,
         published  editions of textual and graphical  works,  in whatever form,
         intended to instruct users in the use of  ChannelHealth  Products,  and
         published  by  ChannelHealth  from time to time during the term of this
         Agreement and all published  statements made by ChannelHealth from time
         to time, unless a failure to so perform is attributable to a failure of
         the IDX Software and IDX Software  Updates to perform  substantially as
         set forth in the standard,  published editions of textual and graphical
         works,  in whatever form,  intended to instruct users in the use of the

                                       10
<PAGE>
         IDX Software and IDX Software  Updates,  and published by IDX from time
         to time during the term of this Agreement

5.2      Regulatory Compliance. During the ChannelHealth Support Term, all
         ChannelHealth Products shall comply with and support all applicable
         Regulatory Requirements.

5.3      Virus  Warranty.  To  ChannelHealth's   knowledge,   the  ChannelHealth
         Products  do  not  contain  any  program  routine,   device,  or  other
         undisclosed feature, including, without limitation, a time bomb, virus,
         software lock,  drop-dead device,  malicious logic, worm, Trojan horse,
         bug,  error,  defect  or  trap  door,  that  is  capable  of  deleting,
         disabling,  or otherwise  harming the  ChannelHealth  Products,  or any
         hardware,  data, or computer  programs or codes,  or that is capable of
         providing access or producing modifications not authorized by IDX.

5.4      Year  2000.  The  ChannelHealth  Products  shall  provide  all  of  the
         following functions:  (a) consistently handles date information before,
         during,  and after  January  1,  2000,  including  but not  limited  to
         accepting   date  input,   providing   date  output,   and   performing
         calculations on dates or portions of dates; (b) function  accurately as
         set forth in the standard,  published editions of textual and graphical
         works,  in whatever  form,  intended  to  instruct  users in the use of
         ChannelHealth  Products,  and published by  ChannelHealth  from time to
         time during the term of this  Agreement  and all  published  statements
         made by  ChannelHealth  from  time to time,  and  without  interruption
         before,  during,  and after  January  1,  2000,  without  any change in
         operations  associated with the advent of the new century;  (c) respond
         to two-digit year-date input in a predefined and consistent manner; and
         (d)  store and  provide  output  of date  information  in ways that are
         unambiguous as to century. The foregoing does not apply to any failures
         of the IDX Software or IDX Software Updates to so perform.

5.5      Remedies  for Breach of Certain  Warranties.  In the event of breach of
         any of the foregoing warranties,  ChannelHealth shall provide, promptly
         and at no cost to IDX, and at IDX's  discretion any of IDX's Customers,
         the necessary  corrections  to meet the warranty.  Such remedy shall be
         IDX's sole and exclusive  remedy in the event of any breach of warranty
         and shall be conditioned  upon written notice to  ChannelHealth  of any
         claimed  breach within one (1) year of the delivery of the item causing
         the breach. If ChannelHealth fails to provide the necessary corrections
         within sixty (60) days of such written notice, IDX shall have the right
         to make such correction itself,  and ChannelHealth  shall reimburse IDX
         for all reasonable fees, costs and expenses in connection therewith.

5.6      Ownership;  Right  to  License.  ChannelHealth  owns or  otherwise  has
         adequate rights to make the grants of the licenses to the ChannelHealth
         Products to IDX hereunder and possesses all rights and interests in the
         ChannelHealth Products necessary to enter into this Agreement.

5.7      Encumbrances.  The  ChannelHealth  Products  are and  shall be free and
         clear of all liens, restrictions,  claims, charges, security interests,
         or other  encumbrances of any nature  whatsoever  which might affect or
         adversely impact on IDX's use of the ChannelHealth Products.

                                       11
<PAGE>
5.8      Required Consents/No Conflicts.  No approval,  authorization,  consent,
         permission, or waiver to or from, or notice, filing, or recording to or
         with, any person, entity or governmental authority is necessary for the
         execution and delivery of this Agreement, and neither the execution and
         delivery of this  Agreement,  nor the grant of licenses  hereunder will
         conflict  with or  violate  any other  license,  instrument,  contract,
         agreement, or other commitment or arrangement to which ChannelHealth is
         a party or by which ChannelHealth is bound.

5.9      Litigation.  No claim,  action,  suit,  proceeding,  inquiry,  hearing,
         arbitration, administrative proceeding, or investigation (collectively,
         "Litigation")  is  pending or  threatened  against  ChannelHealth,  its
         present  or  former  directors,  officers,  or  employees,   affecting,
         involving, or relating to the ChannelHealth Products, which if resolved
         against   ChannelHealth   would   materially   and   adversely   affect
         ChannelHealth's ability to perform this Agreement or the rights granted
         to IDX under this Agreement.

5.10     No Infringement.  With the exception of the IDX Licensed  Technology as
         to which IDX makes certain warranties to ChannelHealth under Section 3,
         the ChannelHealth  Products and all components  thereof do not infringe
         upon the intellectual property rights, including without limitation the
         patent,  copyright,  trademark  or trade  secret  rights,  of any third
         parties,  nor  will  the  use  of  the  ChannelHealth  Products  or any
         component   thereof  by  IDX   subject  any  third  party  to  such  an
         infringement  claim.  The sole and exclusive  remedy for breach of this
         warranty shall be as set forth in Section 7.2.

6.       SUPPORT

6.1      During the IDX Support  Term,  IDX shall provide to  ChannelHealth  IDX
         Software  Maintenance and IDX Software  Updates on a timely basis.  IDX
         shall have no obligation  to provide any services to support,  maintain
         or update CMS or OutReach.

6.2      During the  ChannelHealth  Support  Term,  ChannelHealth  shall provide
         ChannelHealth Maintenance and ChannelHealth Updates on a timely basis.

7.       INDEMNIFICATION

7.1      IDX Indemnity.

         7.1.1    Indemnification Obligations. IDX, at its own expense, shall
                  defend, hold harmless and indemnify ChannelHealth, its
                  officers, directors, employees, agents, successors,
                  affiliates, and assigns, from and against any and all
                  liability, loss, damages, expenses (including attorneys' fees)
                  arising from claims of third parties: (a) that the IDX
                  Licensed Technology or the IDX Software, or any component
                  thereof, infringes or violates any patents, copyrights,
                  trademarks, trade secrets, licenses, or other proprietary
                  rights of any third party, but not including any claim arising
                  out of or related to the matters described in Schedule 3.3, or

                                       12
<PAGE>
                  (b) for personal or bodily injury or damage to tangible
                  property arising out of the negligent or intentional acts of
                  IDX, its employees or agents.  ChannelHealth may, at its own
                  expense, assist in such defense if it so chooses, provided
                  that IDX shall control such defense and all negotiations
                  relative to the settlement of any such claim. IDX shall not
                  settle any claim that adversely affects any
                  rights of ChannelHealth without ChannelHealth's prior written
                  consent. ChannelHealth shall promptly provide IDX with
                  written notice of any claim that ChannelHealth believes falls
                  within the scope of this Section. At any time after
                  IDX becomes aware of any such claim under subsection (a)
                  herein, or in the event that the IDX Licensed Technology,
                  the IDX Software, or any portion thereof, is held to
                  constitute an infringement or its use is enjoined, IDX shall
                  have the option at its own expense to: (i) modify the
                  infringing item without impairing in any material respect the
                  functionality or performance, so that it is non-infringing;
                  (ii) procure for ChannelHealth the right to continue to
                  use the infringing item; or (iii) replace the infringing item
                  with an equally suitable, non-infringing item.

         7.1.2    Exceptions.  IDX's obligations to indemnify as set forth in
                  this Section shall not apply to any claim to the extent
                  that it arises from (i) any modifications, changes, additions,
                  or enhancements to the IDX Licensed Technology that have not
                  been made directly by IDX or have not been made at its express
                  direction or under its direct oversight, control or
                  supervision, (ii) any such modifications made by IDX at the
                  request or to the specification of ChannelHealth,
                  ChannelHealth's Customers, or any of their agents, or (iii)
                  the use of the IDX Licensed Technology in combination with any
                  other item, or in any system or method adopted, permitted,
                  induced, contributed to, or otherwise used by ChannelHealth or
                  any ChannelHealth Customers that is not expressly described in
                  the IDX Licensed Technology.

7.2      ChannelHealth Indemnity.

         7.2.1    Indemnification Obligations.  ChannelHealth, at its own
                  expense, shall defend, hold harmless and indemnify IDX, its
                  officers, directors, employees, agents, successors,
                  affiliates, and assigns, from and against any and all loss,
                  damages, expenses (including attorneys' fees) arising from
                  claims of third parties: (a) that the ChannelHealth
                  Products, or any component thereof, whether used alone or in
                  combination with any other item as intended, designed,
                  suggested or induced by ChannelHealth or its agents, infringes
                  or violates any patents, copyrights, trademarks, trade
                  secrets, licenses, or other proprietary rights of any third
                  party, but not including any claim that the IDX Technology
                  alone infringes or violates any patents, copyrights,
                  trademarks, trade secrets, licenses, or other proprietary
                  rights of any third party, (b) that any modifications or
                  derivative works of the IDX Licensed Technology or any
                  component thereof (i) not made by IDX or not made under IDX's
                  express direction or under its direct oversight, control or
                  supervision, or (ii) made at the direction of ChannelHealth,

                                       13
<PAGE>
                  any ChannelHealth Customers or their agents or affiliates,
                  infringes or violates any patents, copyrights, trademarks,
                  trade secrets, licenses, or other proprietary rights of any
                  third party, (c) that any use by ChannelHealth Customers of
                  the IDX Licensed Technology or any component thereof outside
                  the scope of license set forth herein infringes or violates
                  any patents, copyrights, trademarks, trade secrets, licenses,
                  or other proprietary rights of any third party, (d) that the
                  use of the ChannelHealth Products in combination with any
                  other item, or in any system or method adopted, permitted,
                  induced, contributed to or otherwise used by ChannelHealth or
                  its agents, infringes or violates any patents, copyrights,
                  trademarks, trade secrets, licenses, or other proprietary
                  rights of any third party, (e) for personal or bodily injury
                  or damage to property (tangible and intangible) arising out of
                  the negligent or intentional acts of ChannelHealth,
                  ChannelHealth's Customers, or their agents, and (f) that
                  involve a breach of ChannelHealth's representations,
                  warranties or obligations hereunder.  IDX may, at its own
                  expense, assist in such defense if it so chooses, provided
                  that ChannelHealth shall control such defense and all
                  negotiations relative to the settlement of    any such claim.
                  ChannelHealth shall not settle any claim that adversely
                  affects any rights of IDX without IDX's prior written consent.
                  IDX shall promptly provide ChannelHealth with written notice
                  of any claim that IDX believes falls within the scope of this
                  Section. At any time after ChannelHealth becomes aware of any
                  such claim under subsections (a), (b), or (d) herein, or in
                  the event that the ChannelHealth Products or any portion
                  thereof is held to constitute an infringement or its use is
                  enjoined, ChannelHealth shall have the option at its own
                  expense to: (i) modify the infringing item without impairing
                  in any material respect the functionality or performance, so
                  that it is non-infringing; (ii) procure for IDX the right to
                  continue to use the infringing item; or (iii) replace the
                  infringing item with an equally suitable, non-infringing item.

         7.2.2    Exceptions.  ChannelHealth's obligations to indemnify as set
                  forth in this Section shall not apply to any claim to
                  the extent that it arises from (i) any modifications, changes,
                  additions, or enhancements to the ChannelHealth Licensed
                  Technology that have not been made directly by ChannelHealth
                  or have not been made at its express direction or under its
                  direct oversight, control or supervision, (ii) any such
                  modifications made by ChannelHealth at the request or to the
                  specification of IDX or any of its agents, or (iii) the use of
                  the ChannelHealth Licensed Technology in combination with any
                  other item, or in any system or method adopted, permitted,
                  induced, contributed to, or otherwise used by IDX or IDX
                  Customers that is not marketed, recommended, enabled,
                  contributed to, or otherwise directly or indirectly suggested
                  by ChannelHealth.

8.LIMITATION OF LIABILITY.  IN NO EVENT SHALL IDX BE LIABLE TO CHANNELHEALTH FOR
ANY MONETARY  DAMAGES UNDER THIS  AGREEMENT.  THE  LIMITATIONS SET FORTH IN THIS
SECTION 8 SHALL NOT APPLY TO INDEMNIFICATION  OBLIGATIONS  PURSUANT TO SECTION 7

                                       14
<PAGE>
OF THIS AGREEMENT, TO THIRD PARTY CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY OR
DEATH  AND  OTHER   CLAIMS  FOR  WHICH   CHANNELHEALTH   MAY  BE   ENTITLED   TO
INDEMNIFICATION  OR  CONTRIBUTION  FROM IDX  PURSUANT TO THIS  AGREEMENT OR AS A
MATTER OF LAW, OR TO ANY  MATERIAL  BREACH BY IDX OF ANY  WARRANTY  SET FORTH IN
SECTION 3 OF THIS AGREEMENT.

9. TERMINATION. Either party shall have the right to terminate this Agreement at
its option if the other  party has  committed  a  material  breach of any of the
terms and conditions  hereof.  Such termination shall be deemed effective ninety
(90)  days  after  receipt  of  written  notice  from the party so  electing  to
terminate,  provided  the party  receiving  such notice has not cured the breach
within such ninety (90) day period.

10. CONFIDENTIALITY.

10.1     Confidentiality.  IDX will  receive  or learn from  ChannelHealth,  and
         ChannelHealth's parents, subsidiaries and affiliates, and ChannelHealth
         will learn from IDX, and IDX's parents,  subsidiaries  and  affiliates,
         information,  both orally and in writing,  concerning  the  business of
         ChannelHealth  or IDX,  respectively,  including,  without  limitation,
         financial,  technical and marketing information,  data, and information
         related to the  development  of  technology  and  services  relating to
         ChannelHealth's  and IDX's  business,  as the case may be,  and the IDX
         Licensed  Technology and ChannelHealth  Products,  which information is
         deemed, in the case of ChannelHealth, proprietary to ChannelHealth and,
         in the case of IDX,  proprietary to IDX. Both parties hereby agree,  as
         set forth below, to protect such information, whether furnished before,
         on or after the date of this Agreement,  as it protects its own similar
         confidential  information,  but never less than commercially reasonable
         efforts,  and not to  disclose  such  information  to anyone  except as
         otherwise provided for in this Agreement. Such information, in whole or
         in part,  together  with  analyses,  compilations,  programs,  reports,
         proposals,  studies or any other documentation prepared by the parties,
         as the  case  may  be,  which  contain  or  otherwise  reflect  or make
         reference  to  such   information,   is  hereinafter   referred  to  as
         "Confidential   Information".   Both  parties  hereby  agree  that  the
         Confidential  Information  will be used  solely for the purpose of this
         Agreement  and not for any other  purpose.  Both parties  further agree
         that any Confidential  Information pertaining to the other party is the
         sole and exclusive property of such other party, and that the receiving
         party  shall  not have any  right,  title,  or  interest  in or to such
         Confidential   Information   except  as  expressly   provided  in  this
         Agreement. Both parties further agree to protect and not to disclose to
         anyone   (except  as  provided  in  this   Agreement)  for  any  reason
         Confidential  Information  pertaining  to the  other  party;  provided,
         however,  that: (a) such  Confidential  Information may be disclosed to
         the  receiving  party's  respective  officers,  directors,   employees,
         agents, or representatives  (collectively,  our "Representatives") on a
         "need to know" basis for the purpose of this Agreement on the condition
         that (i) each such  Representative  will be informed  by the  receiving
         party of the confidential  nature of such Confidential  Information and

                                       15
<PAGE>
         will  agree  to be  bound by the  terms  of this  Agreement  and not to
         disclose the Confidential Information to any other person and (ii) both
         parties  agree to accept  full  responsibility  for any  breach of this
         Section  9 by its  respective  Representatives;  and  (b)  Confidential
         Information  pertaining  to the other party may be  disclosed  upon the
         prior written  consent of the other party.  Both parties  hereby agree,
         upon the request of the other party,  to promptly  deliver to the other
         party at its cost the Confidential Information pertaining to such other
         party,  without retaining any copies thereof.  Specifically and without
         limitation,  ChannelHealth  agree to (i)  reproduce  (and  refrain from
         removing or destroying)  copyright and proprietary rights notices which
         are  placed  on  the  IDX  Licensed  Technology  or  the  ChannelHealth
         Products, (ii) erase or otherwise destroy, prior to disposing of media,
         all portions of IDX Licensed  Technology or the ChannelHealth  Products
         contained on such media,  and (iii) notify the other party  promptly in
         writing  upon any  officer or  director  learning  of any  unauthorized
         disclosure or use of the IDX Licensed  Technology or the  ChannelHealth
         Products,  and  reasonably  cooperate  with the other party to cure any
         unauthorized  disclosure  or use of the IDX Licensed  Technology or the
         ChannelHealth   Products.  IDX  agrees  that  ChannelHealth's  use  and
         distribution  of  the  IDX  Licensed  Technology  pursuant  to  and  in
         accordance with the terms of this Agreement shall not be a violation of
         this Section 10.1.

10.2     Non-Confidential Information. The term "Confidential Information" shall
         not include any  information:  (i) which at the time of  disclosure  or
         thereafter is generally available to or known by the public (other than
         as a result of a disclosure  directly or  indirectly  by the  receiving
         party); (ii) is independently developed by the receiving party, without
         reference  to or use of,  the  Confidential  Information  of the  other
         party;  (iii)  was  known  by the  receiving  party  as of the  time of
         disclosure  without  a  breach  of  confidentiality;  (iv) is  lawfully
         learned  from a third  party not  under  obligation  to the  disclosing
         party; or (v) is required to be disclosed pursuant to a subpoena, court
         order or other  legal  process,  whereupon  the  receiving  party shall
         provide  prompt  written  notice  to the  other  party  prior  to  such
         disclosure.

11.      GENERAL

11.1     Force  Majeure.  Except as  expressly  provided to the contrary in this
         Agreement,  neither party shall be liable to the other for any delay or
         failure  to  perform  due to  causes  beyond  its  reasonable  control.
         Performance  times shall be  considered  extended  for a period of time
         equivalent to the time lost because of any such delay.

11.2     Non-revocation. The licenses, immunities, authorities and agreements
         set forth in Sections 2 and 4 hereof are not terminable, cancelable, or
         revocable.

11.3     Notices.  Wherever  under  this  Agreement  one  party is  required  or
         permitted  to give  notice to the other,  such  notice  shall be deemed
         given when  delivered  in hand,  when  telecopied  or faxed and receipt
         confirmed,  when  sent by  overnight  courier  service  to the  address
         specified  below,  or when mailed by United States mail,  registered or
         certified  mail,  return  receipt  requested,   postage  prepaid,   and

                                       16
<PAGE>
         addressed as follows:  Either party hereto may from time to time change
         its  address  for  notification  purposes  by giving the other  written
         notice  of the new  address  and the date  upon  which  it will  become
         effective.

11.4     Governing Law. This Agreement shall be governed by, subject to, and
         interpreted in accordance with the laws of the State of New York,
         without regard to its conflicts of laws principles.

11.5     Severability. In the event any provision hereof shall be deemed invalid
         or  unenforceable by any court or governmental  agency,  such provision
         shall be deemed  severed  from this  Agreement  and replaced by a valid
         provision  which  approximates as closely as possible the intent of the
         parties.  All  remaining  provisions  shall be afforded  full force and
         effect.

11.6     No Waiver.  No delay or omission by either party hereto to exercise any
         right  or  power  hereunder  shall  impair  such  right  or power or be
         construed  to be a waiver  thereof.  A waiver by either of the  parties
         hereto  of any of the  covenants  to be  performed  by the other or any
         breach  thereof shall not be construed to be a waiver of any succeeding
         breach thereof or of any other covenant herein contained.

11.7     Further Assurances and Documents.  IDX and ChannelHealth shall take all
         actions and do all things,  including without  limitation the execution
         and delivery of instruments and documents,  necessary to effectuate the
         purposes and intent of this Agreement.

11.8     Independent Contractor. In performance of this Agreement, each party is
         acting as an  independent  contractor.  Personnel  supplied  by a party
         hereunder are not the other party's personnel or agents, and each party
         assumes full  responsibility for their acts. Each party shall be solely
         responsible  for the  payment  of  compensation  to its  employees  and
         subcontractors  assigned  to  perform  services  hereunder,   and  such
         employees  and  subcontractors  shall  be  informed  that  they are not
         entitled to the provision of any employee  benefits of the other party.
         Neither   party   shall  be   responsible   for   payment  of  workers'
         compensation,   disability  benefits,  unemployment  insurance  or  for
         withholding  income  taxes and  social  security  for any  employee  or
         subcontractor of the other.

11.9     Personnel Rules and Regulations.  The personnel and  subcontractors  of
         each  party  hereto  shall  comply  with  the  other  party's  security
         regulations particular to each work location,  including any procedures
         which such party's  personnel and other  consultants are normally asked
         to follow.  Personnel and subcontractors,  when deemed appropriate by a
         party,  shall be issued visitor  identification  cards.  Each such card
         will be surrendered by such personnel and subcontractors upon demand of
         a party.  Unless otherwise agreed to by the parties,  the personnel and
         subcontractors  of a party shall  observe the  working  hours,  working
         rules and holiday  schedules  of the other  party while  working on the
         other party's premises.

11.10    Assignment.  This Agreement shall be binding upon the parties and their
         respective successors,  representatives and permitted assigns.  Neither
         party may assign this  Agreement  without the prior written  consent of
         the other party,  except that either party hereto may assign its rights

                                       17
<PAGE>
         hereunder to an  Affiliate of such party and either party may,  without
         the consent of the other party,  assign and delegate this Agreement and
         its rights  and  obligations  hereunder  in  connection  with a merger,
         consolidation  or sale of  substantially  all of its assets (which sale
         shall  include  the   assignment  and  assumption  of  all  rights  and
         obligations under the Marketing  Agreement);  provided,  however,  that
         such  assignee  or  transferee  shall  assume  all  obligations  of the
         assigning  or  transferring  party  and any such  assignment  shall not
         relieve  the  assigning  or  transferring   party  of  its  obligations
         hereunder.

11.11    Availability of Records. IDX and ChannelHealth agree that the Secretary
         of the  Department of Health and Human Services (the  "Secretary")  and
         the Comptroller  General of the United States,  or the designee or duly
         authorized  representative  of either of them, shall have access to all
         books and records of each party  pertaining  to the  subject  matter of
         this  Agreement and the  provisions of services under it, in accordance
         with the criteria presently or hereafter developed by the Department of
         Health and Human  Services  as  provided  in Section 952 of the Omnibus
         Reconciliation Act of 1980 (the "Act").  Upon request of the Secretary,
         the Comptroller  General, or the designee or authorized  representative
         of either of them,  IDX and  ChannelHealth  shall  make  available  (at
         reasonable   times  and  places  during  normal  business  hours)  this
         Agreement,   and  all  books,   documents   and   records  of  IDX  and
         ChannelHealth that are necessary to verify the nature and extent of the
         costs of the  services  provided by IDX or  ChannelHealth  furnished in
         connection   with  this   Agreement.   Notwithstanding   the  foregoing
         provisions,  the access to the books,  records and documents of IDX and
         ChannelHealth and any related organization provided for herein shall be
         discontinued  and  become  null and void upon a  finding  by a court or
         quasi-judicial  body of competent  jurisdiction  that this Agreement is
         outside the scope of the  regulatory  or statutory  definition of those
         contracts and agreements  included within the purview of Section 952 of
         the Act or the rules and regulations promulgated thereunder.

11.12    Survival. Sections 1, 2, 3, 4, 5, 7, 8, 10 and 11 shall survive the
         termination of this Agreement.

                                       12
<PAGE>
11.13    Entire  Agreement.   Each  party   acknowledges  that  this  Agreement,
         including the Schedules attached hereto and the documents  incorporated
         by reference herein constitute the complete and exclusive  statement of
         the terms and  conditions  between the parties,  which  supersedes  all
         prior  proposals,  understandings  and all other  agreements,  oral and
         written,  between  the parties  relating to the subject  matter of this
         Agreement.  This  Agreement may not be modified or altered  except by a
         written instrument duly executed by both parties.

IN WITNESS  WHEREOF,  the parties hereto have signed this Agreement the date and
year first written above by their fully authorized representatives.

IDX SYSTEMS CORPORATION                      CHANNELHEALTH INCORPORATED



By:/S/ ROBERT W. BAKER, JR.                 By:/S/ RICHARD E. TARRANT
_______________________________                ________________________________
   [Signature of Authorized Agent]              [Signature of Authorized Agent]

Print Name and Title:                           Print Name and Title:
Robert W. Baker, Jr.                            Richard E. Tarrant
Vice President                                  President



<PAGE>
                                   Schedule 1

                                       To

                Cross License and Software Maintenance Agreement

                                  Definitions

"Administrative Service Agreement" means the administrative service agreement by
and  between   ChannelHealth  and  IDX  executed  or  intended  to  be  executed
concurrently with the License Agreement and the Marketing Agreement.

"Affiliate"  means, with respect to any specified Person,  any other Person that
directly,  or  indirectly  through  one or  more  intermediaries,  controls,  is
controlled by, or is under common control with, such specified Person.

"Agreement"  means this  Agreement,  including all schedules,  exhibits  another
items attached hereto and incorporated by reference herein.

"ChannelHealth  Customer"  means  any  Person  that has  entered  into a written
agreement  with  pursuant  to which  ChannelHealth  provides  any  ChannelHealth
Products,  all Affiliates of such Person,  and all Persons receiving the benefit
of any  ChannelHealth  Products by or through such Person or  Affiliates of such
Person.

"ChannelHealth  Division  Works"  means  all  (i)  computer  software  and  (ii)
computerized or automated products, services, processes, systems, and methods of
any  kind or  nature  developed  or in the  processes  of  development  by IDX's
ChannelHealth Division prior to the Effective Date.

"ChannelHealth Licensed Technology" means (i) the object and Source Code for the
ChannelHealth   Products,   (ii)  ChannelHealth  Updates,  (iii)  the  standard,
published editions of textual and graphical works, in whatever form, intended to
instruct  users  in  the  use  of  ChannelHealth   Products,  and  published  by
ChannelHealth from time to time during the ChannelHealth  Support Term, and (iv)
the intellectual property rights of ChannelHealth,  including without limitation
patent rights,  copyrights,  embodied or contained in the items named in clauses
(i) through (iii).

"ChannelHealth  Maintenance"  means  services  to  correct  errors  found in the
ChannelHealth Products and delivered during the ChannelHealth Support Term.

"ChannelHealth   Products"   means  all  products   and   services   offered  by
ChannelHealth  from time to time during the term of this  Agreement,  whether or
not  described in the License  Agreement or the Marketing  Agreement,  including
without  limitation all (i) computer software and (ii) computerized or automated
products, services, processes, systems, and methods of any kind or nature.

"ChannelHealth Support Term" means the period commencing with the Effective Date
and ending on the  expiration of the Initial Term of the Marketing  Agreement or
later if renewed as set forth in this Agreement.

<PAGE>

"ChannelHealth Updates" means all additions,  corrections,  and modifications to
the ChannelHealth Products provided as part of ChannelHealth Maintenance and all
standard new releases,  new versions,  and updates to the ChannelHealth Products
delivered  by  ChannelHealth   to  its  customers   generally  as  part  of  the
ChannelHealth Products during the ChannelHealth Support Term.

"Clinical Management Suite" or "CMS" means the product currently marketed by IDX
under the  trademark  of "CMS" or "Clinical  Management  Suite,"  Including  its
predecessor product known as "CRS."

"ConnectR"  means the  product  currently  marketed  by IDX under the  trademark
"ConnectR."

"Core Application" means any software application expressly designed to automate
the business processes of physician billing, physician scheduling,  managed care
contract   administration,   hospital   clinical   practice,   hospital  patient
administration,  or  hospital  billing,  including  by way of example and not in
limitation,  as embodied  in the  products  currently  marketed by IDX under the
trademarks "IDXtendR," "IDXSite" and "LastWord."

"Direct  Competitor  of IDX" means any Person that  develops or markets any Core
Application.

"Distribution  Partner"  means  any  Person  that has the  right to  distribute,
resell,  sublicense,  license,  sell or otherwise  provide a party's products or
services,  including  by way of example  and not in  limitation,  any  reseller,
distributor,  licensee,  customer,  contractor,  service  provider,  outsourcing
vendor or other information technology company.

"Effective Date" means January 1, 2000

"Enterprise  Index"  means  the  product  currently  marketed  by IDX  under the
trademark of "Enterprise Index."

"IDX Customer"  means any Person that has entered into a written  agreement with
IDX pursuant to which IDX provides any of its Core  Products,  all Affiliates of
such Person, and all Persons receiving the benefit of any of IDX's Core Products
by or through  such Person or  Affiliates  of such  Person.  IDX will provide to
ChannelHealth a list of customers and update it from time to time.

"IDX Database  Information"  means information  concerning the file structure or
definition  of any IDX  Products  that  would be  necessary  or  useful in using
Integration Methods.

"IDX Licensed  Technology" means (i) the IDX Software,  including the object and
Source Code therefor,  as of the Effective Date, (ii) the object and Source Code
for the  ChannelHealth  Division  Works  as of the  Effective  Date,  (iii)  IDX
Software Updates, (iv) Integration Methods as of the Effective Date, and (v) the
intellectual property rights of IDX, including without limitation patent rights,
copyrights,  and trade  secrets  embodied  or  contained  in the items  named in
clauses (i) through (iv).
<PAGE>
"IDX Names and Marks" means trade names,  trademarks,  service names and service
marks used by IDX in marketing any of its products and services.

"IDX Products" means all products and services  offered by IDX from time to time
during the term of this  Agreement,  whether  or not  described  in the  License
Agreement or the  Marketing  Agreement,  including  without  limitation  all (i)
computer  software  and  (ii)  computerized  or  automated  products,  services,
processes,  systems, and methods of any kind or nature. "IDX Software" means (i)
the Web FrameWork, (ii) ConnectR, (iii) OutReach, (v) CMS, (v) Enterprise Index,
and (vi) the standard,  published  editions of textual and graphical  works,  in
whatever form,  intended to instruct  users in the use of the software  products
named in clauses (i) through (vi) and  published by IDX from time to time during
the IDX Support Term.

"IDX Software" means (i) the Web FrameWork,  (ii) ConnectR, (iii) OutReach, (iv)
CMS, (v) Enterprise Index, and (vi) the standard,  published editions of textual
and graphical works, in whatever form,  intended to instruct users in the use of
the software  products  named in clauses (i) through  (vi) and  published by IDX
from time to time during the IDX Support Term.

"IDX Software  Maintenance"  means  services to correct  errors found in the IDX
Software,  except CMS and OutReach, and delivered during the IDX Support Term as
set forth in this Agreement.

"IDX Software  Updates" means all additions,  corrections,  and modifications to
the IDX Software  provided as part of IDX Software  Maintenance and all standard
new releases,  new versions, and updates to the IDX Software delivered by IDX to
its customers generally as part of the IDX Software during the IDX Support Term.
IDX  Software  Updates  include  New  Enabling  Technologies  only to the extent
necessary  to achieve  compatibility  between  IDX  Products  and  ChannelHealth
Products.

"IDX  Support  Term" means the period  commencing  with the  Effective  Date and
ending on the expiration of the Initial Term of the Marketing Agreement or later
if renewed as set forth in this Agreement.

"Initial  Term"  means a period of five (5) years  commencing  on the  Effective
Date.

"Integration  Method" means any method using any  programmatic  or  computerized
means,  such  as a  program  or data  interface  (including  without  limitation
OutReach and ConnectR),  for  extracting or adding to any databases  included in
any  IDX  Product  or  exchanging  any  data  between  any IDX  Product  and any
ChannelHealth Product.

"License Agreement" means the license agreement by and between ChannelHealth and
IDX  executed  or  intended  to be  executed  concurrently  with  the  Marketing
Agreement and the Administrative Service Agreement.

"Marketing Agreement" means the marketing, development, and support agreement by
and  between  IDX  and  ChannelHealth   executed  or  intended  to  be  executed
concurrently  with  the  License  Agreement  and  the  Administrative   Services
Agreement.

"Merge"  means the process of merging  all or a portion of existing  software or
documentation  into  other  software  or  documentation  or adding  to  existing
software  or  documentation  so that the  resulting  software  or  documentation
contains  functionality that is substantially more or different from that of the
existing  software  or  documentation.  For  purposes of  illustration,  the IDX
Software  shall be deemed to have been  Merged into the  ChannelHealth  Division
Works.
<PAGE>
"New Enabling  Technologies"  means tools and other means for building  products
and integration  methods (similar to the Integration  Methods)  developed by IDX
and  incorporated  by IDX into IDX Software  Updates after the  Effective  Date.
Examples of New Enabling  Technologies that may at IDX's election be embodied in
IDX  Software  Updates  are  the  items  currently  referred  to by IDX as  "IDX
Objects," "IDXml," and "Tabasco."

"OutReach"  means the  product  currently  marketed  by IDX under the  trademark
"OutReach."

"Person" means any  individual,  partnership,  firm,  corporation,  association,
trust, limited liability company, limited liability partnership,  unincorporated
organization  or other  entity,  as well as any syndicate or group that would be
deemed to be a person under Section  13(d)(3) of the Securities  Exchange Act of
1934, as amended.

"Regulatory  Requirements"  means  all  Federal  and state  laws and  regulatory
requirements  applicable to the use by IDX, IDX  Customers,  ChannelHealth,  and
ChannelHealth  Customers of the ChannelHealth  Products from time to time during
the term of this Agreement,  including  without  limitation  those applicable to
billing and claims  submittal,  managed care,  prescriptions,  EDI transactions,
data  transmission,  security and privacy,  and program  requirements  generally
applicable to healthcare organizations, such as those involving accreditation.

"Source  Code"  means  the  human  readable  programming  statements  comprising
software,  together  with  such  available  programmer  notes,   specifications,
schematics,   file  definitions   (including  without  limitation  IDX  Database
Information) and other documentation that would be necessary for a programmer of
ordinary skill to understand, use and Merge the IDX Software.

"Territory"  means (a) the United States and its territories and military bases;
(b) Canada; (c) Mexico;  and (d) any additional  countries (each, an "Additional
Country") included in the Territory as provided in herein.

"Web FrameWork" means the product currently  marketed by IDX under the trademark
"IDX Web FrameWork".


<PAGE>


        Schedule 3.3 to Cross License and Software Maintenance Agreement

On June 11,  1999,  a lawsuit was served on the IDX.  The lawsuit was brought in
the United States District Court for the Northern  District of Texas Forth Worth
Division  and is  entitled  Allcare  Health  Management  System,  Inc. v. Cerner
Corporation,  et al., and claims damages against the IDX for patent infringement
allegedly caused by the sale, marketing,  practice and use of products, systems,
and  services  of IDX,  including  the IDX  Licensed  Technology.  Copies of the
lawsuit have been provided to ChannelHealth.
<PAGE>
        Exhibit 2.4.2 to Cross License and Software Maintenance Agreement

                             CONFIRMATORY ASSIGNMENT

         For good  and  valuable  consideration,  receipt  of  which  is  hereby
acknowledged,  the below-named  Assignor has assigned and does hereby assign and
transfer to [IDX  SYSTEMS  CORPORATION]  [CHANNELHEALTH  INCORPORATED],  a _____
corporation with offices at __________________ ("Assignee",  herein), Assignor's
entire right,  title and interest in and to any and all Proprietary  Information
in that certain software  products known as  _____________________,  and any and
all modules,  portions, or other works contained therein or related thereto (the
"Work").

For purposes  herein,  "Proprietary  Information"  includes  without  limitation
inventions, discoveries, improvements, works of authorship, formulas, processes,
compositions of matter,  computer programs,  code, databases,  mask works, trade
secrets,  designs,  notes,  drawings,  marketing plans, product plans,  business
strategies,  financial information,  forecasts, copyrights, patent rights, Moral
Rights,  other  intellectual  property  rights,  and the  right  to  bring  suit
thereunder.  For purposes  herein,  the term "Moral  Rights"  includes,  without
limitation,  the  right to be known as the  author,  the  right to object to any
alterations  to a work,  the right to prevent  others  from  being  named as the
author of a work,  the right to prevent  others from falsely  attributing to one
the  authorship of work that one has not in fact  written,  the right to prevent
others  from  making  deforming  changes  in a work,  the  right to  withdraw  a
published  work from  distribution  if it no longer  represents the views of the
author,  and the  right to  prevent  others  from  distribution  if it no longer
represents the views of the author, and the right to prevent others from using a
work  or  the  author's  name  in  such  a way as to  reflect  on  the  author's
professional  standing.  Assignor  furthermore waives and agrees never to assert
any Moral Rights Assignor may have in the Work.

Assignor  agrees that on request and without further  consideration,  but at the
expense  of  Assignee,   Assignor  will  communicate  to  the  Assignee  or  its
representatives  or nominees  any facts known to the  Assignor  respecting  said
Proprietary  Information,  and will  testify in any legal  proceeding,  sign all
lawful papers,  execute all  applications and  confirmations,  make all rightful
oaths and generally do everything possible to aid the Assignee,  its successors,
assigns and nominees to obtain,  maintain,  perfect,  and enforce  rights in the
Proprietary Information.

         Signed and sealed this ____ day of _________________, 2000.

Print or type Assignor's name and address:
                                              SIGNATURE (NOTARIZED)

____________________________                  By ______________________________
___________________________                      If Assignor is an entity other
                                                 than an individual,
____________________________________             provide name and title of
                                                 person signing:
____________________________________          NAME: ___________________________
____________________________________          TITLE: __________________________


STATE OF ______________________________
COUNTY OF ____________________________

         On this _________ day of _________, 1994, before me personally appeared
__________________________  personally  know to me  proved to me on the basis of
satisfactory  evidence to be the person whose name is  subscribed  to the within
the instrument, and acknowledged to me that he executed the same of his own free
will for the purposes therein set forth.

Notary Public
(Notary's Seal)
<PAGE>
                                    EXHIBIT F

                             IDX SYSTEMS CORPORATION

                        ADMINISTRATIVE SERVICES AGREEMENT

                                      WITH

                           CHANNELHEALTH INCORPORATED

     This  Administrative  Services  Agreement  is  made  as of the  1st  day of
October,  1999,  by and  between  IDX  Systems  Corporation  ("IDX"),  a Vermont
corporation  with a principal  place of business at 1400 Shelburne  Road,  South
Burlington,  VT  05403,  and  Channelhealth  Incorporated  ("CHI"),  a  Delaware
corporation with a principal place of business at 25 Green Mountain Drive, South
Burlington, VT 05403.

                                  INTRODUCTION

     IDX is engaged in the business of developing  and  distributing  healthcare
products and services.  CHI is a subsidiary of IDX.  Pursuant to this Agreement,
IDX  shall  provide,  and CHI  shall  pay IDX for,  certain  administrative  and
corporate services.

I.       SERVICES TO BE PERFORMED

         As requested  from time to time by CHI, IDX shall perform the following
services:

         A.       PURCHASING

                  1.  IDX shall  act as a  purchasing  agent for CHI,  and shall
                      have express authority to purchase  materials,  equipment,
                      and  supplies,  to  engage  vendors,  and  to  procure  or
                      contract  for  all  other  items  and  services  that  are
                      routinely   utilized  in  the  ordinary  course  of  CHI's
                      business.

              2. IDX shall tender  payment  directly to any vendor from which it
              purchases  goods or services on behalf of CHI,  and such  amounts,
              together with the cost of providing such purchasing services shall
              be included in calculating  the Service Charge under the Price and
              Payment terms of this Agreement.

                  3.  IDX shall be primarily responsible for satisfying purchase
                      prices as between IDX and vendors, but CHI shall be liable
                      to IDX for the  amount  tendered  by IDX for any  goods or
                      services  purchased on behalf of CHI,  whether or not such
                      goods or services are ultimately utilized by CHI.

         B.       ACCOUNTING SERVICES

              IDX shall perform the following financial and accounting services:

                  Such financial planning,  reporting and analysis,  billing and
         accounts  receivable,  accounts payable and expense report  processing,
         payroll,   sales  tax  processing,   contract  management  and  revenue
         recognition, audit assistance and financial systems support services as
         requested by CHI.

                                       1
<PAGE>
         C.       CASH MANAGEMENT SERVICES

              1.  IDX shall  maintain a central  concentration  account  through
                  which  all  of  CHI's   funds  will  flow  and  all  of  CHI's
                  receivables  and  payables of any kind shall be  collected  or
                  tendered  by  IDX on  CHI's  behalf  and  according  to  CHI's
                  requests.  All such  collections or payments shall be recorded
                  as  journal  entries in  accordance  with  generally  accepted
                  accounting  principles.  IDX shall  notify CHI in writing upon
                  closing any account used or established under this Agreement.

              2.  IDX  shall  open  any  other   account,   including,   without
                  limitation,  a payroll,  petty cash,  or zero balance  account
                  upon CHI's  request.  Any  additional  accounts  opened by IDX
                  shall receive  deposits  consisting only of funds,  which have
                  cleared the central concentration account.

              3.  IDX shall provide monthly financial statements to CHI for each
                  account under management.

              4.  IDX shall perform the following additional cash management
                  services:

                  a.       Reconcile all bank accounts used to carry out cash
                           management functions for CHI.

                  b.       Provide CHI with cash flow projections upon
                           reasonable request.

                  c.       Subject to the prior approval of CHI, make certain
                           investments for CHI.

                  d.       Maintain the general ledger accounts of all bank
                           accounts under management.

                  e.       Perform such other cash management services upon
                            which the parties may from time to time agree.

         D.       MIS SERVICES

              IDX shall provide such MIS Services as requested by CHI, including
         without limitation, the procurement and provision of telecommunications
         services,  internet  services,  computer network and hardware equipment
         and maintenance, and information systems support.

         E.       PROPERTY MANAGEMENT SERVICES

              IDX shall provide property  management and  maintenance,  cleaning
         and janitorial services and such other facilities services as requested
         by CHI.
                                       2
<PAGE>
         F.       HUMAN RESOURCES MANAGEMENT

               IDX shall provide such human resources  management services as
         requested by CHI,  including  without  limitation,   employee  benefits
         management, assistance with the  development of employment  practices
         and policies, and such other human resources functions as requested by
         CHI.

         G.       LEGAL SERVICES

              Attorneys  employed by IDX shall  provide  such legal  services as
         requested by CHI, including without limitation,  the provision of legal
         services  directly to CHI and the  engagement  and oversight of outside
         counsel for CHI.

II.      PROVISIONS GOVERNING PERFORMANCE OF SERVICES

         The  following   terms  and   conditions   shall  govern  the  parties'
performance of services:

         A.   IDX shall exercise due care in the performance of all services,
              and meet any applicable federal, state, or local legal
              requirements or professional, or industry standards.

         B.   IDX shall coordinate and consult with the appropriate employees of
              CHI from time to time, and establish  periodic  evaluations of the
              services it provides to CHI.

         C.   IDX shall provide all necessary professional and administrative
              personnel and all facilities needed to perform the
              services for CHI.

         D.   IDX shall permit the independent auditors of CHI to have access to
              its  pertinent  books and  records to verify the  accuracy  of the
              service charges under this agreement.

         E.   Notwithstanding the foregoing, unless granted express, written
              authorization from CHI, IDX is not granted the power to:

              1.  Borrow or lend money on behalf of CHI.

              2.  Incur debt, other than common bank charges, on behalf of CHI.

              3.  Invest the cash under management.
              4.  Engage in any activity that would compromise the fiscal health
                  or  integrity  of CHI, or that would fall outside the scope of
                  IDX's cash management responsibilities.

         F.   IDX  shall  not be  liable  for any  failure  or  omission  in the
              performance of its duties or services  resulting in any obligation
              or  liability  related  thereto  except  in the  event  of  fraud,
              reckless misconduct, willful disregard for CHI's interests, or any
              deliberate act or omission leading to such obligation or loss.
                                       3
<PAGE>
         G.   The  foregoing  services  to  be  performed  by  IDX  shall  be at
              arm's-length,  and the legal  relationship  of IDX to CHI shall be
              that of an  independent  contractor.  CHI and IDX  shall  maintain
              separate  records at all times, and in such a manner as to confirm
              that the  parties  hereunder  are  separate  legal  entities  with
              independent rights and obligations.

         H.   CHI shall  provide IDX access to any records or other  information
              necessary  to provide  the  services  under this  Agreement.  Such
              information  shall be  considered  confidential  unless  otherwise
              stated.

III.     RIGHT TO USE OFFICE SPACE

         IDX grants CHI a license to use office space,  as designated  from time
         to time by  mutual  agreement  of IDX and CHI,  at one or more of IDX's
         offices;  provided  that IDX and CHI shall enter into a formal  license
         agreement on or before February 15, 2000.

V.       PRICE AND PAYMENT TERMS

         A.   The service charges for services  performed for CHI by IDX and the
              charges  for CHI's  license  to use  office  space of IDX shall be
              equal to actual costs incurred by IDX, and allocated to CHI in the
              same manner that IDX  allocates  costs among its  business  units,
              plus,  for costs after  January 1, 2000, a reasonable  mark-up (in
              the aggregate, the "Service Charges").

         B.   The Service Charges may be reviewed and adjusted from time to time
              by mutual  agreement of IDX and CHI and at least annually prior to
              November  30 of each  year.  If IDX and CHI  fail to  agree to the
              adjustment  to the  Service  Charges  prior to  November  30,  the
              Service  Charges  for  the  following  year  shall   automatically
              increase  by a  percentage  equal  to the  overall  percentage  of
              increase of IDX's compensation budget for the next year.

         C.   IDX shall invoice CHI for the Service Charges on a quarterly
              basis.  CHI agrees to pay each invoice in full within
              thirty days of issue.

         D.  Any  unpaid  balances  between  CHI and IDX  under  this  Agreement
         outstanding  for more than thirty  (30) days will accrue  interest at a
         rate of 9%.

VI.      RECORDS

         A. IDX shall maintain, in accordance with generally accepted accounting
         principles  and  practices,   such  records  as  may  be  necessary  to
         adequately  reflect  the  accuracy of the  Service  Charges  under this
         Agreement. IDX will make and maintain such other and additional records
         as CHI may from time to time reasonably require in connection with this
         Agreement.
                                       4
<PAGE>
         B. Each of the parties shall adopt separate records of account and such
         other   methodologies  as  their  auditors  and  accountants  may  deem
         reasonable and appropriate  pertaining to all expenses,  cots, and fees
         earned and incurred hereunder.

         C. Upon prior reasonable notice, IDX will permit CHI or its independent
         auditors  access to IDX's  premises  and  pertinent  books and  records
         during  normal  business  hours to verify the  accuracy  of the records
         which support the Service Charges imposed under this Agreement.

VII.     TERM AND TERMINATION

         The initial  term of this  Agreement  shall be for fifteen  (15) months
commencing on October 1, 1999, and  terminating  on December 31, 2000,  provided
however,  that the Agreement  shall  automatically  renew for successive one (1)
year terms,  unless terminated by either party by written notice delivered prior
to August 30 of the previous year.

VIII.    MISCELLANEOUS

         A.       SURVIVAL

              This  Agreement  shall  continue in force and existence  after the
         merger,   restructuring,   name  change,  transfer,  sale,  assignment,
         conveyance,  or other  reorganization  of either party. The successors,
         assigns, or transferees of either party shall succeed to all rights and
         obligations of the assigning or transferring party.

         B.       FORCE MAJEURE

              Except as expressly  provided in this Agreement,  neither party to
         this  Agreement  shall be liable to the other  party for any failure to
         perform,  or any delay in the performance of, any obligation under this
         Agreement,  if such failure or delay is caused by circumstances  beyond
         the control of that party. For purposes of interpreting this provision,
         "circumstances  beyond the control" shall include,  without limitation,
         any  act of  God,  war,  sabotage,  embargo,  accident,  labor  strike,
         lockout, fire, flood, casualty, earthquake,  governmental action, riot,
         war or  revolution.  The party  experiencing  circumstances  beyond its
         control  shall  immediately  notify the other party of the existence of
         such  circumstances.  The party experiencing  circumstances  beyond its
         control  shall use every  reasonable  effort to mitigate the effects of
         such circumstances as soon as possible.

         C.       CONFIDENTIALITY

              1. In connection  with the performance by IDX of the provisions of
         this  Agreement,  CHI has  agreed  to  provide  IDX with the  necessary
         information   and  data   relating  to  the   administrative   services
         (hereinafter "Confidential Information").  In addition, IDX may provide
         CHI  with  IDX's  Confidential  Information.  In  connection  with  the
         foregoing, IDX and CHI each agree to treat all Confidential Information
         received from the other as follows:

                                       5
<PAGE>
                  a.       Each party recognizes and acknowledges that the
              Confidential Information is disclosed in confidence solely in
              connection with this Agreement.

                  b. Each party  agrees  that it  (including  its  shareholders,
              directors,  officers, employees, and agents) (i) will not disclose
              to any third party any of the Confidential Information,  except to
              the extent required by law,  without the disclosing  party's prior
              written   consent,   (ii)  will  limit  the  availability  of  the
              Confidential  Information to those of its respective shareholders,
              directors,  officers,  employees, and agents who need to know such
              Confidential  Information,  and  (iii)  will  not  use  any of the
              Confidential Information for any purpose other than the foregoing.

                  c. The term  "Confidential  Information"  does not include any
              information  which (i) at the time of  disclosure or thereafter is
              generally  available  to the  public  other  than as a result of a
              disclosure by the receiving  party,  (ii) was within the receiving
              party's  possession prior to its being furnished  pursuant hereto,
              provided that the source of such  information  as not known by the
              receiving party to be bound by a  confidentiality  agreement with,
              or  other   contractual,   legal,   or  fiduciary   obligation  of
              confidentially  with respect to such  information,  (iii)  becomes
              available to the receiving party on a non-confidential  basis from
              a  source  other  than  the  disclosing  party,  or (iv)  has been
              independently acquired or developed by the receiving party without
              violating any provision hereunder.

              d. Upon the termination of this Agreement for any reason, upon the
              request of the  disclosing  party,  all  Confidential  Information
              heretofore  or  hereafter  received or  obtained by the  receiving
              party from the disclosing party shall be promptly  returned to the
              disclosing party, and any analyses or other documents  prepared by
              or for the  receiving  party  which  incorporate  any  part of the
              Confidential  Information,  and all copies,  summaries,  and notes
              shall be promptly destroyed.

         D.       ASSIGNMENT AND DELEGATION

         Neither party to this  Agreement  shall in any way assign,  delegate or
otherwise dispose of this Agreement or any of the rights, privileges,  duties or
obligations  granted or imposed upon it under this  Agreement  without the prior
written consent of the other party. No such consent shall be required,  however,
to assign,  delegate,  or otherwise  dispose of any rights or obligations  under
this  Agreement if made to a  wholly-owned  subsidiary  of IDX. Any  assignment,
delegation or disposal, in whole or in part, of this Agreement without requisite
consent  will  be void  and  have no  effect,  but  such  consent  shall  not be
unreasonably withheld.

         E.       EFFECT ON OTHER AGREEMENTS

         Nothing contained herein shall create any legal liability or obligation
on the part of either  party to this  Agreement  for any third party  contracts,
agreements,  obligations,  or liabilities of the other party,  unless a party to
this  Agreement  expressly  assumes  such  liability or  obligation  in a signed
writing.

                                       6
<PAGE>
         F.       APPLICABLE LAW

         This  agreement  shall be  governed by the laws of the State of Vermont
and may not be amended or modified  except by an instrument in writing signed by
both parties.

         G.       ENTIRE AGREEMENT

         This  Agreement  shall  constitute  the entire  agreement  between  the
parties, and supersedes and cancels all previous  negotiations or understandings
between the parties on the subject  matter hereof  except as expressly  provided
herein.  No  conditions,  use of trade,  course  of  dealing,  understanding  or
agreement  purporting to vary, explain or supplement the terms of this Agreement
shall be binding unless  hereafter made in writing and signed by CHI and IDX. No
modification may be effected by the acknowledgment or acceptance of any purchase
order or  shipping  forms  containing  terms at  variance  with  those set forth
herein.  Waiver by either  party of any term,  provision,  or  condition of this
Agreement shall not be construed to be a waiver of any other term, provision, or
condition nor shall such waiver be deemed a waiver of any subsequent term of the
same provision.

     [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       7
<PAGE>


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

IDX Systems Corporation                     Channelhealth Incorporated

By:/S/ ROBERT W. BAKER, JR.                 By:/S/ RICHARD E. TARRANT
   _______________________________             ________________________________

Title: Vice President                       Title: President

Date:_____________________________          Date: :____________________________



                                       8

<PAGE>

                                    EXHIBIT G

                  Marketing, Development and Service Agreement

                  MARKETING, DEVELOPMENT AND SERVICE AGREEMENT

     THIS AGREEMENT (this "Agreement") is made and entered into as of January 1,
2000 by and between CHANNELHEALTH INCORPORATED, a Delaware corporation ("CHI" or
"ChannelHealth") and IDX SYSTEMS CORPORATION, a Vermont corporation ("IDX").

     WHEREAS,  concurrently  herewith  ChannelHealth and IDX have entered into a
written agreement  entitled "Cross License and Software  Maintenance  Agreement"
(the "License  Agreement"),  pursuant to which IDX and ChannelHealth have agreed
to certain licensing and support transactions and terms; and

     WHEREAS,  the  obligations  of this  Marketing  Agreement  with  respect to
development  and support of  enhanced  and  improved  technology  and  resulting
products and  services  shall be in addition to the  obligations  to license and
support  such  technology,  products  and  services  set  forth  in the  License
Agreement.

     WHEREAS,  concurrently  herewith  ChannelHealth and IDX have entered into a
written   agreement   entitled    "Administrative    Service   Agreement"   (the
"Administrative  Service  Agreement"),  pursuant to which IDX and  ChannelHealth
have agreed to certain services to be provided by IDX to ChannelHealth; and

     WHEREAS,  the execution and delivery of this Agreement by ChannelHealth and
IDX are conditioned upon the execution and delivery by IDX and  ChannelHealth of
the Administrative Service Agreement and the License Agreement.

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

1. DEFINITIONS

The capitalized terms used in this Agreement shall have the meanings ascribed to
them on Schedule 1 attached hereto.

2. DEVELOPMENT AND INSTALLATION SERVICES

The parties shall  cooperate with respect to, and coordinate,  their  respective
product  development  processes  for the  purpose of  creating  and  maintaining
functional  integration and data exchange between the ChannelHealth Products and
the IDX  Products.  In addition,  the parties shall  continue to cooperate  with
respect  to, and  coordinate,  such  processes  for the  purpose  of  developing
additional functional integration and data exchange among other IDX Products and
other  ChannelHealth  Products  for the  purpose  of  creating  work  flows  and
processes  that benefit IDX Customers in general.  The parties  shall  cultivate
business  processes  designed  to  maximize   cooperation  and  coordination  of
development  activities for such purpose. In addition,  the parties agree to the
following:

2.1  Product Development in General.  The following obligations shall be in
     effect during the Initial Term of this Agreement.

                                       1
<PAGE>
     2.1.1    Development  Plans.  ChannelHealth  and IDX shall regularly create
              and update written development plans for their respective products
              and  services and deliver  them  regularly to each other.  IDX and
              ChannelHealth    shall   regularly    solicit    suggestions   and
              specifications  for improvement of their  respective  products and
              services based on the needs and  requirements of IDX Customers and
              ChannelHealth Customers.

     2.1.2    Technologies and Architectures.  All ChannelHealth  Products to be
              sold to IDX Customers  shall conform to and incorporate all of the
              technical,  architectural,  communication,  design and programming
              standards  employed by IDX and embodied in IDX Products  from time
              to time,  including  without  limitation the technical  standards,
              protocols,  conventions and platforms  incorporated in the IDX Web
              FrameWork. IDX shall regularly keep ChannelHealth informed of such
              standards.

     2.1.3    Database.  ChannelHealth  shall not create the  capability  in its
              products  and  services  or  permit  the use of its  products  and
              services to write to any IDX databases  except in conformance with
              written standards and procedures  approved by IDX in advance.  IDX
              shall regularly keep ChannelHealth  informed of such standards and
              procedures.  The  database  update  approach  employed by OutReach
              shall not be considered a standard for updating IDX databases.

     2.1.4    Market Requirements. ChannelHealth shall regularly develop updates
              and enhancements of  ChannelHealth  Products to timely address the
              needs and requirements of IDX Customers in general,  as may change
              from  time  to  time,  including  without  limitation   Regulatory
              Requirements, as determined by IDX and ChannelHealth jointly.

     2.1.5    Early  Releases.  IDX and  ChannelHealth  shall  cooperate  in the
              development  of  ChannelHealth  Updates and shall  deliver to each
              other for testing  purposes one copy of the earliest test releases
              of both the Source Code and object code  versions of all  software
              updates  described in Section 2.1.4 prior to delivery to any other
              customers or  distribution  partners and one complete  copy of the
              general  releases  of Source  Code and object code for all Updates
              prior to delivery to any of their respective customers.

     2.1.6    Synchronization.  ChannelHealth shall keep its products compatible
              with new  versions  and  updates of IDX  products as and when such
              versions and updates are released.

2.2  Enhancement of ChannelHealth Division Works.

     2.2.1    Enhancement of ChannelHealth  Division Works.  ChannelHealth shall
              make   appropriate   investments   to  enhance   and  improve  the
              ChannelHealth Division Works and other ChannelHealth Products.

     2.2.2    Participation  in  Development  and Testing.  IDX shall have first
              priority  to  participate  in  development   and  testing  of  the
              ChannelHealth Products and all enhancements and updates thereto.

2.3  Installation  Services. On a time and materials basis,  ChannelHealth shall
     provide at IDX's option  either as a  contractor  to IDX or directly to IDX

                                       2
<PAGE>
     Customers,  services  necessary to install  ChannelHealth  Products as more
     particularly described below:

2.4  Customer  Support  Services.  ChannelHealth  shall  provide at IDX's option
     either  as a  contractor  to IDX or  directly  to IDX  Customers,  customer
     support services for ChannelHealth  Products as more particularly described
     below:

     2.4.1    CMS.  ChannelHealth  shall  provide  support for all  existing CMS
              customers of IDX in a manner  consistent with support  provided by
              IDX to its  customers  generally  and to the  level  necessary  to
              fulfill all existing support and development commitments of IDX to
              its customers for CMS. As the sole  compensation to  ChannelHealth
              for such services, IDX shall pay to ChannelHealth all support fees
              for CMS it receives from such customers.

     2.4.2    Other Products.  At its own expense and cost, ChannelHealth shall
              provide ChannelHealth Maintenance and ChannelHealth
              Updates for all IDX customers of ChannelHealth Products.

2.5  Service  Quality.   All  services  provided  by  ChannelHealth  under  this
     agreement  shall  be  performed  in  a  good  and  workmanlike  manner  and
     consistent  with high  standards  generally  applicable  in the  healthcare
     clinical  information  systems  industry  and  consistent  with the support
     standards  maintained by the IDX business unit most closely associated with
     the IDX Customer using the affiliated ChannelHealth Products.

2.6  Ownership.  Ownership of software developments shall be governed by the
     License Agreement.

3.   MARKETING

Unless a longer term is expressly provided in this Agreement, during the Initial
Term and any renewal term of this  Agreement,  the parties  shall  closely align
their marketing processes for the purpose of rapidly distributing  ChannelHealth
Products to IDX Customers  and shall  cultivate  business  processes to maximize
cooperation and coordination of marketing activities.  In addition,  the parties
agree to the following:

3.1  Business Plan.  IDX and ChannelHealth shall mutually create and agree to a
     business plan for sales of ChannelHealth Products by IDX.

3.2  Exclusive Marketing Rights. During the Initial Term of this Agreement
     and any renewal term of this Agreement:

     3.2.1    IDX shall have the exclusive  right to market,  sell,  license and
              otherwise distribute the ChannelHealth Products to IDX Customers.

     3.2.2    ChannelHealth  shall not  license or  authorize  any vendor of any
              Core Application to market, sell, license, or otherwise distribute
              any ChannelHealth Products.

     3.2.3    Unless IDX has provided prior written authorization, ChannelHealth
              shall not market any ChannelHealth  Products to any IDX Customers,
              and  ChannelHealth  shall not make any sales of any  ChannelHealth
              Products to any IDX Customers.

     3.2.4    ChannelHealth shall not become a Direct Competitor of IDX.

                                       3
<PAGE>
     3.2.5    Except as set forth in Sections 3.2.6,  3.2.7 and 3.2.8, IDX shall
              not market any  products  or  services of any third party that are
              similar to ChannelHealth Products.

     3.2.6    IDX may cooperate with any vendor of products and services similar
              to the ChannelHealth  Products to provide products and services of
              such vendor to a  particular  IDX  Customer  if such IDX  Customer
              expresses a preference for such other products or services.

     3.2.7    ChannelHealth  shall have no right to limit or prevent  IDX in any
              way from entering into and carrying out a cooperative  development
              or marketing  relationship with any vendor of products or services
              similar to ChannelHealth Products,  including without limitation a
              distribution, co-marketing or resale relationship, if such similar
              products  or  services  are,  in  IDX's   reasonable   good  faith
              determination,  not competitive in functionality,  technology,  or
              price.

     3.2.8    ChannelHealth  shall have no right to limit or prevent  IDX in any
              way from entering  into and carrying out a  cooperative  marketing
              relationship  with any vendor or supplier of products or services,
              including  without  limitation  a  distribution,  co-marketing  or
              resale  relationship,  to the extent  that such vendor or supplier
              markets products or services that are not similar to ChannelHealth
              Products or services pursuant to such relationship.

     3.2.9    The sole and  exclusive  remedy  for  breach  by IDX of any of the
              provisions  of this Section 3.2 shall be that Section 3.2.3 shall,
              upon written notice from  ChannelHealth to IDX, cease to be of any
              force and effect.

3.3  Nonexclusive Marketing Rights.

     3.3.1    Notwithstanding any termination or non-renewal of this Agreement,
              including without limitation any termination under Section 4 of
              this Agreement, for so long as ChannelHealth shall offer for sale,
              license, resale, relicense, or other distribution any
              ChannelHealth Products, or any derivatives, enhancements, or
              improvements thereof, or ChannelHealth shall offer to support or
              maintain any ChannelHealth Products, or any derivatives,
              enhancements, or improvements thereto, IDX shall be entitled to
              distribute such ChannelHealth Products, derivatives, enhancements,
              and improvements,and the support or maintenance services with
              respect thereto, upon the best terms and conditions offered by
              ChannelHealth which, if ChannelHealth has no other distributor,
              shall be equal to the retail price less a commercially
              reasonable discount.

     3.3.2    If ChannelHealth shall at any time offer prices or terms for sale,
              resale, license or other distribution, or the support or
              maintenance of, any ChannelHealth Products or any derivatives,
              enhancements, or improvements that are more favorable than the
              prices or terms set forth in this Agreement or otherwise offered
              to IDX, then ChannelHealth must, within thirty (30) days of such
              agreement provide IDX with notice of such offer, terms and prices.
              Regardless of whether such notice is provided, IDX shall
              automatically become entitled to such more favorable prices and

                                       4
<PAGE>
              terms without further response from IDX, and IDX may elect to
              obtain a refund of any corresponding consideration paid by IDX to
              ChannelHealth or received by ChannelHealth on account of
              distribution of any affected ChannelHealth Products, derivatives,
              enhancements, or improvements.

3.4  Marketing Responsibilities of ChannelHealth. ChannelHealth shall market the
     ChannelHealth Products as described in the Marketing Plan and shall provide
     additional services to support IDX's marketing of ChannelHealth Products to
     IDX Customers as set forth below:

     3.4.1    At its  own  expense,  ChannelHealth  shall  develop  and  produce
              product marketing documentation and collateral similar in kind and
              quality to that  provided by IDX to IDX  Customers  and  prospects
              from time to time  with  respect  to IDX  Products  and  Services.
              ChannelHealth  shall deliver such  documentation and collateral in
              quantities  and at the times and places  reasonably  specified  by
              IDX. Such documentation shall be targeted to IDX Customers and IDX
              shall  have  the  right  to  reasonably  approve  the  design  and
              specifications thereof.

     3.4.2    ChannelHealth  shall  maintain  a  qualified  sales and  marketing
              support  staff in numbers  reasonably  sufficient  to support  IDX
              sales activities.

     3.4.3    ChannelHealth shall provide training to the IDX sales staff in the
              ChannelHealth Products and ChannelHealth's business strategy.

     3.4.4    ChannelHealth shall develop sales tools such as demonstration
              systems for use by IDX sales staff.

     3.4.5    ChannelHealth shall appropriately  compensate and incent its sales
              personnel to assist IDX in selling ChannelHealth Products.

     3.4.6    ChannelHealth shall provide sales support services with respect to
              the ChannelHealth  Products as generally and customarily  employed
              by IDX in  support  of sales of its  products,  including  without
              limitation  assisting  in making sales  calls,  providing  product
              demonstrations,   facilitating   site  visits  and  responding  to
              inquiries  from  prospects  and  customers,  such as requests  for
              proposal, requests for information and requests for quotations.

3.5  Marketing  Responsibilities  of IDX.  IDX shall  market  the  ChannelHealth
     Products and shall have the responsibilities as set forth below:

     3.5.1    IDX shall educate and train its sales and sales support  personnel
              so as to be able to  present  the  ChannelHealth  Products  to IDX
              Customers   and   prospects   as   necessary   to    appropriately
              commercialize the ChannelHealth Products.

     3.5.2    IDX shall appropriately compensate and incent its sales personnel
              to sell ChannelHealth Products.

     3.5.3    IDX shall provide ChannelHealth with current sales projections.

     3.5.4    IDX  shall  include  appropriate   descriptions  of  ChannelHealth
              Products  and its  business  strategy in sales  proposals  for new
              business  as  necessary   to   appropriately   commercialize   the
              ChannelHealth Products.

                                       5
<PAGE>
     3.5.5    IDX  shall  respond  to  requests  for  information,   quotations,
              proposals and the like for ChannelHealth  Products as necessary to
              appropriately commercialize the ChannelHealth Products.

3.6  Use of IDX Name.

     3.6.1    For a period of two years, ChannelHealth may indicate that IDX
              Licensed Technology is included in CMS.

     3.6.2    ChannelHealth  may use the trademark  "IDX" and the  trademarks of
              IDX  pertaining  to  IDX  Products  in  connection  with  customer
              communications pertaining to the co-marketing relationship between
              IDX and ChannelHealth as defined in this Agreement and pursuant to
              IDX's reasonable branding standards in effect from time to time.

3.7  Marketing and  Administrative  Responsibilities  of IDX. IDX shall have the
     authority to market and sell  ChannelHealth  Products pursuant to IDX's own
     terms and conditions  and shall also have the authority as  ChannelHealth's
     agent to collect the sales price for all ChannelHealth Products marketed by
     IDX. In addition, IDX shall have authority as ChannelHealth's agent to bind
     ChannelHealth to perform for IDX Customers all of  ChannelHealth'  standard
     sales terms and conditions.  ChannelHealth  shall confirm such authority to
     any IDX Customer or prospective customer on request of IDX.

4.   COMPENSATION

4.1  Compensation;  Payment.  IDX  shall  be  entitled  to  reasonable  and fair
     compensation  for its sales and  marketing  services  provided  under  this
     Agreement.  IDX shall remit to ChannelHealth  the full amount received from
     the IDX Customer,  and  ChannelHealth  shall pay to IDX sales  compensation
     including  minimum  compensation  payable at least  quarterly.  The minimum
     compensation  shall  cover  all of IDX's  sales  expenses  attributable  to
     marketing  ChannelHealth Products during the first two years of the Initial
     Term.

4.2  Failure to Agree on  Compensation.  IDX and  ChannelHealth  intend that the
     compensation of IDX for the  distribution of  ChannelHealth  Products under
     this Agreement  shall reflect,  insofar as feasible,  fair market value for
     the services  provided by IDX from time to time.  At any time and from time
     to time after the expiration of six (6) months from the Effective Date, but
     not more frequently than one (1) time during any six (6) month period,  IDX
     or  ChannelHealth  may by written  request  demand  determination  of IDX's
     compensation under this Agreement, whether in the form of a percentage rate
     or otherwise,  and IDX and ChannelHealth  shall promptly  negotiate in good
     faith compensation for the services of IDX under this Agreement. If IDX and
     ChannelHealth  are unable or unwilling to agree to new compensation  within
     sixty  (60)  days  after  written  demand  for  negotiation,  then  IDX  or
     ChannelHealth  may submit the issue of fair market  compensation  for final
     determination by any public  accounting firm with a national  practice that
     may be selected mutually by IDX and ChannelHealth (the  "Accountant").  The
     parties shall  cooperate at their own expense with the  Accountant so as to
     facilitate a prompt determination by the Accountant within twenty (20) days
     of the date of  appointment of the  Accountant.  The  determination  of the

                                       6
<PAGE>
     Accountant as to the fair market compensation for the services of IDX under
     this Agreement shall be final. Upon such determination, the compensation of
     IDX shall be the discount rate or other compensation for the sales services
     of IDX under  this  Agreement  until or  unless  such  compensation  may be
     further renegotiated or changed as set forth in this Agreement.

5.  TERM AND TERMINATION

5.1  Term.  Upon the  expiration  of the  Initial  Term,  this  Agreement  shall
     automatically  renew for  additional,  successive one (1) year terms unless
     terminated earlier or either IDX or ChannelHealth  elects not to renew this
     Agreement by giving  written  notice of such  election not later than three
     (3) months prior to the  expiration of the Initial Term or any then current
     renewal term.

5.2  Termination. Notwithstanding Section 5.1, this Agreement may be terminated:

     5.2.1    by ChannelHealth, at any time, not less than sixty (60) days after
              delivery  of notice  to IDX,  in the  event  that IDX  shall  have
              defaulted on or breached any material  term of this  Agreement and
              shall not have  cured  such  breach  within  sixty (60) days after
              receiving such notice from ChannelHealth  specifying the nature of
              such default or breach; or

     5.2.2    by IDX, at any time,  not less than sixty (60) days after delivery
              of notice to ChannelHealth in the event that  ChannelHealth  shall
              have  defaulted on or breached any material term of this Agreement
              and shall not have cured such breach  within sixty (60) days after
              receiving notice from IDX specifying the nature of such default or
              breach; or

     5.2.3    by any party,  immediately upon delivery of notice to the relevant
              party,  in  the  event  that  such  other  party  (i)  requires  a
              composition or other similar arrangement with creditors, files for
              bankruptcy or is declared  bankrupt or (ii) shall have assigned or
              transferred  to any third  party any of its rights or  obligations
              hereunder except in accordance with Section 6.9; or

     5.2.4        by either party upon termination of the License Agreement.

5.3  Effect of Termination; Survival.  No termination of this Agreement shall
     terminate the rights of IDX set forth in Section 3.3. Sections 3.3 and 6
     shall survive any termination of this Agreement.

6.   MISCELLANEOUS

6.1  Indemnification.  Each party (the "Indemnifying Party") will indemnify each
     other party, its officers, employees, and agents (collectively "Indemnified
     Parties")  against,  and hold each  Indemnified  Party  harmless  from, all
     claims,  suits,  judgments,  losses,  damages,  fines or  costs  (including
     reasonable  legal fees and expenses)  ("Losses")  resulting from any claim,
     suit, or demand by any third party ("Third Party Claim") for injuries to or
     deaths of persons or loss of or damage to property  arising out of: (i) the
     Indemnifying  Party's  products or services as marketed by the  Indemnified
     Parties,  unless the Indemnified Parties shall have acted outside the scope
     of their rights under this  Agreement;  and (ii) the  Indemnifying  Party's
     performance or willful misconduct of the Indemnifying Party, its employees,
     officers, or agents in connection with the Indemnifying Party's performance
     of this  Agreement,  except to the extent  caused by the  negligence of any
     Indemnified Party.

                                       7
<PAGE>
     6.1.1   The Indemnifying  Party's  obligations  under  this  Section 6 will
             survive the termination of this Agreement.

     6.1.2    Each Indemnified Party shall give an Indemnifying Party prompt
              written notice of any Third Party Claim of which such
              Indemnified Party has knowledge concerning any Losses as to which
              such Indemnified Party may request indemnification hereunder. If
              the Indemnifying Party acknowledges in writing its obligation to
              indemnify the Indemnified Party hereunder against any Losses that
              may result from such Third Party Claim, then the Indemnifying
              Party shall be entitled to assume and control the defense of such
              Third Party Claim at its expense and through counsel of its choice
              if it gives notice of its intention to do so to the Indemnified
              Party within five (5) days of the receipt of such notice from the
              Indemnified Party; provided, however, that if there exists or is
              reasonably likely to exist a conflict of interest that would make
              it inappropriate in the judgment of the Indemnified Party, in its
              sole and absolute discretion, for the same counsel to represent
              both the Indemnified Party and the Indemnifying Party, then the
              Indemnified Party shall be entitled to retain its own counsel, at
              the expense of the Indemnifying Party. In the event the
              Indemnifying Party exercises the right to undertake any such
              defense against any such Third Party Claim as provided above, the
              Indemnified Party shall cooperate with the Indemnifying Party in
              such defense and make available to the Indemnifying Party, at the
              Indemnifying Party's expense, all witnesses, pertinent records,
              materials and information in the Indemnified Party's possession or
              under the Indemnified Party's control relating thereto as is
              reasonably required by the Indemnifying Party. Similarly, in the
              event the Indemnified Party is, directly or indirectly, conducting
              the defense against any such Third Party Claim, the Indemnifying
              Party shall cooperate with the Indemnified Party in such defense
              and make available to the Indemnified Party, at the Indemnified
              Party's expense, all such witnesses, records, materials and
              information in the Indemnifying Party's possession or under the
              Indemnifying Party's control relating thereto as is reasonably
              required by the Indemnified Party. No such Third Party Claim may
              be settled by the Indemnifying Party without the prior written
              consent of the Indemnified Party.

     6.1.3    In  no  event  shall  the  Indemnifying  Party  be  liable  to  an
              Indemnified Party for any indirect, incidental, special, punitive,
              exemplary  or  consequential  damages  arising out of or otherwise
              relating to this  Agreement,  even if the  Indemnifying  Party has
              been advised or the possibility or likelihood of such damages.

     6.1.4    Notwithstanding  the  foregoing,  with  respect  to any claim that
              would otherwise be subject to  indemnification by a party pursuant
              to this Agreement,  if indemnification  with respect to such claim
              is  governed  by the License  Agreement,  then no  indemnification
              shall be available under this Agreement.

6.2  Expenses.  Except as otherwise  specified in this Agreement,  all costs and
     expenses, including, without limitation, fees and disbursements of counsel,

                                       8
<PAGE>
     financial  advisors  and  accountants,  incurred  in  connection  with this
     Agreement  and the  transactions  contemplated  hereby shall be paid by the
     party  incurring such costs and expenses,  whether or not the Closing shall
     have occurred.

6.3  Further  Assurances and  Documents.  IDX and  ChannelHealth  shall take all
     actions and do all things,  including without  limitation the execution and
     delivery of instruments and documents, necessary to effectuate the purposes
     and intent of this Agreement.

6.4  Notices. All notices,  requests,  claims,  demands and other communications
     hereunder  shall be in  writing  and shall be given or made  (and  shall be
     deemed to have been duly given or made upon receipt) by delivery in person,
     by courier service, by telecopy or by registered or certified mail (postage
     prepaid,  return  receipt  requested)  to  the  respective  parties  at the
     following  addresses  (or at such  other  address  for a party  as shall be
     specified in a notice given in accordance with this Section 5.03):

         (a)  if to ChannelHealth:

              Channelhealth Incorporated
              25 Green Mountain Drive
              South Burlington, Vermont 05403
              Attention:  President

              With a copy to General Counsel at the same address

         (b)  if to IDX:

              IDX Systems Corporation
              1400 Shelburne Road
              South Burlington, Vermont  05402
              Attention:  President

              With a copy to: General Counsel at the same address

6.5  Public Announcements. Except as required by law, governmental regulation or
     by the requirements of any securities exchange on which the securities of a
     party hereto are listed, no party to this Agreement shall make, or cause to
     be made,  any press  release  or public  announcement  in  respect  of this
     Agreement or the transactions  contemplated hereby or otherwise communicate
     with any news media without the prior  written  consent of the other party,
     and the parties  shall  cooperate as to the timing and contents of any such
     press release or public announcement.

6.6  Headings.  The  descriptive  headings  contained in this  Agreement are for
     convenience  of reference  only and shall not affect in any way the meaning
     or interpretation of this Agreement.

6.7  Severability.  If any term or other provision of this Agreement is invalid,
     illegal or incapable of being enforced by any law, governmental  regulation
     or public policy,  all other terms 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

                                       9
<PAGE>
     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  in  order  that  the   transactions
     contemplated  hereby are  consummated  as  originally  contemplated  to the
     greatest extent possible.

6.8  Entire  Agreement.  This Agreement  constitutes the entire agreement of the
     parties hereto with respect to the subject matter hereof and supersedes all
     prior agreements and  undertakings,  both written and oral, with respect to
     the subject matter hereof.

6.9  Assignment.  This  Agreement  shall be binding  upon the  parties and their
     respective successors, representatives and permitted assigns. Neither party
     may assign this  Agreement  without the prior written  consent of the other
     party,  except that either party hereto may assign its rights  hereunder to
     an Affiliate of such party and either party may, without the consent of the
     other  party,  assign  and  delegate  this  Agreement  and its  rights  and
     obligations hereunder in connection with a merger, consolidation or sale of
     substantially  all of its assets (which sale shall  include the  assignment
     and assumption of all rights and obligations  under the License  Agreement;
     provided,  however,  that such  assignee  or  transferee  shall  assume all
     obligations of the assigning or transferring  party and any such assignment
     shall not relieve the assigning or  transferring  party of its  obligations
     hereunder.

6.10 No Third Party  Beneficiaries.  This  Agreement  shall be binding  upon and
     inure  solely to the  benefit of the  parties  hereto  and their  permitted
     assigns and successors and nothing herein,  express or implied, is intended
     to or shall confer upon any other person or entity,  any legal or equitable
     right,  benefit  or remedy of any nature  whatsoever  under or by reason of
     this Agreement.

6.11 Amendment. This Agreement may not be amended or modified except by an
     instrument in writing signed by, or on behalf of, each of the parties.

6.12 Governing Law. This Agreement shall be governed by the laws of the State of
     New York without regard to its conflict of laws provisions.

6.13 Counterparts.  This Agreement may be executed in one or more  counterparts,
     and by the different parties hereto in separate counterparts, each of which
     when  executed  shall be deemed to be an  original  but all of which  taken
     together shall constitute one and the same agreement.

6.14 Specific  Performance.  The parties  hereto agree that  irreparable  damage
     would occur in the event any provision of this  Agreement was not performed
     in accordance  with the terms hereof and that the parties shall be entitled
     to  specific  performance  of the terms  hereof,  in  addition to any other
     remedy at law or equity.

                                       10
<PAGE>
6.15 Waiver  of  Jury  Trial.  Each  of  the  parties  hereto   irrevocably  and
     unconditionally  waives  trial by jury in any legal  action  or  proceeding
     relating to this Agreement,  the Ancillary  Agreements or the  transactions
     contemplated hereby and thereby and for any counterclaim therein.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed  by  their  respective  authorized   signatories  thereunto  duly
authorized as of the day and year first above written.

IDX SYSTEMS CORPORATION                       CHANNELHEALTH INCORPORATED



By:/S/ ROBERT W. BAKER, JR.                  By:/S/ RICHARD E. TARRANT
   __________________________________           _______________________________
   [Signature of Authorized Agent]             [Signature of Authorized Agent]

Print Name and Title:                          Print Name and Title:
Robert W. Baker, Jr.                           Richard E. Tarrant
Vice President                                 President


<PAGE>

                                   Schedule 1

                 to Marketing, Development and Service Agreement

                                   Definitions

"Administrative Service Agreement" means the administrative service agreement by
and  between   ChannelHealth  and  IDX  executed  or  intended  to  be  executed
concurrently with the License Agreement and the Marketing Agreement.

"Affiliate"  means, with respect to any specified Person,  any other Person that
directly,  or  indirectly  through  one or  more  intermediaries,  controls,  is
controlled by, or is under common control with, such specified Person.

"Agreement"  means this  Agreement,  including all schedules,  exhibits  another
items attached hereto and incorporated by reference herein.

"ChannelHealth  Customer"  means  any  Person  that has  entered  into a written
agreement  with  pursuant  to which  ChannelHealth  provides  any  ChannelHealth
Products,  all Affiliates of such Person,  and all Persons receiving the benefit
of any  ChannelHealth  Products by or through such Person or  Affiliates of such
Person.

"ChannelHealth  Division  Works"  means  all  (i)  computer  software  and  (ii)
computerized or automated products, services, processes, systems, and methods of
any  kind or  nature  developed  or in the  processes  of  development  by IDX's
ChannelHealth Division prior to the Effective Date.

"ChannelHealth Licensed Technology" means (i) the object and Source Code for the
ChannelHealth   Products,   (ii)  ChannelHealth  Updates,  (iii)  the  standard,
published editions of textual and graphical works, in whatever form, intended to
instruct  users  in  the  use  of  ChannelHealth   Products,  and  published  by
ChannelHealth from time to time during the ChannelHealth  Support Term, and (iv)
the intellectual property rights of ChannelHealth,  including without limitation
patent rights,  copyrights,  embodied or contained in the items named in clauses
(i) through (iii).

"ChannelHealth  Maintenance"  means  services  to  correct  errors  found in the
ChannelHealth Products and delivered during the ChannelHealth Support Term.

"ChannelHealth   Products"   means  all  products   and   services   offered  by
ChannelHealth  from time to time during the term of this  Agreement,  whether or
not  described in the License  Agreement or the Marketing  Agreement,  including
without  limitation all (i) computer software and (ii) computerized or automated
products, services, processes, systems, and methods of any kind or nature.

"ChannelHealth Support Term" means the period commencing with the Effective Date
and ending on the  expiration of the Initial Term of the Marketing  Agreement or
later if renewed as set forth in this Agreement.
<PAGE>

"ChannelHealth Updates" means all additions,  corrections,  and modifications to
the ChannelHealth Products provided as part of ChannelHealth Maintenance and all
standard new releases,  new versions,  and updates to the ChannelHealth Products
delivered  by  ChannelHealth   to  its  customers   generally  as  part  of  the
ChannelHealth Products during the ChannelHealth Support Term.

"Clinical Management Suite" or "CMS" means the product currently marketed by IDX
under the  trademark  of "CMS" or "Clinical  Management  Suite,"  Including  its
predecessor product known as "CRS."

"ConnectR"  means the  product  currently  marketed  by IDX under the  trademark
"ConnectR."

"Core Application" means any software application expressly designed to automate
the business processes of physician billing, physician scheduling,  managed care
contract   administration,   hospital   clinical   practice,   hospital  patient
administration,  or  hospital  billing,  including  by way of example and not in
limitation,  as embodied  in the  products  currently  marketed by IDX under the
trademarks "IDXtendR," "IDXSite" and "LastWord."

"Direct  Competitor  of IDX" means any Person that  develops or markets any Core
Application.

"Distribution  Partner"  means  any  Person  that has the  right to  distribute,
resell,  sublicense,  license,  sell or otherwise  provide a party's products or
services,  including  by way of example  and not in  limitation,  any  reseller,
distributor,  licensee,  customer,  contractor,  service  provider,  outsourcing
vendor or other information technology company.

"Effective Date" means January 1, 2000

"Enterprise  Index"  means  the  product  currently  marketed  by IDX  under the
trademark of "Enterprise Index."

"IDX Customer"  means any Person that has entered into a written  agreement with
IDX pursuant to which IDX provides any of its Core  Products,  all Affiliates of
such Person, and all Persons receiving the benefit of any of IDX's Core Products
by or through  such Person or  Affiliates  of such  Person.  IDX will provide to
ChannelHealth a list of customers and update it from time to time.

"IDX Database  Information"  means information  concerning the file structure or
definition  of any IDX  Products  that  would be  necessary  or  useful in using
Integration Methods.

"IDX Licensed  Technology" means (i) the IDX Software,  including the object and
Source Code therefor,  as of the Effective Date, (ii) the object and Source Code
for the  ChannelHealth  Division  Works  as of the  Effective  Date,  (iii)  IDX
Software Updates, (iv) Integration Methods as of the Effective Date, and (v) the
intellectual property rights of IDX, including without limitation patent rights,
copyrights,  and trade  secrets  embodied  or  contained  in the items  named in
clauses (i) through (iv).
<PAGE>

"IDX Names and Marks" means trade names,  trademarks,  service names and service
marks used by IDX in marketing any of its products and services.

"IDX Products" means all products and services  offered by IDX from time to time
during the term of this  Agreement,  whether  or not  described  in the  License
Agreement or the  Marketing  Agreement,  including  without  limitation  all (i)
computer  software  and  (ii)  computerized  or  automated  products,  services,
processes, systems, and methods of any kind or nature.

"IDX Software" means (i) the Web FrameWork,  (ii) ConnectR,  (iii) OutReach, (v)
CMS, (v) Enterprise Index, and (vi) the standard,  published editions of textual
and graphical works, in whatever form,  intended to instruct users in the use of
the software  products  named in clauses (i) through  (vi) and  published by IDX
from time to time during the IDX Support Term.

"IDX Software  Maintenance"  means  services to correct  errors found in the IDX
Software,  except CMS and OutReach, and delivered during the IDX Support Term as
set forth in this Agreement.

"IDX Software  Updates" means all additions,  corrections,  and modifications to
the IDX Software  provided as part of IDX Software  Maintenance and all standard
new releases,  new versions, and updates to the IDX Software delivered by IDX to
its customers generally as part of the IDX Software during the IDX Support Term.
IDX  Software  Updates  include  New  Enabling  Technologies  only to the extent
necessary  to achieve  compatibility  between  IDX  Products  and  ChannelHealth
Products.

"IDX  Support  Term" means the period  commencing  with the  Effective  Date and
ending on the expiration of the Initial Term of the Marketing Agreement or later
if renewed as set forth in this Agreement.

"Initial  Term"  means a period of five (5) years  commencing  on the  Effective
Date.

"Integration  Method" means any method using any  programmatic  or  computerized
means,  such  as a  program  or data  interface  (including  without  limitation
OutReach and ConnectR),  for  extracting or adding to any databases  included in
any  IDX  Product  or  exchanging  any  data  between  any IDX  Product  and any
ChannelHealth Product.

"License Agreement" means the license agreement by and between ChannelHealth and
IDX  executed  or  intended  to be  executed  concurrently  with  the  Marketing
Agreement and the Administrative Service Agreement.

"Marketing Agreement" means the marketing, development, and support agreement by
and  between  IDX  and  ChannelHealth   executed  or  intended  to  be  executed
concurrently  with  the  License  Agreement  and  the  Administrative   Services
Agreement.

"Merge"  means the  process of merging  all or a portion of existing
software or  documentation  into other  software or  documentation  or adding to
existing   software  or  documentation   so  that  the  resulting   software  or
documentation  contains  functionality  that is substantially  more or different
from  that  of  the  existing  software  or   documentation.   For  purposes  of
illustration,  the IDX  Software  shall be deemed to have been  Merged  into the
ChannelHealth Division Works.
<PAGE>

"New Enabling  Technologies"  means tools and other means for building  products
and integration  methods (similar to the Integration  Methods)  developed by IDX
and  incorporated  by IDX into IDX Software  Updates after the  Effective  Date.
Examples of New Enabling  Technologies that may at IDX's election be embodied in
IDX  Software  Updates  are  the  items  currently  referred  to by IDX as  "IDX
Objects," "IDXml," and "Tabasco."

"OutReach"  means the  product  currently  marketed  by IDX under the  trademark
"OutReach."

"Person" means any  individual,  partnership,  firm,  corporation,  association,
trust, limited liability company, limited liability partnership,  unincorporated
organization  or other  entity,  as well as any syndicate or group that would be
deemed to be a person under Section  13(d)(3) of the Securities  Exchange Act of
1934, as amended.

"Regulatory  Requirements"  means  all  Federal  and state  laws and  regulatory
requirements  applicable to the use by IDX, IDX  Customers,  ChannelHealth,  and
ChannelHealth  Customers of the ChannelHealth  Products from time to time during
the term of this Agreement,  including  without  limitation  those applicable to
billing and claims  submittal,  managed care,  prescriptions,  EDI transactions,
data  transmission,  security and privacy,  and program  requirements  generally
applicable to healthcare organizations, such as those involving accreditation.

"Source  Code"  means  the  human  readable  programming  statements  comprising
software,  together  with  such  available  programmer  notes,   specifications,
schematics,   file  definitions   (including  without  limitation  IDX  Database
Information) and other documentation that would be necessary for a programmer of
ordinary skill to understand, use and Merge the IDX Software.

"Territory"  means (a) the United States and its territories and military bases;
(b) Canada; (c) Mexico;  and (d) any additional  countries (each, an "Additional
Country") included in the Territory as provided in herein.

"Web FrameWork" means the product currently  marketed by IDX under the trademark
"IDX Web FrameWork".


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                                    EXHIBIT H

                   Opinion of Corporate Counsel to the Company