Document:

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                                                                     EXHIBIT 4.2

                                                                  Execution Copy

                             REGISTRATION AGREEMENT

         THIS REGISTRATION AGREEMENT (this "Agreement") is made and entered into
as of September 30, 2003 by and among NDCHealth Corporation, a Delaware
corporation (the "Company"), MRY Partners, L.P., a limited partnership formed
under the laws of the state of Georgia ("MRY"), and Robert A. Yellowlees, an
individual resident of the state of Georgia and general partner of MRY
("Yellowlees").

                                 R E C I T A L S

         WHEREAS, MRY holds shares of the Company's common stock acquired upon
exercise of options issued by the Company to Yellowlees and sold by Yellowlees
to MRY; and

         WHEREAS, MRY holds options to purchase an additional 705,200 shares of
the Company's common stock, which options were issued by the Company to
Yellowlees and transferred by Yellowlees to MRY; and

         WHEREAS, Yellowlees has requested and the Company has agreed to file a
registration statement on Form S-3 to cover the sale of the Shares and the
Option Shares (as defined herein) and Yellowlees and MRY have agreed with the
Company with respect to certain matters in connection therewith, all as provided
in this Agreement;

         NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

         1. DEFINITIONS

         As used in this Agreement, the following terms have the respective
meanings set forth below:

         Commission: shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act;

         Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended;

         Option Shares: shall mean those shares of the Company's common stock
that may be issued upon exercise of all of the options to purchase shares of the
Company's common stock granted to Yellowlees, transferred by him to MRY and
owned by MRY on the date of this Agreement (705,200 shares as of the date of
this Agreement);

         Person: shall mean an individual, partnership, limited liability
company, joint stock company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof;

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         Register, registered and registration: shall mean a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;

         Registrable Securities: shall mean (A) the Shares and the Option
Shares, and (B) any securities of the Company issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares of Company common stock referred to in clause (A); provided, that
Registrable Securities shall not include (i) any Shares, Option Shares or other
securities referred to in clause (B) sold pursuant to an effective registration
statement relating thereto or Rule 144 (as defined below), (ii) any Shares,
Option Shares or other securities referred to in clause (B) eligible for sale
pursuant to subparagraph (k) under Rule 144 (or any successor provision thereto)
under the Securities Act ("Rule 144"), or (iii) such securities as are acquired
by the Company or any of its subsidiaries;

         Registration Expenses: shall mean all expenses incurred by the Company
in compliance with Section 2(a), (b) and (c) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company; and blue sky fees and expenses;

         Security, Securities: shall have the meaning set forth in Section
2(a)(1) of the Securities Act;

         Securities Act: shall mean the Securities Act of 1933, as amended;

         Selling Expenses: shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for MRY; and

         Shares: shall mean the 491,618 shares of the Company's common stock
held by MRY and acquired upon exercise of options issued by the Company to
Yellowlees on June 1, 1993 and June 1, 1994 and transferred by him to MRY.

         2. REGISTRATION

            (a) Shelf Registration.

                (i) Within twenty-five (25) days after the date of this
Agreement, the Company shall file a "shelf" registration statement pursuant to
Rule 415 under the Securities Act (including any documents incorporated or
deemed to be incorporated by reference therein, the "Shelf Registration") with
respect to the Registrable Securities, with a base prospectus containing a plan
of distribution in substantially the form attached hereto as Exhibit A. The
Company shall, subject to Section 2(f) hereof, use its reasonable efforts to
cause the Shelf Registration to become

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effective, and, subject to the terms of this Agreement, shall use its reasonable
efforts to keep the Shelf Registration continuously effective from the date such
Shelf Registration is effective until the earlier of (A) September 30, 2006 and
(B) the date on which all Registrable Securities may first be sold pursuant to
Rule 144(k) under the Securities Act in order to permit the prospectus forming a
part thereof to be usable by MRY during such period. Notwithstanding the
foregoing, the obligations of the Company hereunder shall be suspended at all
times during which the Company is not eligible to effect and maintain the Shelf
Registration on Form S-3 (or any successor form thereto). The Company will
supplement the Shelf Registration as provided in Section 2(a)(ii) and Section
2(c)(iv), but nothing in this Agreement shall otherwise obligate the Company to
amend the Shelf Registration after it becomes effective.

                (ii) Subject to Section 2(f) hereof, the Company shall amend or
supplement the Shelf Registration as promptly as practicable, (A) as required by
the registration form utilized by the Company or by the instructions applicable
to such registration form or by the Securities Act or the rules and regulations
promulgated thereunder and (B) to include in such Shelf Registration any
additional securities that become Registrable Securities by operation of the
definition thereof.

            (b) Expenses of Registration. All Registration Expenses incurred in
connection with the Shelf Registration and any supplements thereto, whether or
not it becomes effective, and whether all, none or some of the Registrable
Securities are sold pursuant to the Shelf Registration shall be borne by the
Company, and all Selling Expenses shall be borne by MRY.

            (c) Registration Procedures. In connection with the Shelf
Registration the Company will keep MRY advised in writing as to the initiation
and effective date thereof. At its expense, the Company will:

                 (i) furnish to MRY, before filing with the Commission, copies
of the Shelf Registration, any registration statement (excluding all exhibits)
that materially amends or supplements the Shelf Registration and any prospectus
forming a part thereof and any amendments and supplements thereto (excluding all
documents incorporated or deemed incorporated by reference therein and including
each preliminary prospectus, any summary prospectus or any term sheet (as such
term is used in Rule 434 under the Securities Act)) and any other prospectus
that materially amends or supplements the Shelf Registration filed under Rule
424 under the Securities Act, which documents will be subject to the review of
MRY for a period of at least five business days, and the Company shall not file
any such registration statement or such prospectus or any amendment or
supplement to such registration statement or prospectus to which MRY shall
reasonably object within five business days after its receipt thereof, and MRY
shall be deemed to have reasonably objected to such filing only if the
registration statement, amendment, prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or omission;

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                 (ii) furnish to MRY such number of conformed copies of the
Shelf Registration, the applicable registration statement that materially amends
or supplements the Shelf Registration and of each amendment and supplement
thereto (in each case excluding all exhibits) and such number of copies of the
prospectus forming a part of the Shelf Registration or such registration
statement (including each preliminary prospectus, any summary prospectus or any
term sheet (as such term is used in Rule 434 under the Securities Act)) and any
other prospectus that materially amends or supplements the Shelf Registration
whether or not filed under Rule 424 under the Securities Act, in conformity with
the requirements of the Securities Act, and such other documents, including such
documents incorporated or deemed to be incorporated by reference prior to the
effectiveness of such registration, all as MRY from time to time may reasonably
request;

                 (iii) use its reasonable efforts (x) to register or qualify all
Registrable Securities under such other securities or blue sky laws of such
States of the United States of America where an exemption is not available and
as MRY shall reasonably request, (y) to keep such registration or qualification
in effect for so long as the Shelf Registration remains in effect, and (z) to
take any other action which may be reasonably necessary or advisable to enable
MRY to consummate the disposition in such jurisdictions of the securities to be
sold by it, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any jurisdiction
where it is not so qualified, or to subject itself to taxation in any such
jurisdiction, or to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder;

                 (iv) subject to Section 2(f) hereof, promptly notify MRY (A)
upon discovery that, or upon the happening of any event or the existence of any
condition or fact as a result of which, the prospectus forming a part of the
Shelf Registration, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (B) of the issuance by the Commission of
any stop order suspending the effectiveness of the Shelf Registration or the
initiation of proceedings for that purpose; (C) of any request by the Commission
for (1) amendments to the Shelf Registration or any document incorporated or
deemed to be incorporated by reference in the Shelf Registration, (2)
supplements to the prospectus forming a part of the Shelf Registration or (3)
additional information; or (D) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose, and at the request of MRY
promptly prepare and furnish to it a reasonable number of copies of a supplement
to or an amendment of the Shelf Registration or such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to

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make the statements therein, in the light of the circumstances under which they
were made, not misleading;

                 (v) use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration, or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction;

                 (vi) if requested by MRY, promptly incorporate in the Shelf
Registration or prospectus, pursuant to an amendment or supplement, such
information relating to MRY or its affiliates as MRY may reasonably request to
have included therein, and make all required filings of any such prospectus
supplement as soon as practicable after the Company is notified of the matters
to be incorporated in such prospectus supplement;

                 (vii) provide promptly to MRY upon request any document filed
by the Company with the Commission pursuant to the requirements of Section 13
and Section 15 of the Exchange Act;

                 (viii) use its reasonable best efforts to cause all Registrable
Securities included in any registration pursuant hereto to be listed on each
securities exchange on which securities of the same class are then listed, or,
if not then listed on any securities exchange, to be eligible for trading in any
over-the-counter market or trading system in which securities of the same class
are then traded; and

                 (ix) furnish to MRY, addressed to MRY and Yellowlees, an
opinion of counsel for the Company, dated the date of effectiveness of the Shelf
Registration, in customary form, to the effect that the registration statement
has become effective under the Securities Act and that the registration
statement and the prospectus (other than the financial statements and the notes
thereto and the related schedules and other financial and statistical data
included or incorporated by reference therein or omitted therefrom, as to all of
which such counsel shall express no opinion), as of their respective effective
or issue dates, complied as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission thereunder.

             (d) Indemnification.

                 (i) The Company will indemnify and hold harmless each of MRY,
each of its partners, including Yellowlees, and each person controlling MRY
within the meaning of the Securities Act or the Exchange Act, with respect to
the Shelf Registration, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained or incorporated by
reference in any registration statement or prospectus relating thereto
(including any preliminary prospectus), or any amendment or supplement thereto,
or based on any omission (or alleged omission) to state therein a

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material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each of MRY, each of its partners,
including Yellowlees, and each such person controlling MRY, as incurred, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by MRY or Yellowlees and stated to be specifically for use therein.

                 (ii) MRY and Yellowlees, jointly and severally, will indemnify
and hold harmless the Company, each of its directors and officers and each
person who controls the Company within the meaning of the Securities Act or the
Exchange Act, with respect to the Shelf Registration, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained or incorporated by reference in any registration statement or
prospectus relating thereto (including any preliminary prospectus), or any
amendment or supplement thereto, or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company and
such directors, officers, partners, members, persons or control persons, as
incurred, for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Company by MRY or
Yellowlees and stated to be specifically for use therein, including, but not
limited to, the information included in the Questionnaire for Selling
Stockholders attached hereto as Exhibit B.

                 (iii) Each party entitled to indemnification under this Section
2(d)(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed) and the Indemnified Party may participate
in such defense at such party's expense (unless the Indemnified Party shall have
concluded, based on the advice of counsel, that there may be a conflict of
interest between the Indemnifying Party and the Indemnified Party in such
action, in which case the fees and expenses of one such counsel for all
Indemnified Parties shall be at the expense of the Indemnifying Party), and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 2(d) unless the Indemnifying Party is materially prejudiced
thereby. Neither the omission to deliver such notice nor any provision of this
Section 2(d) will relieve the Indemnifying Party of any liability that

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it may have to the Indemnified Party otherwise than under this Section 2(d) or
affect any rights that the Indemnifying Party may have with respect to the
Indemnified Party otherwise than under this Section 2(d). No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.

                 (iv) If the indemnification provided for in this Section 2(d)
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party 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 Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

                 (v) The foregoing indemnity agreement of the Company, MRY and
Yellowlees is subject to the condition that, insofar as they relate to any loss,
claim, liability or damage made in a preliminary prospectus but eliminated or
remedied in (A) the amended prospectus on file with the Commission at the time
the registration statement in question becomes effective or (B) a prospectus
subsequently filed with the Commission pursuant to Commission Rule 424(b) (in
either case, the "Final Prospectus"), such indemnity or contribution agreement
shall not inure to the benefit of MRY or Yellowlees if a copy of the Final
Prospectus was furnished to MRY and was not furnished to the person asserting
the loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.

             (e) Information by MRY. MRY and Yellowlees shall promptly furnish
to the Company such information regarding MRY and the distribution proposed by
MRY as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 2, and shall promptly notify the Company of any
change in such information previously provided.

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             (f) Notice of Proposed Sales; Holdback Agreement; Postponement/
Suspension. Notwithstanding any other provision in this Agreement and as a
condition to the Company's maintaining the effectiveness of the Shelf
Registration as provided in this Agreement, at least five (5) business days
prior to selling any of the Registrable Securities pursuant to the Shelf
Registration, MRY shall notify the Company in writing pursuant to Section
4(a)(i)(A) hereof of its expectation to sell Registrable Securities pursuant to
the Shelf Registration in the ninety (90) day period following such notice.
Notwithstanding the provisions of Section 2 hereof, upon the occurrence or
existence of any pending material corporate development or any other material
event that, in the sole judgment of the Company, makes it appropriate to suspend
the registration rights set forth herein, the Company may, by written notice to
MRY, given as provided in Section 4(a), (1) postpone the filing of the Shelf
Registration pursuant to Section 2(a) or (2) suspend the rights of MRY to make
sales pursuant to the Shelf Registration for such a period of time as management
of the Company may determine in good faith, provided that such periods of
postponement and suspension may not exceed sixty (60) days in the aggregate
during any period of 12 consecutive months. MRY and Yellowlees agree, in
consideration for the Company's filing of the Shelf Registration, to maintain
any communication by the Company with respect to the postponement or suspension
of the Shelf Registration pursuant to this Section 2(f) in confidence such that
the Company may rely on the safe harbor provisions of Rule 100(b)(2)(ii) of
Regulation FD with respect to such communications.

             (g) Sales and Transfer of Shares Sold. MRY and Yellowlees agree
that MRY will dispose of Registrable Securities, the sale of which is covered by
the Shelf Registration, only in a manner described under the heading "PLAN OF
DISTRIBUTION" attached hereto as Exhibit A, and otherwise in accordance with all
applicable securities laws, including prospectus delivery requirements; provided
that MRY may sell Registrable Securities under Rule 144 if available. MRY and
Yellowlees represent that they have no current plans to effect the sale of any
Registrable Securities pursuant to the Shelf Registration through short sales of
the Company's securities or sales to cover short sales. Upon the sale of any
Registrable Securities, MRY and Yellowlees agree to deliver, or cause to be
delivered to the Company's transfer agent the certificate representing the
Registrable Securities sold, together with a stock power and a representation
letter from MRY's broker, or from MRY if it is selling in a privately negotiated
transaction, each in the respective forms described in the memorandum to MRY and
Yellowlees attached hereto as Exhibit C.

             (h) Compliance with Rule 144. The Company will use its commercially
reasonable efforts to file with the Commission such information as is required
under the Exchange Act and the Company shall use its commercially reasonable
efforts to take all action as may be required of the Company as a condition to
the availability of Rule 144, including for transfers by MRY of all or any
portion of the Shares or the Option Shares. The Company shall use its
commercially reasonable efforts to facilitate and expedite transfers of the
Shares or the Option Shares pursuant to Rule 144, which efforts shall include
timely notice to its transfer agent to process such transfers promptly.

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         3. INTERPRETATION OF THIS AGREEMENT

             (a) Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.

             (b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.

             (c) Section Headings. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.

         4. MISCELLANEOUS

             (a) Notices.

                 (i) All communications under this Agreement shall be in writing
and shall be delivered by facsimile or by hand or sent by overnight courier or
overnight US mail:

                     (A) if to the Company, to:

                     NDCHealth Corporation
                     NDC Plaza
                     Atlanta, Georgia  30329-2010
                     Attention: Walter M. Hoff
                                Chairman, President and Chief Executive Officer
                     Facsimile: (404) 728-2947

                     and

                     NDCHealth Corporation
                     NDC Plaza
                     Atlanta, Georgia  30329-2010
                     Attention: Margaret T. Wilkinson
                                Vice President, General Counsel and Secretary
                     Facsimile: (404) 728-3180

or at such other addresses and facsimile numbers as it may have furnished in
writing to MRY and Yellowlees;

                 (B) if to MRY, to the street addresses and facsimile numbers
set forth on Exhibit D or at the most recent facsimile number or numbers and
street

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address or addresses as may be furnished to the Company from time to time in
writing by MRY. MRY agrees to notify the Company of any change in such facsimile
number or numbers and street address or addresses;

                 (C) if to Yellowlees, to the street addresses and facsimile
numbers set forth on Exhibit D or at the most recent facsimile number or numbers
and street address or addresses and as may be furnished to the Company from time
to time in writing by Yellowlees.

                 (ii) Any notice so addressed shall be deemed to be given: if
delivered by facsimile, on the date delivery of such facsimile is confirmed; if
delivered by hand, on the date of such delivery; and if sent by overnight
courier, on the following business day.

             (b) Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by any party
hereto by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and such party may destroy any original
document so reproduced. The parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such party in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

             (c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties; provided, however, that neither MRY or Yellowlees may assign this
Agreement (and the benefits thereof) without the prior written consent of the
Company, which consent, in the case of a transfer to an entity controlled by
Yellowlees or primarily for the benefit of Yellowlees, his spouse or lineal
descendants, shall not be unreasonably withheld; provided, further, however,
that, to the extent MRY sells or otherwise transfers any of the Registrable
Securities to Yellowlees, upon prior written notice to the Company, MRY may
assign this Agreement (and the benefits thereof) with respect to any such
Registrable Securities to Yellowlees without the prior consent of the Company.

             (d) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company, MRY and Yellowlees.

             (e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

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             (f) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended and understood that all of the rights and
privileges of each of MRY shall be enforceable to the fullest extent permitted
by law.

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         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

                               NDCHealth Corporation

                               By: /s/ Margaret T. Wilkinson
                                   ---------------------------------------
                                   Margaret T. Wilkinson, Vice President
                                   General Counsel & Secretary

                               MRY Partners, L.P.

                               By: /s/ Robert A. Yellowlees
                                   ---------------------------------------
                                   Robert A. Yellowlees, General Partner

                               /s/ Robert A. Yellowlees
                               -------------------------------------------
                               Robert A. YellowleesDebt Conversion Agreement 7.31.03

DEBT CONVERSION AGREEMENT 

 

This DEBT CONVERSION AGREEMENT ("Agreement"), dated as of July 31, 2003, is hereby entered into by and between B.A.A.M.S., INC., a Nevada corporation, ("Creditor") and SINGLE SOURCE FINANCIAL SERVICES, INC., a New York corporation (the "Company"). 

 

W I T N E S S E T H 

 

WHEREAS, between July 2000 and July 31, 2003, Creditor loaned Single Source Electronic Transactions, Inc., a wholly owned subsidiary of the Company ("SSET"), an amount which, including interest is equal to $1,179,309.87 as of July 31, 2003, pursuant to the terms of a note payable (the "Note"); 

 

WHEREAS, on July 31, 2003, SSET assigned $716,356.58 of this debt to the Company; 

 

WHEREAS, as of July 31, 2003, the Company owes Creditor a total of $716,356.58, including interest; 

 

WHEREAS, a portion of the amount the Company owes under the Note becomes due on October 31, 2003, with the remainder due in April 2004, and can be repaid at any time without penalty; 

 

WHEREAS, the Company wishes to issue 35,700,000 shares of the Company’s common stock ("Shares") to Creditor in order to pay off $535,500 of principal due under the Note, and the Creditor wishes to receive the Shares in lieu of $535,500 of principal due under the Note; and 

 

WHEREAS, the Company and Creditor desire to have the Shares issued to Creditor on the terms and conditions set forth herein; 

 

NOW THEREFORE, in consideration of the promises and respective mutual agreements herein contained, it is agreed by and between the parties hereto as follows: 

 

ARTICLE 1 

PARTIAL PAYMENT UNDER THE NOTE AND ISSUANCE OF THE SHARES 

 

1.1  Issuance of the Shares . Upon the execution of this Agreement as provided in Section 4.1 hereto (the "Closing"), subject to the terms and conditions herein set forth, and on the basis of the representations, warranties and agreements herein contained, Company shall issue to Creditor, and Creditor shall accept from Company, the Shares. 

1.2  Purchase Price . The purchase price ("Purchase Price"), constituting full consideration for sale, transfer and assignment of the Shares shall be the forgiveness and waiver of $535,000 of principal due under the Note, which will be evidenced by Creditor delivering a signed document acknowledging $535,000 of principal due under the Note has been paid (the "Payment Document"). The entire Purchase Price being converted under this Agreement is the repayment of principal due under the Note and not interest that is due under the Note. 

 

	 
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1.3          Instruments of Conveyance and Transfer . Within a reasonable time following the execution of this Agreement, Creditor shall deliver to Company the Payment Document and Company shall deliver a certificate or certificates representing the Shares to Creditor, in form and substance satisfactory to Creditor, as shall be effective to vest in Creditor all right, title and interest in and to all of the Shares, as set forth in Section 3 herein. 

 

ARTICLE 2 

REPRESENTATIONS AND COVENANTS OF COMPANY AND CREDITOR 

2.1 Company hereby represents and warrants that: 

(a)       It shall transfer title, in and to the Shares, to Creditor subject to the restrictions set forth in Paragraph 2.1(b) herein; 

(b)      As defined herein in Section 4.1, Company shall deliver to Creditor certificates representing the Shares subject to a restrictive legend on the certificate(s), which legend shall provide as follows: 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF FOR A PERIOD OF ONE YEAR FROM THE ISSUANCE THEREOF EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS OR (ii) UPON THE EXPRESS WRITTEN AGREEMENT OF THE COMPANY AND COMPLIANCE, TO THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES.) 

 

2.2. Creditor hereby represents and warrants that: 

(a)      The Shares are being purchased by the Creditor and not by any other person, with the Creditor's own funds and not with the funds of any other person, and for the account of the Creditor, not as a nominee or agent and not for the account of any other person. On acceptance of this Agreement by the Company, no other person will have any interest, beneficial or otherwise, in the Shares. The Creditor is not obligated to transfer Shares to any other person nor does the Creditor have any agreement or understanding to do so. The Creditor is purchasing the Shares for investment for an indefinite period not with a view to the sale or distribution of any part or all thereof by public or private sale or other disposition. The Creditor has no intention of selling, granting any participation in, or otherwise distributing or disposing of any Shares. The Creditor does not intend to subdivide the Creditor's purchase of Shares with any person. 

 

	 
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(b)      The Creditor has been advised that the Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), or qualified under the securities law of any state, on the ground, among others, that no distribution or public offering of the Shares is to be effected and the Shares will be issued by the Company in connection with a transaction that does not involve any public offering within the meaning of section 4(2) of the Act under the respective rules and regulations of the Securities and Exchange Commission and any applicable state blue sky authority. The Creditor understands that the Company is relying in part on the Creditor's representations as set forth herein for purposes of claiming such exemptions and that the basis for such exemptions may not be present if, notwithstanding the Creditor's representations, the Creditor has in mind merely acquiring Shares for resale on the occurrence or nonoccurrence of some predetermined event. The Creditor has no such intention. 

(c)        The Creditor, either alone or with the Creditor's professional advisers (i) has such knowledge and experience in financial and business matters that the Creditor is capable of evaluating the merits and risks of an investment in Shares; and (ii) has the capacity to protect the Creditor's own interests in connection with the Creditor's proposed investment in Shares. 

 

(d)   The Creditor acknowledges that the Creditor has been furnished with such financial and other information concerning the Company, the directors and officers of the Company, and the business and proposed business of the Company as the Creditor considers necessary in connection with the Creditor's investment in Shares. The Creditor is thoroughly familiar with the proposed business, operations, properties and financial condition of the Company and has discussed with officers of the Company any questions the Creditor may have had with respect thereto. The Creditor understands: 

(i)   The risks involved in this offering, including the speculative nature of the investment; 

(ii)  The financial hazards involved in this offering, including the risk of losing the Creditor's entire investment; 

 

(iii)  The lack of liquidity and restrictions on transfers of the Shares; and 

(iv)  The tax consequences of this investment. 

 

	 
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The Creditor has consulted with the Creditor's own legal, accounting, tax, investment and other advisers with respect to the tax treatment of an investment by the Creditor in the Shares and the merits and risks of an investment in the Shares. 

 

(e)  Understanding that the investment in Shares is highly speculative, the Creditor is able to bear the economic risk of such investment. 

 

(f)   The Creditor, if not an individual, is empowered and duly authorized to enter into this Agreement under any governing document, partnership agreement, trust instrument, pension plan, charter, certificate of incorporation, bylaw provision or the like; this Agreement constitutes a valid and binding agreement of the Creditor enforceable against the Creditor in accordance with its terms; and the person signing this Agreement on behalf of the Creditor is empowered and duly authorized to do so by the governing document or trust instrument, pension plan, charter, certificate of incorporation, bylaw provision, board of directors or stockholder resolution, or the like. 

 

(g)  The Social Security Number or taxpayer identification shown in this Agreement is correct, and the Creditor is not subject to backup withholding because (i) the Creditor has not been notified that he or she is subject to backup withholding as a result of a failure to report all interest and dividends or (ii) the Internal Revenue Service has notified the Creditor that he or she is not longer subject to backup withholding. 

 

(h)  The Creditor hereby acknowledges and agrees that this Agreement is an offer by the Creditor to purchase the Shares, which offer may be accepted or declined by the Company. The Creditor hereby further acknowledges that this Agreement does not constitute an offer by the Company to sell securities or a solicitation of an offer to buy securities. 

   ARTICLE 3 

SALE OF THE SHARES 

 

3.1      Without in any way limiting the representations and warranties herein, the Creditor further agrees that the Creditor shall in no event pledge, hypothecate, sell, transfer, assign or otherwise dispose of any of the Shares, nor shall the Creditor receive any consideration for the Shares from any person, unless and until prior to any proposed pledge, hypothecation, sale, transfer, assignment or other disposition: 

 

(a)  A registration statement on Form S-1 under the Act (or any other form appropriate for the purpose under the Act or any form replacing such form) with respect to the Shares proposed to be so disposed of shall be then effective and such disposition shall have been appropriately qualified in accordance with applicable state law and any other applicable securities law; or 

 

	 
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(b)  (i) The Creditor shall have furnished the Company with a detailed explanation of the proposed disposition, (ii) the Creditor shall have furnished the Company with an opinion of the Creditor's counsel in form and substance satisfactory to the Company to the effect that such disposition will not require registration of such Shares under the Act or qualification of such Shares under any applicable blue sky law or any other securities law, and (iii) counsel for the Company shall have concurred in such opinion and the Company shall have advised the Creditor of such concurrence. 

 

3.2       Notwithstanding the foregoing, if, in the opinion of counsel for the Company, the Creditor has acted in a manner inconsistent with the representations and warranties in this Agreement, the Company may refuse to transfer the Creditor's Shares until such time as counsel for the Company is of the opinion that such transfer will not require registration of the Shares under the Act or qualification of the Shares under applicable blue sky law or any other securities law. The Creditor understands and agrees that the Company may refuse to acknowledge or permit any disposition of the Shares that is not in all respects in compliance with this Agreement and that the Company intends to make an appropriate notation in its records to that effect. 

 

ARTICLE 4 

CLOSING AND DELIVERY OF DOCUMENTS 

 

4.1  Closing. The Closing shall be deemed to have occurred upon the date of signing of this Agreement. Subsequent to the signing, the following shall occur as a single integrated transaction: 

 

4.2  Delivery by Company. 

 

(a)   Company shall deliver, or cause to be delivered, to Creditor the stock certificates and any and all other instruments of conveyance and transfer required by Section 1.3. 

 

(b)   Company shall deliver, or cause to be delivered, to Creditor such instruments, documents and certificates as are required to be delivered by Company or its representatives pursuant to the provisions of this Agreement. 

 

4.3  Delivery by Creditor. 

(a)  Creditor shall deliver, or cause to be delivered, to Company the Payment Document required by Section 1.2. 

	 
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(b)  The Creditor shall deliver, or cause to be delivered, to Company such instruments, documents and certificates as are required to be delivered by Creditor or its representatives pursuant to the provisions of this Agreement. 

 

ARTICLE 5 

TERMINATION, AMENDMENT AND WAIVER 

 

5.1  Termination. Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to delivery of the Purchase Price solely by the mutual written consent of all of the parties. 

 

5.2  Waiver and Amendment. Any term, provision, covenant, representation, warranty or condition of this Agreement may be waived, but only by a written instrument signed by the party entitled to the benefits thereof. The failure or delay of any party at any time or times to require performance of any provision hereof or to exercise its rights with respect to any provision hereof shall in no manner operate as a waiver of or affect such party's right at a later time to enforce the same. No waiver by any party of any condition, or of the breach of any term, provision, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or waiver of any other condition or of the breach of any other term, provision, covenant, representation or warranty. No modification or amendment of this Agreement shall be valid and binding unless it be in writing and signed by all parties hereto. 

 

ARTICLE 6 

MISCELLANEOUS 

 

6.1  Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof. No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any party hereto which is not embodied in this Agreement or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth. 

 

6.2  Notices . All notices provided for in this Agreement shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier or messenger or sent by registered or certified mail (air mail if overseas), return receipt requested, or by telex, facsimile transmission, telegram or similar means of communication. Notices shall be deemed to have been received on the date of personal delivery, telex, facsimile transmission, telegram or similar means of communication, or if sent by overnight courier or messenger, shall be deemed to have been received on the next delivery day after deposit with the courier or messenger, or if sent by certified or registered mail, return receipt requested, shall be deemed to have been received on the third business day after the date of mailing. Notices shall be sent to the addresses set forth below: 

	 
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If to Company : 

 

SINGLE SOURCE FINANCIAL SERVICES, INC. 

Attn. Arnold Sock 

11242 Playa Court 

Culver City, California 90230 

Fax No.: (310) 390-3406 

 

If to Creditor : 

 

B.A.A.M.S. 

Attn. Sid Rosenblatt 

11242 Playa Court 

Culver City, California 90230 

Fax No.: (310) 390-3406 

 

6.3  Arbitration 5.3Arbitration.         If a dispute or claim shall arise with respect to any of the terms or provisions of this Agreement, or with respect to the performance by either of the parties under this Agreement, then either party may, by notice as herein provided, require that the dispute be submitted under the Commercial Arbitration Rules of Judicial Mediation and Arbitration Services, Inc. to an arbitrator in good standing with Judicial Mediation and Arbitration Services, Inc. within fifteen (15) days after such notice is given. The written decision of the single arbitrator ultimately appointed by or for both parties shall be binding and conclusive on the parties. Judgment may be entered on such written decision by the single arbitrator in any court having jurisdiction and the parties consent to the jurisdiction of the Municipal and Superior Court of Orange County, California for this purpose. Any arbitration undertaken pursuant to the terms of this section shall occur in Orange County, California. 

   

6.4  Choice of Law and Venue.  This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of California including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any party hereto shall be brought within the State of California, County of Los Angeles. 

	 
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6.5  Jurisdiction.       The parties submit to the jurisdiction of the Courts of the State of California or a Federal Court empanelled in the State of California for the resolution of all legal disputes arising under the terms of this Agreement, including, but not limited to, enforcement of any arbitration award. 

 

6.6  Counterparts.       This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 

 

6.7  Attorneys' Fees.       Except as otherwise provided herein, if a dispute should arise between the parties including, but not limited to arbitration, the prevailing party shall be reimbursed by the non-prevailing party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall be a premium for result or for risk of loss under a contingency fee arrangement. 

 

6.8  Taxes.       Any income taxes required to be paid in connection with the payments due hereunder, shall be borne by the party required to make such payment. Any withholding taxes in the nature of a tax on income shall be deducted from payments due, and the party required to withhold such tax shall furnish to the party receiving such payment all documentation necessary to prove the proper amount to withhold of such taxes and to prove payment to the tax authority of such required withholding. 

 

6.9  No Interpretation Against Drafter. This Agreement has been negotiated at arms length between persons sophisticated and knowledgeable in these types of matters. Accordingly, any normal rules of construction that would require a court to resolve matters of ambiguities against the drafting party is hereby waived and shall not apply in interpreting this Agreement. 

 

6.10         Indemnification: The Creditor hereby agrees to indemnify and defend the Company and its directors and officers and hold them harmless from and against any and all liability, damage, cost or expense incurred on account of or arising out of: 

 

(a)  Any breach of or inaccuracy in the Creditor's representations, warranties or agreements herein; 

 

(b)  Any disposition of any Shares contrary to any of the Creditor's representations, warranties or agreements herein; 

 

(c)  Any action, suit or proceeding based on (i) a claim that any of said representations, warranties or agreements were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company or any director or officer of the Company under the Act, or (ii) any disposition of any Shares. 

 

	 
	 	8	 
	

	 

 

6.11  Successors: The representations, warranties and agreements contained in this Agreement shall be binding on the Creditor's successors, assigns, heirs and legal representatives and shall inure to the benefit of the respective successors and assigns of the Company and its directors and officers. 

 

Number of Shares Issued:  35,700,000 

Amount of Note Being Paid Off:  $ 535,500 

 

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

 

	
"Creditor" 
	
"Company" 

	
 
	
 

	
B.A.A.M.S. 
	
SINGLE SOURCE FINANCIAL SERVICES, INC. 

	
 
	
 

	
 
	
 

	
/s/ Martin Becker 
	
/s/ Arnold Sock 

	

	

	
By: Martin Becker 
	
By: Arnold Sock 

	
Its: President 
	
Its: President 

		

	

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