1
EXHIBIT 99.5
FORM OF STOCK OPTION AGREEMENT, BETWEEN
SYNETIC, INC. AND PARTICIPANT
2
STOCK OPTION AGREEMENT dated as of [ ], 1999 (the "Agreement")
between SYNETIC, INC., a Delaware corporation (the "Company"), and the other
party signatory hereto (the "Participant").
WHEREAS, Section 4 of the Employment Agreement dated as of May
16, 1999 (the "Employment Agreement") between the Company and the Participant,
provides for the granting to the Participant of nonqualified stock options to
purchase 650,000 shares of common stock, $.01 par value, of the Company (the
"Common Shares") upon the terms and conditions hereinafter set forth and in the
Employment Agreement, subject to stockholder approval and the consummation of
the transactions contemplated by the Agreement and Plan of Merger, dated as of
May 16, 1999 (the "Merger Agreement"), among the Company, Xxxxxx Merger Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company, and
Medical Manager Corporation, a Delaware corporation; and
WHEREAS, the Company intends that such options comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Section 162(m) of the Internal Revenue Code of 1986,
as amended;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. Confirmation of Grant of Options; Effectiveness. Pursuant
to a determination by the Stock Option Committee (the "Committee") of the Board
of Directors of the Company (the "Board"), the Company hereby confirms that the
Participant has been granted, effective as of the date hereof (the "Date of
Grant"), and subject to the terms and conditions of this Agreement and the
Employment Agreement and approval by the Company's stockholders at the special
meeting called for approval of the Merger (as defined in the Merger Agreement),
the number of nonqualified stock options (the "Options") specified at the foot
of the signature page hereof. Each such Option shall entitle the Participant to
purchase, upon payment of the Option Price specified at the foot of the
signature page hereof, one Common Share. The Options shall be exercisable as
hereinafter provided. In the event that the transactions contemplated by the
Merger Agreement are not consummated, the Options shall be null and void.
2. Certain Restrictions. None of the Options may be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of, except
by will or the laws of descent and distribution. During the Participant's
lifetime, an Option shall be exercisable only by the Participant or by the
Participant's guardian or legal representative. Each transferee of an Option by
will or the laws of descent and distribution shall, as a condition to the
transfer thereof, execute an agreement pursuant to which it shall become a party
to this Agreement. Any attempt to sell,
3
2
transfer, assign, pledge or otherwise encumber or dispose of any Option contrary
to the provisions of this Agreement, and any levy, attachment or similar process
upon any Option shall be null and void and without effect, and the Board or the
Committee may, in its discretion, upon the happening of any such event,
terminate the Options as of the date of such event.
3. Terms and Conditions of Options. The Options evidenced
hereby are subject to the following terms and conditions:
(a) Vesting. Subject to Section 3(b), the Participant's
Options shall vest and become exercisable ("Vested Options") in accordance with
the following schedule:
Anniversary of % of Options
Date of Grant Exercisable
------------- -----------
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
(b) Option Period. (i) The Options shall not be exercisable
following the tenth anniversary of the Date of Grant, and shall be subject to
earlier termination as provided below.
(ii) In the event that the Participant's employment with the
Company and its subsidiaries terminates for any reason, the Participant (or the
Participant's estate) shall be entitled to exercise the Options which have
become Vested Options as of the date of termination, for a period of 30 days
following the date of termination; provided, however, that any Options which
become Vested Options as of the date of termination of the Employment Period (as
defined in the Employment Agreement) pursuant to Section 3(b)(iii) shall remain
exercisable on the terms and conditions specified in Section 3(b)(iii). Any
Options which have not become Vested Options as of the date of termination shall
terminate and be cancelled without any consideration being paid therefor.
(iii) In the event that the Employment Period is terminated
(A) as a result of the Participant's death or the Participant becoming Disabled
(as defined in the Employment Agreement), (B) by the Company without Cause (as
defined in the Employment Agreement) or (C) by the Participant for Good Reason
(as defined in the Employment Agreement), the Options shall be fully vested and
exercisable as of the date on which the Employment Period terminates, and shall
remain exercisable in accordance with the terms and conditions of Section 5.2,
5.3 or 5.5 of the Employment Agreement, respectively. In the event that the
Employment Period terminates pursuant to the preceding sentence, the 30-day
period specified in Section 3(b)(ii)
4
3
shall commence at the end of the Applicable Period or the Severance Period (as
defined in the Employment Agreement), as the case may be. Notwithstanding the
foregoing provisions of this Section 3(b)(iii), the Options shall cease to be
exercisable on the occurrence of any circumstance or event that would constitute
Cause, including, without limitation, a breach of the covenants contained in
Section 6 of the Employment Agreement.
(iv) In the event that a Change in Control (as defined in the
Employment Agreement) occurs during the Employment Period, the Options shall be
subject to any applicable terms and conditions of Section 4(b) or 4(c) of the
Employment Agreement.
(v) In the event that, prior to the occurrence of a Change in
Control, (A) a material reduction in the Participant's title or
responsibilities, as set forth in Section 1.2(a) of the Employment Agreement,
occurs, (B) the Participant provides written notice detailing such material
reduction to the Company within 30 days after such material reduction occurs and
(C) such material reduction remains in effect 30 days after such written notice
is provided to the Company, the Options shall become fully vested and
exercisable upon the expiration of the 30- day period described in this clause
(C).
(c) Notice of Exercise. Subject to Sections 3(d), 3(f) and
5(b) hereof, the Participant may exercise any or all of the Vested Options (to
the extent not forfeited) by giving written notice to the Vice President of
Finance of the Company at its principal business office. The date of exercise of
a Vested Option shall be the later of (i) the date on which the Vice President
of Finance of the Company receives such written notice or (ii) the date on which
the conditions provided in Sections 3(d), 3(f) and 5(b) hereof are satisfied.
(d) Payment. Prior to the issuance of a certificate pursuant
to Section 3(g) hereof evidencing Common Shares, the Participant shall have paid
to the Company the Option Price of all Common Shares purchased pursuant to
exercise of such Options, in cash or by certified r official bank check, and all
applicable tax withholding obligations as provided in Section 5(b) of this
Agreement. The Option Price may also be payable by a "cashless" exercise
procedure through a broker and approved by the Committee.
(e) Shareholder Rights. The Participant shall have no rights
as a shareholder with respect to any Common Shares issuable upon the exercise of
an Option until a certificate or certificates evidencing such shares shall have
been issued to the Participant, and no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which the record date
is prior to the date upon which the Participant shall become the holder of
record thereof.
(f) Limitation on Exercise. (i) The Common Shares issued upon
exercise of the Options shall be issued only to the Participant or a person
permitted to exercise the Options pursuant to Section 3(b)(ii). Each share
certificate representing Common Shares purchased upon
5
4
exercise of the Options shall bear a legend stating that the Common Shares
evidenced thereby may not be sold or transferred except in compliance with the
Securities Act of 1933, as amended (the "1933 Act") and the provisions of this
Agreement. The certificate(s) may be made subject to a stop transfer order
placed with the Company's transfer agent.
(ii) The Options shall not be exercisable unless and until (A)
a registration statement under the 1933 Act has been duly filed and declared
effective pertaining to the Common Shares subject to such Options and such
Common Shares shall have been qualified under applicable state "blue sky" laws,
or (B) the Committee in its sole discretion determines that such registration
and qualification is not required as a result of the availability of an
exemption from such registration and qualification under such laws. The Company
shall use all reasonable efforts to file a registration statement with the
Securities and Exchange Commission on Form S-8 with respect to the Common Shares
subject to an Option on or prior to the date on which such Option becomes
exercisable. The Company shall have no obligation to issue any Common Shares
pursuant to the exercise of an Option if the Company reasonably determines at
the time of such exercise that the issuance of Common Shares at such time would
violate applicable law with respect to xxxxxxx xxxxxxx or otherwise, or then
existing policies of the Company applicable to employees of the Company or its
Subsidiaries holding options to purchase Common Shares.
(g) Issuance of Certificate. As soon as practicable following
the exercise of any Options, a certificate evidencing the number of Common
Shares issued in connection with such exercise shall be issued in the name of
the Participant.
4. Representations and Warranties. The Participant is aware of
and familiar with the restrictions imposed on the transfer of any Options. The
Participant represents that this Agreement has been duly executed and delivered
by the Participant and constitutes a legal, valid and binding agreement of the
Participant, enforceable against the Participant in accordance with its terms,
except as limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and by general
principles of equity. It shall be a further condition to the Company's
obligation to issue and deliver to the Participant certificates for Common
Shares upon exercise of an Option that the Participant deliver to the Company in
writing a representation that the Participant is exercising such Option for his
own account and, unless the Common Shares are then registered under the 1933
Act, for investment only and not with a view to distribution and that the
Participant will not make any sale, transfer or other disposition of any Common
Shares purchased except (i) pursuant to the registration thereof under the 1933
Act, (ii) pursuant to an opinion of counsel satisfactory in form and substance
to the Company that the sale, transfer or other disposition may be made without
registration, or (iii) pursuant to a "no-action" letter from the Securities and
Exchange Commission. The Participant has been advised and understands that the
Common Shares must be held indefinitely unless they are registered for resale
under the 1933 Act or an exemption from registration is available.
6
5
5. Miscellaneous.
(a) No Rights to Grants or Continued Employment. Neither this
Agreement nor any action taken or omitted to be taken hereunder or thereunder
shall be deemed to create or confer on the Participant any right to be retained
in the employ of the Company or any of its subsidiaries or affiliates, or to
interfere with or to limit in any way the right of the Company or any of its
subsidiaries or affiliates to terminate the employment of the Participant at any
time. The Participant shall have no rights in the benefits conferred by the
Options or in any Common Shares except to the extent the Options are exercised
while vested and exercisable and otherwise in accordance with the terms of this
Agreement. Termination of the Options by reason of cessation of employment shall
not give rise to any claim for damages by the Participant under this Agreement
or the Employment Agreement and shall be without prejudice to any rights or
remedies which the Company or any of its subsidiaries or affiliates may have
against the Participant.
(b) Tax Withholding. The Company and its subsidiaries shall
have the right to require the Participant to remit to the Company, prior to the
delivery of any certificates evidencing Common Shares pursuant to the exercise
of an Option, any amount sufficient to satisfy any federal, state or local tax
withholding requirements. With the consent of the Company in its sole
discretion, prior to the Company's determination of such withholding liability,
the Participant may make an irrevocable election to satisfy, in whole or in
part, such obligation to remit taxes by directing the Company to withhold Common
Shares that would otherwise be received by the Participant. Such election may be
denied by the Company in its sole discretion, or may be made subject to certain
conditions specified by the Company, including, without limitation, conditions
intended to avoid the imposition of liability against the Participant under
Section 16(b) of the Exchange Act.
(c) No Restriction on Right of Company to Effect Corporate
Changes. This Agreement shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the capital structure or
business of the Company, or any merger or consolidation of the Company, or any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Shares or the rights thereof or which are convertible into or
exchangeable for Common Shares, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of the assets or business of
the Company, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(d) Notice of Exercise. Notwithstanding any other provision of
this Agreement, the Company may, from time to time, require reasonable notice of
the Participant's intent to exercise all or a portion of the Options in order
for the Company to comply with any applicable securities laws, including,
without limitation, Regulation M under the Exchange Act.
7
6
The Company shall not be liable for any adverse change in the market value of
the Common Shares during any such notice period.
6. Adjustment.
(a) The number and price per Common Share covered by any
Option, and any other rights under any Option, shall be appropriately adjusted,
as deemed appropriate by the Board or the Committee, as the case may be (whose
good faith determination shall be absolute and binding on the Participant), to
reflect any subdivision (stock split) or consolidation (reverse split) of the
issued Common Shares, or any other recapitalization of the Company, or any
business combination or other transaction involving the Company, which shall
substantially affect the rights of holders of Common Shares. The Committee or
the Board, as the case may be, shall provide for appropriate adjustment of the
Options in the event of stock dividends or distributions of assets or securities
of other companies owned by the Company to stockholders relating to Common
Shares for which the record date is prior to the date the Common Shares
purchased by exercise of the Options are issued or transferred, except that no
such adjustment shall be made for stock dividends of 10% or less (cumulatively,
in the aggregate) or cash dividends.
(b) In the event of a change in the presently authorized
Common Shares which is limited to a change of all of its presently authorized
Common Shares into the same number of shares without par value, or any change of
all of the then authorized Common Shares with par value into the same number of
shares with a different par value, the shares resulting from any such change
shall be deemed to be Common Shares for purposes hereof, and no change in the
number of Common Shares covered by the Options or in the Option Price shall take
place.
7. Survival; Assignment.
(a) All agreements, representations and warranties made herein
and in any certificates delivered pursuant hereto shall survive the issuance to
the Participant of the Options and the Common Shares and, notwithstanding any
investigation heretofore or hereafter made by the Participant or the Company or
on the Participant's or the Company's behalf, shall continue in full force and
effect. Without the prior written consent of the Company, the Participant may
not assign any of his rights hereunder except by will or the laws of descent and
distribution. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the heirs and permitted successors
and assigns of such party; and all agreements herein by or on behalf of the
Company, or by or on behalf of the Participant, shall bind and inure to the
benefit of the heirs and permitted successors and assigns of such parties
hereto.
(b) The Company shall have the right to assign to any of its
affiliates any of its rights, or to delegate to any of its affiliates any of its
obligations, under this Agreement.
8
7
8. Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or sent by certified
or registered mail, return receipt requested, postage prepaid, addressed, if to
the Participant, to his attention at the most recent mailing address that the
Company has on record and, if to the Company, to it at River Drive Center 2, 000
Xxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000, Telecopier No.: (201) 703-
3401, Attention: Vice President of Finance. All such notices shall be
conclusively deemed to be received and shall be effective, if sent by hand
delivery, upon receipt, or if sent by registered or certified mail, on the fifth
day after the day on which such notice is mailed.
9. Waiver. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
10. Source of Rights. This Agreement and the Employment
Agreement shall be the sole and exclusive source of any and all rights which the
Participant, and the Participant's personal representatives or heirs at law, may
have in respect of the Options as granted hereunder. In the event of any
conflict between the provisions of the Employment Agreement and of this
Agreement, the provisions of the Employment Agreement shall prevail.
11. Captions. The captions contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
12. Interpretation and Construction. The good faith
interpretation and construction by the Board or by the Committee of any
provision of this Agreement or any provision of the Employment Agreement
relating to the Options shall be final and conclusive and binding on the parties
hereto.
13. Entire Agreement; Governing Law. This Agreement and the
Employment Agreement set forth the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same agreement. The headings
of sections and subsections herein are included solely for convenience of
reference and shall not affect the meaning of any of the provisions of this
Agreement. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without reference to the choice of law
provisions of New Jersey law.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Participant has executed this
Agreement, both as of the day and year first above written.
9
8
SYNETIC, INC.
By:_________________________________
Name:
Title:
PARTICIPANT
____________________________________
[NAME]
Number of Options: 650,000
Option Price: [FAIR MARKET VALUE ON DATE OF GRANT]
