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EXHIBIT 99.3
STOCK OPTION AGREEMENT, DATED AS OF MAY 16, 1999,
BETWEEN SYNETIC, INC. AND MEDICAL MANAGER CORPORATION
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STOCK OPTION AGREEMENT
Between
SYNETIC, INC.,
(Grantee)
and
MEDICAL MANAGER CORPORATION,
(Issuer)
Dated as of May 16, 1999
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
between SYNETIC, INC., a Delaware corporation ("Grantee"), and MEDICAL MANAGER
CORPORATION, a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and XXXXXX MERGER SUB, INC., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to
enter into, simultaneously herewith, an Agreement and Plan of Merger (the
"Merger Agreement"; terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for, among other things, the merger
of Merger Sub with and into Issuer; and
WHEREAS, as a condition to the willingness of Grantee to enter into
the Merger Agreement, Grantee has required that Issuer agree, and in order to
induce Grantee to enter into the Merger Agreement, Issuer has agreed, to grant
Grantee an option to purchase up to such number of newly issued or treasury
shares of common stock, par value $0.01 per share, of Issuer ("Issuer Common
Stock") as equals 19.9% of the issued and outstanding shares of Issuer Common
Stock at the first time of exercise of the Stock Option (as defined below), in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. Grant of Stock Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Stock Option") to purchase up to such number of shares of Issuer
Common Stock as equals 19.9% of the issued and outstanding shares of Issuer
Common Stock at the first time of exercise of the Stock Option (the "Option
Shares") at a cash purchase price (the "Purchase Price") per Option Share equal
to the product of (a) the average of the closing prices per share of Synetic
Common Stock during the five trading day period beginning on the first business
day following the date of the announcement of the Merger and (b) the Exchange
Ratio.
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SECTION 1.02. Exercise of Stock Option. (a) Subject to the
conditions set forth in Section 1.03 and to any additional requirements of any
applicable foreign, federal, state or local laws, statutes, ordinances,
regulations, rules, codes, judgments, orders, decrees or other requirement or
rule of law ("Laws"), the Stock Option may be exercised by Grantee, in whole or
in part, if Grantee has not materially breached the Merger Agreement, at any
time or from time to time after the occurrence of an Exercise Event (as defined
below); provided that, except as provided in the last sentence of this Section
1.02(a), the Stock Option shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Time, (ii) 18 months after the
occurrence of an Exercise Event (unless prior thereto the Stock Option shall
have been exercised in full) and (iii) the termination of the Merger Agreement
in circumstances which do not constitute an Exercise Event. Notwithstanding the
termination of the Stock Option, Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Stock Option in
accordance with the terms hereof prior to the termination of the Stock Option.
The termination of the Stock Option shall not affect any rights hereunder which
by their terms extend beyond the date of such termination. The periods related
to the exercise of the Stock Option and the other rights of Grantee hereunder
shall be extended only (i) to the extent necessary to obtain all regulatory
approvals required for the exercise of such rights, and for the expiration of
all statutory waiting periods, and (ii) to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act by reason of such exercise.
Notwithstanding anything to the contrary contained in this Section 1.02, a
portion of the Stock Option may be exercised pursuant to Section 1.02(c) hereof
and a portion may be exercised pursuant to Section 1.02(d) hereof at the Closing
(as defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement
upon the occurrence of any event as a result of which Grantee is entitled to
receive the Medical Manager Alternative Transaction Fee pursuant to Section
8.05(b) of the Merger Agreement.
(c) In the event Grantee wishes to exercise the Stock Option,
Grantee shall send a written notice (a "Stock Exercise Notice") to Issuer
specifying the total number of Option Shares Grantee wishes to purchase, the
denominations of the certificate or certificates evidencing such Option Shares
that Grantee wishes to receive, a date (subject to the earlier satisfaction or
waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which
shall be a business day (as such term is used in the Merger Agreement) which is
not earlier than the fifth business day after delivery of such notice, and place
for the closing of such purchase in, Miami, Florida (a "Closing").
(d) If at any time the Stock Option is then exercisable pursuant to
the terms of Section 1.02(a) hereof, Grantee may elect, in lieu of exercising
the Stock Option to purchase Option Shares as provided in Section 1.02(a)
hereof, to send a written notice to Issuer (a "Cash Exercise Notice") specifying
a date not earlier than the fifth business day after delivery of such notice, on
which date Issuer shall pay to Grantee an amount in cash equal to the Spread (as
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defined below) multiplied by such number of Option Shares as Grantee shall
specify in the Cash Exercise Notice. As used in this Agreement, "Spread" shall
mean the excess, if any, over the Purchase Price of the higher of (x) if
applicable, the highest price per share of Issuer Common Stock paid or to be
paid by any person in a Competing Transaction (the "Competing Purchase Price")
and (y) the closing price of the shares of Issuer Common Stock on the National
Association of Securities Dealers Automated Quotation System/NMS ("NASDAQ") on
the last trading day immediately prior to the date of the Cash Exercise Notice
(for purposes of this Section 1.02) or the Repurchase Notice (for purposes of
Section 6.01) (the "Closing Price"). If the Competing Purchase Price includes
any property other than cash, the Competing Purchase Price shall be the sum of
(i) the fixed cash amount, if any, included in the Competing Purchase Price plus
(ii) the fair market value of such other property. If such other property
consists of securities with an existing public trading market, the average of
the closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) for such securities in their principal public
trading market on the five trading days ending five days prior to the date of
the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase
Notice (for purposes of Section 6.01) shall be deemed to equal the fair market
value of such property. If such other property consists of something other than
cash or securities with an existing public trading market and, as of the payment
date for the Spread, agreement on the value of such other property has not been
reached, the Competing Purchase Price shall be deemed to be the amount of any
cash included in the Competing Purchase Price plus the fair market value of such
other property (as determined by a nationally recognized investment banking firm
jointly selected by Grantee and Issuer). For this purpose, the parties shall use
their reasonable commercial efforts to cause any determination of the fair
market value of such other property to be made within three business days after
the date of delivery of the Cash Exercise Notice (for purposes of this Section
1.02) or the Repurchase Notice (for purposes of Section 6.01). Upon exercise of
its right to receive the Spread pursuant to this Section 1.02(e), the
obligations of Issuer to deliver Option Shares pursuant to Section 1.03 shall be
terminated with respect to such number of Option Shares subject to the Cash
Exercise Notice.
SECTION 1.03. Conditions to Closing. The obligation of Issuer to
deliver Option Shares or pay the Spread, as applicable, upon any exercise of the
Stock Option is subject to the conditions that:
(a) all waiting periods, if any, under the HSR Act applicable to the
issuance of Option Shares hereunder shall have expired or have been
terminated, and all consents, approvals, orders or authorizations of, or
registrations, declarations or filings, with any governmental body,
agency, official or authority, if any, required in connection with the
issuance of Option Shares hereunder, the failure of which to have obtained
or made would have the effect of making the issuance of Option Shares
hereunder illegal, shall have been obtained or made, as the case may be;
and
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(b) there shall be no preliminary or permanent injunction or other
final, non-appealable judgment by a court of competent jurisdiction
preventing or prohibiting such exercise of the Stock Option, the delivery
of the Option Shares or payment of the Spread in respect of such exercise.
SECTION 1.04. Closings. At each Closing, (i) in the event of a
Closing pursuant to Section 1.02(c), Issuer shall deliver to Grantee a
certificate or certificates evidencing the applicable number of Option Shares
(in the denominations specified in the Stock Exercise Notice), and Grantee shall
purchase each such Option Share from Issuer at the Purchase Price, or (ii) in
the event of a Closing pursuant to Section 1.02(d), Issuer shall deliver to
Grantee cash in an amount determined pursuant to Section 1.02(d). All payments
made pursuant to this Agreement shall be made by wire transfer of immediately
available funds to an account designated in writing by Grantee to Issuer. Upon
delivery by Grantee to Issuer of the Stock Exercise Notice and the tender of the
applicable cash as described above in this Section 1.04, Grantee shall be deemed
to be the holder of record of the shares of Issuer Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then be actually delivered to Grantee or that Issuer shall have
failed to designate the bank account described above in this Section 1.04.
Certificates evidencing Option Shares delivered hereunder may, at Issuer's
election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR AN EXEMPTION
THEREFROM.
Issuer shall, upon the written request of the holder thereof, issue such holder
a new certificate evidencing such Option Shares without such legend in the event
(x) such Option Shares have been registered pursuant to the Securities Act, (y)
such Option Shares have been sold in reliance on and in accordance with Rule 144
under the Securities Act or (z) such holder shall have delivered to Issuer an
opinion of counsel, which opinion shall, in Issuer's reasonable judgment, be
satisfactory in form and substance to Issuer, to the effect that subsequent
transfers of such Option Shares may be effected without registration under the
Securities Act.
SECTION 1.05. Adjustments upon Share Issuances, Changes in
Capitalization, Etc. (a) In the event of any change in Issuer Common Stock or in
the number of outstanding shares of Issuer Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or similar
transaction or any other extraordinary change in the corporate or capital
structure of Issuer (including, without limitation, the declaration or
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payment of an extraordinary dividend of cash, securities or other property), the
type and number of shares or securities to be issued by Issuer upon exercise of
the Stock Option shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if Grantee had exercised the Stock Option immediately prior to such
event or the record date therefor, as applicable, and had elected (to the
fullest extent it would have been permitted to elect) to receive such
securities, cash or other property.
(b) In the event that Issuer shall enter into an agreement (other
than the Merger Agreement) (i) to consolidate with or merge into any person,
other than Merger Sub or any other subsidiary of Grantee, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Merger Sub or any other subsidiary of Grantee, to
merge into Issuer and Issuer shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of Issuer
Common Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or then outstanding
shares of Issuer Common Stock shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the surviving corporation or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any person, other than Grantee or any of its subsidiaries, then, and in each
such case, proper provision shall be made in the agreements governing such
transaction so that Grantee shall receive upon exercise of the Stock Option the
number and class of shares or other securities or property that Grantee would
have received in respect of Issuer Common Stock if Grantee had exercised the
Stock Option immediately prior to such transaction or the record date therefor,
as applicable, and had elected (to the fullest extent it would have been
permitted to elect) to receive such securities, cash or other property.
(c) The provisions of this Agreement, including, without limitation,
Sections 1.01, 1.02, 1.04, 3.01 and 3.02, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ISSUER
Issuer hereby represents and warrants to Grantee as follows:
SECTION 2.01. Authority Relative to This Agreement. Issuer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by Issuer
of this Agreement and the
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consummation by Issuer of the transactions contemplated hereby are within
Issuer's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by Issuer and, assuming the due authorization, execution and delivery
by Grantee, constitutes a valid and binding agreement of Issuer enforceable
against Issuer in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
SECTION 2.02. Authority to Issue Shares. Issuer has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof until its obligation to deliver shares of
Issuer Common Stock upon the exercise of the Stock Option terminates, shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and Issuer
shall take all necessary corporate action to authorize and reserve and permit it
to issue all additional shares of Issuer Common Stock or other securities which
may be issued pursuant to Section 1.05, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
SECTION 2.03. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Issuer of this Agreement and the
consummation by Issuer of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (insofar as such action or filing relates to Issuer) other than (i)
compliance with any applicable requirements of the HSR Act, (ii) compliance with
any applicable requirements of the Exchange Act and (iii) such other consents,
approvals and filings which, if not obtained or made, would not, individually or
in the aggregate, have a material adverse effect on Issuer or materially impair
the ability of Issuer to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Issuer of this
Agreement and the consummation by Issuer of the transactions contemplated hereby
do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Issuer or
any Issuer subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 2.03(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Issuer or any Issuer subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Issuer
or any Issuer subsidiary or to a loss of any benefit to which Issuer or any
Issuer subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Issuer or any Issuer subsidiary or any license,
franchise, permit or
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other similar authorization held by Issuer or any Issuer subsidiary or (iv)
result in the creation or imposition of any lien, claim, charge or encumbrance
on any asset of Issuer or any Issuer subsidiary other than, in the case of each
of (ii) and (iii), any such items that, individually or in the aggregate, would
not have a material adverse effect on Issuer or materially impair the ability of
Issuer to consummate the transactions contemplated by this Agreement.
SECTION 2.04. Board Action. The Board of Directors of Issuer has
taken all action necessary to ensure that the restrictions on business
combinations contained in Section 203 of the Delaware Law will not apply to, or
as a result of, the purchase by Grantee pursuant to this Agreement of shares of
Issuer Common Stock. To the knowledge of Issuer, no other state takeover statute
is applicable to, or as a result of, the purchase by Grantee pursuant to this
Agreement of shares of Issuer Common Stock.
ARTICLE III
COVENANTS OF ISSUER
SECTION 3.01. Listing; Other Action. (a) Issuer shall, at its
expense, use its reasonable best efforts to cause the Option Shares to be
approved for listing on NASDAQ, subject to notice of issuance, as promptly as
practicable following an Exercise Event, and shall provide prompt notice to
NASDAQ of the issuance of each Option Share, except to the extent the delivery
of the Option Shares can be satisfied with shares of Issuer Common Stock held in
treasury by Issuer.
(b) Issuer shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereunder, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Authorities. Without limiting the generality of the foregoing, Issuer shall,
when required in order to effect the transactions contemplated hereunder, make
all necessary filings, and thereafter make any other required or appropriate
submissions, under the HSR Act and shall supply as promptly as practicable to
the appropriate Governmental Authority any additional information and
documentary material that may be requested pursuant to the HSR Act.
SECTION 3.02. Registration. (a) In the event that Grantee shall
desire to sell any of the Option Shares within two years after the purchase of
such Option Shares pursuant hereto, and such sale requires, in the opinion of
counsel to Grantee (which opinion shall be, in the reasonable judgment of Issuer
and its counsel, satisfactory in form and substance to Issuer and its counsel)
registration of such Option Shares under the Securities Act, Issuer shall
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cooperate with Grantee and any underwriters in registering such Option Shares
for resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and state
securities laws and entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided,
however, that Issuer shall not be required to have declared effective more than
one registration statement hereunder and shall be entitled to delay the filing
or effectiveness of any registration statement for up to 90 days if the offering
would, in the judgment of the Board of Directors of Issuer, require premature
disclosure of any material corporate development or otherwise interfere with or
adversely affect any pending or proposed offering of securities of Issuer or any
other material transaction involving Issuer. Grantee agrees to use all
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee shall acquire beneficially more
than 5% of the then outstanding voting power of Issuer.
(b) If Issuer at any time after the exercise of the Stock Option
proposes to register any shares of Issuer Common Stock under the Securities Act
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Grantee of its intention to do so
and, upon the written request of Grantee given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Grantee), Issuer will cause all such shares for which Grantee requests
participation in such registration, to be so registered and included in such
underwritten public offering; provided, however, that Issuer may elect not to
cause any such shares to be so registered (i) if the underwriters in good faith
object for valid business reasons or (ii) in the case of a registration solely
to implement an employee benefit plan or a registration statement filed on Form
S-4 of the Securities Act (or any successor form thereto); provided further that
Issuer may make an election pursuant to clause (i) not more than two times.
(c) If the Issuer Common Stock is registered pursuant to the
provisions of this Section 3.02, Issuer agrees (i) to furnish copies of the
registration statement and prospectus relating to the Option Shares covered
thereby in such numbers as Grantee may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Issuer Common Stock meeting the requirements of such securities laws, and to
furnish Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. Issuer
shall bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and
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accountants for Issuer, except that Grantee shall pay the fees and disbursements
of its counsel and the underwriting fees and selling commissions applicable to
the shares of Issuer Common Stock sold by Grantee. Issuer shall indemnify and
hold harmless Grantee, its affiliates and its officers and directors from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable attorney's fees) arising out of or
based upon any statements contained in, omissions or alleged omissions from,
each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by Grantee, its affiliates and its officers and other
representatives expressly for use in any registration statement (or any
amendment thereto) or any preliminary prospectus filed pursuant to this Section
3.02. Issuer shall also indemnify and hold harmless each underwriter and each
person who controls any underwriter within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable attorney's fees) arising
out of or based upon any statements contained in, omissions or alleged omissions
from, each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by the underwriters expressly for use in any registration
statement (or any amendment thereto) or any preliminary prospectus filed
pursuant to this Section 3.02.
SECTION 3.03. Profit Limitation. (a) Within 15 days of the receipt
of cash proceeds by Grantee from the disposition of the Stock Option, or in
payment of the Spread pursuant to Section 1.02(d) hereof, or from the sale of
Option Shares (or any other securities into which such shares are converted or
exchanged), including any repurchase of such shares pursuant to Section 6.01,
that results in Total Profit (as defined below) exceeding the Maximum Total
Profit Amount (as defined below), Grantee shall remit an amount in cash to the
Issuer so that Grantee's Total Profit shall no longer exceed the Maximum Total
Profit Amount; provided, however, that nothing in this Agreement shall affect
the ability of Grantee to receive, nor relieve Issuer of its obligation to pay,
any payment provided for in Section 8.05 of the Merger Agreement. If Total
Profit received by Grantee exceeds the Maximum Total Profit Amount following
receipt of such a payment pursuant to Section 8.05 of the Merger Agreement,
Grantee shall be obligated to remit an amount in cash to the Issuer so that
Grantee's Total Profit shall no longer exceed the Maximum Total Profit Amount,
such remittance to be made within 15 days of the latest of (i) the date of
receipt of such payment, (ii) the date of receipt of the cash proceeds by
Grantee from the sale of Option Shares (or securities into which such Option
Shares are converted or exchanged) and (iii) the date of receipt of the cash
proceeds from disposition of the Option.
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(b) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of any excess of (i) the sum of (A) the aggregate net cash
proceeds received by Grantee pursuant to Issuer's repurchase of Option Shares
pursuant to Section 6.01 hereof, plus (B) the aggregate net cash proceeds
received by Grantee pursuant to Section 1.02(d) hereof, plus (C) the aggregate
net cash proceeds received by Grantee pursuant to the sale of Option Shares (or
any other securities into which such shares are converted or exchanged) to any
unaffiliated party, over (ii) the sum of (A) Grantee's aggregate purchase price
for all Option Shares purchased by Grantee plus (B) the aggregate cash amount
remitted to the Issuer by Grantee pursuant to Section 3.03(a).
(c) As used herein, the term "Maximum Total Profit Amount" shall
mean $54,896,000 minus the aggregate amount actually received by the Grantee in
payment of the Medical Manager Alternative Transaction Fee pursuant to Section
8.05 of the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GRANTEE
Grantee hereby represents and warrants to Issuer as follows:
SECTION 4.01. Authority Relative to This Agreement. Grantee is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by
Grantee of this Agreement and the consummation by Grantee of the transactions
contemplated hereby are within Grantee's corporate powers and have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by Grantee and, assuming the due authorization,
execution and delivery by Issuer, constitutes a valid and binding agreement of
Grantee enforceable against Issuer in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 4.02. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Grantee of this Agreement and the
consummation by Grantee of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority (insofar as such action or filing relates to Grantee)
other than (i) compliance with any applicable requirements of the XXX Xxx,
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(xx) compliance with any applicable requirements of the Exchange Act, (iii)
approvals and authorizations of self-regulatory and governmental organizations
in the securities and commodities field and (iv) such other consents, approvals
and filings which, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on Grantee or materially impair the
ability of Grantee to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Grantee of this
Agreement and the consummation by Grantee of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Grantee or
any Grantee subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 4.02(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Grantee or any Grantee subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Grantee
or any Grantee subsidiary or to a loss of any benefit to which Grantee or any
Grantee subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Grantee or any Grantee subsidiary or any license,
franchise, permit or other similar authorization held by Grantee or any Grantee
subsidiary or (iv) result in the creation or imposition of any lien, claim,
charge or encumbrance on any asset of Grantee or any Grantee subsidiary other
than, in the case of each of (ii) and (iii), any such items that, individually
or in the aggregate, would not have a material adverse effect on Grantee or
materially impair the ability of Grantee to consummate the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF GRANTEE
Grantee hereby covenants and agrees as follows:
SECTION 5.01. Distribution. Grantee shall acquire the Option Shares
for investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act and
applicable state securities and Blue Sky Laws.
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ARTICLE VI
REPURCHASE ELECTION
SECTION 6.01. Repurchase Election. (a) Grantee shall have the
option, at any time and from time to time commencing upon the first occurrence
of an Exercise Event in which the consideration to be received by Issuer or its
stockholders, as the case may be, pursuant to a Competing Transaction consists
in whole or in part of shares of capital stock of a third party and ending on
the tenth business day after the first mailing to Issuer's stockholders of a
proxy statement, tender offer statement or other disclosure or offering document
relating to such Competing Transaction, to send a written notice to Issuer (a
"Repurchase Notice") that it will require Issuer (or any successor entity
thereof) to pay to Grantee the Repurchase Fee (as defined below) as provided in
Section 6.01(b) below, upon delivery by Grantee of the shares of Issuer Common
Stock acquired hereunder with respect to which Grantee then has beneficial
ownership. The date on which Grantee delivers the Repurchase Notice under this
Section 6.01 is referred to as the "Repurchase Request Date". The "Repurchase
Fee" shall be equal to the sum of the following:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Stock Option with respect to
which Grantee then has beneficial ownership; and
(ii) subject to the maximum amounts specified in Section 3.03, the
Spread, multiplied by the number of shares of Issuer Common Stock with
respect to which the Stock Option has been exercised and with respect to
which Grantee then has beneficial ownership.
(b) If Grantee exercises its rights under this Section 6.01, within
five business days after the Repurchase Request Date, (i) Issuer shall pay by
wire transfer to Grantee the Repurchase Fee in immediately available funds to an
account designated in writing by Grantee to Issuer, and (ii) Grantee shall
surrender to Issuer certificates evidencing the shares of Issuer Common Stock
acquired hereunder with respect to which Grantee then has beneficial ownership,
and Grantee shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever.
(c) Issuer shall use best efforts to ensure that it can fully
perform all of its obligations under this Section 6.01 under applicable Law.
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(d) If and to the extent that Issuer is unable to perform any of its
obligations under this Section 6.01 under applicable Law, Issuer shall make no
distribution on any of its stock until such time as it has fully performed any
such obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment; No Waiver. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Issuer and Grantee or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 7.02. Fees and Expenses. Except as otherwise provided herein
or in Section 8.05 of the Merger Agreement, all costs and expenses (including,
without limitation, all fees and disbursements of counsel, accountants,
investment bankers, experts and consultants to a party) incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
SECTION 7.03. 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 made or given upon receipt) by delivery
in person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at their
addresses as specified in Section 9.02 of the Merger Agreement.
SECTION 7.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement 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 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 a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
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SECTION 7.05. Assignment; Binding Effect; Benefit. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights, interests or
obligations under this Agreement without the prior written consent of the other
parties hereto.
SECTION 7.06. 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, that the parties hereto would
not have an adequate remedy at law for money damages in such event and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
SECTION 7.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
SECTION 7.08. Consent to Jurisdiction. (a) Synetic and Medical
Manager hereby irrevocably submits to the exclusive jurisdiction of the courts
of the State of Delaware and to the jurisdiction of the United States District
Court for the State of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and Synetic and Medical Manager
hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Delaware state or
federal court. Synetic and Medical Manager agree that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Synetic and Medical Manager irrevocably consent to the service
of the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such party. Nothing in this Section 7.08 shall affect the right of any party
to serve legal process in any other manner permitted by law.
SECTION 7.09. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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SECTION 7.11. Waiver of Jury Trial. Each of the parties hereto
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the parties hereto in the
negotiation, administration, performance and enforcement thereof.
SECTION 7.12. Entire Agreement. This Agreement and, to the extent
referred to herein, the Merger Agreement, constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect thereto; provided, however, that any capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by both parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
ISSUER:
MEDICAL MANAGER CORPORATION, a
Delaware corporation
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
By: Xxxxxxx X. Xxxxxx
Its: CEO
GRANTEE:
SYNETIC, INC., a Delaware corporation
/s/ Xxxxx X. Love
---------------------------------
By: Xxxxx X. Love
Its: EVP
