EXHIBIT 4.5
STOCK OPTION AGREEMENT dated as of September 12, 2000 (the
"Agreement") between MEDICAL MANAGER CORPORATION, a Delaware corporation (the
"Company"), and the other party signatory hereto (the "Participant").
WHEREAS, Section 4.4 of the Amended and Restated Employment
Agreement dated as of June 18, 2000 (the "Employment Agreement") by and among
the Company, CareInsite, Inc. ("CareInsite") and the Participant, provides for
the grant to the Participant of a nonqualified stock option to purchase 300,000
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 the consummation of the transactions contemplated by the
Agreement and Plan of Merger dated February 13, 2000 between Medical Manager and
Healtheon/WebMD Corporation, a Delaware corporation ("Healtheon") as amended by
Amendment No. 1 thereto, dated as of June 18, 2000 (collectively the "Medical
Manager Agreement");
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. Confirmation of Grant of Option; 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, a nonqualified stock option (the "Option") to purchase that
number of Common Shares specified at the foot of the signature page
hereof, upon payment of the Option Price specified at the foot of the
signature page hereof. The Option shall be exercisable as hereinafter
provided. In the event that the Effective Time (as defined in the
Medical Manager Agreement) does not occur, the Option shall be null and
void.
2. Certain Restrictions. The Option may not be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of,
except by will or the laws of descent and distribution; provided,
however, that the Committee may, subject to such terms and conditions
as the Committee shall specify, permit the transfer of the Option to
the Participant's family members, to one or more trusts established in
whole or in part for the benefit of one or more of such family members
or to any other entity that is owned by such family members. During the
Participant's lifetime, the Option shall be exercisable only by the
Participant or by the Participant's guardian or legal representative.
Each transferee of the 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, transfer, assign, pledge or otherwise encumber or
dispose of the Option, contrary to the provisions of this Agreement,
and any levy, attachment or similar process upon an 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
Option as of the date of such event.
3. Terms and Conditions of Option. The Option evidenced
hereby is subject to the following terms and conditions:
(a) Vesting. Subject to Section 3(b) of this Agreement,
the Participant's Option shall vest and become exercisable ("Vested
Options") in accordance with the following schedule:
Anniversary of % of Option
Effective Time Exercisable
---------------------------------------
1st 50%
2nd 75%
3rd 100%
(b) Option Period. (i) The Option 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 service as an
Employee is deemed terminated by the Company upon the death of the
Participant, or the Participant becoming Disabled (as defined in
Section 5.2(b) of the Employment Agreement), the Option shall remain
outstanding and continue to vest as set forth above, and shall
otherwise be treated as if the Participant remained employed by the
Company or CareInsite during the Applicable Period (as defined in
Section 5.2(a)(i) of the Employment Agreement), provided, however, that
the continuation of vesting and exercisability of the Option shall
cease on the occurrence of a material breach of the covenants set forth
in Section 6 of the Employment Agreement.
(iii) In the event the Optionee's service as an Employee is
terminated by the Company or any Subsidiary for Cause or by the
Optionee without Good Reason (as such terms are defined in Sections
5.1(b) and 5.5(b), respectively, of the Employment Agreement), (y) the
unvested portion of the Option shall terminate immediately and the
Optionee shall have no right after such termination to exercise such
unvested portion of the Option and (z) the Vested Options shall remain
outstanding and exercisable for 90 days following the Optionee's
termination.
(iv) In the event that the Optionee's service as an
Employee is terminated by the Company without Cause or the Participant
terminates his employment with the Company for Good Reason, the Option
shall become fully vested and exercisable as of the date on which his
employment terminates, and shall remain exercisable by the Participant
until the tenth anniversary of the date of grant, provided, however,
that if the Participant incurs a Good Reason event prior to the first
anniversary of the Effective Time and the Participant resigns his
employment or his employment is terminated for Cause by the Surviving
Corporation (as defined in the preambles to the Employment Agreement)
or CareInsite prior to the first anniversary of the Effective Time, the
Participant shall forfeit the Option and shall be required to disgorge
to the Surviving Corporation any gains realized on the exercise of such
Option (except to the extent that such Option was already vested prior
to the Participant incurring a Good Reason event). Provided, further,
that the continuation of vesting and exercisability of the Option shall
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cease on the occurrence of any material breach of the covenants
contained in Section 6 of the Employment Agreement.
(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 the Vested Options 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 the Option, in cash or
by certified or 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 the 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 Option shall be issued only to the Participant or
a person permitted to exercise the Option pursuant to Section 3(b)(ii).
Each share certificate representing Common Shares purchased upon
exercise of the Option 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 Option 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
Option 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
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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 Option, 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
Option. 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.
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, CareInsite or any of their
subsidiaries or affiliates, or to interfere with or to limit in any way the
right of the Company, CareInsite or any of their 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 Option or in any Common Shares
except to the extent the Option is exercised while vested and exercisable and
otherwise in accordance with the terms of this Agreement. Termination of the
Option 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,
CareInsite or any of their 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
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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 Option in order for the Company to comply with any applicable securities
laws, including, without limitation, Regulation M under the Exchange Act. 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 the
Option, and any other rights under the 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
Option 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 Option 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 Option or in the Option Price shall take
place.
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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 Option 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. 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.: (000) 000-0000, 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 Option as granted hereunder.
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 Option 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
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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.
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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.
MEDICAL MANAGER CORPORATION
By: /s/ Authorized Signatory
--------------------------------
Name:
Title:
PARTICIPANT
/s/ Xxxxxx X. Xxxx
------------------------------------
XXXXXX X. XXXX
Number of Options: 300,000
Option Price: $15 per Common Share
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