<PAGE> 1
SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
MEDICAL MANAGER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
MEDICAL MANAGER CORPORATION
3001 NORTH ROCKY POINT DRIVE, SUITE 100
TAMPA, FLORIDA 33607
-----------------------------
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
-----------------------------
TO THE STOCKHOLDERS OF MEDICAL MANAGER CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Medical Manager Corporation, a Delaware corporation (the "Company"), will be
held on July 29, 1997 at 10:00 A.M., Eastern Daylight Savings Time, at the
Company's Alachua, Florida offices located at 15151 N.W. 99th Street, Alachua,
Florida 32618, for the following purposes, all of which are set forth more
completely in the accompanying proxy statement:
(1) To re-elect John H. Kang and elect Frederick B. Karl, Jr. to serve on
the Company's Board of Directors until the 2000 Annual Meeting of
Stockholders or until the election and qualification of their
respective successors;
(2) To ratify the selection of Coopers & Lybrand LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997; and
(3) To transact such other business as may properly come before the
meeting.
Pursuant to the Company's By-laws, the Board of Directors has fixed the
close of business on June 23, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting.
A FORM OF PROXY AND THE ANNUAL REPORT OF THE COMPANY FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996 ARE ENCLOSED. IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE
ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Frederick B. Karl, Jr.
Vice President, General Counsel and
Secretary
Tampa, Florida
June 27, 1997
<PAGE> 3
MEDICAL MANAGER CORPORATION
3001 NORTH ROCKY POINT DRIVE, SUITE 100
TAMPA, FLORIDA 33607
---------------------
PROXY STATEMENT
---------------------
The enclosed proxy is solicited by the Board of Directors (the "Board") of
Medical Manager Corporation, a Delaware corporation (the "Company"), for use at
the Company's 1997 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on July 29, 1997 at 10:00 A.M. Eastern Daylight Savings Time, at the
Company's Alachua, Florida offices located at 15151 N.W. 99th Street, Alachua,
Florida 32615. The approximate date on which this proxy statement and the
enclosed form of proxy will be sent to stockholders will be June 27, 1997. The
form of proxy provides a space for you to indicate your vote for each proposal.
You are urged to indicate your vote on each matter in the space provided. If
signed but no space is marked, the proxy will be voted by the persons therein
named for each of the following purposes: (i) the re-election of John H. Kang
and election of Frederick B. Karl, Jr. to serve on the Company's Board of
Directors until the 2000 Annual Meeting of Stockholders or until their
successors are elected and qualified, (ii) the ratification of the selection of
Coopers & Lybrand LLP as the Company's independent auditors for the fiscal year
ending December 31, 1997; and (iii) in their discretion, upon such other
business as may properly come before the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE FILL IN, SIGN
AND RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
The cost of the Board's proxy solicitation will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies personally and by telephone and facsimile, all
without extra compensation.
At the close of business on June 23, 1997 (the "Record Date"), the Company
had outstanding 18,713,408 shares of $.01 par value common stock ("Common
Stock"). Each share of Common Stock entitles the holder thereof on the Record
Date to one vote on each matter submitted to a vote of stockholders at the
Annual Meeting. Only stockholders of record at the close of business on the
Record Date are entitled to notice of and to vote at the Annual Meeting. In the
event that there are not sufficient votes for approval of any of the matters to
be voted upon at the Annual Meeting, the Annual Meeting may be adjourned in
order to permit further solicitation of proxies. The quorum necessary to conduct
business at the Annual Meeting consists of a majority of the outstanding shares
of Common Stock.
Shares represented by proxies which are marked "abstain" or which are
marked to deny discretionary authority will only be counted for determining the
presence of a quorum. Votes withheld in connection with the election of one or
more of the nominees for Director will not be counted as votes cast for such
individuals. In addition, where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those shares will not
be included in the vote totals.
A list of the stockholders entitled to vote at the Annual Meeting will be
available at the Company's principal executive office located at 3001 North
Rocky Point Drive, Suite 100, Tampa, Florida 33607, for a period of ten (10)
days prior to the Annual Meeting for examination by any stockholder.
Officers and directors of the Company beneficially own approximately 49.6%
of the outstanding shares of Common Stock. See "Security Ownership of Certain
Beneficial Owners and Management."
A STOCKHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM OF PROXY HAS THE
POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE
TO THE SECRETARY OF THE COMPANY, BY EXECUTING A LATER-DATED PROXY OR BY
ATTENDING THE MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS WITHHELD,
PROXIES WHICH ARE PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET FORTH
THEREON.
<PAGE> 4
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of the Record Date,
concerning each of the Company's current directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION TERM EXPIRES
- ------------------------------------- --------- ------------------------------------ --------------
<S> <C> <C> <C>
Michael A. Singer.................... 50 Chairman of the Board; Chief 1999
Executive Officer
John H. Kang......................... 34 President; Director 1997
Richard W. Mehrlich.................. 49 Executive Vice President -- Sales 1998
and Marketing; Director
Lee A. Robbins....................... 55 Vice President and Chief Financial Not Applicable
Officer
John P. Sessions..................... 55 Vice President and Chief Operating Not Applicable
Officer
Frederick B. Karl, Jr................ 42 Vice President, General Counsel and 1997
Secretary; Director
Courtney F. Jones.................... 57 Director 1999
Raymond Kurzweil..................... 49 Director 1998
Chris A. Peifer...................... 49 Director 1998
</TABLE>
Michael A. Singer has been Chairman of the Board and Chief Executive
Officer of the Company since the consummation of the Company's initial public
offering (the "Offering") in February 1997. Mr. Singer is the founder of Medical
Manager Research & Development, Inc., formerly known as Personalized
Programming, Inc. ("MM Research & Development"), one of the five businesses
which became separate wholly-owned subsidiaries of the Company simultaneously
with the closing of the Offering (the "Founding Companies"), and the principal
inventor of The Medical Manager software program. From MM Research &
Development's inception in 1981, Mr. Singer has been a director and its
President and Chief Executive Officer. Mr. Singer received a B.A. in Business
Administration from the University of Florida in 1969, and a Masters degree in
Economics from the University of Florida in 1971.
John H. Kang has been President and a director of the Company since July
1996. He is the founder of Medical Manager Southeast, Inc., formerly known as
National Medical Systems, Inc. ("MM Southeast") and has served as its President
since its inception in 1994. In 1987, Mr. Kang founded J. Holdsworth Capital,
Ltd., a private investment firm, and is currently its President. He has been a
director of Amorphous Technologies International, a company engaged in the
research and development and manufacture of metal alloy, since May 1995. Mr.
Kang also has been a director of Nutcracker Snacks, Inc., a manufacturer of
snack foods, since December 1988. From June 1988 until September 1996, Mr. Kang
was the Chairman and a director of Clayton Group, Inc., a distributor of
waterworks materials. Mr. Kang received an A.B. in Economics from Harvard
College in 1985.
Richard W. Mehrlich has been Executive Vice President -- Sales and
Marketing and a director of the Company since the consummation of the Offering.
Mr. Mehrlich is the founder and a director of Medical Manager Sales & Marketing,
Inc., formerly known as Systems Plus, Inc. ("MM Sales & Marketing"), and has
been President and Chief Executive Officer of MM Sales & Marketing since its
inception in 1980. Mr. Mehrlich's previous sales and marketing experience
includes serving as Director of Marketing for Dynabyte Corporation, a
microcomputer hardware manufacturer, and as a regional sales representative for
Texas Instruments, Component Sales Division. Mr. Mehrlich received a degree in
Electrical Engineering from the Milwaukee School of Engineering in 1970.
Lee A. Robbins has been Vice President of the Company since November 1996
and Chief Financial Officer since the consummation of the Offering. From July
1995 through November 1996, Mr. Robbins served as Vice President and Chief
Financial Officer of American Ophthalmic Incorporated, a physician practice
2
<PAGE> 5
management company. From 1985 to June 1995, he was Vice President and Chief
Financial Officer of Puritan-Bennett Corporation, a respiratory equipment
company. Before entering the health care management industry in 1985, Mr.
Robbins held a number of financial positions with Armco Inc., a Fortune 500
company based in Middletown, Ohio. Mr. Robbins received a B.S. in Accounting
from the University of Cincinnati and an M.B.A. from Xavier University.
John P. Sessions has been Vice President and Chief Operating Officer of the
Company since April 1997. Prior to joining the Company, Mr. Sessions was
employed as Executive Vice President and Chief Operating Officer of Companion
Technologies, Inc., a subsidiary of Blue Cross/Blue Shield of South Carolina,
from 1995 to 1997. From 1986 to 1995, Mr. Sessions served as Vice President and
Chief Operating Officer of Companion Technologies, Inc. Mr. Sessions graduated
from the Electronic Computer Programming Institute of the University of South
Carolina in 1968 with a degree in Computer Science.
Frederick B. Karl, Jr. has been Vice President, General Counsel and
Secretary of the Company since the consummation of the Offering and became a
director in April 1997. Mr. Karl has been the General Counsel of MM Research &
Development since 1988, and also has served as a Vice President of MM Research &
Development since 1990. Mr. Karl provided legal services to MM Research &
Development from 1984 through 1988 while he was in private practice. Mr. Karl
received a B.A. from Florida State University in 1977 and a J.D. from the
University of Florida College of Law in 1981.
Courtney F. Jones has been a director of the Company since April 1997. Mr.
Jones has served as Director, Chairman of the Audit Committee and Member of the
Executive Committee of First Data Corporation since its inception in 1992. Prior
to that, Mr. Jones served as Managing Director in the Investment Banking
Division of Merrill Lynch & Co., Inc. from 1989 to 1990, Director, Executive
Vice President and Chief Financial Officer of Merrill Lynch & Co. from 1985 to
1989 and Secretary to the Finance Committee of the Board of Directors and
Treasurer of General Motors Corporation from 1982 to 1985. Mr. Jones received
his B.S. degree from Wayne State University in 1963 and his M.B.A. degree from
the University of Chicago in 1968.
Raymond Kurzweil has been a director of the Company since April 1997. Mr.
Kurzweil is the founder of Kurzweil Applied Intelligence, Inc. ("KAI") and has
served as Chief Technology Officer of KAI since its inception in 1982. KAI has
executed a definitive agreement to be acquired by a third party. Upon the
consummation of this acquisition, Mr. Kurzweil will no longer be an employee of
KAI, but will serve as a consultant to KAI. Mr. Kurzweil has also served as the
Chairman and Chief Executive Officer of Kurzweil Educational Systems, Inc. and
Kurzweil Technologies, Inc. since 1996 and 1995, respectively. Mr. Kurzweil also
serves on the Board of Directors of Wang Laboratories, Inc. Mr. Kurzweil
received a B.S. degree in Computer Science and Literature from Massachusetts
Institute of Technology in 1970.
Chris A. Peifer has been a director of the Company since April 1997. Mr.
Peifer has been the President of Tice Financial Services, Inc. ("Tice") in
Tampa, Florida since 1987. Prior to joining Tice, Mr. Peifer was Chairman and
Chief Executive Officer of EESCO, Inc., a regional distributor of electrical
equipment headquartered in Chicago, IL, from 1985 to 1987. From 1982 to 1985,
Mr. Peifer was President and Chief Executive Officer of Bass & Company of
Atlanta, GA. Mr. Peifer was a founder and served as a director of The Commercial
Bank of Georgia from 1988 to 1996. Mr. Peifer has served as a director of
PrimeSource of Dallas, Texas from 1989 to the present. Mr. Peifer received a
B.A. degree from Denison University in 1970 and an M.B.A. degree from the
Kellogg School at Northwestern University.
BOARD CLASSIFICATION
The Board is divided into three classes, with directors serving staggered
three-year terms, expiring at the annual meeting of stockholders in 1997, 1998
and 1999, respectively. At each annual meeting of stockholders, one class of
directors will be elected for a full term of three years to succeed that class
of directors whose terms are expiring. Mr. Singer has the right to designate up
to two directors of the Company. See "Certain Transactions."
3
<PAGE> 6
MEETING OF THE BOARD OF DIRECTORS
The Board did not hold any formal meetings during the fiscal year ended
December 31, 1996, but acted on five occasions by unanimous written consent in
lieu of a meeting of the Board.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has the responsibility for establishing broad corporate policies
and for the overall performance of the Company. The Board has established an
Audit Committee and a Compensation Committee, each of which consists solely of
independent directors, to assist it in carrying out its duties. Neither the
Audit Committee nor the Compensation Committee existed during the fiscal year
ended December 31, 1996.
The Audit Committee is responsible for recommending to the Board the
selection of the independent certified public accountants, reviewing the
arrangements and scope of the independent audit, and reviewing all financial
statements. Messrs. Jones, Kurzweil and Peifer comprise the membership of the
Audit Committee.
The Compensation Committee is responsible for making recommendations to the
Board concerning executive compensation, including base salaries, bonuses and
criteria for their award, stock option plans, stock option grants and other
benefits. The Compensation Committee also administers the Company's 1996 Long
Term Incentive Plan and 1996 Non-Employee Directors Stock Plan. Messrs. Jones,
Kurzweil and Peifer comprise the membership of the Compensation Committee.
DIRECTOR COMPENSATION
Directors who are also employees of the Company or one of its subsidiaries
will not receive additional compensation for serving as directors. Under the
Company's current compensation policy, non-employee directors will receive an
annual retainer of $2,000, plus a $1,000 fee for attending each meeting of the
Board and each Board committee meeting. Such cash fees may, at the election of
the director, be paid instead in the form of shares of Common Stock or be
deferred in the form of "deferred shares" under the Company's 1996 Non-Employee
Directors' Stock Plan. In addition, under such plan, each non-employee director
will automatically receive an option to acquire, at the then current market
price, a specified number of shares of Common Stock (currently 10,000 shares)
upon such person's initial election as a director, and, subject to a limited
exception, an annual option to acquire, at the then current market price, a
specified number of shares (currently 5,000 shares) at each annual meeting of
the Company's stockholders thereafter at which such director is re-elected or
remains a director. Directors also will be reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board or committees thereof, in their
capacity as directors. The Board will periodically review and may revise the
compensation policies for non-employee directors.
EXECUTIVE COMPENSATION
The Company was incorporated in July 1996, conducted no significant
operations and generated no revenue prior to the closing of the Offering and did
not pay any of its executive officers compensation during 1996, except for Mr.
Robbins, whose employment commenced on November 25, 1996.
Each of Messrs. Singer, Kang, Mehrlich, Karl and Robbins has entered into
an employment agreement with the Company providing for an annual base salary of
$150,000 and a bonus to be determined annually pursuant to an incentive bonus
plan to be established by the Company. Each employment agreement is for a term
of five years. Effective as of the expiration of such initial five-year term and
as of each anniversary date thereof, the term shall be extended automatically
for an additional 12-month period on the same terms and conditions existing at
the time of renewal unless, not later than two months prior to each such
respective date, the Company shall have given notice to the employee that the
terms shall not be so extended. Each of these agreements provides that, in the
event of a termination of employment by the Company without cause (other than
upon the death or disability of the employee) or by the employee for good reason
(including a notice of termination by such employee following a change of
control of the Company, as defined in the employment agreement, or the
non-renewal of the employment agreement by the Company), the employee shall be
entitled to severance payments equal to the employee's base salary as in effect
immediately prior to such
4
<PAGE> 7
termination over the longer of the then-remaining term or 24 months (the
"Severance Period"). The employee will also be entitled to coverage under the
group medical care, disability and life insurance benefit plans or arrangements
in which the employee is participating at the time of termination, for the
continuation of the Severance Period, provided that the employee does not have
comparable substitute coverage from another employer. Each employment agreement
contains a covenant not to compete with the Company during the period of
employment, as well as during the Severance Period, without the prior approval
of the Board.
1996 LONG-TERM INCENTIVE PLAN
As of September 1996, the Board and the Company's stockholders approved the
Company's 1996 Long-Term Incentive Plan (the "Plan"). The maximum number of
shares of Common Stock that may be subject to outstanding awards may not exceed
the greater of 2,000,000 shares or 10% of the aggregate number of shares of
Common Stock outstanding. Awards may be settled in cash, shares, other awards or
other property, as determined by the Compensation Committee. The number of
shares reserved or deliverable under the Plan and the annual per-participant
limit is subject to adjustment in the event of stock splits, stock dividends and
other extraordinary corporate events. The purpose of the Plan is to provide
executive officers (including directors who also serve as executive officers),
key employees, consultants and other service providers with additional
incentives by enabling such persons to increase their ownership interests in the
Company. Individual awards under the Plan may take the form of one or more of:
(i) either incentive stock options ("ISOs") or non-qualified stock options
("NQSOs"); (ii) stock appreciation rights ("SARs"); (iii) restricted or deferred
stock; (iv) dividend equivalents; (v) bonus shares and awards in lieu of Company
obligations to pay cash compensation; and (vi) other awards the value of which
is based in whole or in part upon the value of the Common Stock. Upon a change
of control of the Company (as defined in the Plan), certain conditions and
restrictions relating to an award with respect to the exercisability or
settlement of such award will be accelerated.
The Compensation Committee will administer the Plan and generally select
the individuals who will receive awards and the terms and conditions of those
awards (including exercise prices, vesting and forfeiture conditions,
performance conditions and periods during which awards will remain outstanding).
The number of shares deliverable upon exercise of ISOs is limited to 500,000,
and the number of shares deliverable as non-performance based restricted stock
and deferred stock, is limited to 500,000. Shares of Common Stock that are
attributable to awards that have expired, terminated or been canceled or
forfeited or otherwise terminate without delivery of shares are available for
issuance or use in connection with future awards. The Plan also provides that no
participant may be granted in any calendar year awards settleable by delivery of
more than 250,000 shares, and limits payments under cash-settled awards in any
calendar year to an amount equal to the fair market value of that number of
shares.
The Company generally will be entitled to a tax deduction equal to the
amount of compensation realized by a participant through awards under the Plan,
except (i) no deduction is permitted in connection with ISOs if the participant
holds the shares acquired upon exercise for the required holding periods; and
(ii) deductions for some awards could be limited under the $1 million
deductibility cap of Section 162(m) of the Internal Revenue Code. This
limitation, however, should not apply to awards granted under a plan during a
grace period of up to three years following the Offering, and should not apply
to certain options, SARs and performance-based awards granted thereafter if the
Company is in compliance with certain requirements under Section 162(m).
The Plan will remain in effect until terminated by the Board. The Plan may
be amended by the Board without the consent of the stockholders of the Company,
except that any amendment, although effective when made, will be subject to
stockholder approval if required by any Federal or state law or regulation or by
the rules of any stock exchange or automated quotation system on which the
Common Stock may then be listed or quoted.
In connection with the Offering, NQSOs to purchase a total of 1,536,900
shares of Common Stock of the Company were granted on February 4, 1997 as
follows: 140,000 shares to Mr. Karl, 100,000 shares to Mr. Robbins, and
1,296,900 shares to employees of and a consultant to the Company and the
Founding
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<PAGE> 8
Companies. Each of the foregoing options has an exercise price of $11 per share.
All of these options will vest as to 25% each on the date that is six months, 18
months, 30 months and 42 months after the date of grant, and generally will
expire on the earlier of 10 years after the date of grant or three months after
termination of employment. If termination is for cause, all options will
terminate immediately. In addition, under the employment agreements described
above, if termination is without cause or if the employee leaves for good reason
all unrated options will become immediately vested and exercisable and remain
exercisable for the longer of three months or the duration of the severance
periods provided thereunder. Subsequent to the Offering, NQSOs to purchase a
total of 130,000 share were granted as follows: 100,000 shares to Mr. Sessions,
20,000 shares to Mr. Robbins and 10,000 to Mr. Jones. The options were granted
to Mr. Sessions on April 30, 1997 at an exercise price of $11.00 per share, the
options were granted to Mr. Robbins on May 1, 1997 at an exercise price of
$11.00 per share and the options were granted to Mr. Jones, in his capacity as a
consultant to the Company, on April 30, 1997 at an exercise price of $8.875 per
share. These subsequently granted options will vest and terminate as described
above, except with respect to the options granted to Mr. Jones which will fully
vest on April 30, 1998 and will expire on the earlier of 10 years after the date
of grant or one year after the termination of Mr. Jones's service as a director
of the Company. In addition, 50,000 shares of Common Stock were awarded to Mr.
Sessions on April 18, 1997, the date of the execution of his employment
agreement with the Company. These shares will vest in six equal annual
installments beginning on April 18, 1998, the first anniversary of the execution
of Mr. Sessions employment agreement.
1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
The Company's 1996 Non-Employee Directors' Stock Plan (the "Directors'
Plan"), which was adopted by the Board and approved by the Company's
stockholders as of September 1996, provides for the automatic grant to each
non-employee director of an initial option to purchase 10,000 shares upon such
person's initial election as a director. In addition, the Directors' Plan
provides for an automatic annual grant to each non-employee director of an
option to purchase 5,000 shares at each annual meeting of stockholders following
the Offering, provided, however, that a director will not be granted an annual
option if he or she was granted an initial option during the preceding three
months. The number of shares to be subject to initial or annual options granted
after the first annual meeting of stockholders following the Offering may be
altered by the Board. A total of 250,000 shares are reserved for issuance under
the Directors' Plan. The number of shares reserved, as well as the number to be
subject to automatically granted options, will be adjusted in the event of stock
splits, stock dividends and other extraordinary corporate events.
Options granted under the Directors' Plan will have an exercise price per
share equal to the fair market value of a share at the date of grant. Options
will expire at the earlier of 10 years after the date of grant or one year after
termination of service as a director. Options will become exercisable one year
after the date of grant, subject to acceleration by the Board, and will be
forfeited upon termination of service as a director for reasons other than death
or disability unless the director served for at least 11 months after the date
of grant or the option was otherwise exercisable at the date of termination. In
addition, the Directors' Plan permits non-employee directors to elect to
receive, in lieu of such directors' fees, shares or credits representing
"deferred shares" to be settled at future dates, as elected by the director. The
number of shares or deferred shares received will be equal to the number of
shares which, at the date the fees would otherwise be payable, will have an
aggregate fair market value equal to the amount of such fees. Each "deferred
share" will be settled by delivery of a share of Common Stock at such time as
may have been elected by the director prior to the deferral.
In connection with the appointment of Messrs. Jones, Kurzweil and Peifer as
directors on April 30, 1997, stock options to purchase 10,000 shares of Common
Stock each were granted to Messrs. Jones, Kurzweil and Peifer. These stock
options have an exercise price of $8.875 per share, the fair market value of the
Common Stock on the date of grant, and fully vest on April 30, 1998.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for making recommendations to the
Board concerning executive compensation, including base salaries, bonuses and
the bases for their award, stock option plans and
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<PAGE> 9
other benefits. Each of the members of the Compensation Committee is an
independent outside director of the Company.
Although the Compensation Committee was recently formed and has not yet
formally met, the Committee expects to generally consider the overall
performance of the Company during the current fiscal year, the individual
executive officer's contribution to the achievement of operating goals and
business objectives and the levels of compensation of companies which, in the
view of the Compensation Committee, are similar in size and development to the
Company. The Compensation Committee has not targeted a specific compensation
level comparable to such companies, but intends to review such data for
assurance that the Company's compensation package is competitive in the
industry.
It is the Compensation Committee's view that senior executives' interests
should complement those of stockholders. Accordingly, it is anticipated that a
substantial portion of senior executive compensation above a base salary will be
provided through bonuses tied to certain indicators of Company performance and
through the grant of stock options, thus creating incentives for executives to
achieve long term Company objectives and increase stockholder value.
Courtney F. Jones
Raymond Kurzweil
Chris A. Peifer
As Members of the Compensation
Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was an officer or employee of the
Company or of any of its subsidiaries during the prior year or was formerly an
officer of the Company or of any of its subsidiaries. During the last fiscal
year none of the executive officers of the Company have served on the board of
directors or compensation committee of any other entity, any of whose officers
served either on the Board of the Company or on the Compensation Committee of
the Company.
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<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of the Common Stock of the Company by (i)
each person known to beneficially own more than 5% of the outstanding shares of
Common Stock; (ii) each of the Company's directors; (iii) each executive
officer; and (iv) all executive officers and directors as a group. Each person
listed below has an address in care of the Company's principal executive
offices, except as otherwise indicated, and has sole voting and investment power
with respect to his shares unless otherwise indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME NUMBER PERCENT
---- ------------ ----------
<S> <C> <C>
Michael A. Singer........................................... 6,395,000 34.2%
John H. Kang................................................ 515,614 2.8%
Richard W. Mehrlich......................................... 2,210,000 11.8%
Lee A. Robbins(1)........................................... 30,000 *
John P. Sessions(2)......................................... 1,000 *
Frederick B. Karl, Jr.(3)................................... 36,000 *
Courtney F. Jones(4)........................................ 0 0
Raymond Kurzweil(5)......................................... 0 0
Chris A. Peifer(6)(7)....................................... 96,636 *
Electronic Data Systems Corporation......................... 1,221,896 6.5%
5400 Legacy Drive
Plano, Texas 75024-3105
All executive officers and directors as a group (9
persons).................................................. 9,284,250 49.6%
</TABLE>
- ---------------
(1) Includes 25,000 shares underlying options which are exercisable within 60
days of the date hereof. Does not include 95,000 shares issuable in
connection with options that are not exercisable within 60 days of the date
hereof.
(2) Excludes 50,000 shares of Common Stock awarded to Mr. Sessions on April 18,
1996, the date of the execution of his employment agreement with the
Company, which share award vests in six equal annual installments beginning
on April 18, 1998. Also excludes 100,000 shares issuable in connection with
options that are not exercisable within 60 days of the date hereof.
(3) Includes 35,000 shares underlying options which are exercisable within 60
days of the date hereof. Does not include 105,000 shares issuable in
connection with options that are not exercisable within 60 days of the date
hereof.
(4) Excludes 20,000 shares issuable in connection with options that are not
exercisable within 60 days of the date hereof.
(5) Excludes 10,000 shares issuable in connection with options that are not
exercisable within 60 days of the date hereof.
(6) Excludes 10,000 shares issuable in connection with options that are not
exercisable within 60 days of the date hereof.
(7) Mr. Peifer acquired 51,636 of the 96,636 beneficially owned shares in
connection with the Company's acquisition of MM Southeast, which was one of
the Founding Companies.
8
<PAGE> 11
CERTAIN TRANSACTIONS
ORGANIZATION OF THE COMPANY
Simultaneously with the closing of the Offering, the Company acquired by
merger all of the issued and outstanding stock of the five Founding Companies,
at which time each Founding Company became a wholly-owned subsidiary of the
Company (the "Mergers"). The aggregate consideration paid by the Company in the
Mergers was approximately $175.7 million, consisting of approximately $46.9
million in cash and 11,705,470 shares of Common Stock. The factors considered by
the Company in determining the consideration paid included, among others, the
historical operating results, the net worth, the amount and type of indebtedness
and the future prospects of the Founding Companies. Certain of the Founding
Companies have made distributions or issued notes totaling approximately $5.5
million, representing S corporation earnings previously taxed to their
respective stockholders.
Pursuant to the agreements entered into in connection with the Mergers, the
stockholders of the Founding Companies agreed not to compete with the Company
for five years, commencing February 4, 1997.
The aggregate consideration paid by the Company for each of the Founding
Companies was as follows: MM Research & Development: $105.1 million, consisting
of $35.0 million paid in cash and 6,370,000 shares of Common Stock; MM Sales &
Marketing: $33.7 million, consisting of $9.3 million paid in cash and 2,210,000
shares of Common Stock; MM Southeast: $28.5 million, consisting of 2,595,645
shares of Common Stock; RTI Business Systems, Inc. ("MM RTI"): $5.6 million,
consisting of $1.8 million paid in cash and 350,000 shares of Common Stock; and
Systems Management, Inc. ("MM SMI"): $2.8 million, consisting of $0.8 million
paid in cash and 179,825 shares of Common Stock.
In connection with the Mergers, and as consideration for their interests in
the Founding Companies, certain executive officers, directors and holders of
more than 5% of the outstanding shares of Common Stock of the Company received,
directly or indirectly, cash and shares of Common Stock of the Company as
follows: Mr. Singer -- $35.0 million and 6,370,000 shares of Common Stock; Mr.
Kang -- 490,621 shares of Common Stock; Mr. Mehrlich -- $9.3 million and
2,210,000 shares of Common Stock; and Mr. Peifer -- 51,636 shares of Common
Stock.
In connection with the Mergers, the Company has agreed that for so long as
Mr. Singer beneficially owns at least 10% of the issued and outstanding Common
Stock of the Company, Mr. Singer will have the right to designate two
individuals to serve as directors on the Board if the Board consists of six or
more members and one individual to serve as a director if the Board consists of
five or fewer members. Since the Board currently consists of seven members, Mr.
Singer has the right to designate two members of the Board.
CERTAIN INDEBTEDNESS
Prior to the Offering, certain of the Founding Companies incurred
indebtedness that was personally guaranteed by their respective stockholders. At
February 1, 1997, the aggregate amount of indebtedness of the Founding Companies
that was subject to such personal guarantees was approximately $5.5 million. The
Company repaid substantially all of such indebtedness immediately prior to the
consummation of the Mergers. The Company also repaid all of the indebtedness
owed to Mr. Kang, which aggregated approximately $400,000, immediately prior to
the consummation of the Mergers.
In addition, Messrs. Singer and Kang each made an interest-free loan of
$50,000 to the Company to be used for working capital purposes. Such loans were
repaid out of the proceeds of the Offering.
REAL ESTATE AND OTHER TRANSACTIONS
MM Research & Development leases property in Alachua, Florida that is owned
by a company controlled by Mr. Singer and a member of his family. MM Research &
Development is responsible for all real estate taxes, insurance and maintenance
relating to the property. The term of the lease is through March 31, 1999 and
provides for two one-year extensions in favor of MM Research & Development. The
lease commenced on
9
<PAGE> 12
April 1, 1996 and provides for annual rentals of approximately $320,000. The
Company believes that the rent for such property does not exceed the fair market
rental value thereof.
Certain property owned by MM Systems Management with a net book value of
$283,000 was distributed to an entity controlled by the stockholders of MM
Systems Management and is leased to the Company. The lease is for a term of five
years with three renewal options for five years each and provides for annual
rent of approximately $83,160. MM Systems Management is responsible for all real
estate taxes, insurance and maintenance. The Company believes that the rent for
such property does not exceed the fair market rental value thereof.
Mr. Mehrlich owns a 90% interest in Professional Management Systems, Inc.
("PMSI"), an independent dealer for The Medical Manager system in the greater
Chicago, Illinois area. He acquired the interest in February 1996. MM Sales &
Marketing recognized revenue, primarily from software license, from PMSI
totaling approximately $243,000 and $255,000 for 1995 and 1996, respectively.
COMPANY POLICY
The Company intends that any transactions with executive officers,
directors and holders of more than 5% of the Common Stock (including any
transactions with respect to PMSI) will be approved by a majority of the Board,
including a majority of the disinterested members of the Board.
PROPOSAL 1. ELECTION OF DIRECTORS
At the Annual Meeting, two directors will be elected to serve on the
Company's Board. The two directors will be elected to serve until the 2000
Annual Meeting of stockholders (or until their successors are elected and
qualified).
It is intended that proxies will be voted for the following nominees, each
to serve a three year term ending at the 2000 Annual Meeting of Stockholders:
John H. Kang and Frederick B. Karl, Jr. Brief biographies of each of the
nominees for director are set forth under "Directors and Executive Officers"
above.
The affirmative vote of a plurality of the votes cast by the shares of the
Company's issued and outstanding Common Stock present at the meeting, either in
person or by proxy, is required to approve this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF JOHN H.
KANG AND THE ELECTION OF FREDERICK B. KARL, JR. AS DIRECTORS.
PROPOSAL 2. RATIFICATION OF AUDITORS
The Board has approved the Company's engagement of the firm of Coopers &
Lybrand LLP as the Company's independent auditors for the fiscal year ending
December 31, 1997. Coopers & Lybrand LLP has served as the Company's independent
auditors since the Company's inception in 1996, and is familiar with the
Company's business and management. The Board believes that Coopers & Lybrand LLP
has the personnel, professional qualifications and independence necessary to act
as the Company's independent auditors.
Representatives of Coopers & Lybrand LLP are expected to appear at the
Annual Meeting, to make a statement, if they wish to do so, and to be available
to answer appropriate questions from stockholders at that time.
Although stockholder approval of the Company's auditors is not required,
the Board is submitting such engagement to a vote of the Company's stockholders.
Approval of this proposal will require the affirmative vote of a majority of the
Company's outstanding Common Stock in attendance at the meeting, voting in
person or by proxy.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF COOPERS &
LYBRAND LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997.
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<PAGE> 13
OTHER MATTERS
The Board is not aware of any other business that may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy-holders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting
of Stockholders of the Company must be received by the Company not later than
January 31, 1998 at its principal executive offices, 3001 North Rocky Point
Drive, Suite 100, Tampa, Florida 33607, Attention: Frederick B. Karl, Jr., Vice
President, General Counsel and Secretary, for inclusion in the proxy statement
and form of proxy relating to the 1998 Annual Meeting of Stockholders.
ADDITIONAL INFORMATION
The Company will furnish without charge to any stockholder submitting a
written request, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 filed with the Securities and Exchange Commission,
including the financial statements and schedules thereto. Such written request
should be directed to the Company, attention: Frederick B. Karl, Jr., Vice
President, General Counsel and Secretary at the address set forth above.
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<PAGE> 14
PROXY
MEDICAL MANAGER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Michael A. Singer and John H. Kang, each with power of substitution, are
hereby authorized to vote all shares of common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Stockholders
of Medical Manager Corporation to be held on July 29, 1997, or any postponements
or adjournments thereof, as indicated on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF EACH OF THE NOMINEES AND FOR PROPOSAL 2 SET FORTH ON THE
OTHER SIDE. AS TO ANY OTHER MATTER, SAID PROXIES SHALL VOTE IN ACCORDANCE WITH
THEIR BEST JUDGMENT.
The undersigned hereby acknowledges receipt of the Notice of the 1997
Annual Meeting of Stockholders, the Proxy Statement and the Annual Report to
Stockholders for the fiscal year ended December 31, 1996 furnished herewith.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<TABLE>
<CAPTION>
A [X] PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE.
A VOTE FOR ALL NOMINEES AND FOR PROPOSAL 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS
<S> <C>
1. To Elect John H. Kang and Frederick B. Karl, Jr. 2. To Ratify the selection of Coopers & Lybrand as
as Directors as the Company's Independent Auditors for the
Fiscal Year Ending December 31, 1997
FOR WITHHELD FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
For except vote withheld from the following 3. In their discretion, the Proxies are authorized to vote upon
nominee(s): such other business as may properly come before the meeting.
- ------------------------------------------- Change of Address and or Comments Mark Here.
--------------------------------------------
--------------------------------------------
--------------------------------------------
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS
PROXY CARD USING THE ENCLOSED ENVELOPE.
SIGNATURE ________________________________________________________________________________________________ DATE _________, 1997
SIGNATURE IF HELD JOINTLY __________________________________________________________________________________ DATE _________, 1997
</TABLE>
