SYNETIC INC, 424B3, 1995-01-31

SYNETIC INC
424B3, 1995-01-31
DRUG STORES AND PROPRIETARY STORES

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<PAGE>

Rule 424(b)(3)
Registration No. 33-88814

PROSPECTUS
1,000,000 SHARES

LOGO SYNETIC, INC.
COMMON STOCK

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On January 27, 1995, Synetic, Inc. ("Synetic" or the "Company") called for
redemption on February 13, 1995 (the "Redemption Date") all of its 7%
Convertible Subordinated Debentures Due 2001 (the "Debentures") at a
redemption price of $1,040 for each $1,000 principal amount of Debentures,
plus accrued interest of $14 per $1,000 principal amount of Debentures from
December 1, 1994 to the Redemption Date, for a total amount payable of $1,054
for each $1,000 principal amount of Debentures (the "Redemption Price").

The Debentures are convertible into shares of the Company's common stock,
par value $0.01 per share (the "Common Stock"), at a conversion price of
$20.40 per share, or 49.02 shares for each $1,000 principal amount of
Debentures. Cash will be paid for fractional shares of Common Stock, and no
payment or adjustment will be made on conversion of any Debenture for interest
accrued thereon or for dividends on any Common Stock issued. The conversion
right expires at 5:00 p.m., New York City time, on February 10, 1995 (the
"Conversion Expiration Date"), which is the last business day prior to the
Redemption Date. On and after the Redemption Date, registered holders of the
Debentures ("Holders") shall be entitled only to the Redemption Price and
interest shall cease to accrue.

The Common Stock is listed on the Nasdaq National Market. On January 26,
1995, the closing price of the Company's Common Stock on the Nasdaq National
Market was $23 1/16 per share.

The Company has entered into a standby purchase agreement (the "Standby
Agreement") with Smith Barney Inc. and PaineWebber Incorporated (together, the
"Purchasers") pursuant to which the Purchasers have agreed, subject to certain
conditions, to purchase from the Company all of the shares of Common Stock
(the "Shares") that otherwise would have been issuable upon conversion of up
to $18,250,000 aggregate principal amount of the Debentures that are either
(i) duly surrendered for redemption or (ii) not duly surrendered for
conversion by the Conversion Expiration Date or for redemption by the
Redemption Date by persons other than the Purchasers (the Debentures referred
to above in clauses (i) and (ii) are hereinafter referred to as the "Redeemed
Debentures"). In addition, an institutional investor has agreed with the
Company to surrender for conversion into Common Stock the $22,050,000
aggregate principal amount of Debentures it holds as of the date of this
Prospectus. The aggregate purchase price paid by the Purchasers for the Shares
will be an amount equal to the aggregate Redemption Price of the Redeemed
Debentures. The proceeds from the sale will be used by the Company to pay the
aggregate Redemption Price of the Redeemed Debentures. In addition, the
Purchasers may purchase Debentures in the open market or otherwise on or prior
to the Conversion Expiration Date and have agreed to convert into Common Stock
all the Debentures which they own on the Conversion Expiration Date, but will
not be compensated by the Company upon any subsequent sale of such shares of
Common Stock. This Prospectus covers 894,607 shares of Common Stock issuable
upon conversion of $18,250,000 aggregate principal amount of Redeemed
Debentures and 105,393 shares of Common Stock issuable upon conversion of
Debentures purchased in the open market or otherwise by the Purchasers for
which such Purchasers may be required to deliver a prospectus upon resale of
such shares. See "Standby Arrangements" for a description of the Purchasers'
compensation arrangements with the Company. The Purchasers have not been
retained with respect to the redemption of the Debentures or the issuance of
Common Stock to Holders who elect to surrender their Debentures for conversion
or to solicit conversions of the Debentures and will receive no remuneration
in connection therewith.

Prior to and after the Redemption Date, the Purchasers may offer to the
public shares of Common Stock, including shares acquired through conversion of
Debentures purchased by the Purchasers as described above, at prices set by
them from time to time and to dealers at such prices less a selling concession
to be determined by the Purchasers. Prior to the Redemption Date, it is
intended that such prices will not be increased more frequently than once in
any day and will not exceed the greater of the last sale or current asked
price of the Common Stock on the Nasdaq National Market, plus applicable
dealers' commissions. Sales of Common Stock by the Purchasers may be made on
the Nasdaq National Market, in block trades, in the over-the-counter market,
in privately negotiated transactions or otherwise, from time to time. In
effecting such sales, the Purchasers may realize profits or incur losses
independent of the compensation referred to under "Standby Arrangements." Any
Common Stock so offered by the Purchasers will be subject to prior sale, to
receipt and acceptance by them and to approval of certain legal matters by
legal counsel. The Purchasers reserve the right to reject any order in whole
or in part and withdraw, cancel or modify the offer without notice. The
Company has agreed to indemnify the Purchasers against, and to provide
contribution with respect to, certain liabilities, including liabilities
arising under the Securities Act of 1933, as amended. See "Standby
Arrangements." The Purchasers have agreed to remit to the Company 50% of the
net profits realized by the Purchasers on sales of Shares purchased from the
Company pursuant to the Standby Agreement described under "Standby
Arrangements" to the extent such Shares were purchased to fund redemptions of
Redeemed Debentures that were not timely surrendered for conversion or
redemption.

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" FOR A
DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

SMITH BARNEY INC. PAINEWEBBER INCORPORATED

The date of this Prospectus is January 27, 1995.
<PAGE>

IN CONNECTION WITH THIS OFFERING, THE PURCHASERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES OR THE COMMON
STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, THE PURCHASERS MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"STANDBY ARRANGEMENTS."

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information can be inspected and copied at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661.
Copies may also be obtained from the Public Reference Section of the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Such reports, proxy and information statements and other
information can also be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3
(together with all amendments and exhibits and schedules thereto, hereinafter
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Common Stock offered by
this Prospectus. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the Rules and Regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is made to the
Registration Statement. Statements made in the Prospectus as to the contents of
any contract, agreement or other document referred to are not necessarily
complete; with respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission (File No. 0-
17822) pursuant to the Exchange Act are hereby incorporated by reference: (i)
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1994, as amended by Form 10-K/A dated October 28, 1994 (as so amended, the
"1994 10-K"); (ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarter ended September 30, 1994 and for the fiscal quarter ended December 31,
1994 (the "Second Quarter Form 10-Q"); and (iii) the Company's Current Reports
on Form 8-K filed with the Commission on August 16, 1994, September 16, 1994,
December 29, 1994 and January 27, 1995. The Form 8-K filed with the Commission
on January 27, 1995 is hereafter referred to as the "1995 Form 8-K."

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of Common Stock made hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated or incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide, without charge, upon written or oral request, to
each person to whom a copy of this Prospectus is delivered, a copy of any and
all the documents incorporated by reference in the Registration Statement (not
including exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such information
should be directed to Victor L. Marrero, Vice President--Finance, Synetic,
Inc., 669 River Drive, Elmwood Park, New Jersey 07407, telephone (201) 703-
3400.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by, and should
be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing in the documents
incorporated herein by reference or elsewhere in this Prospectus. Unless
otherwise indicated by the context, all references in this Prospectus to the
"Company" include, collectively, the Company and its subsidiaries. For purposes
of this Prospectus, references to 100% Converted mean that $80,500,000
aggregate principal amount of Debentures is converted into shares of Common
Stock and references to 50% Converted mean that $40,300,000 aggregate principal
amount of Debentures is converted into shares of Common Stock.

THE COMPANY

The Company intends to pursue an acquisition program pursuant to which it
will seek to effect one or more acquisitions of or business combinations with
businesses that the Company believes have significant growth potential. The
Company expects that the growth potential from such transactions may come from,
among other factors, its ability to (i) improve the financial and operating
performance of an acquired business, (ii) redefine the business strategy of an
acquired business to enhance its market position or gain entry to new markets
for its products or services or (iii) enhance the value of an acquired business
by the acquisition of similar or complementary businesses. The Company intends
initially to concentrate its acquisition efforts in the health care industry
but such emphasis would not limit in any manner its ability to pursue
acquisition opportunities in other industries. The Company's acquisition
program could result in a substantial change in the business, operations and
financial condition of the Company. As of the date of this Prospectus, the
Company has not yet entered into any agreement or understanding with a
prospective acquisition candidate.

Martin J. Wygod, Chairman of the Board of the Company, has indicated that he
intends to assist the Company in pursuing its acquisition program by bringing
opportunities for potential acquisitions to the Company. In addition, Mr. Wygod
has indicated that he is willing to assist the Company in negotiating such
acquisitions and in seeking financing in the event any such acquisition were to
be financed externally by the Company.

Porex Technologies Corp. (together with its subsidiaries, "Porex"), a wholly
owned subsidiary of the Company, designs, manufactures and distributes porous
and solid plastic components and products used in health care, industrial and
consumer applications. Porex's principal products, which incorporate porous
plastics, are used to filter, drain, vent or control the flow of fluids or
gases. A large percentage of Porex's products are sold to other manufacturers
for incorporation into their products. The Company believes Porex's principal
strengths to be its manufacturing processes, quality control and relationships
with distributors of its proprietary health care products. For the fiscal year
ended June 30, 1994 and the six months ended December 31, 1994, Porex had net
sales of approximately $33,100,000 and $18,400,000, respectively. For the
fiscal year ended June 30, 1994 and the six months ended December 31, 1994,
Porex's foreign and export sales, which are made principally to Europe, were
$7,900,000, or 23.9% of sales, and $4,500,000, or 24.4% of sales, respectively.

3
<PAGE>

RECENT TRANSACTIONS

Prior to June 28, 1989, the date of the initial public offering of the
Company, the Company was an indirect wholly owned subsidiary of Medco
Containment Services, Inc. ("Medco"). Thereafter, the Company became a publicly
held, partially owned subsidiary of Medco. Medco provides health care cost
containment services, principally managed prescription drug programs, to
benefit plan sponsors, and through a wholly owned subsidiary, managed mental
health care and substance abuse services and employee assistance programs to
benefit plan sponsors. On November 18, 1993, Medco was acquired by Merck & Co.,
Inc. ("Merck"), and as a result, the Company became an indirect, partially
owned subsidiary of Merck. Merck is a worldwide organization engaged primarily
in the business of discovering, developing, producing and marketing products
and services for the treatment of disease and the maintenance or restoration of
health. Until December 14, 1994, the Company's operations consisted of Porex
and a group of subsidiaries that provided institutional pharmacy services (the
"Institutional Pharmacies Business"). The Institutional Pharmacies Business
accounted for approximately $78,705,000, or 70.4%, of the Company's net sales
and approximately $1,823,000, or 73.2%, of its net income during the fiscal
year ended June 30, 1994.

On December 14, 1994, the Company consummated certain transactions pursuant
to which: (1) the Company sold the Institutional Pharmacies Business to
Pharmacy Corporation of America ("PCA"), an indirect wholly owned subsidiary of
Beverly Enterprises, Inc. ("Beverly Enterprises") (such sale is referred to
herein as the "Divestiture"), for approximately $107,300,000 in cash, subject
to certain post-closing adjustments; (2) the Company purchased 5,268,463 shares
of Common Stock from Merck for an aggregate purchase price of $35,778,088,
subject to certain post-closing adjustments; and (3) SN Investors, L.P. ("SN
Investors"), a limited partnership of which the general partner is SYNC, Inc.
(the "General Partner"), whose sole stockholder is Mr. Martin J. Wygod,
purchased 5,061,857 shares of Common Stock from Merck for an aggregate purchase
price of $34,375,029, subject to certain post-closing adjustments, pursuant to
an assignment by the Company of the right to purchase such shares from Merck.
See "Certain Transactions." The purchases of shares of Common Stock from Merck
by the Company and SN Investors are hereinafter referred to as the "Purchase."
The shares of Common Stock purchased by the Company are being held as treasury
shares and are no longer outstanding or entitled to vote.

Immediately prior to the consummation of the Purchase, Merck owned
approximately 58.0% of the issued and outstanding Common Stock. As a result of
the consummation of the Purchase, Mr. Wygod and SN Investors own as of the date
of this Prospectus an aggregate of approximately 41.2% of the outstanding
Common Stock and Merck no longer owns an equity interest in the Company.

The Company's purpose in entering into the Purchase was to acquire a
significant portion of its Common Stock on terms it believed to be in the
interests of its public stockholders and to structure the Company as an
independent public company with the benefit of Mr. Wygod's association as a
significant investor. Merck required the consummation of the Divestiture as a
condition to the Purchase. Both the Purchase and the Divestiture were approved
by a special committee of independent directors of the Company and by the
requisite votes, at a Special Meeting of Stockholders held on December 7, 1994
(the "Special Meeting"), of the stockholders of the Company.

4
<PAGE>

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The summary financial data set forth below for the five years in the period
ended June 30, 1994 has been derived from the Consolidated Financial Statements
of the Company, which have been audited by Arthur Andersen LLP, independent
accountants. The summary financial data as of and for the six-month periods
ended December 31, 1993 and 1994 are derived from unaudited consolidated
financial statements of the Company, which, in the opinion of management,
include all normal and recurring adjustments necessary to present fairly the
financial position and the results of operations of the Company for those
periods. Such information should be read in conjunction with the Consolidated
Financial Statements of the Company and the related notes thereto included in
the 1995 Form 8-K and Second Quarter Form 10-Q that are incorporated by
reference into this Prospectus. The summary financial data for the three years
in the period ended June 30, 1994 has been restated to reflect the Divestiture.
See "Certain Transactions."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------------ ------------------
1990 1991 1992 1993 1994 1993 1994
-------- --------- --------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1):
Net sales............... $ 23,985 $ 24,704 $ 28,486 $30,645 $33,093 $15,360 $18,423
Costs and expenses:
Cost of sales.......... 13,468 14,642 16,788 18,239 21,494 9,790 11,047
Selling, general and
administrative........ 6,004 5,755 7,030 8,096 9,052 4,652 5,411
Interest and other
income................ (1,583) (706) (4,901) (7,147) (5,071) (2,552) (2,982)
Interest expense....... 328 259 3,538 6,027 5,975 3,013 2,968
Purchase and Sale
Agreement related
expenses and other.... -- -- -- -- 563(2) 563(2) 5,580(3)
-------- -------- -------- ------- ------- ------- -------
18,217 19,950 22,455 25,215 32,013 15,466 22,024
Income from continuing
operations before
provision for income
taxes.................. 5,768 4,754 6,031 5,430 1,080 (106) (3,601)
Provision for income
taxes.................. 1,879 1,630 2,151 2,046 411 (39) (1,356)
-------- -------- -------- ------- ------- ------- -------
Income from continuing
operations............. 3,889 3,124 3,880 3,384 669 (67) (2,245)
Income from discontinued
operations............. -- -- 1,376 2,734 1,823 1,087 12,748(4)
-------- -------- -------- ------- ------- ------- -------
Net income........... 3,889 3,124 5,256 6,118 2,492 1,020 10,503
-------- -------- -------- ------- ------- ------- -------
Primary net income per
share:
Continuing operations.. $ 0.27 $ 0.21 $ 0.24 $ 0.19 $ 0.04 $ 0.00 $ (0.12)
Discontinued
operations............ -- -- 0.09 0.16 0.10 0.06 0.71
-------- -------- -------- ------- ------- ------- -------
Net income per share. $ 0.27 $ 0.21 $ 0.33 $ 0.35 $ 0.14 $ 0.06 $ 0.59
======== ======== ======== ======= ======= ======= =======
Weighted average shares
outstanding(5)......... 14,318 14,562 16,028 17,485 17,968 17,992 17,939
======== ======== ======== ======= ======= ======= =======
Fully diluted net income
per share:
Continuing operations.. -- -- -- -- -- -- $ (0.02)
Discontinued
operations............ -- -- -- -- -- -- 0.58
-------- -------- -------- ------- ------- ------- -------
Net income per share. -- -- -- -- -- -- $ 0.56
======== ======== ======== ======= ======= ======= =======
Fully diluted weighted
average shares
outstanding............ -- -- -- -- -- -- 22,144
======== ======== ======== ======= ======= ======= =======
<CAPTION>
AT DECEMBER 31, 1994
------------------------------
AS ADJUSTED
--------------------
100% 50%
ACTUAL CONVERTED CONVERTED
-------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $102,904 $100,821 $ 56,677
Total assets............ 207,154 203,001 158,857
Long-term debt, less
current portion........ 80,500 -- --
Stockholders' equity.... 82,438 159,254 115,841
</TABLE>
- --------
(1) This continuing operations data excludes the results of operations of the
Institutional Pharmacies Business, which was sold on December 14, 1994.
(2) This amount includes a nonrecurring pretax charge of $563 ($372 or $0.02
per share on an after tax basis). This charge is related to one-time
payments made to certain executive officers in conjunction with the
acquisition of the Company's parent company, Medco, by Merck.
(3) This amount includes a nonrecurring pretax charge of $5,580 ($3,683 after
tax) or $0.21 per share on a primary net income per share basis and $0.17
per share on a fully diluted net income per share basis. This charge is
primarily related to the grant of stock options below fair market value to
certain officers for services provided in connection with the Purchase and
the Divestiture.
(4) This amount includes a nonrecurring after tax gain of $11,785 or $0.66 per
share on a primary net income basis and $0.53 per share on a fully diluted
net income basis. This amount related to the sale of the Institutional
Pharmacies Business.
(5) This data has been restated to reflect a 2-for-1 stock split of the Common
Stock effective on February 26, 1993.

5
<PAGE>

RISK FACTORS

Prior to making an investment decision with respect to the Common Stock
offered hereby, prospective investors should carefully consider the specific
factors set forth below, together with all of the other information appearing
herein, in light of their particular investment objectives and financial
circumstances.

ACQUISITION PROGRAM

The Company intends to pursue an acquisition program pursuant to which it
will seek to effect one or more acquisitions of or business combinations with
businesses that the Company believes have significant growth potential. The
future growth of the Company will depend primarily on its ability to consummate
one or more such acquisitions and to operate such businesses successfully. The
Company's acquisition program could result in a substantial change in the
business, operations and financial condition of the Company. As the Company has
not yet entered into any agreement or understanding with a prospective
acquisition candidate, there is no basis for investors in this Offering to
evaluate the possible merits or risks of the operations of such business.
Although management of the Company will endeavor to evaluate the risks inherent
in any particular acquisition candidate, there can be no assurance that the
Company will properly ascertain all such risks. Any acquisitions will be
limited, as required by agreements to which the Company is a party, to areas of
business that would not be competitive with certain businesses of Merck and its
subsidiaries or with the Institutional Pharmacies Business. See "Certain
Transactions--The Divestiture, The Purchase and Certain Additional Agreements."
No assurances, however, can be given that the Company will succeed in
consummating any acquisitions or that the Company will be able to successfully
manage or integrate any business that it acquires.

The success of the Company's acquisition program will depend on, among other
things, the availability of acquisition candidates, the availability of funds
to finance acquisitions, and the availability of management resources to
oversee the operation of acquired businesses. Financing for acquisitions may
come from several sources, including, without limitation, (a) cash and cash
equivalents on hand and marketable securities and (b) proceeds from the
incurrence of indebtedness or the issuance of additional Common Stock,
preferred stock, convertible debt or other securities, which could result in
substantial dilution of the percentage ownership of the stockholders of the
Company at the time of any such issuance. The proceeds from any financing may
be used for costs associated with identifying and evaluating prospective
acquisition candidates, and for structuring, negotiating, financing and
consummating any such acquisition transactions and for other general corporate
purposes. The Company does not intend to seek stockholder approval for any such
acquisition or security issuance unless required by applicable law or
regulation. Although Mr. Wygod has indicated his intention to assist the
Company in its acquisition program by bringing opportunities for potential
acquisitions to the Company and to assist the Company in negotiating such
acquisitions and in seeking financing in the event any such acquisition were to
be financed by the Company, he is not an officer or an employee of the Company
nor is he required pursuant to any contractual obligation to provide such
support or assistance. See "Business--Acquisition Program."

REGULATION OF POREX

Porex manufactures and distributes certain medical/surgical devices, such as
plastic and reconstructive surgical implants and tissue expanders, which are
subject to government regulations, including approval procedures instituted by
the Food and Drug Administration (the "FDA"). Certain other health care
products may also be subject to such regulations and approval processes.
Compliance with such regulations and the process of obtaining approvals can be
costly, complicated and time-consuming and there can be no assurance that such
approvals will be granted on a timely basis, if ever. See "Business--
Regulation."

POTENTIAL LIABILITY RISK AND AVAILABILITY OF INSURANCE

The products sold by the Company expose it to potential risk for product
liability claims, particularly with respect to Porex's medical/surgical
products. The Company believes that it carries adequate insurance

6
<PAGE>

coverage against product liability claims and other risks. There can be no
assurance, however, that claims in excess of the Company's insurance coverage
will not arise. In addition, the Company's insurance policies must be renewed
annually. In 1994, Porex was notified that its insurance carrier would not
renew its then-existing insurance coverage after December 31, 1994 with respect
to actions and claims arising out of Porex's distribution of silicone mammary
implants. However, Porex has exercised its right to purchase extended reporting
period coverage with respect to such actions and claims. Such coverage provides
insurance, subject to existing policy limits but for an unlimited time period,
with respect to actions and claims made after December 31, 1994 that are based
on events that occurred during the policy period. Porex has renewed its
insurance coverage with the same carrier for other liability claims. Although
the Company has been able to obtain adequate insurance coverage at an
acceptable cost in the past and believes that it is adequately indemnified for
products manufactured by others and distributed by it, there can be no
assurance that in the future it will be able to obtain such insurance at an
acceptable cost or be adequately protected by such indemnification. See
"Business--Health Care Products" and "Business--Legal Proceedings--Mammary
Implant Litigation."

CERTAIN LITIGATION

During the year ended June 30, 1988, Porex began distributing silicone
mammary implants ("implants") in the United States pursuant to a distribution
arrangement (the "Distribution Agreement") with a Japanese manufacturer (the
"Manufacturer"). On July 9, 1991, the FDA mandated a recall of all implants
manufactured by companies that elected not to comply with certain FDA
regulations regarding data collection. Accordingly, Porex notified all of its
customers not to use any implants sold by Porex and to return such implants to
Porex for a full refund. Porex had ceased offering implants for sale prior to
the recall date.

Since March 1991, Porex has been named as one of many co-defendants in a
number of actions, including putative class actions, brought by recipients of
implants who allege that their mammary implants caused one or more of a wide
range of ailments. These implant cases and claims generally raise difficult and
complex factual and legal issues and are subject to many uncertainties and
complexities, including, but not limited to, the facts and circumstances of
each particular case or claim, the jurisdiction in which each suit is brought,
and differences in applicable law. The Company does not have sufficient
information to evaluate each case and claim. Certain of the actions against
Porex have been dismissed where it was determined that the implant in question
was not distributed by Porex, and certain other claims have been settled by the
Manufacturer or by the insurance carriers of Porex without material cost to
Porex. The Company believes that Porex has a valid claim for indemnification
under the Distribution Agreement with respect to any liabilities that could
result from pending actions or claims by recipients of implants or any similar
actions or claims that may be commenced in the future. Porex's right to
indemnification, however, is subject to a disagreement with the Manufacturer.
Pending the resolution of such disagreement, the Manufacturer has been paying a
portion of the costs of the settled claims. There can be no assurance, however,
that the Manufacturer will continue to pay any portion of such costs.

In 1994, Porex was notified that its insurance carrier would not renew its
then-existing insurance coverage after December 31, 1994 with respect to
actions and claims arising out of Porex's distribution of implants. However,
Porex has exercised its right, under such policy, to purchase extended
reporting period coverage with respect to such actions and claims. Such
coverage provides insurance, subject to existing policy limits but for an
unlimited time period, with respect to actions and claims made after December
31, 1994 that are based on events that occurred during the policy period. The
Company believes that such coverage, together with Porex's insurance policies
in effect on or before December 31, 1994, should provide adequate coverage
against liabilities that could result from actions or claims arising out of
Porex's distribution of implants. To the extent that certain of such actions
and claims seek punitive and compensatory damages arising out of alleged
intentional torts, if awarded such damages may or may not be covered, in whole
or in part, by Porex's insurance policies. In addition, Porex's recovery from
its insurance carriers is subject to policy limits and certain other
conditions. Porex has been expensing the retention amount under its policies as
incurred. See "--Potential Liability Risk and Availability of Insurance" above
and "Business--Legal Proceedings--Mammary Implant Litigation."

7
<PAGE>

SHARES AVAILABLE FOR FUTURE SALE

Of the currently outstanding shares of Common Stock, 5,061,857 shares (the
Wygod Shares, as previously defined) are owned by SN Investors and are
"restricted securities," within the meaning of Rule 144 promulgated pursuant to
the Securities Act ("Rule 144"). In addition, as more fully set forth in
"Certain Transactions--The Purchase--Investment Agreement," the Wygod Shares
are subject to certain restrictions on transfer. Upon expiration of such
restrictions, SN Investors may be able to sell without registration under the
Securities Act the number of such shares permitted under Rule 144. The Company
has granted certain demand registration rights to Mr. Wygod with respect to the
Wygod Shares that are assignable to SN Investors. Any sales by SN Investors
pursuant to Rule 144 or such registration rights could have a material adverse
effect on the prevailing market price for the Common Stock.

The Company has reserved an aggregate of 4,308,170 shares of Common Stock for
issuance pursuant to stock option agreements and stock option plans. The sale
of a substantial amount of such additional shares of Common Stock following
their issuance could have a material adverse effect on the market price of the
Common Stock.

INVESTMENT COMPANY ACT

A significant portion of the Company's assets are invested in short-term,
interest-bearing investment grade securities pending use in operations and for
acquisitions. The nature of these securities could under certain circumstances
result in the Company being deemed an investment company under the Investment
Company Act of 1940 (the "Investment Company Act"). The Investment Company Act
requires registration of, and imposes substantial restrictions on, companies
that engage, or propose to engage, primarily in the business of investing,
reinvesting, or trading in securities, or that engage, or propose to engage, in
the business of investing, reinvesting, owning, holding or trading in
securities and that fail certain statistical tests concerning a company's
ownership of securities. The Company intends to structure its investments and
acquisition program so as to avoid application of the Investment Company Act
and, if necessary, will apply to the Commission for an exemption from the
Investment Company Act. There can be no assurance, however, that such an
exemption will be available to the Company. If the Company were required to
register as an investment company under the Investment Company Act, it would
become subject to regulations that could have a material adverse impact on its
business.

USE OF PROCEEDS

The proceeds, if any, received by the Company from the sale of Common Stock
to the Purchasers pursuant to the standby arrangements described herein under
"Standby Arrangements" will be used to pay the Redemption Price of Debentures
not duly tendered for conversion. Any other amounts received by the Company
from the Purchasers pursuant to the standby arrangements described herein will
be used for general corporate purposes. The amount of the proceeds, if any, to
be received by the Company from the Purchasers is not determinable at this
time, as neither the number of shares, if any, that will be sold to the
Purchasers nor the amount of profit, if any, that the Purchasers will realize
upon resale of such shares and will be required to share with the Company can
be determined at this time. The Company will not receive any proceeds from the
issuance of Common Stock upon conversion of Debentures.

8
<PAGE>

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the symbol
SNTC. The following table sets forth for the periods indicated the high and low
sale prices for the Company's Common Stock as reported by the Nasdaq National
Market, as adjusted to reflect a 2-for-1 stock split of the Common Stock
effective February 26, 1993.

<TABLE>
<CAPTION>
Fiscal Year 1993 HIGH LOW
---------------- ---- ----
<S> <C> <C>
First Quarter.......................................... $19 1/4 $17 1/2
Second Quarter......................................... 22 1/4 18
Third Quarter.......................................... 22 1/2 15
Fourth Quarter......................................... 16 11

Fiscal Year 1994
----------------
First Quarter.......................................... 15 3/4 10 3/4
Second Quarter......................................... 12 8 3/4
Third Quarter.......................................... 12 1/2 10
Fourth Quarter......................................... 16 1/2 8 1/4

Fiscal Year 1995
----------------
First Quarter.......................................... 16 1/4 11 1/2
Second Quarter......................................... 20 1/4 14 3/4
Third Quarter (through January 26, 1995)............... 24 1/2 19
</TABLE>

On January 26, 1995, the last sale price of the Common Stock as reported by
the Nasdaq National Market was $23 1/16. As of January 25, 1995, the Company's
Common Stock was held by 199 stockholders of record. The Company believes that
its Common Stock is beneficially held by at least 400 stockholders.

DIVIDEND POLICY

For each of the fiscal years ended June 30, 1994 and 1993 and the six months
ended December 31, 1994, the Company did not pay any dividends to the holders
of its Common Stock. The Company intends to continue to retain earnings to
finance its business and, accordingly, does not currently anticipate paying
cash dividends to holders of its Common Stock.

9
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at December
31, 1994 and as adjusted to give effect to the assumed conversion of 100% and
50%, respectively, of the outstanding Debentures into shares of Common Stock on
December 31, 1994.

<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------------
100% 50%
CONVERTED CONVERTED
--------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and marketable securities(2)................ $173,048 $170,496 $126,351
======== ======== ========
Current portion of long-term debt(3)............. $ 444 $ 444 $ 444
======== ======== ========
Long-term debt, less current portion(4)
7% Convertible Subordinated Debentures Due
2001.......................................... 80,500 -- --
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized; none issued................ -- -- --
Common stock, $.01 par value, 50,000,000 shares
authorized; 17,820,732 shares issued,
12,552,269 shares outstanding(5).............. 178 217 198
Additional paid-in capital..................... 72,997 150,774 110,413
Treasury stock at cost; 5,268,463 shares....... (35,778) (35,778) (35,778)
Retained earnings.............................. 45,041 44,041 41,008
-------- -------- --------
Total stockholders' equity................... 82,438 159,254 115,841
-------- -------- --------
Total capitalization....................... $162,938 $159,254 $115,841
======== ======== ========
</TABLE>
- --------
(1) The as adjusted amounts include expenses related to the conversion of
Debentures into shares of Common Stock.
(2) Includes the Company's current cash balance as of December 31, 1994 and
short- and long-term marketable securities. This amount will be reduced by
approximately $38,000,000 when the Company pays certain current
liabilities, including taxes, that arose in connection with the
Divestiture.
(3) As of December 31, 1994, the Company had no short-term indebtedness.
(4) See Note 4 to the Consolidated Financial Statements of the Company for the
year ended June 30, 1994 included in the 1995 Form 8-K that is incorporated
by reference into this Prospectus.
(5) These amounts do not include at December 31, 1994 (i) 220,000 shares
reserved for issuance under certain stock option agreements and (ii)
4,205,860 shares reserved for issuance under the Company's stock option
plans. Assuming 100% and 50% conversion of the Debentures, there would have
been 21,766,842 and 19,796,238 shares issued and 16,498,379 and 14,527,775
shares outstanding, respectively, at December 31, 1994.

10
<PAGE>

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial data set forth below as of and for the five years in
the period ended June 30, 1994 has been derived from the Consolidated
Financial Statements of the Company, which have been audited by Arthur
Andersen LLP, independent accountants. The selected financial data as of and
for the six-month periods ended December 31, 1993 and 1994 are derived from
unaudited consolidated financial statements of the Company, which, in the
opinion of management, include all normal and recurring adjustments necessary
to present fairly the financial position and the results of operations of the
Company for those periods. Such information should be read in conjunction with
the Consolidated Financial Statements of the Company and the related notes
thereto included in the 1995 Form 8-K and Second Quarter Form 10-Q that are
incorporated by reference into this Prospectus. The selected financial data
for the three years in the period ended June 30, 1994 has been restated to
reflect the Divestiture. See "Certain Transactions."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------- ------------------
1990 1991 1992 1993 1994 1993 1994
------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA(1):
Net sales............... $23,985 $24,704 $28,486 $30,645 $33,093 $ 15,360 $ 18,423
Costs and expenses:
Cost of sales.......... 13,468 14,642 16,788 18,239 21,494 9,790 11,047
Selling, general and
administrative........ 6,004 5,755 7,030 8,096 9,052 4,652 5,411
Interest and other in-
come.................. (1,583) (706) (4,901) (7,147) (5,071) (2,552) (2,982)
Interest expense....... 328 259 3,538 6,027 5,975 3,013 2,968
Purchase and Sale
Agreement related
expenses and other.... -- -- -- -- 563(2) 563(2) 5,580(3)
------- ------- ------- ------- ------- -------- --------
18,217 19,950 22,455 25,215 32,013 15,466 22,024
Income from continuing
operations before
provision for income
taxes.................. 5,768 4,754 6,031 5,430 1,080 (106) (3,601)
Provision for income
taxes.................. 1,879 1,630 2,151 2,046 411 (39) (1,356)
------- ------- ------- ------- ------- -------- --------
Income from continuing
operations............. 3,889 3,124 3,880 3,384 669 (67) (2,245)
Income from discontinued
operations............. -- -- 1,376 2,734 1,823 1,087 12,748(4)
------- ------- ------- ------- ------- -------- --------
Net income........... 3,889 3,124 5,256 6,118 2,492 1,020 10,503
------- ------- ------- ------- ------- -------- --------
Primary net income per
share:
Continuing operations.. $ 0.27 $ 0.21 $ 0.24 $ 0.19 $ 0.04 $ 0.00 ($ 0.12)
Discontinued opera-
tions................. -- -- 0.09 0.16 0.10 0.06 0.71
------- ------- ------- ------- ------- -------- --------
Net income per share. $ 0.27 $ 0.21 $ 0.33 $ 0.35 $ 0.14 $ 0.06 $ 0.59
======= ======= ======= ======= ======= ======== ========
Weighted average shares
outstanding(5)......... 14,318 14,562 16,028 17,485 17,968 17,992 17,939
======= ======= ======= ======= ======= ======== ========
Fully diluted net income
per share:
Continuing operations.. -- -- -- -- -- -- ($ 0.02)
Discontinued opera-
tions................. -- -- -- -- -- -- 0.58
======= ======= ======= ======= ======= ======== ========
Net income per share. -- -- -- -- -- -- $0.56
======= ======= ======= ======= ======= ======== ========
Fully diluted weighted
average shares out-
standing............... -- -- -- -- -- -- 22,144
======= ======= ======= ======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31, 1994
--------------------------------------- ----------------------------
AS ADJUSTED
-------------------
100% 50%
1990 1991 1992 1993 1994 ACTUAL CONVERTED CONVERTED
------- ------- ------- ------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $28,572 $30,430 $44,350 $65,171 $66,020 $102,904 $100,821 $56,677
Net assets of discontin-
ued operations......... -- -- 25,352 52,548 55,882 -- -- --
Total assets............ 43,262 46,233 163,011 189,494 194,009 207,154 203,001 158,857
Long-term debt, less
current portion........ 2,541 1,875 81,714 81,058 80,716 80,500 -- --
Stockholders' equity.... 36,379 39,566 74,056 102,378 105,130 82,438 159,254 115,841
</TABLE>
- --------
(1) This continuing operations data excludes the results of operations of the
Institutional Pharmacies Business, which was sold on December 14, 1994.
(2) This amount includes a nonrecurring pretax charge of $563 ($372 after tax
or $0.02 per share on an after tax basis). This charge is related to one-
time payments made to certain executive officers in conjunction with
Merck's acquisition of the Company's then parent company, Medco.
(3) This amount includes a nonrecurring pretax charge of $5,580 ($3,683 after
tax) or $0.21 per share on a primary net income per share basis and $0.17
per share on a fully diluted net income per share basis. This charge is
primarily related to the grant of stock options below fair market value to
certain officers for services provided in connection with the Purchase and
the Divestiture.
(4) This amount includes a nonrecurring after tax gain of $11,785 or $0.66 per
share on a primary net income basis and $0.53 per share on a fully diluted
net income basis. This amount related to the sale of the Institutional
Pharmacies Business.
(5) This data has been restated to reflect a 2-for-1 stock split of the Common
Stock effective on February 26, 1993.

11
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On December 14, 1994, the Company sold its Institutional Pharmacies Business,
which accounted for approximately $78,705,000, or 70.4%, of the Company's net
sales and approximately $1,823,000, or 73.2%, of its net income during fiscal
year ended June 30, 1994. The current operations of the Company consist of
Porex. See "Prospectus Summary--Recent Transactions" and "Certain
Transactions." The Company's financial statements have been restated to exclude
the Institutional Pharmacies Business, and the discussion set forth below is
based on such financial statements.

SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993

Net sales for the six months ended December 31, 1994 increased by $3,063,000,
or 19.9%, over the prior year period as a result of sales improvements across
many product lines, principally increased sales of writing instrument
components in the consumer sector and medical products in the health care
sector.

Cost of sales for the six months ended December 31, 1994 increased by
$1,257,000, or 12.8%, over the prior year period due to the increased sales
volume noted above and costs associated with the establishment of additional
manufacturing capabilities. As a percent of net sales, cost of sales for the
six months ended December 31, 1994 decreased to 60.0% from 63.7% in the prior
year period principally due to increased sales of higher margin products and
manufacturing efficiencies resulting from the automation of certain production
processes.

Selling, general and administrative expenses for the six months ended
December 31, 1994 increased by $759,000, or 16.3%, over the prior year period
due primarily to the addition of sales personnel and additional costs relating
to the expansion of European operations. As a percent of net sales, selling,
general and administrative expenses for the six months ended December 31, 1994
was 29.4%, which did not vary materially from the prior year period.

Interest and other income for the six months ended December 31, 1994
increased by $430,000, or 16.8%, over the prior year period as a result of a
combination of higher interest rates on the Company's investment portfolio and
the receipt of the proceeds from the consummation of the Divestiture on
December 14, 1994 offset by the cost to the Company of the Purchase.

Interest expense for the six months ended December 31, 1994 did not vary
materially from the prior year period.

Purchase and Sale Agreement related expenses and other expenses for the six
months ended December 31, 1994 increased by $5,017,000 over the prior year
period primarily as a result of the one time charge related to the issuance of
stock options issued to certain officers as compensation for services in
conjunction with the consummation of the Purchase and Sale Agreement.

The effective tax rate for the six months ended December 31, 1994 did not
vary materially from the comparable prior year period.

FISCAL YEARS ENDED JUNE 30, 1994 AND 1993

Net sales for the year ended June 30, 1994 increased by $2,448,000, or 8.0%,
over the prior year period. The sales increase was due principally to increased
unit sales of science specialty products, plastic vials and surgical products
in the health care market segment and, to a lesser extent, to increased unit
sales across the

12
<PAGE>

industrial segment product line. These increases were partially offset by a
decrease in sales of blood serum filters. The effect of inflation was not
significant for the year ended June 30, 1994.

Cost of sales for the year ended June 30, 1994 increased by $3,255,000, or
17.8%, over the prior year period primarily as a result of the increased sales
volume. As a percent of net sales, cost of sales increased to 65.0% from 59.5%
in the prior year primarily as a result of a change in the composition of sales
to lower margin products and to the addition of manufacturing overhead to
support new product lines.

Selling, general and administrative expenses for the year ended June 30, 1994
increased by $956,000, or 11.8%, as compared to the prior year period primarily
due to increased staffing levels and marketing expenditures in Porex's surgical
product group and slightly higher corporate overhead expenses. As a percent of
net sales, selling, general and administrative expenses increased to 27.4% from
26.4% in the prior year period due to the increases in the costs noted above.

Interest and other income for the year ended June 30, 1994 decreased by
$2,076,000, or 29.0%, from the prior year period due to lower interest and
dividend rates available during the year.

Interest expense for the year ended June 30, 1994 did not vary materially
from the prior year period.

Purchase and Sale Agreement related expenses and other expenses for the year
ended June 30, 1994 consists of one-time payments made to certain executive
officers in conjunction with Merck's acquisition of Medco, the Company's then
parent company.

The effective tax rate for the year ended June 30, 1994 did not vary
materially from the prior year period.

FISCAL YEARS ENDED JUNE 30, 1993 AND 1992

Net sales for the year ended June 30, 1993 of $30,645,000 increased by
$2,159,000, or 7.6%, over the prior year period. The sales increase was due
principally to increased unit sales of medical OEM products and surgical
products in the health care market segment and, to a lesser extent, increased
unit sales across the industrial segment product line. These increases were
partially offset by a decrease in unit sales of writing instrument components
in the consumer segment. The effect of inflation was not significant for the
year ended June 30, 1993.

Cost of sales for the year ended June 30, 1993 increased by $1,451,000, or
8.6%, over the prior year period primarily as a result of the increased sales
volume. As a percent of net sales, cost of sales increased to 59.5% from 58.9%
in the prior year primarily as a result of a change in the composition of sales
to lower margin products.

Selling, general and administrative expenses for the year ended June 30, 1993
increased by $1,066,000, or 15.2%, as compared to the prior year period
primarily due to increased staffing levels required by the establishment of a
new product development group at Porex. As a percent of net sales, selling,
general and administrative expenses increased to 26.4% from 24.7% in the prior
year period due to the increases in the costs noted above.

Interest and other income for the year ended June 30, 1993 increased
$2,246,000, or 45.8%, as compared to the prior year period due to an increase
in the funds available for investment as a result of the net proceeds resulting
from the issuance of the Company's common stock and the issuance of the
Company's 7% Convertible Subordinated Debentures Due 2001, which were completed
in the second quarter of fiscal 1992.

13
<PAGE>

Interest expense for the year ended June 30, 1993 increased $2,489,000, or
70.4%, as compared to the prior year period as a result of the Company's 7%
Convertible Subordinated Debentures being outstanding for the full period.

The effective tax rate for the year ended June 30, 1993 was 37.7%, which
increased from 35.7% in the prior year period primarily due to a combination of
an increase in state income taxes and a decrease in the amount of dividend
income, which is non-taxable.

CAPITAL RESOURCES AND LIQUIDITY

Cash, cash equivalents and marketable securities increased by $70,497,000 to
$173,048,000 during the six months ended December 31, 1994 principally due to
the proceeds received from the consummation of the Divestiture offset by the
cost to the Company of the Purchase. Excluding the effects of these
transactions, cash provided by operations, net of capital expenditures
increased by $1,962,000.

In accordance with the Purchase and Sale Agreement, the Company and Merck
entered into a six-month agreement for the provision of certain transition
services by Merck or its subsidiaries to the Company, in order to facilitate
the Company's orderly transition to being an independent entity. Such services
include, among other things, administrative, legal and other transition
services at a cost determined on the same basis as historically determined. As
a result of the consummation of the Purchase and Sale Agreement noted above,
the Company operates independently from Merck and Medco, and will no longer be
charged corporate overhead costs based on the cost-sharing methodology
previously utilized by Medco. The Company is now directly incurring certain
corporate overhead costs, which were allocated pursuant to its services
agreement with Medco prior to the consummation of the Purchase and Sale
Agreement. The Company estimates such additional costs, which consist primarily
of salaries and benefits, rent and insurance, will increase corporate overhead
by approximately $2,000,000 over the next twelve months. The Company believes
that its cash flow from operations and the income earned on its investments are
sufficient to meet the anticipated working capital requirements of its
business, including these increased corporate overhead expenses, during this
period.

The Company continues to pursue an acquisition program pursuant to which it
seeks to effect one or more acquisitions or other similar business combinations
with businesses it believes have significant growth potential. Financing for
such acquisitions may come from several sources, including, without limitation,
(a) cash, cash equivalents and marketable securities and (b) proceeds from the
incurrence of additional indebtedness or the issuance of common stock,
preferred stock, convertible debt or other securities. There can be no
assurance that the Company's acquisition program will be successful. See
"Business--Acquisition Program."

The Company has called for redemption of all of its Debentures. The
Debentures are convertible into shares of the Company's Common Stock. The
Company has entered into (i) a Standby Agreement with the Purchasers pursuant
to which the Purchasers have agreed, subject to certain conditions, to purchase
from the Company a number of shares of Common Stock that otherwise would have
been issuable upon conversion of up to $18,250,000 aggregate principal amount
of the Debentures that are not surrendered for conversion and (ii) an agreement
with an institutional investor to surrender for conversion $22,050,000
aggregate principal amount of Debentures held by such investor. If Debentures
in excess of the amounts discussed above are not surrendered for conversion,
the Company may be required to redeem up to $40,200,000 of its Debentures for
cash.

14
<PAGE>

BUSINESS

On December 14, 1994, the Company consummated the Divestiture and the
Purchase. In the Purchase, the Company and SN Investors purchased approximately
58.0% of the Common Stock from Merck. As a result of the Purchase, SN Investors
and Mr. Wygod own as of the date of this Prospectus an aggregate of
approximately 41.2% of the outstanding Common Stock, and Merck no longer owns
an equity interest in the Company. In the Divestiture, the Company sold its
Institutional Pharmacies Business, which accounted for approximately
$78,705,000, or 70.4%, of the Company's net sales and approximately $1,823,000,
or 73.2%, of its net income during the fiscal year ended June 30, 1994. The
current operations of the Company consist of Porex. See "Prospectus Summary--
Recent Transactions" and "Certain Transactions."

The Company is a Delaware corporation and was incorporated in May 1989. The
Company's principal offices are located at 669 River Drive, Elmwood Park, New
Jersey 07407, and its telephone number is (201) 703-3400.

ACQUISITION PROGRAM

The Company intends to pursue an acquisition program pursuant to which it
will seek to effect one or more acquisitions of or business combinations with
businesses that the Company believes have significant growth potential. The
Company expects that the growth potential from such transactions may come from,
among other factors, its ability to (i) improve the financial and operating
performance of an acquired business, (ii) redefine the business strategy of an
acquired business to enhance its market position or gain entry to new markets
for its products or services or (iii) enhance the value of an acquired business
by the acquisition of similar or complementary businesses. The Company intends
initially to concentrate its acquisition efforts in the health care industry
but such emphasis would not limit in any manner its ability to pursue
acquisition opportunities in other industries. Any acquisitions will be
limited, as required by agreements to which the Company is a party, to areas of
business that would not be competitive with certain businesses of Merck and its
subsidiaries, including the Institutional Pharmacies Business. See "Certain
Transactions--The Divestiture, The Purchase and Certain Additional Agreements."
The Company's acquisition program could result in a substantial change in the
business, operations and financial condition of the Company. As of the date of
this Prospectus, the Company has not yet entered into any agreement or
understanding with a prospective acquisition candidate.

The success of the Company's acquisition program will depend on, among other
things, the availability of acquisition candidates, the availability of funds
to finance acquisitions, and the availability of management resources to
oversee the operation of acquired businesses. As of the date of this
Prospectus, the Company had approximately $135,000,000 in cash and marketable
securities available for acquisitions and other corporate purposes. This amount
will be reduced by any payments made by the Company to fund the redemption of
the Debentures to the extent such payments exceed the amounts provided by the
Purchasers under the Standby Agreement. Financing for acquisitions may also
come from other sources, including, without limitation, proceeds from the
incurrence of indebtedness or the issuance of additional Common Stock,
preferred stock, convertible debt or other securities, which could result in
substantial dilution of the percentage ownership of the stockholders of the
Company at the time of any such issuance. The proceeds from any financing may
be used for costs associated with identifying and evaluating prospective
acquisition candidates, and for structuring, negotiating, financing and
consummating any such acquisition transactions and for other general corporate
purposes. The Company does not intend to seek stockholder approval for any such
acquisition or security issuance unless required by applicable law or
regulation. No assurance can be given that the Company will succeed in
consummating any acquisitions or that the Company will be able to successfully
manage or integrate any business that it acquires. The future growth of the
Company will depend primarily on its ability to consummate one or more such
acquisitions and to operate such businesses successfully.

15
<PAGE>

Mr. Wygod has indicated that he intends to assist the Company in pursuing its
acquisition program by bringing opportunities for potential acquisitions to the
Company. In addition, Mr. Wygod has indicated that he is willing to assist the
Company in negotiating such acquisitions and in seeking financing in the event
any such acquisition were to be financed externally by the Company.

POREX

GENERAL

Porex Technologies Corp., a wholly owned subsidiary of the Company, designs,
manufactures and distributes porous and solid plastic components and products
used in health care, industrial and consumer applications. Porex's principal
products, which incorporate porous plastics, are used to filter, drain,
diffuse, vent or control the flow of fluids or gases. A large percentage of
Porex's products are sold to other manufacturers for incorporation into their
products.

Porex's health care products include proprietary products manufactured and
sold under Porex's trade names. These products are sold for clinical and
medical/surgical use in hospitals, clinics, physicians' offices and
laboratories. Porex also manufactures and sells a line of plastic vials and
produces components made to the specifications of original equipment
manufacturers ("OEMs") for incorporation into their health care products.
Porex's industrial and consumer products consist primarily of custom-
manufactured components made for manufacturers of industrial and consumer
products. The Company believes Porex's principal strengths to be its
manufacturing processes, quality control and relationships with distributors of
its proprietary health care products.

Porous plastics are permeable plastic structures having omni-directional
(i.e., porous in all directions to the flow of fluids or gases) interconnecting
pores. Porous plastics are manufactured by Porex with pore sizes between
approximately 10 and 500 micrometers (one micrometer is equal to one-millionth
of a meter; an object of 40 micrometers in size is about as small as can be
discerned by the naked eye). Porous plastic materials can be molded from
several thermoplastic raw materials and are produced by Porex at its own
manufacturing facilities as fabricated devices, custom-molded shapes, sheets,
tubes or rods depending on proprietary application or manufacturer
specifications. Porex also purchases for resale through its distribution
channels certain products which are complementary to its manufactured product
lines.

Porex has an injection molding facility which produces solid plastic products
for health care, consumer and industrial applications.

HEALTH CARE PRODUCTS

Porex's proprietary products for clinical and surgical applications include
blood serum filters, blood tube closure devices and a line of medical/surgical
products designed primarily for use in plastic and reconstructive surgery and
maxillofacial surgery. Porex also manufactures and sells a line of plastic
vials and produces components for incorporation into health care products made
by OEMs.

Blood Serum Filters and Related Products. Porex's blood serum filters are
used to separate microscopic particles and fibrous matter (fibrin) from
centrifuged blood serum to prevent clogging of automated laboratory chemical
analysis equipment. The filters allow the serum to pass through while blocking
passage of particulate materials. Analysis of the serum provides specific
information as to a patient's health. Porex also manufactures a line of closure
devices that are used with blood serum filters and tubes.

In response to health concerns regarding the handling of human blood, new
blood testing equipment is being developed which may not require filtered blood
serum for analysis, or which may eliminate the need for handling of blood serum
by medical personnel. Increased use of such new equipment may have an adverse
impact on sales of Porex's current line of blood serum filters.

16
<PAGE>

Surgical Products. Porex's surgical products are marketed primarily to
surgeons who specialize in plastic and reconstructive surgery and maxillofacial
surgery. The product line includes MEDPOR (R) Surgical Implant material, which
is polymeric biomaterial used for craniofacial reconstruction and augmentation,
tissue expanders and TLS (R) Surgical Drainage Systems for small wound sites.
Porex also markets TLS (TM) Surgical Marker pens to mark the areas of proposed
surgical incision. Porex manufactures MEDPOR (R) Surgical Implant material and
distributes, and in some cases assembles, the other items in its surgical
product line.

OEM Medical Products. Porex manufactures various porous plastic components
which it sells to other health care product manufacturers for incorporation
into their finished products. These porous plastics are used to vent or diffuse
gases or fluids and are used as membrane supports in other manufacturers'
products. The components include (i) disks used to support membranes, modules
and other filtration devices used in diagnostic kits and therapeutic devices
utilizing monoclonal antibody technology, (ii) a venting system for catheters
which allows air to vent from a catheter as it is inserted into a vein, while
at the same time preventing blood spillage and possible contamination of
hospital personnel, (iii) a porous disk used in pipette tips to prevent the
fluid to be pipetted from passing into the pipette instrument, and (iv) an
oxygen diffuser, which is typically used in oxygen therapy equipment to
humidify oxygen.

Vial and Solid Plastic Components. Porex manufactures and sells a full line
of plastic vials for pharmaceuticals. Porex also produces close tolerance solid
plastic components which use most thermoplastic resins, but primarily
polystyrene, polypropylene, nylon and thermoplastic rubber for medical and
industrial applications. These products are custom designed and produced to
satisfy individual customer specifications.

During the year ended June 30, 1994, Medco purchased certain plastic vials
and caps manufactured by Porex for use in its operations at an aggregate price
of $2,312,000, representing substantially all of Porex's sales of such
products. These sales were based on prices and terms generally available to
non-affiliates. Pursuant to a Purchase Agreement dated as of May 24, 1994
between Medco and Porex (the "Medco/Porex Purchase Agreement"), entered into in
connection with the Divestiture and the Purchase, Porex will supply to Medco
all of Medco's needs as described therein (the "Requirements") for certain
plastic vials and/or caps of different styles, dimensions and designs as
described therein (the "Products"), for Medco's use in its prescription
dispensing operations, and Medco will purchase such Requirements for a period
beginning on December 14, 1994 and ending on December 14, 1996. The cost to
Medco of the Products is the price in effect on the date of the Medco/Porex
Purchase Agreement, and Medco will be entitled to that price until December 14,
1995. Such price will increase by 3% on such date subject to certain
adjustments set forth in the Medco/Porex Purchase Agreement.

INDUSTRIAL PRODUCTS

Porex manufactures a variety of custom porous plastic components for
industrial applications. These components are produced as molded shapes, and in
sheets, tubes and rods, individually designed to customer specifications as to
size, rigidity, porosity and other needs.

Automotive Products. Porex believes that it is currently the largest producer
of porous plastic vents used in domestic automobile batteries. A battery vent
is used as a flame arrester to prevent damage to an automotive storage battery
and possible personal injury. The typical lead-acid storage battery, when being
charged, generates significant quantities of hydrogen gas. The accumulated
hydrogen must be vented into the atmosphere to prevent internal pressure build-
up in the battery. The porous plastic material incorporated into the battery
vent allows the generated hydrogen to pass into the atmosphere and reduces the
possibility that accidental sparks or flames will enter the battery.

Wastewater Treatment Products. Porex manufactures a porous plastic material
used for filter support media for wastewater treatment facilities. Such
facilities are generally large construction projects built under contracts
awarded to third parties through competitive bidding with state or local
government authorities for communities. Porex expects continued sales in this
area. However, due to the scale and frequency of such construction projects, as
well as the dependence of Porex's customers on government contracts, sales of
wastewater treatment components are expected to be irregular.

17
<PAGE>

Other OEM Industrial Components. Porex produces (i) industrial filters to
remove particulate matter, oil and water residues from compressed air lines,
(ii) silencers and mufflers to reduce sound levels produced by compressed air
exhaust, (iii) miscellaneous water filters for industrial use, including use in
vending machines, and (iv) products for facilitating the movement of powdered
materials. Porex also manufactures a large variety of highly specialized
plastic components to meet specific applications for manufacturers.

CONSUMER PRODUCTS

Porex manufactures a line of porous plastic components used in a variety of
home and office products and appliances. Porex's consumer products include a
variety of writing pen tips or "nibs" which Porex supplies principally to
manufacturers of marking and highlighting pens. The porous nib conducts the ink
stored in the pen barrel to the writing surface by capillary action. Porex
produces a variety of porous plastic filters used in home water filters and
conditioners. The filters are used for particle and sediment removal through
devices attached to a sink or faucet. Porex's porous plastic components are
used in health and beauty aid products (such as deodorant and fragrance
applicators).

MARKETING AND DISTRIBUTION

As of December 31, 1994, Porex had over 300 customers for its porous and
solid plastic products. Porex distributes its proprietary blood serum filters
and related products through independent distributors. Porex's MEDPOR(R)
products are sold primarily by Porex's marketing staff while the remaining
surgical products are sold primarily through independent dealers and agents. In
the United States, sales of OEM health care products, industrial products and
consumer products are made directly by Porex's marketing staff.
Internationally, such products are sold through independent distributors and
agents who work in conjunction with Porex's marketing staff. Export sales,
which are made principally to Europe, consist primarily of Porex's OEM medical
product, industrial product and consumer product lines. For the fiscal year
ended June 30, 1994 and six months ended December 31, 1994, Porex's foreign
sales and export sales were $7,900,000, or 23.9% of sales, and $4,500,000, or
24.4% of sales.

Porex has a marketing staff of 17 professional employees, nine of whom work
with manufacturers on matters which include development of component products
to help solve such manufacturers' problems.

SEASONALITY AND BACKLOG

Porex's plastic products business is not seasonal to any significant extent.
At December 31, 1994, Porex's backlog was approximately $8,160,000, as compared
to approximately $8,152,000 at June 30, 1994. The backlog consists primarily of
blanket orders with release dates of up to 12 months, the full amounts of which
are expected to be filled over a 12-month period.

PRODUCT AND PROCESS DEVELOPMENT

Porex maintains a continuing development program devoted primarily to porous
materials and their applications and proprietary products for the clinical
laboratory. Development activities include designing new and improved products,
either proprietary or for customers' specific requirements, and new
manufacturing processes.

Porex's development expenditures were $1,328,000, $1,547,000 and $1,554,000
for the fiscal years ended June 30, 1994, 1993 and 1992, respectively and
$785,000 for the six months ended December 31, 1994. Recently, new product
development activities have focused on porous components for use in health care
and other applications and proprietary products for the clinical laboratory.

RAW MATERIALS

The principal raw materials used by Porex in its plastic products business
are a variety of plastic resins which are generally available from a number of
suppliers in the United States in adequate quantities to meet Porex's needs.
Porex has been able to obtain adequate supplies of raw materials and believes
that sufficient supplies will be available in the foreseeable future. Porex has
no long-term supply contracts for the purchase of raw materials. Because the
primary resource used in plastic resins is petroleum, the cost and availability
of plastic resins for use in Porex's products varies to a great extent with the
price of petroleum. Porex's inability to acquire sufficient plastic resins at a
reasonable price would affect Porex's ability to maintain its margins in the
short term.

18
<PAGE>

Porex requires high-grade plastic resins with specific properties as raw
materials for certain of its porous plastic products. Accordingly, shipments of
raw materials from suppliers are closely monitored for compliance with Porex's
standards. Porex has routinely rejected pre-shipment samples of product from
raw material suppliers. Although there are various suppliers of high-grade
plastic resins with specific properties and Porex has not experienced any
material difficulty in obtaining adequate supplies of high-grade materials, the
inability to obtain such high-grade plastic resins, or any raw materials, could
have a material adverse effect on Porex. To ensure the availability of high-
grade plastic resins with specific properties, Porex occasionally purchases
more than it would otherwise currently require. Porex maintains an inventory of
raw materials sufficient to satisfy its production needs for an extended period
of time.

For its solid plastic products, Porex utilizes commercial grade thermoplastic
resins, including polyethylene, polypropylene and polystyrene. Such materials
are readily available from a number of sources and Porex is not dependent on
any single source of supply. Because of the ready availability of such
materials, Porex does not maintain a significant inventory of such raw
materials.

PATENTS AND TRADEMARKS

Porex owns a number of patents and trademarks in the United States and
foreign countries. The majority of Porex's patents and patent applications
relates to porous plastics and medical devices. Porex is the exclusive licensee
of a patented valve device used in one model of its blood serum filters, and of
a patent on a surgical drain device. Porex does not consider either license
material to its business operations. Porex owns one patent on blood serum
filters. Although Porex deems its patents to be important to its business and
intends to continue to seek patent protection when deemed appropriate, no
significant portion of the business of Porex is deemed by management to be
materially dependent on any particular patent. Porex believes that its non-
patented manufacturing processes are protected under contractual and other
legal principles which, however, do not afford the statutory exclusivity
possible for patented processes.

REGULATION

The developing, testing, marketing and manufacturing of medical devices such
as plastic and reconstructive surgical implants and tissue expanders are
regulated under the Medical Device Amendments of 1976 to the Federal Food, Drug
and Cosmetic Act (the "1976 Amendments") and additional regulations promulgated
by the FDA. In general, these statutes and regulations require that
manufacturers adhere to certain standards designed to ensure the safety and
effectiveness of medical devices.

Under the 1976 Amendments, each medical device manufacturer must be a
"registered device manufacturer" and must comply with regulations applicable
generally to manufacturing practices and clinical investigations involving
humans. The FDA is authorized to obtain and inspect devices, their labeling and
advertising, and to inspect the facilities in which they are manufactured in
order to ensure that a device is not improperly manufactured or labeled. Porex
is registered with the FDA and Porex's Japanese supplier of tissue expanders
has submitted its facilities to voluntary FDA inspection.

In addition, the sale and marketing of specific medical devices are regulated
by the FDA under the 1976 Amendments, which classify medical devices based upon
the degree of regulation deemed appropriate and necessary by the FDA. A device
may be classified as a Class I, II or III device based on recommendations of
advisory panels appointed by the FDA. Class I devices are subject only to
general controls. Class II devices, in addition to general controls, are
subject to "performance standards." Class III devices, including most devices
used or implanted in the body, require FDA pre-market approval before they may
be distributed other than in clinical trials.

Porex's MEDPOR (R) Surgical Implants and tissue expanders are regulated as
Class II medical devices. Products which Porex may introduce in the future, if
any, may also be classified as Class I, Class II or Class

19
<PAGE>

III medical devices. The procedure for obtaining classification of a new device
as a Class I or Class II device involves the submission of a petition to the
FDA. If the FDA determines that the device is substantially equivalent to a
pre-enactment device or a device subsequently classified in Class I or Class
II, then within 210 days of the filing of the petition it may grant approval to
market the device commercially. If the FDA determines the device is not
substantially equivalent to a pre-enactment device or a device subsequently
classified in Class I or Class II, it is automatically placed into Class III
and will either require reclassification or the submission of valid scientific
evidence to prove the device is safe and effective for human use. Devices to be
implanted will be categorized as Class III unless such classification is not
necessary to ensure their safety and effectiveness. For new Class III devices,
Porex may submit to the FDA an application for an Investigational Device
Exemption ("IDE"). An approved IDE exempts Porex from certain otherwise
applicable FDA regulations and grants approval for a clinical investigation, or
human study, to generate data to prove safety and effectiveness. In addition,
the possibility exists that certain pre-enactment, or substantially equivalent,
devices may be placed into Class III by the FDA.

When a manufacturer believes that sufficient clinical data has been generated
to prove the safety and effectiveness of the device, it may submit a pre-market
approval application ("PMA") to the FDA. The FDA reviews the PMA and determines
whether it is in submittable form and all key elements have been included.
Following acceptance of the PMA, the FDA continues its review process which
includes submission of the PMA to a panel of experts appointed by the FDA to
review the PMA and to recommend appropriate action. The panel then recommends
that the PMA be approved, not approved or approved subject to conditions. The
FDA may act according to the panel's recommendations, or it may overrule the
panel. In approving a PMA, the FDA may require some form of post-market
surveillance or other restriction.

Certain environmental regulations also apply to Porex's business, and the
Company believes that Porex is in substantial compliance with all of such
regulations. However, Porex is subject to random and scheduled checks by
environmental authorities. The Company does not anticipate that any material
capital expenditures will be required to comply with environmental regulations.

COMPETITION

Competition in Porex's plastic products business is characterized by
technological change, product obsolescence and the introduction of competitive
products at lower prices. Porex attempts to compete principally through product
performance, quality and service, rather than price.

In the porous plastics area, Porex's competitors include other producers of
porous plastic materials as well as companies that manufacture and sell
products made from materials other than porous plastics which can be used for
the same purposes as Porex's products. In this field, Porex has two significant
direct competitors in the United States and two significant direct competitors
in Europe. Porex competes with several manufacturers of blood serum filters
whose products perform the same function as Porex's original blood serum filter
and its other blood serum filters and which utilize technologies both similar
to and different from Porex's products. See "Business--Health Care Products--
Blood Serum Filters and Related Products." Porex's porous plastic pen nibs
compete with felt and fiber tips manufactured by a variety of suppliers in the
United States and other countries. Other of Porex's industrial products made of
porous plastic compete, depending on the industrial application, with porous
metals, metal screens, fiberglass tubes, pleated paper, resin-impregnated felt,
ceramics and other substances and devices.

The market for injection molded solid plastic components and products is
highly competitive and highly fragmented. Many manufacturers compete both
domestically and abroad and no company controls a significant percentage of the
market.

20
<PAGE>

EMPLOYEES

As of December 31, 1994, the Company had approximately 455 employees.

PROPERTIES

The Company leases approximately 7,000 square feet of corporate office space
at 669 River Drive, Elmwood Park, New Jersey 07407.

Porex owns a total of 47 acres of land at three locations in Georgia with
four buildings with an approximate area of 242,000 square feet, used for
manufacturing, research, office space and warehouse purposes. The land and
buildings at one such location are subject to a first mortgage securing certain
industrial revenue bonds. See Note 4 to the Consolidated Financial Statements
of the Company included in the 1995 Form 8-K that is incorporated by reference
into this Prospectus. Porex also owns a manufacturing, office and warehouse
facility in Bautzen, Germany with 2.1 acres of land and approximately 20,900
square feet in two buildings.

The Company is contemplating either building or renting approximately 50,000
square feet of additional manufacturing and warehouse space for Porex within
the next two years.

LEGAL PROCEEDINGS

Mammary Implant Litigation. During the year ended June 30, 1988, Synetic's
subsidiary Porex began distributing silicone mammary implants in the United
States pursuant to the Distribution Agreement with a Japanese manufacturer.
Because of increased government regulation and examination, Porex's supplier
determined to withdraw its implants from the United States market. On July 9,
1991, the FDA mandated a recall of all implants manufactured by companies that
elected not to comply with certain FDA regulations regarding data collection.
Accordingly, Porex notified all of its customers not to use any implants sold
by Porex and to return such implants to Porex for a full refund. Porex had
ceased offering implants for sale prior to the recall date. The cost of this
recall was included in the Company's expenses for the fiscal year ended June
30, 1992. Porex believes that after accounting for implants returned to it, the
aggregate number of recipients of implants distributed by Porex under the
Distribution Agreement in the United States totals approximately 2,500.

Since March 1991, Porex has been named as one of many co-defendants in a
number of actions brought by recipients of implants. As of January 26, 1995,
certain of the actions against Porex have been dismissed where it was
determined that the implant in question was not distributed by Porex. In
addition, 38 claims have been settled by the Manufacturer or by the insurance
carriers of Porex without material cost to Porex. As of January 26, 1995, 220
actions and 36 out-of-court claims were pending against Porex. Of the 220
actions, 68 involve implants identified as distributed by Porex and 112 cases
involve implants identified as not having been distributed by Porex. In the
remaining 40 actions, the implants have not been identified.

The typical case or claim alleges that the individual's mammary implants
caused one or more of a wide range of ailments. These implant cases and claims
generally raise difficult and complex factual and legal issues and are subject
to many uncertainties and complexities, including, but not limited to, the
facts and circumstances of each particular case or claim, the jurisdiction in
which each suit is brought, and differences in applicable law. The Company does
not have sufficient information to evaluate each case and claim.

21
<PAGE>

together with Porex's insurance policies in effect on or before December 31,
1994, should provide adequate coverage against liabilities that could result
from actions or claims arising out of Porex's distribution of implants. To the
extent that certain of such actions and claims seek punitive and compensatory
damages arising out of alleged intentional torts, if awarded such damages may
or may not be covered, in whole or in part, by Porex's insurance policies. In
addition, Porex's recovery from its insurance carriers is subject to policy
limits and certain other conditions. Porex has been expensing the retention
amount under its policies as incurred.

The Company believes that Porex has a valid claim for indemnification under
the Distribution Agreement with respect to any liabilities that could result
from pending actions or claims by recipients of implants or any similar actions
or claims that may be commenced in the future. However, Porex's right to
indemnification is subject to a disagreement with the Manufacturer. Pending the
resolution of such disagreement, the Manufacturer has been paying a portion of
the costs of the settled claims.

Based on the foregoing, the Company believes that the possibility is remote
that pending actions and claims by recipients of mammary implant devices or any
similar actions and claims that may be commenced or made in the future could
pose a material risk to the financial position of the Company or its results of
operations.

Stockholder Litigation. On August 18, 1994, an action entitled Fuss v. Wygod,
et al. was filed against the Company, its directors, and Merck in the Court of
Chancery of the State of Delaware in and for New Castle County (the Delaware
Court ). The action purportedly arises out of the events leading to the
Divestiture and the Purchase and is purportedly brought both derivatively on
behalf of the Company and as a class action on behalf of the Company's
stockholders other than the defendants. By her derivative claim, plaintiff
alleges, among other things, that such transactions were designed to entrench
the individual defendants in office and does not serve the corporate purposes
of the Company. By the class action claim, plaintiff alleges, among other
things, that the defendants breached fiduciary duties owed to members of the
alleged class by approving the proposed transaction without conducting an
auction or otherwise adequately considering alternative transactions. The
lawsuit seeks, among other things, a preliminary and permanent injunction
enjoining the proposed transaction, damages, and costs and attorneys' fees.

On October 14, 1994, the parties entered into a Memorandum of Understanding
(the "Memorandum") in connection with a contemplated settlement of the lawsuit.
The basis for the contemplated settlement includes (a) changes to the terms of
the Purchase partially in response to the filing of the lawsuit and (b)
resolution of certain disclosure issues raised by plaintiff's comments on a
draft of the proxy statement sent to stockholders of the Company in connection
with the Divestiture and the Purchase. In the Memorandum, the parties agree in
principle to use their best efforts to enter into and execute a stipulation of
settlement to release any and all claims that have been or could have been
asserted by or on behalf of the plaintiff or any members of the proposed class
(the "Class") against any of the defendants in the lawsuit which arise out of
or relate to the Divestiture or the Purchase or to any of the transactions or
events described in the lawsuit. The contemplated settlement is subject to,
among other things, (i) completion of discovery to confirm that the settlement
is fair and reasonable and is in the best interest of the stockholders of the
Company who are members of the Class and (ii) dismissal of the lawsuit with
prejudice and without awarding costs to any party, except for certain fees and
expenses that plaintiff's counsel intends to seek.

The defendants have denied, and continue to deny, that they have committed or
have threatened to commit any violation of law or breaches of duty to the
plaintiff or members of the Class and the defendants have entered into the
Memorandum because, among other reasons, the proposed settlement would
eliminate the burden and expense of further litigation and would facilitate the
consummation of transactions that they believe are in the best interests of the
Company and its stockholders.

In connection with the contemplated settlement, plaintiff's counsel will
apply to the Delaware Court for an aggregate award of attorneys' fees and
expenses in an amount not to exceed $275,000. Subject to the terms

22
<PAGE>

and conditions of the Memorandum, the Company will pay such fees and expenses
as may be awarded by the Delaware Court. The Purchase and Sale Agreement
provides that Merck, in the event that the Company, its officers, directors or
advisors become involved in any action or proceeding in connection with or
arising out of any of the matters referred to in or contemplated by the
Purchase and Sale Agreement, will reimburse the Company for 58.7% of its legal
and other expenses (including fees and expenses of any attorneys, payments
pursuant to any reimbursement, indemnification or similar arrangement with its
officers, directors or advisors and amounts, including attorneys' fees, paid in
settlement of any such action or proceeding) incurred in connection therewith.
In no event, however, will Merck be required to reimburse the Company in an
amount greater than the amount of the consideration received (and not otherwise
returned to the Company pursuant to the Purchase and Sale Agreement) by Merck
pursuant to the Purchase and Sale Agreement in excess of $45,453,750.

Enforcement Division Investigation. In late June, the Division of Enforcement
of the Securities and Exchange Commission (the "Enforcement Division") began an
investigation regarding the trading in the securities of the Company. The
Company is cooperating fully with the Enforcement Division's requests for
information and, although it cannot predict the ultimate result of the inquiry,
the Company believes that such inquiry will not have a material adverse effect
on its financial position or results of operations.

The Company is not a party to any other legal proceedings which, in its
belief, could have a material adverse effect on the Company.

23
<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS OF THE COMPANY

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
James V. Manning.......... 47 Chief Executive Officer and a director of the
Company
Paul C. Suthern........... 43 President and Chief Operating Officer and a
director of the Company
Ray E. Hannah............. 59 Vice President--Technologies Group and a
director of the Company; President and Chief
Executive Officer of Porex
Victor L. Marrero......... 38 Vice President--Finance and Chief Financial
Officer
Thomas R. Ferguson........ 67 Director(1)
Mervyn L. Goldstein, M.D.. 57 Director
Roger H. Licht............ 40 Director
Per G. H. Lofberg......... 47 Director
Charles A. Mele........... 37 Director
Herman Sarkowsky.......... 69 Director(1)
Albert W. Weis............ 66 Director(1)
Martin J. Wygod........... 54 Chairman of the Board and a director of the
Company

The officers of the Company who are not executive officers of the Company
are as follows:

<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
David J. Schlanger........ 35 Vice President--Corporate Development
Pamela B. Spira........... 35 Vice President--Corporate Development
Anthony Vuolo............. 37 Vice President--Financial Analysis

The senior officers of Porex who are not also executive officers of the
Company are as follows:

<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Richard S. Kingman........ 47 Executive Vice President and Chief Operating
Officer
Donald K. Jackson......... 46 Vice President--Finance
Philip C. White........... 48 Vice President--Human Resources
</TABLE>
- --------
(1) Member of the Audit Committee and the Stock Option Committee.

Pursuant to the terms of the Company's Certificate of Incorporation, the
Board of Directors is divided into three classes with staggered three-year
terms. Not more than one class of directors is elected at any annual meeting of
stockholders.

Messrs. Hannah, Licht, Lofberg and Sarkowsky have been elected for a term
expiring at the 1994 Annual Meeting. Messrs. Manning, Mele and Weis have been
elected for a term expiring at the 1995 Annual Meeting. Messrs. Ferguson,
Suthern and Wygod and Dr. Goldstein have been elected for a term expiring at
the 1996 Annual Meeting. See "Description of Capital Stock--Voting Rights."

24
<PAGE>

Mr. Manning has been Chief Executive Officer of the Company since January
1995 and has been an executive officer of the Company for more than the last
five years and was, until December 1994, an executive officer of Medco for more
than five years. He has also been Chairman of the Board of COMNET Corporation
("Comnet") since 1993.

Mr. Suthern has been President and Chief Operating Officer of the Company
since February 1993 and was also the Chief Executive Officer from October 1993
until January 1995. Mr. Suthern was also President and Chief Operating Officer
of Medco from November 1992 through December 1994. Mr. Suthern was Assistant to
Medco's Chairman from December 1991 to November 1992. Prior thereto he was
Executive Vice President--Operations of Medco for more than five years.

Mr. Hannah has been President of Porex since September 1987 and its Chief
Executive Officer since November 1992. Mr. Hannah was the Chief Operating
Officer of Porex from November 1984 to November 1992.

Mr. Marrero has been Vice President--Finance and Chief Financial Officer of
the Company since December 1994 and has been an officer of the Company for more
than the last five years and was, until December 1994, the Senior Vice
President--Treasurer of Medco for more than five years.

Mr. Ferguson has been a director of the Company for more than five years. He
has been a member of the law firm of Ferguson, Case, Orr, Paterson & Cunningham
since March 1990; for more than five years prior thereto he was a member of the
law firm of Ferguson, Regnier & Paterson, a professional corporation.

Dr. Goldstein has been a director of the Company for more than five years. He
has been a physician in private practice, Associate Clinical Professor of
Medicine at the Albert Einstein College of Medicine in New York City and
Attending Physician in Medicine and Oncology at Montefiore Medical Center in
New York City for more than five years. Since December 1988 he has been
Physician Director of Quality Assurance at Montefiore Medical Center.

Mr. Licht has been a director of the Company for more than five years. He has
been a member of the law firm of Licht & Licht for more than five years.

Mr. Lofberg has been a director of the Company since January 1995. He has
been President of the Merck-Medco Managed Care Division of Merck since November
1993. Prior to that, Mr. Lofberg was Senior Executive Vice President--Strategic
Planning and Sales and Marketing of Medco for more than five years.

Mr. Mele has been a director of the Company since May 1989. He has been an
executive officer of Medco for more than five years and was an executive
officer of the Company from May 1989 until December 1994. Mr. Mele is also a
director of Comnet and of Group 1 Software, Inc., computer software companies.

Mr. Sarkowsky has been a director of the Company for more than five years. He
has been Chairman of the Board and Chief Executive Officer of Sarkowsky
Investment Corporation, a diversified investment company, for more than five
years. Mr. Sarkowsky is also a director of Eagle Hardware & Garden Inc. and
Hollywood Park, Inc.

Mr. Weis has been a director of the Company for more than five years. He has
been President of A.M. Weis & Co., Inc., a commodities trading corporation, for
more than five years. Mr. Weis is a member of the Board of the Commodities
Clearing Corporation.

Mr. Wygod has been Chairman of the Board of the Company since May 1989. From
May 1989 to February 1993, Mr. Wygod also served as the Company's President and
Chief Executive Officer and until May 1994 was an executive officer of the
Company. Until May 1994, Mr. Wygod was Chairman of the Board of Medco for more
than five years, and until January 1993 he also served as Chief Executive
Officer of Medco. In addition, from November 1993 until May 1994, Mr. Wygod
served as a director of Merck. He is also

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engaged in the business of racing, boarding and breeding thoroughbred horses
and is President of River Edge Farm, Inc., which is engaged in the business of
breeding and boarding thoroughbred horses.

Mr. Schlanger has been Vice President--Corporate Development of the Company
since December 1994. Mr. Schlanger was Executive Director--Corporate
Development of Merck from February 1994 until December 1994, and from June 1990
through December 1994, he was Vice President--Legal of Medco. Prior thereto he
was an associate at the law firm of Latham & Watkins in New York.

Ms. Spira has been Vice President--Corporate Development of the Company since
December 1994. Ms. Spira was an employee of Medco from July 1994 until December
1994 and a consultant to Medco from April 1993 until July 1994. From 1990
through March 1993, she was a Vice President in the investment banking division
of Goldman, Sachs & Co.

Mr. Vuolo has been Vice President--Financial Analysis of the Company since
December 1994. Mr. Vuolo was Executive Vice President--Finance and Chief
Financial Officer of Medco Behavioral Care Corp., a subsidiary of Merck from
November 1993 until December 1994. Until December 1994, he had also been Senior
Vice President--Acquisitions of Medco for more than five years.

Mr. Hannah is the only executive officer of the Company who devotes his full
time to the operation of Porex. Porex has additional senior officers who also
manage the day-to-day operations of Porex.

No family relationship exists among any of the directors and executive
officers of the Company except that Martin J. Wygod, Chairman of the Board of
the Company, and Paul C. Suthern are brothers-in-law. No arrangement or
understanding exists between any director or executive officer and any other
person pursuant to which any director or executive officer was selected as a
director or executive officer of the Company. All executive officers are
elected annually by the Board of Directors and serve at the discretion of the
Board of Directors.

EXECUTIVE COMPENSATION, AGREEMENTS AND OTHER ARRANGEMENTS

Except as otherwise described in the 1994 10-K that is incorporated by
reference into this Prospectus and an accelerated payment of $112,640 to Mr.
Manning in connection with the acquisition of Medco by Merck, the executive
officers of the Company at June 30, 1994, other than Mr. Hannah, did not
receive any cash compensation for services to the Company or its subsidiaries
or participate in the employee benefit plans and arrangements of the Company or
its subsidiaries for the year ended June 30, 1994. Following the consummation
of the Purchase, the executive officers of the Company became salaried
employees of the Company. It is expected that the Company's executive officers
will participate in the Company's employee benefit plans and arrangements.

As of December 7, 1994, the Company granted options to purchase 150,000,
180,000 and 125,000 shares of Common Stock to Messrs. Manning, Suthern and
Marrero, respectively, and options to purchase an aggregate of 375,000 shares
of Common Stock to certain other officers of the Company. All of the options
have an exercise price of $10.00 per share and were granted for services
provided in connection with the Purchase and the Divestiture. Such options vest
at the rate of 20% per year.

CERTAIN TRANSACTIONS

BACKGROUND

On December 14, 1994 (the "Closing Date"), the Company consummated the
Divestiture and the Purchase pursuant to which: (1) the Company sold its
Institutional Pharmacies Business to PCA, an indirect wholly owned subsidiary
of Beverly Enterprises, for approximately $107,300,000 in cash (the "Purchase
Price"), subject to certain post-closing adjustments; (2) the Company purchased
5,268,463 shares of Common Stock from Merck, pursuant to the Purchase and Sale
Agreement, dated as of May 24, 1994, by and between

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<PAGE>

the Company and Merck (the "Purchase and Sale Agreement") for an aggregate
purchase price of $35,778,088, subject to certain post-closing adjustments; and
(3) SN Investors purchased 5,061,857 shares of Common Stock from Merck for an
aggregate purchase price of $34,375,029, subject to certain post-closing
adjustments, pursuant to an assignment by the Company of the right to purchase
such shares from Merck under the Purchase and Sale Agreement. SN Investors is a
limited partnership in which SYNC, Inc., an entity whose sole stockholder is
Mr. Martin J. Wygod, is the general partner and Mr. Wygod and certain trusts
for the benefit of Mr. Wygod and members of his family (collectively, with Mr.
Wygod, the "Wygod Entities") and independent third parties are limited
partners.

Immediately prior to the consummation of the Purchase, Merck owned
approximately 58% of the issued and outstanding Common Stock. As a result of
the consummation of the Purchase, Mr. Wygod and SN Investors as of the date of
this Prospectus own an aggregate of approximately 41.2% of the outstanding
Common Stock and Merck no longer owns an equity interest in the Company.

THE DIVESTITURE

On December 14, 1994, the Company completed the sale to PCA of the
subsidiaries through which the Company had been providing institutional
pharmacies services (the "Institutional Pharmacy Companies") pursuant to the
Stock Purchase Agreement. The purchase price was approximately $107,300,000 in
cash, subject to certain post-closing adjustments.

The Stock Purchase Agreement. The Stock Purchase Agreement provides that the
Purchase Price will be adjusted for changes, between the date of the Stock
Purchase Agreement and the Closing Date, in the combined net worth of the
Institutional Pharmacy Companies, based on an audited combined balance sheet
for the Institutional Pharmacy Companies as of the Closing Date, to be prepared
no later than 60 days following the Closing Date. A portion of the Purchase
Price equal to $5,000,000 was deposited at the Divestiture closing into an
escrow account to be distributed to PCA to offset amounts, if any, payable by
the Company pursuant to its obligation, under the Stock Purchase Agreement, to
indemnify PCA for losses to PCA arising out of the breach of or any inaccuracy
in any representation or agreement of the Company contained in the Stock
Purchase Agreement. The amount of the escrowed funds remaining 120 days after
the Closing Date (the "Distribution Date") will be released to the Company;
except that any escrowed funds as to which a claim has been made by PCA prior
to the Distribution Date will remain in escrow pending resolution of such
claim.

In the Stock Purchase Agreement, the Company agreed that until December 14,
1999 (the "Non-Competition Period"), the Company will not, without PCA's prior
written consent, directly or indirectly, engage in the ownership, management,
operation or control of any profit or non-profit business or organization in
any part of Connecticut, Indiana, Massachusetts and Rhode Island which,
directly or indirectly, engages in the business engaged in by any of the
Institutional Pharmacy Companies as of the Closing Date, including but not
limited to providing infusion therapy, distributing urological, enteral and
other health care products and supplies, providing medical record keeping
services, or providing prescription vending services and consultant pharmacist
services, in each case to nursing homes and other similar long-term care
facilities. In addition, during the Non-Competition Period, the Company agreed
not to solicit or induce any employee of any of the Institutional Pharmacy
Companies to become employed by any person (other than PCA).

The Company is not prohibited, however, from acquiring any business that
competes with PCA (the "Acquired Competing Business"), through merger, stock
purchase, acquisition of assets or otherwise, provided that (A) such Acquired
Competing Business constitutes a subsidiary or division (other than a
"significant Subsidiary" as such term is defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission) of a larger business
acquired at the same time as the Acquired Competing Business, which larger
business does not compete with PCA, and (B) such Acquired Competing Business is
sold to a person who is not an affiliate of the Company within one year from
the date of acquisition thereof.

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<PAGE>

THE PURCHASE

Immediately following the Divestiture, the Company purchased 5,268,463 of the
shares of Common Stock from Merck, pursuant to the Purchase and Sale Agreement
for an aggregate purchase price of $35,778,088 (or approximately $6.79 per
share), subject to adjustment as described below.

At the time of the purchase by the Company, SN Investors purchased 5,061,857
shares of Common Stock (the "Wygod Shares") from Merck for an aggregate
purchase price of $34,375,029 (or approximately $6.79 per share), subject to
adjustment as described below. The purchase by SN Investors was made pursuant
to an assignment by the Company to Mr. Wygod of the right to purchase the Wygod
Shares pursuant to an Amended and Restated Investment Agreement, dated as of
September 13, 1994 (the "Investment Agreement"), between the Company and Mr.
Wygod. Mr. Wygod, as permitted under the Investment Agreement, further assigned
to SN Investors his right to purchase the Wygod Shares. The Investment
Agreement governs the terms and conditions under which the Wygod Shares will be
held by Mr. Wygod and his permitted assignees and transferees.

Purchase and Sale Agreement. In the Purchase and Sale Agreement, the Company
agreed, until May 24, 1999, to be bound by the restrictions contained in the
Consulting Agreement described below under "--Certain Additional Agreements--
The Consulting Agreement," provided that such restrictions shall be of no
further force and effect in the event of the death of Mr. Wygod, or if Mr.
Wygod ceases to be a director of the Company or any subsidiary of the Company,
ceases to have any ownership interest in the Company (provided that if the
Company is a public company he may have up to a 1% equity interest in the
Company), and is not a principal, agent or employee of or consultant to the
Company or any subsidiary of the Company, or is not otherwise rendering any
services to the Company or any subsidiary of the Company. The aggregate amount
of the purchase price paid at the Purchase closing was determined pursuant to
the provisions of the Purchase and Sale Agreement according to the following
formula: (a) $45,453,750 plus (b) 33.3% of the net proceeds of the Divestiture
(after deducting estimated amounts of taxes and direct costs relating thereto)
to the extent the net proceeds exceeded $27,500,000 up to $32,500,000 plus (c)
58.65% of the net proceeds of the Divestiture to the extent such amount
exceeded $32,500,000.

For purposes of calculating the net proceeds of the Divestiture under the
Purchase and Sale Agreement, no part of the $5,000,000 held by the escrow agent
will be included until released from the escrow for the benefit of the Company.
From time to time, as (i) amounts held in escrow are released, (ii) the amount
of the cash proceeds received by the Company in the Divestiture is adjusted
pursuant to the provisions of the Stock Purchase Agreement or (iii) a
determination of the actual amount of direct costs and taxes paid relating to
the Divestiture requires a recalculation of net proceeds, then, pursuant to the
Purchase and Sale Agreement, the price for the purchase of the Shares will also
be adjusted in accordance with the formula described above. The amount of the
adjustment to the purchase price of the Shares, as so calculated, will be
either refunded to the Company and SN Investors by Merck or paid to Merck by
the Company and SN Investors, as the case may be.

Investment Agreement. The Investment Agreement, in which the Company assigned
the rights and obligations to purchase the Wygod Shares to Mr. Wygod, governs
the terms and conditions under which the Wygod Shares will be held by Mr. Wygod
and his permitted assignees and transferees. Mr. Wygod, as permitted under the
Investment Agreement, assigned such rights and obligations to SN Investors.
Pursuant to the Investment Agreement, SN Investors was required to be a limited
partnership in which Mr. Wygod or an entity controlled by Mr. Wygod is the
general partner and one or more of the Wygod Entities and/or independent third
parties are limited partners and was required to agree to be bound by all of
the restrictions and obligations applicable to Mr. Wygod under the Investment
Agreement. Additionally, the Investment Agreement required the initial
investment of the Wygod Entities in SN Investors to be at least $20,000,000 (on
a cost basis) (the "Wygod Investment") and that, until the earliest to occur of
(a) December 14, 1998, (b) the death or adjudication of incompetency of Mr.
Wygod or (c) a Change of Control (as defined in the Investment Agreement) (the
"Restriction Period"), in respect of the Wygod Investment, except to the extent
of proceeds from sales of the Wygod Shares pursuant to a tender or exchange
offer for shares of Common

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<PAGE>

Stock that is not opposed by the Board of Directors of the Company, the Wygod
Entities will at all times maintain (directly and/or through SN Investors) at
least $20,000,000 (on a cost basis) in the Wygod Investment and will not cause
or allow the amount of the Wygod Investment (on a cost basis) to be less than
$20,000,000 (net of any disposition, transfer, pledge or distribution by SN
Investors or any other arrangement involving the transfer of ownership or
interests in Wygod Shares (or proceeds therefrom), but not taking into account
any reduction in the Wygod Investment by virtue of a decline in the value of
Wygod Shares).

A "Change of Control" under the Investment Agreement means: (a) the
acquisition by any person, entity or group of at least 50% of the voting power
of the voting securities of the Company other than the Wygod Shares; (b)
individuals who, as of the date of the Investment Agreement, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors (provided that
directors whose nomination or election was approved by the Incumbent Board are
also generally deemed to be part of the Incumbent Board); (c) a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Business Combination"), excluding,
however, such a Business Combination pursuant to which (i) all or substantially
all of the individuals and entities who were the beneficial owners of the
Company's voting securities immediately prior to such Business Combination
beneficially own more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors of the corporation
resulting from such Business Combination, in substantially the same proportions
as their ownership immediately prior to such Business Combination of the
Company's voting securities, and (ii) at least a majority of the board of
directors of the resulting corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action of the
Board of Directors providing for such Business Combination; (d) a complete
liquidation or dissolution of the Company; or (e) the issuance by the Company
following the Closing Date of shares of Common Stock constituting in the
aggregate more than 50% of the shares of Common Stock outstanding as of
immediately following the Closing Date.

Pursuant to the Investment Agreement, during the Restriction Period: (a) Mr.
Wygod and SN Investors are required to vote the Wygod Shares, with respect to
the election of directors, for the nominees who would have been elected based
on the vote of all other stockholders in proportion to the votes that such
nominees received from all other stockholders, and on all other matters to come
before the stockholders of the Company, in the same manner as a majority of the
outstanding shares of Common Stock (other than the Wygod Shares) are voted; and
(b) except for sales pursuant to a tender or exchange offer for the shares of
Common Stock that is not opposed by the Board of Directors of the Company,
neither Mr. Wygod nor SN Investors may transfer interests in the Wygod Shares
(except that Mr. Wygod may transfer interests in SN Investors to the extent
otherwise permitted by the Investment Agreement).

Under the Investment Agreement, following the earlier to occur of (a)
December 14, 1998 or (b) the death or adjudication of incompetency of Mr.
Wygod: (i) to the extent the Wygod Entities and/or SN Investors retain the
power to vote Wygod Shares that have, in the aggregate, in excess of 20% of the
voting power of the Company's voting securities outstanding at the time of any
vote by stockholders of the Company, Mr. Wygod and SN Investors will vote (or
cause to be voted) the portion of such Wygod Shares representing the excess
above 20% of such voting power, with respect to the election of directors, for
the nominees who would have been elected based on the vote of all other
stockholders in proportion to the votes that such nominees received from all
other stockholders, and on all matters to come before the stockholders of the
Company, in the same manner as a majority of the outstanding shares of Common
Stock, other than the Wygod Shares, are voted; and (ii) to the extent that
Wygod Entities and/or SN Investors retain beneficial ownership of Wygod Shares
that have, in the aggregate, in excess of 20% of the voting power of the
outstanding voting securities of the Company, the portion of such Wygod Shares
representing the excess above 20% of such voting power at the time of any
proposed sale or transfer thereof shall not be sold or transferred except (A)
to transferees reasonably acceptable to the Company (provided that, without the
Company's consent, no such transfer or series of transfers to a single person,
entity or group will involve the

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<PAGE>

transfer of more than 9.9% of the voting power of the Company's outstanding
voting securities and no such transfer or series of transfers will be made to a
single person, entity or group that will own, following such transfers, more
than 50% of the voting power of the Company's outstanding voting securities),
(B) to the partners of SN Investors in proportion to their respective interests
in SN Investors (provided that, without the Company's consent, no such transfer
or series of transfers to a single person, entity or group (other than Mr.
Wygod or the Wygod Entities) will involve the transfer of more than 9.9% of the
voting power of the Company's outstanding voting securities), (C) in ordinary
open market transactions, or (D) pursuant to an underwritten public offering.

The restrictions described in the foregoing paragraph will not apply (a) in
the event there has been, or from and after the occurrence of, a Change of
Control of the Company, (b) at any time after December 14, 2004 or (c) to any
person or entity, other than Mr. Wygod, the Wygod Entities or SN Investors, to
whom Wygod Shares are transferred (including by means of distributions from SN
Investors) in accordance with the provisions of the foregoing paragraph.

The Investment Agreement also provides certain demand registration rights to
Mr. Wygod at Mr. Wygod's expense which are assignable to any permitted
transferee of the Wygod Shares; provided that, in no event is the Company
required to file in the aggregate more than two registration statements in
connection therewith. Mr. Wygod has not assigned such registration rights to SN
Investors. While Mr. Wygod currently intends to assign such registration rights
to SN Investors in the event the General Partner determines to sell or
otherwise transfer the Wygod Shares under circumstances in which registration
would be required, Mr. Wygod is under no obligation to do so.

Certain provisions of the Investment Agreement may have the effect of
deterring a change of control of the Company that is not supported by the Board
of Directors of the Company or Mr. Wygod. During the Restriction Period, Mr.
Wygod and SN Investors are prohibited from transferring the Wygod Shares,
except pursuant to a tender or exchange offer that is not opposed by the Board
of Directors of the Company or to specified permitted transferees. In addition,
under the Investment Agreement, in the event that a Change of Control (as
defined in the Investment Agreement) were to occur during the Restriction
Period, Mr. Wygod and SN Investors would no longer be obligated under the
Investment Agreement to vote in the same manner as the majority of the other
outstanding shares of Common Stock (other than the Wygod Shares) are voted,
with the result that Mr. Wygod and SN Investors would have unrestricted voting
power with respect to the Wygod Shares. The effect of these provisions of the
Investment Agreement may be to discourage the commencement of a tender or
exchange offer opposed by the Board of Directors of the Company during the
Restriction Period and to discourage a proxy solicitation to change a majority
of the Board of Directors of the Company absent the support of Mr. Wygod.

CERTAIN ADDITIONAL AGREEMENTS

Consulting Agreement. In the Consulting Agreement, dated as of May 24, 1994
(the "Consulting Agreement"), by and among Mr. Wygod, Merck and Medco, Mr.
Wygod has agreed that, until May 24, 1999, absent Merck's prior written
approval, he will not (as principal, agent, employee, consultant or otherwise)
directly or indirectly engage in activities with, nor render services to, any
business engaged or about to become engaged in a Competitive Business (as
defined in the Consulting Agreement). A "Competitive Business" is defined in
the Consulting Agreement as: (a) the pharmaceutical business of Merck and its
affiliates (unless such business is subsequently disposed of and Mr. Wygod did
not have material involvement in such business during the two-year period
preceding May 24, 1994), (b) the business, as of either November 18, 1993 or
May 24, 1994, of Medco and its subsidiaries (unless such business is
subsequently disposed of and Mr. Wygod did not have material involvement in
such business during the two-year period preceding May 24, 1994), other than
the business of Porex and the other plastic businesses of the Company as
conducted as of May 24, 1994, or (c) any other then-current business of Merck
and its affiliates as to which Mr. Wygod became materially involved following
November 18, 1993; provided, however, that the Consulting Agreement permits Mr.
Wygod to have a 1% or less equity interest in a Competitive Business

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<PAGE>

that is a public corporation. In addition, the Consulting Agreement provides
that, until May 24, 1999, Mr. Wygod will not, directly or indirectly: (i)
solicit or contact any customer or prospective customer of Medco and/or any of
its affiliates as to matters that relate to a Competitive Business in which
Medco or its affiliates is then engaged or which is in any way inconsistent or
interferes therewith; (ii) induce, or attempt to induce, any employees or
agents or consultants of Medco and/or its affiliates to do anything from which
Mr. Wygod is restricted by reason of the Consulting Agreement; or (iii) offer
or aid others to offer employment to any employees of Medco or its affiliates.

Medco/Porex Purchase Agreement. Pursuant to the Medco/Porex Purchase
Agreement between Medco and Porex entered into pursuant to the Purchase and
Sale Agreement, Porex will supply to Medco all of its requirements for certain
Products for Medco's use in its prescription dispensing operations (the
"Requirements"), and Medco will purchase such Requirements for a period
beginning on December 14, 1994 and ending on December 14, 1996. The cost to
Medco of the Products is the price in effect on the date of the Medco/Porex
Purchase Agreement and Medco will be entitled to that price until December 14,
1995. Such price will increase by 3% on December 14, 1995, subject to certain
adjustments set forth in the Medco/Porex Purchase Agreement. During the fiscal
year ended June 30, 1994, the aggregate price for Medco's purchases of such
plastic vials and caps was $2,312,000, representing substantially all of the
Company's sales of such products. These sales were based on prices and terms
generally available to non-affiliates.

Transition Agreement. Pursuant to the Transition Agreement, dated as of
November 4, 1994 between Merck and the Company, Merck has agreed to cause Medco
to provide to the Company, for a period of 180 days following December 14,
1994, certain administrative, legal, tax, accounting and other transition
services. The Company has agreed to pay the actual costs for such services or,
where such costs are not separately identifiable, a portion of the total cost
based on the ratio of the Company's sales to the sales of all entities for
which these services are provided by Medco.

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company is subject to
the Delaware General Corporation Law (the "DGCL") and to provisions contained
in the Company's Certificate of Incorporation and By-Laws, copies of which are
exhibits to the 1994 10-K that is incorporated by reference into this
Prospectus. Reference is made to such exhibits for a detailed description of
the provisions thereof summarized below.

The authorized capital stock of the Company consists of 10,000,000 shares of
Preferred Stock, $.01 par value (the "Preferred Stock"), and 50,000,000 shares
of Common Stock, $.01 par value. None of the Preferred Stock is issued and
outstanding. At January 25, 1995, there were 12,690,098 shares of Common Stock
outstanding. As of December 31, 1994, on a pro forma basis assuming all of the
Debentures are converted into Common Stock, there would have been 16,498,379
shares of Common Stock outstanding. Holders of capital stock of the Company
have no preemptive or other subscription rights.

PREFERRED STOCK

The Preferred Stock may be issued from time to time in one or more series,
without stockholder approval. The Board of Directors is authorized to determine
(subject to limitations prescribed by law) the other rights including voting
rights, if any, preferences, terms and limitations to be granted to and imposed
upon any wholly unissued series of Preferred Stock and to fix the number of
shares of any series of Preferred Stock and the designation of any such series.
The Company has no present plans to issue any shares of Preferred Stock.
Because of its broad discretion with respect to the creation and issuance of
any series of Preferred Stock without stockholder approval, the Board of
Directors could adversely affect the voting power of Common Stock. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company.

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<PAGE>

COMMON STOCK

Subject to prior rights of any Preferred Stock then outstanding, the holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor declared and paid by the Company. The Company
does not currently anticipate paying cash dividends to holders of its Common
Stock. See "Dividend Policy."

Upon liquidation, dissolution or winding up of the Company, the assets
legally available for distribution to stockholders are distributable ratably
among the holders of the Common Stock at the time outstanding, subject to the
rights, if any, of the holders of any Preferred Stock then outstanding. Since
the Company's Board of Directors has the authority to fix the rights and
preferences of, and to issue, the Company's authorized but unissued Preferred
Stock without approval of the holders of its Common Stock, the rights of such
holders may be materially limited or qualified by the issuance of the Preferred
Stock.

VOTING RIGHTS

Stockholders are entitled to one vote for each share of Common Stock held of
record, except that for the election of directors, stockholders have cumulative
voting rights. Cumulative voting for directors means that, at each election of
directors, the number of shares eligible to be voted by a stockholder is
multiplied by the number of directors to be elected. A stockholder may cast all
such stockholder's votes for a single candidate, or may allocate them among two
or more candidates in any manner such stockholder chooses. For example, if
three directors are to be elected, holders of one-third of the shares would be
able, by cumulating their votes, to elect one director, regardless of how the
other shares are voted. Currently, the Company has 11 directors. The maximum
number of directors permitted under the Company's Certificate of Incorporation
is 12.

The affirmative vote of the holders of at least two-thirds of the Company's
shares entitled to vote in an election of directors is required to amend (i)
the provisions of the Company's Certificate of Incorporation relating to
cumulative voting, classification of the Company's directors into three
classes, election of only one-third of the Board at each annual meeting of
stockholders and the power to remove directors or fill vacancies, and (ii) the
By-Laws to increase the number of directors above 12. The Company's Certificate
of Incorporation also provides that any or all directors may be removed with or
without cause prior to completion of their term only upon the vote of holders
of two-thirds of the outstanding shares of Common Stock entitled to vote
generally in the election of directors; provided that, in accordance with the
DGCL, if less than the entire Board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the class of
directors of which he is a part.

The provisions in the Certificate of Incorporation of the Company relating to
a staggered Board of Directors, super-majority requirements and delegation of
rights to issue Preferred Stock may have the effect not only of discouraging
tender offers or other stock acquisitions but also of deterring existing
stockholders from making management changes. A staggered Board, while promoting
stability in Board membership and management, also moderates the pace of any
change in control of the Board of Directors by extending the time required to
elect a majority, effectively requiring action in at least two annual meetings.
Moreover, a staggered Board makes it more difficult for minority stockholders,
even with cumulative voting, to elect a director. For example, to elect one
director of a non-staggered 12-member Board, stockholders with cumulative
voting would need only one-twelfth of the votes cast. To elect one member of a
staggered Board with three classes and 12 members, stockholders with cumulative
voting would need one-fourth of the votes cast. The provisions with respect to
removal of directors, while intended to prevent circumvention of benefits
derived from classification of directors and to prevent a transfer of control
of the Board of Directors through the removal process, also have the effect of
preventing removal of a director for just cause by a majority of outstanding
voting shares. The ability of the Board of Directors to issue Preferred Stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third party to secure a
majority of outstanding voting stock. See "Certain Transactions--The Purchase"
for a description of voting restrictions on shares held by SN Investors.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Registrar & Transfer
Company.

SHARES ELIGIBLE FOR FUTURE SALE

As of January 25, 1995, the Company had 12,690,098 shares of Common Stock
outstanding, and on a pro forma basis assuming conversion of all of the
Debentures, would have had 16,636,208 shares of Common Stock outstanding. Of
the currently outstanding shares, the 7,628,241 shares not owned by SN
Investors are freely tradable without restrictions or further registration
under the Securities Act; however, any shares owned by an "affiliate" of the
Company (as that term is defined in the rules and regulations under the
Securities Act) may not be resold in a public distribution except in compliance
with the registration requirements of the Securities Act or pursuant to Rule
144 thereunder. All of the remaining 5,061,857 shares held by SN Investors are
"restricted securities" within the meaning of Rule 144.

In general, Rule 144 under the Securities Act provides that an affiliate of
the Company, subject to any applicable holding period, may sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of the Common Stock or the average weekly trading
volume in composite trading on all exchanges during the four calendar weeks
preceding such sale. In addition, sales under Rule 144 may be made only through
unsolicited "broker's transactions" and are subject to various other
conditions.

The Company's affiliates are eligible to sell shares of Common Stock in the
public market pursuant to Rule 144 if the conditions of Rule 144 have been met.
In addition, SN Investors is able to sell shares of Common Stock in a
transaction complying with the registration requirements of the Securities Act
or in a private transaction not subject to such requirements. The Investment
Agreement provides certain demand registration rights to Mr. Wygod at Mr.
Wygod's expense, which are assignable to any permitted transferee of the Wygod
Shares; provided that in no event is the Company required to file in the
aggregate more than two registration statements in connection therewith. Mr.
Wygod has not assigned such registration rights to the Partnership. While Mr.
Wygod currently intends to assign such registration rights to the Partnership
in the event the General Partner determines to sell or otherwise transfer the
Wygod Shares under circumstances in which registration would be required, Mr.
Wygod is under no obligation to do so.

For information concerning shares which may be issued under the Company's
stock option plans, see "Risk Factors--Shares Available for Future Sale."

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Thirteen of the Company's Certificate of Incorporation provides that
no director shall have any personal liability to the Company or its
stockholders for any monetary damages for breach of fiduciary duty as a
director, provided that such provision does not limit or eliminate the
liability of any director (i) for breach of such director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation (involving certain
unlawful dividends or stock repurchases) or (iv) for any transaction from which
such director derived an improper personal benefit. Amendment to such article
does not affect the liability of any director for any act or omission occurring
prior to the effective time of such amendment.

Pursuant to separate Indemnification Agreements between the Company and its
directors and officers, the Company has agreed to indemnify such directors and
officers to the fullest extent permitted by Delaware law, as the same may be
amended from time to time.

33
<PAGE>

STANDBY ARRANGEMENTS

The Company and the Purchasers have entered into a standby purchase agreement
(the "Standby Agreement") pursuant to which each of the Purchasers have agreed,
severally and not jointly, subject to certain conditions, to purchase from the
Company 50% of the Shares of Common Stock that would otherwise be issuable upon
conversion of up to $18,250,000 aggregate principal amount of Redeemed
Debentures. The aggregate purchase price paid by the Purchasers for the Shares
will be an amount equal to the aggregate Redemption Price of the Redeemed
Debentures. Up to 894,607 shares of Common Stock are subject to purchase under
the Standby Agreement. The obligations of the Purchasers to purchase shares
under the Standby Agreement will apply first to the shares issued upon
conversion of the Redeemed Debentures that are duly surrendered for Redemption.

The Purchasers also may acquire Debentures for their own account in the open
market or otherwise on or prior to the Conversion Expiration Date in such
amounts and at such prices as the Purchasers deem advisable. For the purpose of
stabilizing the price of the Common Stock, engaging in certain hedging
transactions or otherwise, the Purchasers may make purchases and sales of
Common Stock or Debentures, in the open market or otherwise, for long or short
account, on such terms as the Purchasers deem advisable, and may over-allot in
arranging sales, all subject to applicable provisions of the 1934 Act. Such
transactions involving Debentures may occur prior to or on the Conversion
Expiration Date, and such transactions involving Common Stock may occur prior
to, on or after the Conversion Expiration Date. The Purchasers have agreed to
surrender for conversion into Common Stock any Debentures beneficially owned by
them on the Conversion Expiration Date, but will not be compensated by the
Company upon any subsequent sale of such shares of Common Stock. The Purchasers
have not been retained with respect to the redemption of the Debentures or the
issuance of Common Stock to Holders who elect to surrender their Debentures for
conversion or to solicit conversions of the Debentures and will receive no
remuneration in connection therewith.

Pursuant to the terms of the Standby Agreement and in consideration of the
Purchasers' obligations thereunder, the Company has agreed to pay to the
Purchasers the sum of $600,000 plus an additional $2.00 per Share for each
Share purchased by the Purchasers pursuant to the Standby Agreement. Pursuant
to the foregoing arrangements, the Purchasers would receive minimum
compensation aggregating $600,000 and maximum compensation aggregating
$2,389,214. The Purchasers have agreed to remit to the Company 50% of the
excess of the aggregate proceeds received upon the resale by the Purchasers of
the Shares (net of selling concessions, commissions, transfer taxes and other
direct, out-of-pocket selling expenses) over the aggregate purchase price paid
by the Purchasers for such Shares to the extent such purchases are made to fund
redemption of Debentures that are not duly surrendered for conversion by the
Conversion Expiration Date or for redemption by the Redemption Date. The
Company has agreed to reimburse the Purchasers for their out-of-pocket expenses
not in excess of $85,000 in connection with the transaction contemplated by the
Standby Agreement and to indemnify the Purchasers against, and to provide
contribution with respect to, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.

34
<PAGE>

An institutional investor has agreed with the Company to surrender for
conversion into Common Stock the $22,050,000 aggregate principal amount of
Debentures it holds. Additionally, in consideration of a payment of $1,000,000
such institutional investor has agreed that, from the date hereof through
February 21, 1995, it will not offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or enter into
any swap or similar agreement that transfers, in whole or in part, the economic
risk of ownership of the Common Stock.

Pursuant to the Standby Agreement, the Company, each executive officer of the
Company and each director of the Company have agreed, with certain exceptions,
that, for a period of 90 days from the date hereof, without the prior written
consent of the Purchasers, it will not issue or sell, or enter into any
agreement, arrangement or understanding of any kind, or take any action, for
the issuance or sale of, or otherwise dispose of any capital stock of the
Company (or securities convertible into, exercisable or exchangeable for
capital stock).

The rules of the Securities and Exchange Commission (the "Commission")
generally prohibit the Purchasers from making a market in the Common Stock
during the two business day period prior to commencement of sales in this
offering (the "Cooling Off Period"). The Commission has, however, adopted Rule
10b-6A under the Securities Exchange Act of 1934 ("Rule 10b-6A") which provides
an exemption from such prohibition for certain passive market making
transactions. Such passive market making transactions must comply with
applicable price and volume limits and must be identified as passive market
making transactions. In general, pursuant to Rule 10b-6A, a passive market
maker may display its bid for a security at a price not in excess of the
highest independent bid for the security. If all independent bids are lowered
below the passive market maker's bid, however, such bid must then be lowered
when certain purchase limits are exceeded. Further, net purchases by a passive
market maker on each day are generally limited to a specified percentage of the
passive market maker's average daily trading volume in a security during a
specified prior period and must be discontinued when such limit is reached.
Pursuant to the exemption provided by Rule 10b-6A, the Purchasers may engage in
passive market making in the Common Stock during the Cooling Off Period.
Passive market making may stabilize the market price of the Common Stock at a
level above that which might otherwise prevail, and if commenced, may be
discontinued at any time.

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the
Common Stock offered hereby will be passed upon for the Company by Shearman &
Sterling, New York, New York. Certain legal matters will be passed upon for the
Purchasers by Brown & Wood, New York, New York. Shearman & Sterling is a
limited partner in SN Investors.

The statements of law under the captions "Risk Factors--Regulation of Porex"
and "Business--Regulation" in this Prospectus are based upon the opinion of
Emens, Kegler, Brown, Hill & Ritter Co., L.P.A., Columbus, Ohio, special
regulatory counsel to the Company. Robert D. Marotta, Esq., of counsel to such
firm, holds 50,000 options to purchase Common Stock.

EXPERTS

The audited Consolidated Financial Statements and schedules of the Company
that are incorporated by reference into this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

35
<PAGE>

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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE PURCHASER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 8
Price Range of Common Stock............................................... 9
Dividend Policy........................................................... 9
Capitalization............................................................ 10
Selected Financial Data................................................... 11
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 12
Business.................................................................. 15
Management................................................................ 24
Certain Transactions...................................................... 26
Description of Capital Stock.............................................. 31
Standby Arrangements...................................................... 34
Legal Matters............................................................. 35
Experts................................................................... 35
</TABLE>

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1,000,000 SHARES

SYNETIC, INC.

COMMON STOCK

[LOGO OF SYNETIC, INC.]

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PROSPECTUS

JANUARY 27, 1995

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SMITH BARNEY INC.

PAINEWEBBER INCORPORATED

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