<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1999
REGISTRATION NO. 333-81123
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SYNETIC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3089 22-2975182
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
RIVER DRIVE CENTER 2 CHARLES A. MELE, ESQ.
669 RIVER DRIVE RIVER DRIVE CENTER 2
ELMWOOD PARK, NJ 07407 669 RIVER DRIVE
(201) 703-3400 ELMWOOD PARK, NJ 07407
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER (201) 703-3400
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE
EXECUTIVE OFFICE) NUMBER
INCLUDING AREA CODE OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPIES TO:
<TABLE>
<S> <C>
CREIGHTON O'M. CONDON, ESQ. BRADLEY D. HOUSER, ESQ.
SHEARMAN & STERLING AKERMAN, SENTERFITT & EIDSON, P.A.
599 LEXINGTON AVENUE ONE SOUTHEAST THIRD AVENUE, 28TH FLOOR
NEW YORK, NY 10022-4000 MIAMI, FL 33131
(212) 848-4000 (305) 374-5600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and the
conditions to consummation of the offer described herein have been satisfied or
waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE OFFERING PRICE REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share.......................... 18,202,213 Not Applicable Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the maximum number of shares of Synetic Common Stock that may be
required to be issued in connection with the merger, calculated as the
product of (a) 24,269,617, which is the sum of (i) the number of shares of
common stock of Medical Manager Corporation, par value $.01 per share
outstanding on June 21, 1999, (ii) the number of shares of Medical Manager
Common Stock issuable pursuant to outstanding stock options through the date
the merger is expected to be consummated, and (iii) the number of shares of
Medical Manager Common Stock otherwise expected to be issued prior to the
date the Merger is expected to be consummated and (b) a maximum exchange
ratio of .750 of a share of Synetic Common Stock for each share of Medical
Manager Common Stock.
(2) Pursuant to Rule 457(b) under the Securities Act, the registration fee has
been reduced by the $210,743.59 paid on June 7, 1999 in connection with the
filing under the Securities Exchange Act of 1934, as amended, of preliminary
copies of the proxy materials included herein. The remainder of the
registration fee was paid on June 18, 1999. No registration fee is payable
upon the filing of this Pre-Effective Amendment No. 1 to Form S-4.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[SYNETIC, INC. LOGO]
669 RIVER DRIVE
ELMWOOD PARK, NEW JERSEY 07407
June 24, 1999
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Synetic, Inc. to be held at the Saddle Brook Marriott Hotel, Garden State
Parkway at Interstate 80 in Saddle Brook, New Jersey, on July 23, 1999, at 9:30
a.m., local time. Synetic has entered into an agreement with Medical Manager
Corporation pursuant to which the businesses of Synetic and Medical Manager will
be combined to form an organization with the components we believe are necessary
to transform the information infrastructure of America's practicing physicians,
with the goal of revolutionizing the way in which physicians can communicate
electronically with payers, suppliers, providers and patients.
The transaction is structured as a merger, in which each share of Medical
Manager Common Stock will be converted into the right to receive .625 shares of
Synetic Common Stock if the average closing price of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
greater than or equal to $67.20. If the average closing price per share of
Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $67.20 but at least $56.00, the exchange
ratio will be adjusted upward so that the value of the Synetic Common Stock to
be received for each share of Medical Manager Common Stock based on such
adjusted exchange ratio is equal to $42.00 based on the average closing price of
Synetic Common Stock during such period. If the average closing price per share
of Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $56.00, the exchange ratio will be .750
shares of Synetic Common Stock for each share of Medical Manager Common Stock,
unless the board of directors of Medical Manager exercises its right to
terminate the merger. Synetic and Medical Manager will issue a joint press
release announcing the exchange ratio prior to the opening of trading on July
21, 1999. As a result of this transaction, Medical Manager will become a wholly
owned subsidiary of Synetic. At the Synetic Special Meeting, you will be asked
to consider and vote on the following matters in connection with the merger:
- the issuance of up to 18,202,213 shares of Synetic Common Stock to
current Medical Manager stockholders in the merger;
- as contemplated by the merger agreement, the amendment and restatement of
Article One of the Synetic Certificate of Incorporation, effective at the
effective time of the merger, with the effect of changing the name of
Synetic to "Medical Manager Corporation";
- the amendment and restatement of Article Four of the Synetic Certificate
of Incorporation, effective at the effective time of the merger, with the
effect of increasing the number of authorized shares of capital stock of
Synetic to 310,000,000, with 300,000,000 designated as Synetic Common
Stock;
- the amendment and restatement of Article Nine of the Synetic Certificate
of Incorporation, effective at the effective time of the merger, with the
effect of deleting the last clause of Article Nine which states "provided
that the Board of Directors may not amend the By-Laws to increase the
number of directors above twelve"; and
- the grant of options to purchase 650,000 shares of Synetic Common Stock
to each of Messrs. Michael A. Singer, Chairman and Chief Executive
Officer, and John H. Kang, President, of Medical Manager, under their
employment agreements.
The accompanying Joint Proxy Statement/Prospectus presents the details of this
proposed strategic merger.
SYNETIC'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ISSUANCE OF
SHARES OF SYNETIC COMMON STOCK TO CURRENT MEDICAL MANAGER STOCKHOLDERS IN THE
MERGER REFERRED TO ABOVE, THE AMENDMENTS AND RESTATEMENTS OF THE SYNETIC
CERTIFICATE OF INCORPORATION REFERRED TO ABOVE AND, SUBJECT TO THE SEPARATE
APPROVAL OF THE STOCK OPTION COMMITTEE OF SYNETIC'S BOARD OF DIRECTORS, THE
GRANT OF OPTIONS TO EACH OF MESSRS. SINGER AND KANG REFERRED TO ABOVE AND
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THESE PROPOSALS.
The merger of Synetic and Medical Manager will create an organization with
the components we believe are necessary to transform the information
infrastructure of America's practicing physicians, with the goal of
revolutionizing the way in which physicians can communicate electronically with
payers, suppliers, providers and patients.
If you have questions about the merger or would like additional copies of
the accompanying Joint Proxy Statement/Prospectus, you should contact: Risa
Fisher, Director of Investor Relations, at (201)703-3400. Even if you plan to
attend the Synetic Special Meeting in person, please complete, sign, date and
promptly return the enclosed proxy card in the enclosed postage-prepaid
envelope.
Sincerely,
/s/ Martin J. Wygod
Martin J. Wygod
Chairman of the Board
<PAGE> 3
[MEDICAL MANAGER CORPORATION LOGO]
3001 N. Rocky Point Drive East, Suite 400
Tampa, Florida 33607
June 24, 1999
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Medical Manager Corporation to be held at 15151 Northwest 99th Street in
Alachua, Florida, on July 23, 1999, at 10:00 a.m., local time. Medical Manager
has entered into an agreement with Synetic, Inc. pursuant to which the
businesses of Medical Manager and Synetic will be strategically combined to form
an organization with the components we believe are necessary to transform the
information infrastructure of America's practicing physicians, with the goal of
revolutionizing the way in which physicians can communicate electronically with
payers, suppliers, providers and patients.
The transaction is structured as a merger, in which each share of Medical
Manager Common Stock will be converted into the right to receive .625 shares of
Synetic Common Stock if the average closing price of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
greater than or equal to $67.20. If the average closing price per share of
Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $67.20 but at least $56.00, the exchange
ratio will be adjusted upward so that the value of the Synetic Common Stock to
be received for each share of Medical Manager Common Stock based on such
adjusted exchange ratio is equal to $42.00 based on the average closing price of
Synetic Common Stock during such period. If the average closing price per share
of Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $56.00, the exchange ratio will be .750
shares of Synetic Common Stock for each share of Medical Manager Common Stock,
unless the board of directors of Medical Manager exercises its right to
terminate the merger. Synetic and Medical Manager will issue a joint press
release announcing the exchange ratio prior to the opening of trading on July
21, 1999. As a result of this transaction, Medical Manager will become a wholly
owned subsidiary of Synetic. Synetic Common Stock is traded on the Nasdaq
National Market System under the symbol "SNTC". On June 23, 1999 the stock
closed at $70.3125 per share.
At the Medical Manager Special Meeting you will be asked to approve the
merger. The accompanying Joint Proxy Statement/Prospectus presents the details
of this proposed strategic merger. The merger cannot be completed without the
approval of the holders of a majority of the outstanding common stock of Medical
Manager.
MEDICAL MANAGER'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE MERGER.
If you have questions about the merger or would like additional copies of
the accompanying Joint Proxy Statement/Prospectus, you should contact: Charles
Hutchinson, Controller of Medical Manager, (813) 287-2990, extension 102. Even
if you plan to attend the Medical Manager Special Meeting in person, please
complete, sign, date and promptly return the enclosed proxy card in the enclosed
postage-prepaid envelope.
Sincerely,
/s/ Michael H. Singer
Michael A. Singer
Chairman and Chief Executive Officer
<PAGE> 4
[SYNETIC LOGO]
669 RIVER DRIVE
ELMWOOD PARK, NEW JERSEY 07407
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 23, 1999
To the Stockholders of Synetic:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Synetic,
Inc. will be held at Saddle Brook Marriott Hotel, Garden State Parkway at
Interstate 80 in Saddle Brook, New Jersey on July 23, 1999, at 9:30 a.m., local
time, for the following purposes:
1. To consider and vote upon a proposal to issue up to 18,202,213 shares
of Synetic Common Stock in exchange for shares of Medical Manager
Common Stock pursuant to the merger agreement between Synetic and
Medical Manager. As a result of this transaction, Medical Manager will
become a wholly owned subsidiary of Synetic.
2. To consider and vote upon a proposal, as contemplated by the merger
agreement, regarding the amendment and restatement of Article One of
the Synetic Certificate of Incorporation, effective at the effective
time of the merger, with the effect of changing the name of Synetic to
"Medical Manager Corporation".
3. To consider and vote upon a proposal, regarding the amendment and
restatement of Article Four of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the
effect of increasing the number of authorized shares of capital stock
of Synetic to 310,000,000, with 300,000,000 designated as Synetic
Common Stock.
4. To consider and vote upon a proposal, regarding the amendment and
restatement of Article Nine of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the
effect of deleting the last clause of Article Nine which states
"provided that the Board of Directors may not amend the By-Laws to
increase the number of directors above twelve."
5. To consider and vote upon a proposal to grant options to purchase
650,000 shares of Synetic Common Stock to each of Messrs. Michael A.
Singer and John H. Kang under the terms of their employment agreements.
A copy of the merger agreement and of the proposed Amended and Restated
Certificate of Incorporation of Synetic are attached as Annex A and Annex D,
respectively, to the accompanying Joint Proxy Statement/Prospectus.
Only stockholders of record at the close of business on June 21, 1999 will
be entitled to vote at the Synetic Special Meeting. The stock transfer books
will not be closed.
All stockholders are cordially invited to attend the Synetic Special
Meeting in person. However, to ensure your representation at the Synetic Special
Meeting, you are urged to complete, sign, date and return the enclosed proxy
card in the enclosed postage-prepaid envelope as promptly as possible.
By Order of the Board of Directors,
Charles A. Mele
Secretary
Elmwood Park, New Jersey
June 24, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SYNETIC SPECIAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE> 5
[MEDICAL MANAGER CORPORATION LOGO]
3001 N. ROCKY POINT DRIVE EAST, SUITE 400
TAMPA, FLORIDA 33607
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 23, 1999
To the Stockholders of Medical Manager Corporation:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Medical
Manager Corporation will be held at 15151 Northwest 99th Street in Alachua,
Florida on July 23, 1999, at 10:00 a.m., local time, to consider and vote upon a
proposal to approve and adopt the merger agreement between Medical Manager and
Synetic, Inc. pursuant to which Medical Manager will merge with a subsidiary of
Synetic, with Medical Manager becoming a wholly owned subsidiary of Synetic.
A copy of the merger agreement is attached as Annex A to the accompanying
Joint Proxy Statement/Prospectus.
Only stockholders of record at the close of business on June 21, 1999 will
be entitled to vote at the Medical Manager Special Meeting. The stock transfer
books will not be closed.
All stockholders are cordially invited to attend the Medical Manager
Special Meeting in person. However, to ensure your representation at the Medical
Manager Special Meeting, you are urged to complete, sign, date and return the
enclosed proxy card in the enclosed postage-prepaid envelope as promptly as
possible.
By Order of the Board of Directors,
Frederick B. Karl, Jr.
Vice President and General Counsel
Tampa, Florida
June 24, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEDICAL MANAGER SPECIAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
<PAGE> 6
JOINT PROXY STATEMENT/PROSPECTUS
[SYNETIC INC. LOGO][MEDICAL MANAGER CORPORATION LOGO]
PROPOSED MERGER -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of Synetic, Inc. and Medical Manager Corporation
have approved a merger agreement that would have the effect of causing Medical
Manager to become a wholly owned subsidiary of Synetic. After the merger is
completed, Synetic will change its name to Medical Manager Corporation. However,
for the convenience of the reader, references in this document to Synetic mean
Synetic before or after the merger as the context requires.
BE SURE TO READ THE "RISK FACTORS" BEGINNING ON PAGE 22.
Here is what will happen to your shares if the merger is completed:
SYNETIC STOCKHOLDERS:
Each share of Synetic Common Stock that you own will remain outstanding as a
share of Synetic Common Stock.
MEDICAL MANAGER STOCKHOLDERS:
Each share of Medical Manager Common Stock that you own will be converted
into .625 shares of Synetic Common Stock, if the average closing price of
Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is greater than or equal to $67.20. If the average
closing price per share of Synetic Common Stock during the period from and
including July 7, 1999 to and including July 20, 1999 is less than $67.20 but at
least $56.00, the exchange ratio will be adjusted upward so that the value of
the Synetic Common Stock to be received for each share of Medical Manager Common
Stock based on such adjusted exchange ratio is equal to $42.00 based on the
average closing price of Synetic Common Stock during such period. If the average
closing price per share of Synetic Common Stock during the period from and
including July 7, 1999 to and including July 20, 1999 is less than $56.00, the
exchange ratio will be .750 shares of Synetic Common Stock for each share of
Medical Manager Common Stock, unless the board of directors of Medical Manager
exercises its right to terminate the merger. Synetic and Medical Manager will
issue a joint press release announcing the exchange ratio prior to the opening
of trading on July 21, 1999.
Synetic Common Stock will trade on the Nasdaq National Market System under
the new symbol "MMGR".
If this merger is completed, Medical Manager stockholders will own
approximately 42.3% of the combined company while Synetic stockholders will own
approximately 57.7%.
AT THE SYNETIC SPECIAL MEETING TO BE HELD ON JULY 23, 1999, AT THE SADDLE
BROOK MARRIOTT HOTEL, GARDEN STATE PARKWAY AT INTERSTATE 80 IN SADDLE BROOK, NEW
JERSEY, COMMENCING AT 9:30 A.M., LOCAL TIME, WE ARE ASKING SYNETIC STOCKHOLDERS
TO APPROVE:
- - A proposal to issue up to 18,202,213 shares of Synetic Common Stock in
exchange for shares of Medical Manager Common Stock, the approval of which is
necessary to permit the merger to occur;
- - A proposal, as contemplated by the merger agreement, to amend and restate
Article One of the Synetic Certificate of Incorporation, effective at the
effective time of the merger, with the effect of changing the name of Synetic,
Inc. to "Medical Manager Corporation";
- - A proposal to amend and restate Article Four of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the effect
of increasing the number of authorized shares of capital stock of Synetic to
310,000,000, with 300,000,000 designated as Synetic Common Stock;
- - A proposal to amend and restate Article Nine of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the effect
of deleting the last clause of Article Nine which states "provided that the
Board of Directors may not amend the By-Laws to increase the number of
directors above twelve"; and
- - A proposal to grant options to purchase 650,000 shares of Synetic Common Stock
to each of Messrs. Michael A. Singer and John H. Kang under their employment
agreements.
AT THE MEDICAL MANAGER SPECIAL MEETING TO BE HELD ON JULY 23, 1999, AT 15151
NORTHWEST 99TH STREET, ALACHUA, FLORIDA, COMMENCING AT 10:00 A.M., LOCAL TIME,
WE ARE ASKING MEDICAL MANAGER STOCKHOLDERS TO APPROVE:
- - The merger agreement, pursuant to which Medical Manager will merge with a
subsidiary of Synetic and become a wholly owned subsidiary of Synetic.
YOUR VOTE IS IMPORTANT. Please vote on these proposals by completing and
mailing the enclosed proxy card, even if you plan to attend your stockholders
meeting. This Joint Proxy Statement/Prospectus provides detailed information
about the meetings scheduled for our stockholders to vote on these matters. We
encourage you to read this Joint Proxy Statement/Prospectus carefully before you
vote. You may obtain more information about Synetic and Medical Manager from
documents that we have filed with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE SYNETIC COMMON STOCK TO BE ISSUED IN CONNECTION
WITH THIS JOINT PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT/ PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Joint Proxy Statement/Prospectus is dated June 24, 1999 and is first
being mailed to stockholders of Synetic and Medical Manager on or about June 24,
1999.
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT ARE THE BENEFITS OF THE MERGER?
A. The merger creates an organization with the components we believe are needed
to change the information infrastructure of America's practicing physicians,
with the goal of revolutionizing the way in which physicians can communicate
electronically with payers, suppliers, providers and patients. We believe
that Synetic will be uniquely positioned to capitalize on the growing need
to create an effective channel of communication between physicians and
insurance companies and pharmacies. As a result, we believe that this merger
should increase stockholder value for you.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: For Synetic stockholders, each of the shares of Synetic Common Stock held by
Synetic stockholders will remain outstanding at the time of the merger.
For Medical Manager stockholders, at the effective time of the merger, each
issued and outstanding share of Medical Manager Common Stock will be
converted into the right to receive .625 shares of Synetic Common Stock,
which is referred to as the "exchange ratio", if the average closing price
of Synetic Common Stock during the period from and including July 7, 1999
to and including July 20, 1999 is greater than or equal to $67.20.
If the average closing price per share of Synetic Common Stock during the
period from and including July 7, 1999 to and including July 20, 1999 is
less than $67.20 but at least $56.00, the exchange ratio will be adjusted
upward so that the value of the Synetic Common Stock to be received for
each share of Medical Manager Common Stock based on such adjusted exchange
ratio is equal to $42.00 based on the average closing price of Synetic
Common Stock during such period. If the average closing price per share of
Synetic Common Stock during the period from and including July 7, 1999 to
and including July 20, 1999 is less than $56.00, the exchange ratio will be
.750 shares of Synetic Common Stock for each share of Medical Manager
Common Stock, unless the board of directors of Medical Manager exercises
its right to terminate the merger. Synetic and Medical Manager will issue a
joint press release announcing the exchange ratio prior to the opening of
trading on July 21, 1999.
Q: WHAT DO I NEED TO DO NOW?
A. After you read and consider carefully the information contained in this
document, please fill out and sign your proxy card. Then mail your signed
proxy card in the enclosed return envelope as soon as possible so that your
shares may be represented at the Synetic Special Meeting or the Medical
Manager Special Meeting, as applicable. The board of directors of Medical
Manager unanimously recommends that you vote FOR the merger, and the board
of directors of Synetic unanimously recommends that you vote FOR the
proposals described in this document to be voted on by the Synetic
stockholders in connection with the merger.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the instructions provided by your broker regarding
how to instruct your broker to vote your shares.
Q: CAN I CHANGE MY VOTE OR REVOKE MY PROXY AFTER I HAVE MAILED MY SIGNED PROXY
CARD?
A: You can change your vote at any time before your proxy is voted at the
Synetic Special Meeting or the Medical Manager Special Meeting. You can do
this in one of three ways. First, you can send a written notice stating that
you would like to revoke your proxy. Second, you can complete and submit a
new proxy card. If you choose either of these methods, you must timely
submit your notice of revocation or your new proxy card to the appropriate
company at the address shown below. Third, you can attend the Synetic
Special Meeting or the Medical Manager Special Meeting and
<PAGE> 8
vote in person. Simply attending a meeting, however, will not revoke your
proxy. If you have instructed a broker to vote your shares, you must follow
instructions received from your broker to change your vote.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After we have completed the merger, we will send Medical Manager
stockholders written instructions informing them how to exchange their stock
certificates. Synetic stockholders will keep their stock certificates.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working towards completing the merger as soon as possible. We hope to
complete the merger as early as July 23, 1999. However, if all applicable
antitrust waiting periods have not expired by that date or if other
conditions to the merger are not satisfied, the merger may be completed
later.
Q: WHAT ARE THE TAX CONSIDERATIONS OF THE MERGER?
A: We expect that the merger generally will be tax-free to you for federal
income tax purposes (other than with respect to cash that stockholders of
Medical Manager may receive instead of fractional shares). To review the tax
considerations of the merger in greater detail, see pages 70 to 72.
Q: WHAT IF I HAVE QUESTIONS?
A: If you are a Synetic stockholder, please call Risa Fisher, Director of
Investor Relations at Synetic, at (201) 703-3400.
If you are a Medical Manager stockholder, please call Charles Hutchinson,
Controller of Medical Manager, at (813) 287-2990, extension 102.
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY............................. 1
SELECTED FINANCIAL DATA............. 11
SUMMARY UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION... 15
COMPARATIVE PER SHARE DATA.......... 17
MARKET PRICE AND DIVIDEND
INFORMATION....................... 19
FORWARD-LOOKING STATEMENTS MAY PROVE
INACCURATE........................ 21
RISK FACTORS........................ 22
Risks Relating to the Merger...... 22
Risks Inherent in the Businesses
of Synetic..................... 24
Risks Inherent in the Business of
CareInsite..................... 24
Risks Inherent in the Business of
Porex.......................... 29
Risks Inherent in the Business of
Medical Manager................ 29
Risks Common to Each of Synetic's
Businesses..................... 34
THE SPECIAL MEETINGS................ 42
The Synetic Special Meeting....... 42
The Medical Manager Special
Meeting........................ 46
THE MERGER.......................... 49
Background of the Merger.......... 49
Recommendation of the Synetic
Board of Directors; Reasons of
Synetic for the Merger......... 50
Opinion of PaineWebber
Incorporated................... 53
Recommendation of the Medical
Manager Board of Directors;
Reasons of Medical Manager for
the Merger..................... 59
Opinion of Donaldson, Lufkin &
Jenrette Securities
Corporation.................... 61
Interests of Certain Persons in
the Merger..................... 66
Material Federal Income Tax
Consequences Relating to the
Stock Options.................. 70
Material Federal Income Tax
Consequences of the Merger..... 70
Accounting Treatment.............. 72
Regulatory Approvals.............. 72
Federal Securities Laws
Consequences................... 73
Nasdaq National Market System
Quotation...................... 73
Appraisal Rights.................. 73
THE MERGER AGREEMENT................ 74
Structure of the Merger........... 74
Conversion of Securities.......... 74
Representations and Warranties.... 75
Certain Covenants................. 76
No Solicitation................... 76
Stock Options and Employee Benefit
Plans.......................... 77
Conditions to the Merger.......... 78
Termination of the Merger
Agreement...................... 80
Termination Expenses and
Alternative Transaction Fees... 81
Expenses.......................... 83
Amendment and Waiver.............. 83
STOCK OPTION AGREEMENTS............. 84
Number of Shares.................. 84
Exercise Price.................... 84
Exercisability.................... 84
Limitation on Proceeds............ 84
REGISTRATION RIGHTS AGREEMENT....... 85
EXCLUSIVE ELECTRONIC GATEWAY AND
NETWORK SERVICE AGREEMENT......... 85
OPERATION, GOVERNANCE AND MANAGEMENT
OF SYNETIC FOLLOWING THE MERGER... 86
Business of Synetic............... 86
Name Change....................... 87
Board of Directors of Synetic..... 87
Management of Synetic............. 88
UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL DATA.......... 89
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
DESCRIPTION OF SYNETIC'S CAPITAL STOCK......... 98
Authorized Capital........................... 98
Common Stock................................. 98
Preferred Stock.............................. 98
Section 203 of the Delaware General
Corporation Law........................... 98
Indemnification.............................. 99
COMPARISON OF CAPITAL STOCK.................... 99
Authorized Capital Stock..................... 100
Special Meetings of Stockholders............. 100
Classification of the Board of Directors..... 100
Removal of Directors; Filling Vacancies on
the Board of Directors.................... 100
Amendment of Certificate of Incorporation and
By-laws................................... 101
STOCKHOLDER PROPOSALS.......................... 101
LEGAL MATTERS.................................. 101
EXPERTS........................................ 102
WHERE YOU CAN FIND MORE INFORMATION............ 103
Annex A -- Agreement and Plan of Merger........ A-1
Annex B -- Opinion of PaineWebber
Incorporated........................ B-1
Annex C -- Opinion of Donaldson, Lufkin &
Jenrette Securities Corporation..... C-1
Annex D -- Form of Proposed Amended and
Restated Certificate of
Incorporation of Synetic............ D-1
</TABLE>
ii
<PAGE> 11
SUMMARY
Because this is a summary, it does not contain all of the information that
may be important to you. You should carefully read this entire Joint Proxy
Statement/Prospectus and its Annexes and the other documents to which we have
referred you before you decide how to vote. See "Where You Can Find More
Information" (page 103).
THE COMPANIES
SYNETIC, INC.
Synetic is engaged in two principal business activities, plastics and
filtration technologies and healthcare communications. Through wholly owned
subsidiaries, including Porex Technologies Corp., Synetic designs, manufactures
and distributes porous and solid plastics components and products. These
products are used in life sciences, healthcare, industrial, and consumer
applications. Through its majority-owned subsidiary, CareInsite, Inc., Synetic
is engaged in an area of business relating to the use of Internet technology to
expand the channels of communication in the healthcare industry. Synetic's
address is: River Drive Center 2, 669 River Drive, Elmwood Park, New Jersey
07407; its telephone number is (201) 703-3400.
MEDICAL MANAGER CORPORATION
Medical Manager is a leading provider of comprehensive physician practice
management information systems to independent physicians, independent practice
associations, management service organizations, physician practice management
organizations, management care organizations and other providers of health care
services in the United States. Medical Manager develops, markets and supports
The Medical Manager practice management system, which addresses the financial,
administrative, clinical and practice management needs of physician practices.
The Medical Manager system has been implemented in a wide variety of practice
settings from small physician groups to multi-provider independent practice
associations and management service organizations. Medical Manager's proprietary
systems enable physicians and their administrative staffs to efficiently manage
their practices while delivering quality patient care in a constantly changing
health care environment. Since the development of The Medical Manager software
in 1982, Medical Manager's installed base has grown to over 24,000 client sites,
representing more than 80 practice specialities, making it the most widely
installed physician practice management system in the United States to date.
Medical Manager's address is: 3001 N. Rocky Point Drive East, Suite 400, Tampa,
Florida 33607; its telephone number is (813) 287-2990.
PURPOSES OF THE SPECIAL MEETINGS
(PAGES 42 AND 46)
SYNETIC. The purpose of the Synetic Special Meeting is to consider and vote
upon:
- - the issuance of up to 18,202,213 shares of Synetic Common Stock to current
Medical Manager stockholders in the merger;
- - as contemplated by the merger agreement, the amendment and restatement of
Article One of the Synetic Certificate of Incorporation, effective at the
effective time of the merger, with the effect of changing the name of Synetic
to "Medical Manager Corporation";
- - the amendment and restatement of Article Four of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the effect
of increasing the number of authorized shares of capital stock of Synetic to
310,000,000, with 300,000,000 designated as Synetic Common Stock;
- - the amendment and restatement of Article Nine of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the effect
of deleting the last clause of Article Nine which states "provided that the
Board of Directors may not amend the By-Laws to increase the numbers of
directors above twelve"; and
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<PAGE> 12
- - the grant of options to purchase 650,000 shares of Synetic Common Stock to
each of Messrs. Michael A. Singer and John H. Kang under their employment
agreements.
MEDICAL MANAGER. The purpose of the Medical Manager Special Meeting is to
consider and vote upon:
- a proposal to approve and adopt the merger agreement.
DATE, TIMES AND PLACES OF THE SPECIAL
MEETINGS (PAGES 42 AND 46)
SYNETIC. The Synetic Special Meeting will be held on July 23, 1999, at
Saddle Brook Marriott Hotel, Garden State Parkway at Interstate 80, Saddle
Brook, New Jersey, commencing at 9:30 a.m., local time.
MEDICAL MANAGER. The Medical Manager Special Meeting will be held on July
23, 1999, at 15151 Northwest 99th Street, Alachua, Florida, commencing at 10:00
a.m., local time.
STOCKHOLDERS ENTITLED TO VOTE AT THE SPECIAL
MEETINGS (PAGES 44 AND 46)
SYNETIC. The close of business on June 21, 1999 is the record date for the
Synetic Special Meeting. Only Synetic stockholders on the record date are
entitled to notice of and to vote at the Synetic Special Meeting. On the record
date, there were 20,680,309 shares of Synetic Common Stock outstanding. Each
share of Synetic Common Stock will be entitled to one vote on each matter to be
acted upon at the Synetic Special Meeting. As of June 1, 1999, current directors
and executive officers of Synetic and their affiliates may be deemed to be
beneficial owners of approximately 6,227,486 shares of Synetic Common Stock
(excluding options not exercised as of the record date), or approximately 30% of
the shares of Synetic Common Stock entitled to vote at the Synetic Special
Meeting.
MEDICAL MANAGER. The close of business on June 21, 1999 is the record date
for the Medical Manager Special Meeting. Only Medical Manager stockholders on
the record date are entitled to notice of and to vote at the Medical Manager
Special Meeting. On the record date, there were 22,473,766 shares of Medical
Manager Common Stock outstanding. Each share of Medical Manager Common Stock
will be entitled to one vote on each matter to be acted upon at the Medical
Manager Special Meeting. As of June 1, 1999, current directors and executive
officers of Medical Manager and their affiliates may be deemed to be beneficial
owners of approximately 8,640,149 shares of Medical Manager Common Stock, or
approximately 38% of the shares of Medical Manager Common Stock entitled to vote
at the Medical Manager Special Meeting.
VOTES REQUIRED (PAGES 44 THROUGH 45
AND PAGE 47)
SYNETIC. The affirmative vote of the majority of the shares of Synetic
Common Stock present in person or by proxy at the Synetic Special Meeting is
required to approve the proposal to issue shares of Synetic Common Stock in
connection with the merger and the proposal to grant options to purchase 650,000
shares of Synetic Common Stock to each of Messrs. Singer and Kang under their
employment agreements. The approval of the proposal to issue shares of Synetic
Common Stock is a condition to the consummation of the merger. The affirmative
vote of the majority of the outstanding shares of Synetic Common Stock is
required to approve the proposals to amend the Synetic Certificate of
Incorporation to increase the number of authorized shares of Synetic capital
stock to 310,000,000 shares with 300,000,000 designated as Common Stock; to
change the name of Synetic to "Medical Manager Corporation"; and to amend and
restate Article Nine of the Synetic Certificate of Incorporation.
MEDICAL MANAGER. The affirmative vote of the holders of a majority of the
outstanding shares of Medical Manager Common Stock is required to approve the
merger agreement. Such approval is a condition to the consummation of the
merger.
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<PAGE> 13
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
(PAGES 50 THROUGH 53 AND 59
THROUGH 61)
SYNETIC. The Synetic board of directors has determined that the merger is
fair to, and in the best interests of, Synetic and its stockholders and has
unanimously approved the merger agreement and the proposal to issue shares of
Synetic Common Stock in connection with the merger, subject to the separate
approval of the stock option committee of the Synetic board of directors, the
proposal to grant options to purchase 650,000 shares of Synetic Common Stock to
each of Messrs. Singer and Kang under their employment agreements and the
proposals to amend and restate the Synetic Certificate of Incorporation.
Accordingly, the Synetic board of directors unanimously recommends that Synetic
stockholders vote FOR the proposal to issue shares of Synetic Common Stock in
connection with the merger, the proposals to amend and restate the Synetic
Certificate of Incorporation and the proposal to grant options to purchase
650,000 shares of Synetic Common Stock to each of Messrs. Singer and Kang under
their employment agreements.
MEDICAL MANAGER. The Medical Manager board of directors has determined that
the merger is fair to, advisable and in the best interests of, Medical Manager
and its stockholders and has unanimously approved the merger agreement proposal.
Accordingly, the Medical Manager board of directors recommends that Medical
Manager stockholders vote FOR the approval and adoption of the merger agreement.
OPINIONS OF FINANCIAL ADVISORS
(PAGES 53 THROUGH 59 AND 61 THROUGH 66)
In deciding to approve the merger, the boards of directors of Synetic and
Medical Manager considered opinions from their respective financial advisors as
to the fairness, from a financial point of view, of the exchange ratio.
Synetic received an opinion from its financial advisor, PaineWebber
Incorporated, that, as of the date of that opinion, the exchange ratio was fair,
from a financial point of view, to Synetic.
Medical Manager received an opinion from its financial advisor, Donaldson,
Lufkin & Jenrette Securities Corporation or "DLJ", that, as of the date of that
opinion, the consideration to be received by the stockholders of Medical Manager
was fair, from a financial point of view.
Copies of the fairness opinions of PaineWebber and DLJ are attached to this
Joint Proxy Statement/Prospectus as Annexes B and C, respectively. WE URGE YOU
TO READ THESE OPINIONS CAREFULLY.
RISK FACTORS (PAGES 22 THROUGH 41)
There are risk factors that should be considered by the Synetic
stockholders in deciding how to vote at the Synetic Special Meeting and by the
Medical Manager stockholders in deciding how to vote at the Medical Manager
Special Meeting. Such risk factors include the following:
- - Medical Manager stockholders may receive shares of Synetic Common Stock with a
market value lower than anticipated and Synetic stockholders may suffer
greater than expected dilution;
- - integrating business operations may be difficult and may have a negative
impact on Synetic's business, and there are uncertainties in realizing
benefits from the combination;
- - risks generally associated with acquisitions and the expansion of the existing
operations of Synetic; and
- - risks inherent in the industry, the business of, or particular to Synetic or
Medical Manager, including dependence on proprietary technology and those
related to competition and government regulation.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
(PAGES 66 THROUGH 70)
SYNETIC. In considering the recommendations of the Synetic board of
directors regarding approval of the proposal to issue shares of Synetic Common
Stock in connection with the
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<PAGE> 14
merger, the proposals to amend and restate the Synetic Certificate of
Incorporation, and the proposal to grant options to purchase 650,000 shares of
Synetic Common Stock to each of Messrs. Singer and Kang under their employment
agreements, Synetic stockholders should be aware of interests that some of the
officers and directors of Synetic, and some of the persons designated by Synetic
to become directors of Synetic, have in the merger that may be different from
your and their interests as stockholders generally. The Synetic board of
directors has recognized such interests and has determined that such interests
neither support nor detract from the fairness of the merger to Synetic's
stockholders. These include the following:
- - The eleven members of the Synetic board of directors are expected to remain as
members of the board of directors of Synetic as of the effective time of the
merger.
MEDICAL MANAGER. In considering the recommendations of the Medical Manager
board of directors regarding approval of the proposal to approve and adopt the
merger agreement, Medical Manager stockholders should be aware of interests that
some of the officers and directors of Medical Manager, and some of the persons
designated by Medical Manager to become directors of Synetic, have in the merger
that may be different from your and their interests as stockholders generally.
The Medical Manager board of directors has recognized such interests and has
determined that such interests neither support nor detract from the fairness of
the merger to Medical Manager's stockholders. These include the following:
- - Five members of the Medical Manager board of directors are expected to become
members of the Synetic board of directors as of the effective time of the
merger.
- - As of the record date, approximately 524,000 shares of Medical Manager Common
Stock were subject to options granted to executive officers and directors
under Medical Manager's equity based compensation plans. All such stock
options are subject to accelerated vesting upon a change of control of Medical
Manager. All outstanding options to purchase Medical Manager Common Stock
under such plans will be assumed by Synetic and will become options to
purchase Synetic Common Stock, with appropriate adjustments to be made to the
number of shares and the exercise price under such options based on the
exchange ratio.
- - Synetic entered into an employment agreement with Michael A. Singer, Chairman
and Chief Executive Officer of Medical Manager, effective upon the
consummation of the merger. The employment agreement provides for Mr. Singer's
appointment as the sole Vice Chairman and the Co-Chief Executive Officer of
Synetic and as the most senior executive officer of Medical Manager Research
and Development Inc., a Florida corporation and a wholly owned subsidiary of
Medical Manager.
- - Synetic entered into an employment agreement with John H. Kang effective upon
the consummation of the merger. The employment agreement provides for Mr.
Kang's appointment as the Co-Chief Executive Officer of Synetic.
- - Under the employment agreements with Messrs. Singer and Kang, Synetic will
grant options to purchase 650,000 shares of Synetic Common Stock to each of
Messrs. Singer and Kang.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGES 70 THROUGH 72)
It is expected that the merger generally will be tax-free to Synetic and
Medical Manager stockholders for federal income tax purposes (other than with
respect to cash that stockholders of Medical Manager may receive instead of
fractional shares). It is a condition to the merger that Synetic and Medical
Manager each have received an opinion of counsel to the effect that the merger
will constitute a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended, which is referred to in this
document as the "Code".
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<PAGE> 15
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX
ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER AS IT
APPLIES TO YOU.
ACCOUNTING TREATMENT (PAGE 72)
We expect the merger to qualify as a pooling of interests for accounting
and financial reporting purposes, which means that we will treat our companies
as if they had always been combined for accounting and financial reporting
purposes.
REGULATORY APPROVALS
(PAGES 72 THROUGH 73)
The Federal Trade Commission and the Antitrust Division of the Department
of Justice frequently scrutinize the legality under the antitrust laws of
transactions such as the merger. At any time before or after the merger, the DOJ
or the FTC could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the merger or
seeking divestiture of substantial assets of Synetic or Medical Manager or their
subsidiaries. Private parties and state attorneys general may also bring an
action under the antitrust laws under particular circumstances. There can be no
assurance that a challenge to the merger on antitrust grounds will not be made
or, if such a challenge is made, of the result.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which
we refer to in this document as the "HSR Act", and the rules and regulations of
the FTC, provide that some merger transactions, including the merger, may not be
consummated until required information and materials have been furnished to the
DOJ and the FTC and the applicable waiting periods have expired or been
terminated.
FEDERAL SECURITIES LAWS CONSEQUENCES
(PAGE 73)
All shares of Synetic Common Stock received by Medical Manager stockholders
in the merger will be freely transferable, except that shares of Synetic Common
Stock received by persons who are deemed to be affiliates of Medical Manager
prior to the merger may be resold by them only in transactions permitted by the
resale provisions of Rule 145 promulgated under the Securities Act of 1933, as
amended, which we refer to in this document as the "Securities Act", or Rule 144
promulgated under the Securities Act in the case of such persons who become
affiliates of Synetic, or otherwise in compliance with, or pursuant to an
exemption from, the registration requirements of the Securities Act.
NASDAQ NATIONAL MARKET SYSTEM QUOTATION
(PAGE 73)
It is a condition to the merger that the shares of Synetic Common Stock to
be issued pursuant to the merger agreement be approved for listing on the Nasdaq
National Market System, subject to official notice of issuance. An application
will be filed for listing the shares of Synetic Common Stock to be issued in the
merger on the Nasdaq National Market System.
APPRAISAL RIGHTS (PAGE 73)
In accordance with the Delaware General Corporation Law, there will be no
appraisal rights available to holders of Medical Manager Common Stock in
connection with the merger.
STRUCTURE OF THE MERGER (PAGE 74)
A copy of the merger agreement is attached to this Joint Proxy Statement/
Prospectus. We encourage you to read this agreement because it is the legal
document that governs the proposed merger.
At the effective time of the merger, Marlin Merger Sub, Inc., a wholly
owned subsidiary of Synetic, which we refer to in this document as "Merger Sub",
will be merged with and into Medical Manager, with Medical Manager as the
surviving corporation and as a wholly owned subsidiary of Synetic immediately
after the merger. At the effective time of the merger, Synetic will change its
name to "Medical Manager Corporation", and Medical Manager
5
<PAGE> 16
will change its name to "Medical Manager
Systems, Inc."
CONVERSION OF SECURITIES
(PAGES 74 THROUGH 75)
At the effective time of the merger, each issued and outstanding share of
Medical Manager Common Stock will be converted into the right to receive .625
shares of Synetic Common Stock, if the average closing price of Synetic Common
Stock during the period from and including July 7, 1999 to and including July
20, 1999 is greater than or equal to $67.20.
If the average closing price per share of Synetic Common Stock during the
period from and including July 7, 1999 to and including July 20, 1999 is less
than $67.20 but at least $56.00, the exchange ratio will be adjusted upward so
that the value of the Synetic Common Stock to be received for each share of
Medical Manager Common Stock based on such adjusted exchange ratio is equal to
$42.00 based on the average closing price of Synetic Common Stock during such
period. If the average closing price per share of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
less than $56.00, the exchange ratio will be .750 shares of Synetic Common Stock
for each share of Medical Manager Common Stock, unless the board of directors of
Medical Manager exercises its right to terminate the merger. Synetic and Medical
Manager will issue a joint press release announcing the exchange ratio prior to
the opening of trading on July 21, 1999.
No fractional shares of Synetic Common Stock will be issued to any Medical
Manager stockholder upon surrender of certificates previously representing
Medical Manager Common Stock. Synetic will pay cash in lieu of issuing such
fractional shares.
Promptly after the effective time of the merger, Synetic will cause the
Exchange Agent to mail letters of transmittal and exchange instructions to each
holder of record of Medical Manager Common Stock to be used to surrender and
exchange certificates formerly evidencing shares of Medical Manager Common Stock
for certificates evidencing the shares of Synetic Common Stock to which such
holder has become entitled. MEDICAL MANAGER STOCKHOLDERS SHOULD NOT SEND IN
THEIR CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM. SYNETIC STOCKHOLDERS
SHOULD NOT SEND IN THEIR CERTIFICATES.
Assuming an exchange ratio of .625 shares of Synetic Common Stock for each
share of Medical Manager Common Stock, and assuming all Medical Manager stock
options are exercised as a result of the merger, Synetic will issue
approximately 15,169,000 shares of Synetic Common Stock to Medical Manager
stockholders. We estimate Medical Manager stockholders will own approximately
42.3% and Synetic stockholders will own approximately 57.7%, respectively, of
the outstanding shares of Synetic Common Stock immediately following
consummation of the merger.
STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS
(PAGES 77 THROUGH 78)
Stock options issued under Medical Manager stock option plans to purchase
Medical Manager Common Stock will be automatically converted into stock options
to purchase Synetic Common Stock. The number of shares and the exercise price of
these converted options will give effect to the exchange ratio.
Synetic has agreed that, for a period of two years immediately following
the effective time of the merger, it will maintain employee benefit plans,
programs and arrangements for the benefit of active and retired employees of
Medical Manager and its subsidiaries that in the aggregate will provide
compensation and benefits that are substantially comparable to the compensation
and benefits provided to such active and retired employees under the employee
benefit plans, programs and arrangements of Medical Manager and its subsidiaries
as in effect immediately prior to the effective time of the merger, except that
changes may be made to such employee benefit plans and arrangements to the
extent necessary or desirable in light of applicable law.
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<PAGE> 17
CONDITIONS TO THE MERGER
(PAGES 78 THROUGH 80)
The respective obligations of Synetic, Medical Manager and Merger Sub to
effect the merger are subject to the satisfaction or waiver of the following
conditions on or prior to the closing date of the merger:
- - The merger agreement having been duly approved and adopted by the stockholders
of Medical Manager;
- - The proposal to issue shares of Synetic Common Stock having been duly approved
by the stockholders of Synetic;
- - The waiting period (and any extension thereof) applicable to the merger under
the HSR Act and other similar laws having expired or been terminated;
- - No governmental order, writ, injunction or decree being in effect that would
make the merger illegal or otherwise prohibit the consummation of the merger;
- - The Synetic Registration Statement on Form S-4 having become effective and not
being the subject of a stop order or proceedings seeking a stop order;
- - Arthur Andersen LLP, as the independent public accountants of Synetic, having
issued a letter as of the date the Synetic Registration Statement on Form S-4
becomes effective and as of the effective time to the effect that accounting
for the merger as a pooling of interests under applicable accounting standards
is appropriate;
- - PricewaterhouseCoopers LLP, as the independent public accountants of Medical
Manager, having issued a letter as of the date the Synetic Registration
Statement on Form S-4 becomes effective and as of the effective time to the
effect that they concur with the conclusions of Medical Manager's management
that no conditions exist with respect to Medical Manager that would preclude
Medical Manager from being a party to a merger accounted for as a pooling of
interests; and
- - The shares of Synetic Common Stock to be issued in the merger having been
authorized for listing on the Nasdaq National Market System.
The obligations of Synetic and Merger Sub to effect the merger are subject
to the satisfaction or waiver of the following additional conditions:
- - Each of the representations and warranties of Medical Manager set forth in the
merger agreement being true and correct when made and on and as of the
effective time of the merger as if made on and as of such time, except where
the failure to be so true and correct would not have, individually or in the
aggregate, a material adverse effect on Medical Manager, and Synetic having
received a certificate signed by an officer of Medical Manager to such effect;
- - Medical Manager having performed in all material respects all of the
obligations required to be performed by it at or prior to the effective time
of the merger, and Synetic having received a certificate signed by an officer
of Medical Manager to such effect;
- - Synetic having received the opinion of Shearman & Sterling to the effect that
the merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the Code, and that
Synetic, Merger Sub and Medical Manager are each a party to the reorganization
within the meaning of Section 368(a) of the Code;
- - Synetic having received from any person who is an affiliate of Medical Manager
on May 16, 1999, or at any time after that date until the effective time of
the merger will be an affiliate of Medical Manager, an agreement restricting
the sale of their shares of Medical Manager Common Stock and the shares of
Synetic Common Stock that they receive in the merger;
- - The employment agreements with each of Michael A. Singer and John H. Kang
becoming effective at the effective time of the merger; and
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<PAGE> 18
- - There not having occurred any events or circumstances since May 16, 1999 that
would have a material adverse effect on Medical Manager.
The obligations of Medical Manager to effect the merger are subject to the
satisfaction or waiver of the following additional conditions:
- - Each of the representations and warranties of Synetic and Merger Sub set forth
in the merger agreement being true and correct when made and on and as of the
effective time of the merger as if made on and as of such time, except where
the failure to be so true and correct would not have, individually or in the
aggregate, a material adverse effect on Synetic, and Medical Manager having
received a certificate signed by an officer of Synetic and Merger Sub to such
effect;
- - Synetic having performed in all material respects all of the obligations
required to be performed by it at or prior to the effective time of the
merger, and Medical Manager having received a certificate signed by an officer
of Synetic and Merger Sub to such effect;
- - Medical Manager having received the opinion of Akerman, Senterfitt & Eidson,
P.A. to the effect that the merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section 368(a)
of the Code, and that Synetic, Merger Sub and Medical Manager are each a party
to the reorganization within the meaning of Section 368(a) of the Code;
- - Medical Manager having received from any person who is an affiliate of Synetic
on May 16, 1999, or at any time after that date until the effective time of
the merger will be an affiliate of Synetic, an agreement restricting the sale
of their shares of Synetic Common Stock;
- - There not having occurred any events or circumstances since May 16, 1999 that
would have a material adverse effect on Synetic; and
- - The employment agreements between Synetic and each of Michael A. Singer and
John H. Kang not having been terminated by Synetic.
TERMINATION OF THE MERGER AGREEMENT (PAGES 80 THROUGH 81)
Prior to the effective time of the merger, the merger agreement may be
terminated:
- - by mutual consent of each of Medical Manager and Synetic;
- - by either Medical Manager or Synetic if the merger has not been consummated by
November 30, 1999;
- - by either Medical Manager or Synetic, if
-- the board of directors of the other party withdraws, modifies or changes
its recommendation of the merger agreement or the merger in a manner
adverse to the terminating party; or
-- the board of directors of the non-terminating party recommends a competing
transaction proposal; or
-- a tender offer for 15% or more of the other party is commenced and the
board of directors of that party fails to recommend against acceptance of
that transaction; or
-- any person that is a group as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended, which we refer to in this document as the
"Exchange Act", becomes the beneficial owner of 25% or more of the other
party.
- - by Synetic, if the merger agreement and the transactions contemplated thereby
fail to receive the requisite vote for approval and adoption at the Medical
Manager stockholders' meeting;
- - by Medical Manager, if the proposal to issue up to 18,202,213 shares of
Synetic Common Stock in exchange for Medical Manager Common Stock pursuant to
the merger agreement fails to receive the requisite vote for approval and
adoption at the Synetic stockholders' meeting;
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<PAGE> 19
- - by either Medical Manager or Synetic upon a breach by the other party of any
representation, warranty, covenant or agreement set forth in the merger
agreement, or if any representation or warranty of the other party becomes
untrue, in either case such that the conditions to closing the merger would
not be satisfied, except that the merger agreement may not be terminated if
the breach is curable by the breaching party through using its best efforts so
long as the breaching party is using its best efforts to cure the breach;
- - by Medical Manager if the average closing price per share of Synetic Common
Stock during the period from and including July 7, 1999 to and including July
20, 1999 is less than $56.00, so long as notice is provided by Medical Manager
to Synetic not later than 6:00 PM on the trading day prior to July 21, 1999;
or
- - by either Medical Manager or Synetic if there is a final court or governmental
order preventing the consummation of the merger.
TERMINATION EXPENSES AND ALTERNATIVE
TRANSACTION FEES (PAGES 81 THROUGH 83)
Under some circumstances, if the merger agreement is terminated, either
Synetic or Medical Manager may be required to reimburse the other party for
termination expenses of up to $5,000,000 and to pay the other party an
alternative transaction fee of $65,000,000, in the case of payment by Synetic to
Medical Manager, or $42,000,000, in the case of payment by Medical Manager to
Synetic.
STOCK OPTION AGREEMENTS
(PAGE 84)
As an inducement to each party to enter into the merger agreement, each
party was granted a stock option to purchase, in the case of Synetic, up to
19.9% of the issued and outstanding shares of Medical Manager Common Stock at
the time of exercise at $54.0875 per share and, in the case of Medical Manager,
up to 10% of the issued and outstanding shares of Synetic Common Stock at the
time of exercise at $101.2125 per share. The options under each agreement will
only become exercisable if the merger agreement is terminated under
circumstances involving a competing transaction proposal. The possibility that
either party could exercise these stock options might act as a deterrent to
other potential acquirers.
REGISTRATION RIGHTS AGREEMENT (PAGE 85)
Synetic entered into a registration rights agreement with Michael A.
Singer, John H. Kang and Richard W. Mehrlich, which gives Messrs. Singer, Kang
and Mehrlich the right, under certain circumstances, to demand two registrations
with the Commission of their shares of Synetic Common Stock. Synetic will use
its reasonable efforts to cause a registration statement to be made available
upon request by the stockholders named above.
EXCLUSIVE ELECTRONIC GATEWAY AND NETWORK SERVICE AGREEMENT (PAGE 85)
Medical Manager and CareInsite, Inc., a majority-owned subsidiary of
Synetic, have entered into an agreement under which CareInsite will be exclusive
provider of certain network, web hosting and transaction services to Medical
Manager. CareInsite intends to use Medical Manager's sales and support network
as a platform from which to distribute, install and support CareInsite's
transaction, messaging and content services to Medical Manager's customers.
BUSINESS OF SYNETIC (PAGES 86 THROUGH 87)
Following completion of the merger, Synetic will be engaged in three
principal businesses:
- - the development and provision of an Internet-based healthcare electronic
commerce network that links physicians, payers, suppliers and patients, which
business will be conducted through Synetic's majority-owned subsidiary,
CareInsite;
- - the continued development and provision of comprehensive physician practice
management information systems to independent physicians, independent practice
associations,
9
<PAGE> 20
management service organizations, physician practice management organizations
and other providers of healthcare services in the United States; and
- - the design, manufacture and distribution of porous and solid plastic
components and products for use life sciences, healthcare, industrial and
consumer applications through Porex and the other plastic and filtration
technologies subsidiaries of Synetic.
BOARD OF DIRECTORS OF SYNETIC
(PAGES 87 THROUGH 88)
Pursuant to the merger agreement, the size of the Synetic board of
directors will be increased to 16 persons. The Synetic board of directors will
elect, effective upon consummation of the merger, five members of the board of
directors of Medical Manager to be members of the Synetic board of directors,
together with the 11 members of the Synetic board of directors, who will
continue as directors after the merger.
MANAGEMENT OF SYNETIC
(PAGE 88)
Martin J. Wygod will remain the Chairman of the board of directors of
Synetic after the effective time of the merger. Mr. Singer will be the Vice
Chairman, and each of Messrs. Singer and Kang will be Co-Chief Executive
Officers of Synetic after the effective time of the merger. Messrs. Singer and
Kang will report directly to the Chairman of Synetic after the effective time of
the merger. The By-laws of Synetic will be amended at the effective time of the
merger to reflect the chairman's position as an executive officer of Synetic,
the addition of the office of Vice Chairman, and the positions of Co-Chief
Executive Officer.
COMPARISON OF CAPITAL STOCK
(PAGES 99 THROUGH 101)
The rights of holders of Synetic Common Stock are currently governed by
Delaware law and the Synetic Certificate of Incorporation and the Synetic
By-laws. The rights of holders of Medical Manager Common Stock are currently
governed by Delaware law and the Medical Manager Certificate of Incorporation
and the Medical Manager By-laws. When the merger is completed, holders of
Medical Manager Common Stock will become holders of Synetic Common Stock. See
pages 99 through 101 to learn more about the material differences between the
rights of holders of Synetic Common Stock and Medical Manager Common Stock.
10
<PAGE> 21
SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA OF SYNETIC
Synetic's selected financial data as of and for the years ended June 30,
1994, 1995, 1996, 1997 and 1998 as set forth below has been derived from the
audited information included in the Synetic annual report on Form 10-K filed for
the year ended June 30, 1998. Synetic's selected financial data as of and for
the two years ended June 30, 1994 and 1995 have been restated to reflect the
divestiture of Synetic's institutional pharmacies business in December 1994.
Synetic's selected financial data as of and for the nine months ended March 31,
1998 and 1999 as set forth below has been derived from the unaudited information
included in the Synetic quarterly report on Form 10-Q filed for the period ended
March 31, 1999. The selected financial data for the nine months ended March 31,
1998 and 1999 reflects all adjustments deemed necessary by management for a fair
presentation of the results for these interim periods. You should not expect the
results for the nine months ended March 31, 1999 to be necessarily indicative of
Synetic's results that might be obtained for the full year. The following
historical financial information is only a summary and should be read in
conjunction with the information contained in the reports on Form 10-K and Form
10-Q as filed by Synetic and also in conjunction with the other information
incorporated by reference in this document. See "Where You Can Find More
Information" (page 103).
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED JUNE 30, MARCH 31,
------------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- -------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $33,093 $39,179 $45,128 $ 52,885 $64,945 $46,710 $68,730
Income (loss) from continuing
operations before provision for
income taxes........................ 1,080 1,078 13,202 (24,626)(1) 14,832 10,225 4,770(2)
Provision for income taxes............ 411 443 4,617 2,834 5,788 4,064 2,517
------- ------- ------- -------- ------- ------- -------
Income (loss) from continuing
operations.......................... 669 635 8,585 (27,460) 9,044 6,161 2,253
Income from discontinued operations... 1,823 15,459 -- -- -- -- --
------- ------- ------- -------- ------- ------- -------
Net income (loss)..................... $ 2,492 $16,094 $ 8,585 $(27,460) $ 9,044 $ 6,161 $ 2,253
======= ======= ======= ======== ======= ======= =======
Net income (loss) per share -- basic:
Continuing operations............... $ 0.04 $ 0.04 $ 0.52 $ (1.60) $ 0.51 $ 0.35 $ 0.12
Discontinued operations............. 0.10 0.94 -- -- -- -- --
------- ------- ------- -------- ------- ------- -------
Net income (loss) per share --basic... $ 0.14 $ 0.98 $ 0.52 $ (1.60) $ 0.51 $ 0.35 $ 0.12
======= ======= ======= ======== ======= ======= =======
Net income (loss) per share --diluted:
Continuing operations............... $ 0.04 $ 0.04 $ 0.48 $ (1.60) $ 0.46 $ 0.32 $ 0.11
Discontinued operations............. 0.10 0.89 -- -- -- -- --
------- ------- ------- -------- ------- ------- -------
Net income (loss) per
share -- diluted.................... $ 0.14 $ 0.93 $ 0.48 $ (1.60) $ 0.46 $ 0.32 $ 0.11
======= ======= ======= ======== ======= ======= =======
</TABLE>
11
<PAGE> 22
<TABLE>
<CAPTION>
AT JUNE 30, AT MARCH 31,
---------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 64,625 $105,279 $166,328 $ 91,073 $108,069 $ 93,608 $ 79,792
Net assets of discontinued
operations........................ 55,882 -- -- -- -- -- --
Total assets........................ 194,009 188,174 199,592 384,339 396,926 387,177 539,962
Long-term debt, less current
portion........................... 80,716 -- -- 165,000 159,500 159,500 168,965
Stockholders' equity................ 105,130 166,832 181,089 188,736 206,226 201,754 319,964
</TABLE>
- -------------------------
(1) Includes $37,413 ($35,583 after tax) write-off of acquired in-process
research and development costs in conjunction with the purchase of Avicenna
Systems Corporation and CareAgents, Inc. and certain software costs.
(2) Includes a write-off of $2,381 of capitalized software costs which relate to
the abandonment of our development efforts with respect to certain of our
products and services. Those services were abandoned as a result of
encountering a high risk development issue associated with integrating those
products and services with the acquired Cerner technology. Also includes
$2,500 ($1,628 after tax) in charges relating to expenses incurred with the
Merck litigation.
12
<PAGE> 23
SELECTED FINANCIAL DATA OF MEDICAL MANAGER
Medical Manager's selected historical financial data as of and for the
years ended December 31, 1994, 1995, 1996, 1997 and 1998 as set forth below has
been derived from the audited and unaudited information included in the Medical
Manager annual report on Form 10-K for the year ended December 31, 1998 and from
the unaudited financial information of the companies subsequently acquired by
Medical Manager. Medical Manager's selected historical financial data has been
restated to reflect the results of operations of acquired companies accounted
for using the pooling of interests method of accounting. The results of other
acquired companies accounted for using the purchase method of accounting have
been reflected from their acquisition dates. The selected historical financial
data for Medical Manager as of and for the three months ended March 31, 1998 and
1999 are derived from unaudited financial statements which, in the opinion of
management, include all normal and recurring adjustments necessary to present
fairly the financial position and the results of operations for those periods.
The operating results for the three months ended March 31, 1999 are not
necessarily indicative of the operating results to be expected for the full
year. The following historical financial data is only a summary and should be
read in conjunction with the information contained in the reports on Form 10-K
and Form 10-Q as filed by Medical Manager and also in conjunction with the other
information incorporated by reference in this document. See "Where You Can Find
More Information" (page 103).
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------ -----------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................ $41,190 $47,193 $52,927 $96,386 $141,296 $30,981 $41,328
Income before provision
for income taxes....... 5,166 5,251 5,287 15,405 24,304(2) 5,677 8,545
Provision for income
taxes.................. 26 33 16 5,695 8,688 2,147 2,993
------- ------- ------- ------- -------- ------- -------
Net income............... $ 5,140 $ 5,218 $ 5,271 $ 9,710 $ 15,616 $ 3,530 $ 5,552
======= ======= ======= ======= ======== ======= =======
Net income per share(1):
Basic.................. $ -- $ -- $ -- $ 0.48 $ 0.72 $ 0.17 $ 0.25
======= ======= ======= ======= ======== ======= =======
Diluted................ $ -- $ -- $ -- $ 0.47 $ 0.69 $ 0.16 $ 0.24
======= ======= ======= ======= ======== ======= =======
</TABLE>
13
<PAGE> 24
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------------------------ ------------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- ------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit)............... $ (902) $ (419) $(1,048) $ 6,595 $ 57,463 $ 9,753 $ 57,439
Total assets.............. 14,007 15,682 15,121 62,305 122,058 65,958 126,202
Long-term debt, less
current portion......... 2,260 2,186 2,946 4,461 2,436 4,417 250
Stockholders' equity...... 3,578 4,136 682 33,054 93,842 36,947 100,609
</TABLE>
- -------------------------
(1) On January 30, 1997 the common stock of Medical Manager began trading on the
Nasdaq National Market System. Prior to this date, there was no established
trading market for Medical Manager Common Stock. As such, no per share data
is presented for periods ending prior to January 30, 1997.
(2) Includes $2,366 ($1,400 after tax) in charges relating to the settlement of
a class action lawsuit alleging that versions of The Medical Manager
software prior to Version 9.0 will not properly recognize and process
information relating to dates in and after the year 2000.
14
<PAGE> 25
SUMMARY UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION
Synetic's fiscal year ends on June 30, while Medical Manager's fiscal year
ends on December 31. For purposes of combining Medical Manager's historical
financial data with Synetic's historical financial data in the pro forma
combined condensed financial information in this document, the audited financial
data of Synetic for the fiscal years ended June 30, 1996, 1997 and 1998 have
been combined with Medical Manager's unaudited financial data for the twelve
months ended June 30, 1996, 1997 and 1998. Medical Manager's unaudited data for
the twelve months ended June 30, 1996, 1997 and 1998 was derived from Medical
Manager's books and records for the appropriate periods. Synetic's unaudited
financial data for the nine months ended March 31, 1999 have been combined with
Medical Manager's unaudited financial data for the nine months ended March 31,
1999.
We have included this unaudited pro forma combined condensed financial
information only for the purpose of illustration, and it does not necessarily
indicate what the operating results or financial position would have been if the
merger between Synetic and Medical Manager had been completed on July 1, 1995.
Moreover, this data does not necessarily indicate what the future operating
results or financial position of the combined company will be. You should read
this summary unaudited pro forma combined condensed financial information in
conjunction with the "Unaudited Pro Forma Combined Condensed Financial Data"
included elsewhere in this document and with the historical financial statements
of Synetic and Medical Manager and the related notes thereto, that are
incorporated by reference in this document. This summary unaudited pro forma
combined condensed financial information does not reflect any adjustments to
conform accounting practices as a result of the merger or any future merger
related expenses, as discussed in Note 4.
SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JUNE 30,(1) MARCH 31,(1)
------------------------------- -------------------
1996(6) 1997 1998 1998 1999
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales......................... $95,294 $123,631 $182,610 $130,303 $186,302
Income (loss) before provision for
income taxes.................... 19,258 (15,725)(2) 35,879 24,269 24,941(3)(7)
Provision for income taxes........ 4,647 5,008 13,817 9,742 9,701
------- -------- -------- -------- --------
Net income (loss)(4).............. $14,611 $(20,733) $ 22,062 $ 14,527 $ 15,240
======= ======== ======== ======== ========
Net income (loss) per share(5)
Basic........................... $ -- $ (0.81) $ 0.72 $ 0.48 $ 0.46
======= ======== ======== ======== ========
Diluted......................... $ -- $ (0.81) $ 0.66 $ 0.44 $ 0.43
======= ======== ======== ======== ========
</TABLE>
15
<PAGE> 26
<TABLE>
<CAPTION>
AT JUNE 30, 1998(1) AT MARCH 31, 1999(1)
------------------- --------------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................... $160,890 $137,231
Total assets...................................... 507,697 666,164
Long-term debt, less current portion.............. 161,913 169,215
Stockholders' equity.............................. 290,694 420,573
</TABLE>
- -------------------------
(1) Historical amounts have been adjusted to reflect all acquisitions accounted
for using the pooling of interests method of accounting for all periods.
(2) Includes $37,413 ($35,583 after tax) write-off of acquired in-process
research and development costs in conjunction with the purchase of Avicenna
Systems Corporation and CareAgents, Inc. and certain software costs.
(3) Includes a write-off of $2,381 of capitalized software costs which relate to
the abandonment of our development efforts with respect to certain of our
products and services. Those services were abandoned as a result of
encountering a high risk development issue associated with integrating those
products and services with the acquired Cerner technology. Includes $2,500
($1,628 after tax) in charges, relating to expenses incurred with the Merck
litigation.
(4) Amount does not reflect the pro forma effect of future expenses for the
merger. In connection with the merger, Synetic and Medical Manager expect to
incur investment banking, legal, accounting and other related transaction
costs and fees. Additionally, Synetic and Medical Manager expect to incur
other merger-related costs associated with the integration of the separate
companies. The merger-related expenses will be charged to expense in the
period which the merger is consummated or in subsequent periods when
incurred. Since the merger has not yet been consummated and transition plans
are currently being developed, the merger-related costs cannot be estimated
at this time.
The accounting policies of Synetic and Medical Manager are currently being
reviewed from a conformity perspective. The impact of conforming accounting
policies (if any) is not presently estimable. If conforming adjustments are
required, they will be recorded as part of the restatement of prior periods,
as required by the pooling-of-interests accounting method.
(5) Net income per common share amounts assume the conversion of each share of
Medical Manager Common Stock into .625 of a Synetic common share, based on
the exchange ratio.
(6) On January 30, 1997 the common stock of Medical Manager began trading on the
Nasdaq National Market System. Prior to this date, there was no established
trading market for Medical Manager Common Stock. As such, no per share data
is presented for periods ending prior to January 30, 1997.
(7) Includes $2,366 ($1,400 after tax) in charges relating to the settlement of
a class action lawsuit alleging that versions of The Medical Manager
software prior to Version 9.0 will not properly recognize and process
information relating to dates in and after the year 2000.
16
<PAGE> 27
COMPARATIVE PER SHARE DATA
We have set forth below information concerning earnings, cash dividends
declared and book value per share data for Synetic and Medical Manager on both a
historical and pro forma combined basis and on a per share equivalent pro forma
basis for Medical Manager. We have derived the pro forma combined earnings per
share from the "Summary Unaudited Pro Forma Combined Condensed Financial
Information" and from the "Selected Unaudited Pro Forma Combined Condensed
Financial Data" presented elsewhere in this document (which give effect to the
merger under the pooling-of-interests accounting method). Book value per share
for the pro forma combined presentation is based upon outstanding Synetic common
shares, adjusted to include the estimated number of Synetic common shares to be
issued in the merger for outstanding shares of Medical Manager Common Stock at
the time the merger is completed. The per share equivalent pro forma combined
data for shares of Medical Manager Common Stock is based on the assumed
conversion of each share of Medical Manager Common Stock into .625 of a Synetic
common share based upon the exchange ratio. You should read the information set
forth below in conjunction with the respective audited and unaudited financial
statements of Synetic and Medical Manager incorporated by reference in this
document and the "Summary Unaudited Pro Forma Combined Condensed Financial
Information" and the notes thereto presented elsewhere in this document.
<TABLE>
<CAPTION>
SYNETIC
------------------------------------------
YEAR ENDED JUNE 30, NINE MONTHS
------------------------- ENDED
1996 1997 1998 MARCH 31, 1999
----- ------ ------ --------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE:
Net income (loss) per share -- basic,
historical................................... $0.52 $(1.60) $ 0.51 $ 0.12
Net income (loss) per share -- diluted,
historical................................... $0.48 $(1.60) $ 0.46 $ 0.11
Dividends per share............................ $ -- $ -- $ -- $ --
Net income (loss) per share -- basic, pro
forma(1)(2)(3)............................... $ -- $(0.81) $ 0.72 $ 0.46
Net income (loss) per share -- diluted, pro
forma(1)(2)(3)............................... $ -- $(0.81) $ 0.66 $ 0.43
Book value per share, historical............... $11.62 $15.63
Book value per share, pro forma(1)(2)(3)....... $ 9.20 $12.21
</TABLE>
<TABLE>
<CAPTION>
MEDICAL MANAGER
------------------------------------------
YEAR ENDED DECEMBER 31, THREE MONTHS
------------------------- ENDED
1996(1) 1997 1998 MARCH 31, 1999
------- ----- ----- --------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE:
Net income per share -- basic, historical(1).... $ -- $0.48 $0.72 $0.25
Net income per share -- diluted,
historical(1)................................. $ -- $0.47 $0.69 $0.24
Dividends per share............................. $ -- $ -- $ -- $ --
Book value per share, historical................ $4.24 $4.50
</TABLE>
17
<PAGE> 28
<TABLE>
<CAPTION>
MEDICAL MANAGER -- PRO FORMA (EQUIVALENT)
-------------------------------------------
YEAR ENDED JUNE 30, NINE MONTHS
-------------------------- ENDED
1996(1) 1997 1998 MARCH 31, 1999
------- ------ ----- --------------
<S> <C> <C> <C> <C>
PRO FORMA (EQUIVALENT) EARNINGS PER SHARE:
Net income (loss) per share -- basic, pro forma
(equivalent)(1)(2)(3)........................ $ -- $(0.51) $0.45 $0.29
Net income (loss) per share -- diluted, pro
forma (equivalent)(1)(2)(3).................. $ -- $(0.51) $0.41 $0.27
Book value per share, pro forma
(equivalent)(1)(2) (3)....................... $5.75 $7.63
</TABLE>
- -------------------------
(1) On January 30, 1997 the common stock of Medical Manager began trading on the
Nasdaq National Market System. Prior to this date, there was no established
trading market for Medical Manager Common Stock. As such, no per share data
is presented for periods ending prior to January 30, 1997.
(2) The Pro Forma Combined and the Pro Forma Equivalent Combined information
presents the combination of Synetic and Medical Manager as of and for the
fiscal years ended June 30, 1996, 1997 and 1998 and as of and for the nine
months ended March 31, 1999.
(3) Amount does not reflect the pro forma effect of merger expenses for the
merger. In connection with the merger, Synetic and Medical Manager expect to
incur investment banking, legal, accounting and other related transaction
costs and fees. Additionally, the companies expect to incur other costs
associated with the integration of the separate companies. The
merger-related expenses will be charged to expense in the period in which
the merger is consummated or in subsequent periods when incurred. Since the
merger has not yet been consummated and transition plans are currently being
developed, the merger-related costs cannot be estimated at this time.
The accounting policies of Synetic and Medical Manager are currently being
reviewed from a conformity perspective. The impact of conforming accounting
policies (if any) is not presently estimable. If conforming adjustments are
required, they will be recorded as part of the restatement of prior periods,
as required by the pooling-of-interests accounting method.
18
<PAGE> 29
MARKET PRICE AND DIVIDEND INFORMATION
MARKET PRICES
Synetic Common Stock and Medical Manager Common Stock are each listed on
the Nasdaq National Market System under the symbols "SNTC" and "MMGR",
respectively. On January 30, 1997, Medical Manager Common Stock began trading on
the Nasdaq National Market System. The following table shows, for the periods
indicated, the high and low sale prices per share for Synetic and Medical
Manager Common Stock based on published financial sources (Medical Manager
values are for periods since January 30, 1997).
<TABLE>
<CAPTION>
SYNETIC MEDICAL MANAGER
COMMON STOCK COMMON STOCK
------------------ ------------------
QUARTER ENDED HIGH LOW HIGH LOW
- ------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
September 30, 1996............................. $37.250 $30.750
December 31, 1996.............................. $55.875 $31.500
March 31, 1997................................. $52.750 $45.000 $11.125 $ 9.125
June 30, 1997.................................. $47.750 $34.500 $15.375 $ 8.000
September 30, 1997............................. $45.875 $36.500 $21.625 $14.750
December 31, 1997.............................. $42.250 $35.250 $21.125 $15.500
March 31, 1998................................. $55.000 $36.000 $29.625 $17.250
June 30, 1998.................................. $65.250 $51.000 $31.875 $20.750
September 30, 1998............................. $59.000 $30.250 $30.000 $12.625
December 31, 1998.............................. $47.625 $33.000 $31.750 $18.500
March 31, 1999................................. $60.750 $37.500 $37.125 $19.750
</TABLE>
Upon completion of the merger, the combined company will change its name to
Medical Manager Corporation and its common stock will be traded on the Nasdaq
National Market System under the symbol "MMGR".
As of June 21, 1999, there were approximately 6,921 beneficial owners of
Synetic Common Stock, including 155 holders of record. As of June 21, 1999,
there were approximately 5,144 beneficial owners of Medical Manager Common
Stock, including 186 holders of record.
19
<PAGE> 30
The following table presents trading information for Synetic and Medical
Manager Common Stock on the Nasdaq National Market System, respectively, on May
14, 1999 (the last full day of trading prior to the announcement of the merger)
and June 23, 1999 (the last practicable trading day for which information was
available prior to the date of this Joint Proxy Statement/Prospectus). Also set
forth below for each of those dates is the equivalent pro forma price of Medical
Manager Common Stock (determined by multiplying the applicable price of Synetic
Common Stock by the .625 exchange ratio). Because the exchange ratio will not be
finally determined until two days prior to the Medical Manager Special Meeting,
at which point it will be fixed, and because the market price of Synetic Common
Stock that Medical Manager stockholders will receive in the merger may increase
or decrease prior to and following the completion of the merger, we urge you to
obtain current market quotations.
<TABLE>
<CAPTION>
MAY 14, 1999 JUNE 23, 1999
------------------ --------------------
HIGH LOW HIGH LOW
------- ------- -------- --------
<S> <C> <C> <C> <C>
Synetic...................................... $99.250 $95.000 71.500 70.000
Medical Manager.............................. $35.500 $32.125 43.750 43.063
Medical Manager Equivalent
Pro Forma.................................. $62.031 $59.375 44.688 43.750
</TABLE>
DIVIDENDS
Synetic has never paid cash dividends on Synetic Common Stock. Medical
Manager has never paid cash dividends on Medical Manager Common Stock. The
decision whether to apply legally available funds to the payment of dividends on
Synetic Common Stock will be made by the Synetic board of directors from time to
time in the exercise of its business judgment.
20
<PAGE> 31
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Some of the statements included or incorporated by reference in this Joint
Proxy Statement/Prospectus that are not statements of historical fact are
"forward-looking statements" within the meaning of the Securities Litigation
Reform Act of 1995. Forward-looking statements include those preceded by,
followed by or that include the words "expects", "intends", "plans", "projects",
"believes", "estimates", "anticipates" and variations of these and similar
expressions. Such statements refer to, among other things, the plans, strategies
and prospects, both business and financial, of Synetic and Medical Manager and
of the combined company after completion of the merger. These statements are
based largely on management's expectations in light of their experience in their
respective industries and are not guarantees of performance or results.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in or implied by
such statements, including those described in the documents incorporated by
reference in or annexed to this Joint Proxy Statement/Prospectus and the
following risks and uncertainties:
- the merger not being completed;
- implementation of or changes in the laws, regulations or policies
governing the healthcare and healthcare communications industries that
could negatively affect the development of products and services by
Synetic;
- the combined company's ability to continue to attract and retain
qualified personnel;
- expected benefits from the merger not being fully realized or not being
realized within the expected time frames;
- the ability to achieve sufficient levels of physician penetration and
market acceptance of the combined company's services;
- the ability to quickly and successfully deploy CareInsite's system;
- combined revenues after completion of the merger being lower than
expected;
- costs or operational difficulties related to integrating the businesses
of the companies into one combined company being greater than expected;
- excessive or unanticipated demands placed on management by the
substantial increase in Synetic's size;
- unanticipated increases in financing and financing-related costs;
- general economic or business conditions affecting the healthcare,
healthcare communications and porous plastics industries being less
favorable than expected;
- the inability of Synetic to accomplish its strategic objectives for
external expansion, including through selective acquisitions, and
internal expansion, including through sales and marketing activities;
- regulatory authorities making adverse determinations regarding the
merger; and
- other developments described more fully under the caption "Risk Factors".
Synetic and Medical Manager make no commitments to disclose any revisions
to forward-looking statements, or any facts, events or circumstances after the
date hereof that may bear upon forward-looking statements.
21
<PAGE> 32
RISK FACTORS
The following risk factors, in addition to the other information contained
or incorporated by reference in this Joint Proxy Statement/Prospectus, should be
considered by holders of Synetic Common Stock and by holders of Medical Manager
Common Stock in determining how to vote at the Synetic Special Meeting and the
Medical Manager Special Meeting.
RISKS RELATING TO THE MERGER
MEDICAL MANAGER STOCKHOLDERS MAY RECEIVE SHARES OF SYNETIC COMMON STOCK
WITH A MARKET VALUE LOWER THAN ANTICIPATED; SYNETIC STOCKHOLDERS MAY SUFFER
GREATER THAN EXPECTED DILUTION. Medical Manager stockholders are not assured of
receiving consideration in the merger having a set market value. As a result, at
the time of the Synetic Special Meeting and the Medical Manager Special Meeting,
you will not know the exact market value of the Synetic Common Stock that
Medical Manager stockholders will receive when the merger is completed. If the
merger is completed, each share of Medical Manager Common Stock will be
converted into a number of shares of Synetic Common Stock determined by
reference to the average of the closing price of Synetic Common Stock during the
ten trading day period from and including July 7, 1999 to and including July 20,
1999, as follows:
If the average of the closing price of Synetic Common Stock during
those ten trading days is equal to or above $67.20, then each share of
Medical Manager Common Stock will be converted into .625 shares of Synetic
Common Stock.
If the average of the closing price of Synetic Common Stock during
those ten trading days is below $67.20 and equal to or above $56.00, then
each share of Medical Manager Common Stock will be converted into a number
of shares of Synetic Common Stock that, when multiplied by the average of
the closing price of Synetic Common Stock during those ten trading days,
will equal $42.00.
If the average of the closing price of Synetic Common Stock during
those ten trading days is below $56.00, then each share of Medical Manager
Common Stock will be converted into .750 shares of Synetic Common Stock
unless the board of directors of Medical Manager exercises its right to
terminate the merger.
Holders of Medical Manager Common Stock will receive a fixed number of
shares of Synetic Common Stock if the average closing price of Synetic Common
Stock during those ten trading days is above $67.20 or below $56.00 as described
above. If that average closing price is between $67.20 and $56.00, then holders
of shares of Medical Manager Common Stock will receive a number of shares of
Synetic Common Stock which varies according to the average closing price during
those ten trading days. This process for determining the number of shares of
Synetic Common Stock to be issued involves risks for both stockholders of
Medical Manager and for stockholders of Synetic. If the average closing price is
between $67.20 and $56.00, Medical Manager stockholders will receive fewer
shares of Synetic Common Stock the higher the average of the closing price of
Synetic Common Stock in that range during those ten trading days. This would
involve a lower amount of dilution to Synetic stockholders. On the other hand,
Medical Manager stockholders will receive more shares of Synetic Common Stock
the lower the average of the closing price of Synetic Common Stock in that range
during those ten trading days, and Synetic stockholders would then suffer
greater dilution. If the average closing price is less than $56.00, the exchange
ratio will be fixed at .750 unless the board of directors of
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Medical Manager exercises its right to terminate the merger, and the market
value of the Synetic Common Stock that Medical Manager stockholders will receive
when the merger is completed may be less than $42.00.
The market prices of Medical Manager Common Stock and Synetic Common Stock
when the merger takes place may vary from their prices at the date of this Joint
Proxy Statement/Prospectus, from their prices on the date of determination of
any adjustment to the exchange ratio and from their prices at the time their
respective stockholders vote on the proposals relating to the merger. Changes in
such market prices may result from, among other things:
- period-to-period variations in operating results;
- changes in earnings estimates by analysts;
- market conditions in the healthcare, the healthcare Internet
communications and the plastics and filtration technologies industries;
- prospects for healthcare reform;
- general economic conditions;
- fluctuations in the securities markets in general; and
- problems relating to achieving revenue.
On May 14, 1999 (the last trading day prior to the announcement of the
merger agreement), the closing market prices of Synetic Common Stock and Medical
Manager Common Stock were $95.50 and $33.75, respectively; on June 23, 1999, the
closing market prices of Synetic Common Stock and Medical Manager Common Stock
were $70.3125 and $43.75, respectively. During the twelve month period ending on
June 23, 1999 (the most recent practicable date prior to the printing of this
Joint Proxy Statement/ Prospectus), the closing market price of Synetic Common
Stock varied from a low of $31.875 to a high of $107.9375 and the closing market
price of Medical Manager Common Stock varied from a high of $57.6875 to a low of
$12.875.
SYNETIC'S STOCK PRICE COULD BE VOLATILE. In addition, after the effective
time of the merger, the market price of Synetic Common Stock could fluctuate
significantly in response to various factors, including the factors listed above
and problems with the integration of the companies.
INTEGRATING BUSINESS OPERATIONS MAY BE DIFFICULT AND MAY HAVE A NEGATIVE
IMPACT ON SYNETIC'S BUSINESS. The combination of Synetic and Medical Manager
involves the integration of separate companies that have previously operated
independently and have different corporate cultures. The process of combining
the companies may be disruptive to their businesses and may cause an
interruption of, or a loss of momentum in, such businesses as a result of the
following difficulties, among others:
- loss of key employees or customers;
- possible inconsistencies in standards, controls, procedures and policies
among the companies being combined and the need to implement and
harmonize company-wide financial, accounting, information and other
systems;
- failure to maintain the quality of services that such companies have
historically provided;
- the need to coordinate geographically diverse organizations; and
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- the diversion of management's attention from the day-to-day business of
Synetic and Medical Manager as a result of the need to deal with the
above disruptions and difficulties and/or the possible need to add
management resources to do so.
Such disruptions and difficulties, if they occur, may cause Synetic to fail
to realize the benefits that it currently expects to result from such
integration and may cause material adverse short- and long-term effects on the
operating results and financial condition of Synetic.
UNCERTAINTIES IN REALIZING BENEFITS FROM THE COMBINATION. Even if Synetic
is able to integrate the operations of the companies successfully, there can be
no assurance that such integration will result in the realization of the full
benefits that it currently expects to result from such integration or that such
benefits will be achieved within the time frame that Synetic currently expects.
- Revenue enhancements from cross-selling complementary services may not
materialize as expected.
- The benefits from the merger may be offset by costs incurred in
integrating the companies.
- The benefits from the transaction may also be offset by increases in
other expenses, by operating losses or by problems in the business
unrelated to the transaction.
RISKS INHERENT IN THE BUSINESSES OF SYNETIC
Following completion of the merger, Synetic will be engaged in three
principal businesses:
- healthcare electronic commerce over the Internet through its
majority-owned subsidiary, CareInsite;
- the design, manufacture and distribution of porous and solid plastic
components used in healthcare, industrial and consumer applications
through Porex Technologies Corp., and the other plastic and filtration
technologies subsidiaries of Synetic; and
- providing physician practice management information systems through
Medical Manager, which, after completion of the merger, will be a wholly
owned subsidiary of Synetic.
Each of these businesses involves significant risks and uncertainties
specific to that business, as well as risks and uncertainties common to all of
these businesses. The risks and uncertainties of each of these businesses
individually present risks and uncertainties to Synetic as a whole.
RISKS INHERENT IN THE BUSINESS OF CAREINSITE
SYNETIC IS ENGAGED IN A NEW BUSINESS THAT PROVIDES HEALTHCARE ELECTRONIC
COMMERCE SERVICES AND THAT ONLY RECENTLY BEGAN TO GENERATE REVENUES AND HAS
INCURRED NET LOSSES SINCE INCEPTION. CareInsite, Synetic's majority-owned
subsidiary, began operations in December 1996 and has not yet delivered any of
its healthcare e-commerce services. CareInsite did not generate its first
revenues until the quarter ended March 31, 1999. As of March 31, 1999,
CareInsite had an accumulated deficit of $68.2 million. Synetic expects that
CareInsite will continue to incur significant development, deployment and sales
and marketing expenses in connection with its business and that CareInsite will
continue to
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incur operating losses for at least the next two fiscal years. Synetic cautions
that CareInsite may never achieve or sustain profitability. The provision of
services using Internet technology in the healthcare e-commerce industry is a
developing business that is inherently riskier than businesses in industries
where companies have established operating histories.
CAREINSITE WILL NOT BECOME PROFITABLE UNLESS IT ACHIEVES SUFFICIENT LEVELS
OF PHYSICIAN PENETRATION AND MARKET ACCEPTANCE OF ITS SERVICES. CareInsite's
business model depends on its ability to generate usage by a large number of
physicians with a high volume of healthcare transactions and to sell healthcare
e-commerce services to payers and other healthcare constituents. The acceptance
by physicians of CareInsite's transaction, messaging and content services will
require adoption of new methods of conducting business and exchanging
information. Synetic cannot assure you that physicians will integrate
CareInsite's services into their office workflow, or that the healthcare market
will accept its services as a replacement for traditional methods of conducting
healthcare transactions. The healthcare industry uses existing computer systems
that may be unable to access CareInsite's Internet-based solutions. Customers
using existing systems may refuse to adopt new systems when they have made
extensive investment in hardware, software and training for existing systems or
if they perceive that the CareInsite system will not adequately protect
proprietary information. Failure to achieve broad physician penetration or
successfully contract with healthcare participants would have a material adverse
effect on Synetic's business prospects.
Achieving market acceptance for CareInsite's services will require
substantial marketing efforts and expenditure of significant funds to create
awareness and demand by participants in the healthcare industry. Synetic
believes that CareInsite must gain significant market share with its services
before its competitors introduce alternative services with features similar to
CareInsite's. Synetic cannot assure you that CareInsite will be able to succeed
in positioning its services as a preferred method for healthcare e-commerce, or
that any pricing strategy that CareInsite develops will be economically viable
or acceptable to the market. Failure to successfully market its services would
have a material adverse affect on Synetic's business prospects.
SYNETIC'S BUSINESS PROSPECTS WILL SUFFER IF CAREINSITE IS NOT ABLE TO
QUICKLY AND SUCCESSFULLY DEPLOY ITS CAREINSITE SYSTEM. Synetic believes that its
business prospects will suffer if CareInsite does not deploy its services
quickly. CareInsite has not yet deployed its architecture or processed any
transactions over its CareInsite system. CareInsite currently intends to deploy
access to its services by the end of 1999, although Synetic cannot assure you
that CareInsite will be able to do so at that time, or at all. In order to
deploy its services, CareInsite must integrate its architecture with
physicians', payers' and suppliers' systems. CareInsite will need to expend
substantial resources to integrate its CareInsite system with the existing
computer systems of large healthcare organizations. CareInsite has limited
experience in doing so, and may experience delays in the integration process.
These delays would, in turn, delay CareInsite's ability to generate revenue from
its services and may have a material adverse effect on Synetic's business,
financial condition and results of operations. Once CareInsite has deployed its
CareInsite system, it may need to expand and adapt it to accommodate additional
users, increased transaction volumes and changing customer requirements. This
expansion and adaptation could be expensive. CareInsite may be unable to expand
or adapt its network infrastructure to meet additional demand or its customers'
changing needs on a timely basis and at a commercially reasonable cost, or at
all. Any failure to deploy, expand or adapt the CareInsite system quickly could
have a material adverse effect on Synetic's business prospects.
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CAREINSITE DOES NOT CURRENTLY HAVE A SUBSTANTIAL CUSTOMER BASE AND ITS
REVENUES WILL INITIALLY COME FROM A FEW PAYERS IN ONE GEOGRAPHIC
MARKET. CareInsite does not currently have a substantial customer base. In
addition, CareInsite expects that initially it will generate a significant
portion of its revenue from providing its products and services in the New York
metropolitan area and from a small number of payers. If CareInsite does not
generate as much revenue in this market or from these payers as it expects, its
revenue will be significantly reduced which would have a material adverse effect
on Synetic's business prospects.
CAREINSITE MAY EXPERIENCE SIGNIFICANT DELAYS IN GENERATING REVENUES FROM
ITS SERVICES BECAUSE POTENTIAL CUSTOMERS COULD TAKE A LONG TIME TO EVALUATE THE
PURCHASE OF ITS SERVICES. A key element of CareInsite's strategy is to market
its services directly to large healthcare organizations. CareInsite does not
control many of the factors that will influence physicians', payers' and
suppliers' buying decisions. CareInsite expects that the sales and
implementation process will be lengthy and will involve a significant technical
evaluation and commitment of capital and other resources by physicians, payers
and suppliers. The sale and implementation of CareInsite's services are subject
to delays due to physicians', payers' and suppliers' internal budgets and
procedures for approving large capital expenditures and deploying new
technologies within their networks.
CAREINSITE'S BUSINESS WILL SUFFER IF THE INTEGRITY AND SECURITY OF ITS
SYSTEMS IS INADEQUATE. Once CareInsite begins to deliver its healthcare
e-commerce services, its business could be harmed if CareInsite or its present
or future customers were to experience any system delays, failures or loss of
data. CareInsite currently intends to initially process substantially all its
customer transactions and data at its facilities in Cambridge, Massachusetts.
Although CareInsite intends to have safeguards for emergencies, the occurrence
of a catastrophic event or other system failure at its facilities could
interrupt its operations or result in the loss of stored data. In addition,
CareInsite will depend on the efficient operation of Internet connections from
customers to its systems. These connections, in turn, depend on the efficient
operation of Web browsers, Internet service providers and Internet backbone
service providers. In the past, Internet users have occasionally experienced
difficulties with Internet and online services due to system failures. Any
disruption in Internet access provided by third parties could have a material
adverse effect on Synetic's business, results of operations and financial
condition. Furthermore, CareInsite will be dependent on hardware suppliers for
prompt delivery, installation and service of equipment used to deliver its
services.
Despite the implementation of security measures, CareInsite's
infrastructure may be vulnerable to damage from physical break-ins, computer
viruses, programming errors, attacks by hackers or similar disruptive problems.
A material security breach could damage CareInsite's reputation or result in
liability to CareInsite. CareInsite will retain confidential customer and
patient information in its processing center. An experienced computer user who
is able to access CareInsite's computer systems could gain access to
confidential patient and company information. Furthermore, CareInsite may not
have a timely remedy to secure its system against any hacker who has been able
to penetrate its system. Therefore, it is critical that CareInsite's facilities
and infrastructure remain and are perceived by the marketplace to be secure. The
occurrence of any of these events could result in the interruption, delay or
cessation of service, which could have a material adverse effect on Synetic's
business, results of operations and financial condition.
A significant barrier to electronic commerce and communications are the
issues presented by the secure transmission of confidential information over
public networks.
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CareInsite will rely on encryption and authentication technology licensed from
third parties to secure Internet transmission of and access to confidential
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the methods CareInsite will use to
protect customer transaction data. A party who is able to circumvent
CareInsite's security measures could misappropriate or alter proprietary
information or cause interruptions in CareInsite's operations. If any such
compromise of CareInsite's security or misappropriation of proprietary
information were to occur, it could have a material adverse effect on
CareInsite's, and thus Synetic's, business, financial condition and results of
operations. CareInsite may be required to expend significant capital and other
resources to protect against such security breaches or to alleviate problems
caused by security breaches. CareInsite may also be required to spend
significant resources and encounter significant delays in upgrading its systems
to incorporate more advanced encryption and authentication technology as it
becomes available. Concerns over the security of the Internet and other online
transactions and the privacy of users may also inhibit the growth of the
Internet and other online services generally, and CareInsite's services in
particular, especially as a means of conducting commercial and/or healthcare-
related transactions. There can be no assurance that CareInsite's security
measures will prevent security breaches or that failure to prevent such security
breaches will not have a material adverse effect on Synetic's business,
prospects, financial condition and results of operations.
CareInsite's operations will also be dependent on the development and
maintenance of software. Although CareInsite intends to use all necessary means
to ensure the efficient and effective development and maintenance of software,
both activities are extremely complex and thus frequently characterized by
unexpected problems and delays.
YEAR 2000. Many currently installed computer systems and software products
are coded to accept or recognize only two digit entries for the year in the date
code field. These systems and software products will need to accept four digit
year entries to distinguish 21st century dates from 20th century dates. As a
result, computer systems and/or software used by many companies and governmental
agencies may need to be upgraded to comply with such Year 2000 requirements or
risk system failure or miscalculations causing disruptions of normal business
activities.
State of Readiness. CareInsite made a preliminary assessment of the Year
2000 readiness of its information technology systems, including the hardware and
software that enable it to develop and deliver its healthcare e-commerce
services as well as its non-information technology systems. The assessment plan
consists of:
- quality assurance testing of internally developed proprietary software;
- contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to
developing healthcare e-commerce network;
- contacting vendors of material non-IT systems;
- assessment of repair or replacement requirements;
- repair or replacement; and
- implementation.
CareInsite has been informed by vendors of material hardware and software
components of IT systems that the products used by CareInsite are currently Year
2000
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compliant. CareInsite has also been informed by non-IT system vendors that the
products used by CareInsite are currently Year 2000 compliant.
Costs. To date, CareInsite has not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
CareInsite's expenses have related to, and are expected to continue to relate
to, the operating costs associated with time spent developing a Year 2000
compliant healthcare e-commerce channel.
CareInsite is not currently aware of any Year 2000 compliance problems
relating to information technology or non-information technology systems that it
believes would have a material adverse effect on its or Synetic's business,
financial condition and results of operations. There can be no assurance that
CareInsite will not discover Year 2000 compliance problems that will require
substantial revisions to systems, products or services. In addition, there can
be no assurance that third-party software, hardware or services incorporated
into material information technology and non-information technology systems will
not need to be revised or replaced, all of which could be time consuming and
expensive. Any failure to fix information technology systems or to replace
third-party software, hardware or services on a timely basis could result in
lost revenues, increased operating costs, the loss of customers and other
business interruptions, any of which could have a material adverse effect on
Synetic's business, results of operations and financial condition.
In addition, there can be no assurance that physicians, payers, suppliers,
Internet access companies, third-party service providers, vendors, business
partners and others outside CareInsite's control will be Year 2000 compliant.
The failure by such entities to be Year 2000 compliant could result in a
systemic failure beyond CareInsite's control, such as a prolonged Internet or
communications failure, which could also prevent CareInsite from delivering its
services to customers, decrease the use of the Internet or prevent users from
assessing CareInsite's service. Such a failure could have a material adverse
effect on Synetic's business, results of operations and financial condition.
Also, a general Year 2000 systemic failure could require healthcare companies to
spend large amounts of money to correct any such failures, reducing the amount
of money that might otherwise be available to be spent on services such as those
to be provided by CareInsite.
Contingency plan. CareInsite is continuing to assess and test its systems
for Year 2000 compliance. CareInsite has also developed contingency plans for
system failure, service disruption and data corruption issues due to Year 2000
problems. In the event that there is a system problem due to a Year 2000 date,
CareInsite will immediately attempt to diagnose and fix the problems. At the
same time, CareInsite will change (a) the system clock back to 1999 while
separately logging all transactions so affected and/or (b) the dates within
transactions to 1999 while separately logging all transactions so affected. In
the event that a Year 2000 problem occurs at an external entity, that entity
will be informed of the problem and CareInsite will continue to review and
repair the dates until the problem is fixed. Synetic cannot assure you that
CareInsite will be able to successfully diagnose and/or fix any Year 2000
problems that occur or that the cost of doing so will not be material.
As the Year 2000 issue has many elements and potential consequences, some
of which are not reasonably foreseeable, the ultimate impact of the Year 2000 on
CareInsite's, and thus Synetic's, operations could differ materially from its
expectations.
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RISKS INHERENT IN THE BUSINESS OF POREX
POTENTIAL LIABILITY RISK AND AVAILABILITY OF INSURANCE. The products sold by
Porex expose it to potential risk for product liability claims, particularly
with respect to Porex's life sciences, clinical, surgical and medical products.
Synetic believes that Porex carries adequate insurance coverage against product
liability claims and other risks. There can be no assurance, however, that
claims in excess of Porex's insurance coverage will not arise. In addition,
Porex's insurance policies must be renewed annually. Although Porex 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. For example, in 1994, as described further in "-- Risks
Common to each of Synetic's Businesses -- Synetic's Principal Businesses Are
Subject to Litigation -- Mammary Implant Litigation" below, 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. See also "Legal Proceedings" in Synetic's Form 10-K for the
fiscal year ended June 30, 1998, which is incorporated by reference in this
Joint Proxy Statement/Prospectus.
YEAR 2000. Porex has completed an assessment of its Year 2000 readiness and is
undergoing a conversion of its internal systems which are not currently Year
2000 compliant. Porex has completed the conversion of all significant
non-manufacturing related systems. Porex expects conversion of manufacturing
related, information technology, referred to in this document as "IT", systems
to be completed and fully tested by June 30, 1999. For manufacturing related,
non-IT systems, all significant microprocessor-embedded production equipment has
been upgraded and Porex believes it is Year 2000 compliant.
Porex is in the process of communicating with its business partners,
suppliers, vendors and customers concerning the state of their readiness for the
Year 2000. The information gathered to date does not permit Porex to complete
its assessment of risk related to the Year 2000 that these third parties may
present. If third parties upon which Porex relies are unable to address this
issue in a timely manner, such occurrence could result in a material risk to
Synetic.
Porex expects that the cost of Year 2000 compliance will not be material.
If Porex does not complete the conversion of its manufacturing related IT
systems by June 30, 1999, Porex has Year 2000 compliant upgrades it believes can
be readily installed for its existing systems. Porex believes that, should it be
necessary, the cost of installing such upgrades would not be material.
Porex intends to have in inventory a reserve of raw materials, which it
believes will be sufficient to avoid a disruption in its manufacturing process,
to minimize the risk associated with third-party suppliers experiencing Year
2000 problems.
As the Year 2000 issue has many elements and potential consequences, some
of which are not reasonably foreseeable, the ultimate impact of the Year 2000 on
Porex's, and thus Synetic's, operations could differ materially from its
expectations.
RISKS INHERENT IN THE BUSINESS OF MEDICAL MANAGER
RISKS ASSOCIATED WITH ACQUISITION STRATEGY. As part of its growth strategy,
Medical Manager intends to acquire additional independent dealers of The Medical
Manager
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physician practice management system, complementary technologies outside the
dealer network and other complementary companies and technologies. There can be
no assurance that Medical Manager will be able to identify, acquire or
profitably integrate and manage additional dealers or complementary
technologies, if any, into Medical Manager without substantial costs, delays or
other operational or financial problems. Further, acquisitions involve a number
of special risks, including possible adverse effects on Medical Manager's
operating results, diversion of management's attention, failure to retain key
personnel of acquired entities, amortization of acquired intangible assets and
risks associated with unanticipated events or liabilities, some or all of which
could have a material adverse effect on Synetic's results of operations,
financial condition, business and business prospects. Customer dissatisfaction
or performance problems at a single acquired company could have an adverse
effect on the reputation of Medical Manager and render ineffective Medical
Manager's national sales and marketing initiatives. In addition, there can be no
assurance that dealers or complementary technologies acquired in the future will
achieve anticipated revenue and earnings. There also can be no assurance that
the existing dealer network will continue to be receptive to Medical Manager's
acquisition program or that dealers which are not acquired by Medical Manager
will adhere to Medical Manager's marketing, training, support and pricing
directives. The occurrence of either of these events would impair Medical
Manager's plans to rationalize its distribution network.
DEPENDENCE ON PRINCIPAL PRODUCTS. Medical Manager currently derives a
significant percentage of its revenue from sales of The Medical Manager core
system. As a result, any event adversely affecting its core product could have a
material adverse effect on Synetic's results of operations, financial condition
or business. Although Medical Manager has experienced increasing annual sales,
on a pro forma basis, revenue associated with existing products could decline as
a result of several factors, including price competition and sales practices.
There can be no assurance that Medical Manager will continue to be successful in
marketing its current products or any new or enhanced products.
QUALITY ASSURANCE AND PRODUCT ACCEPTANCE CONCERNS. Health care providers demand
the highest level of reliability and quality from their information systems.
Although Medical Manager devotes substantial resources to meeting these demands,
its products may, from time to time, contain errors. Such errors may result in a
loss of, or delay in, market acceptance of its products. Delays or difficulties
associated with new product introductions or product enhancements could have a
material adverse effect on Synetic's results of operations, financial condition
or business.
RISK OF PRODUCT-RELATED CLAIMS. Certain of Medical Manager's products provide
applications that relate to financial records, patient medical records and
treatment plans. Any failure of Medical Manager's products to provide accurate,
confidential and timely information could result in product liability or breach
of contract claims against Medical Manager by its clients, their patients or
others. Medical Manager's products manage and report on financial data, and any
errors in such financial data could result in liability to Medical Manager. In
addition, because Medical Manager's products facilitate electronic claims
submissions, any resulting loss of financial data could result in liability to
Medical Manager. Medical Manager maintains insurance to protect against such
claims, but there can be no assurance that such insurance coverage will be
available or, if available, will adequately cover any claim asserted against
Medical Manager. A successful claim brought against Medical Manager in excess of
its insurance coverage could have a material adverse effect on Synetic's results
of operations, financial condition or business. Even unsuccessful
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claims could result in the expenditure of funds in litigation, as well as
diversion of management time and resources. There can be no assurance that
Medical Manager will not be subject to product liability or breach of contract
claims, that such claims will not result in liability in excess of its insurance
coverage, that Medical Manager's insurance will cover such claims or that
appropriate insurance will continue to be available to Medical Manager in the
future at commercially reasonable rates.
YEAR 2000 -- PROPRIETARY PRODUCTS. The Year 2000 issue also creates risk for
Medical Manager from problems that may be experienced by customers of its
software. While Version 9 of The Medical Manager practice management system,
which was commercially released in November 1997, is Year 2000 compliant, prior
versions of the system are not. Medical Manager has encouraged users of
pre-Version 9 versions of The Medical Manager software to upgrade to Version 9
in order to become Year 2000 compliant. In August of 1998, Medical Manager
announced that it was developing and had begun in-house testing of a patch that
would allow its previous version, Version 8, first released in November 1993, to
handle the date change to the new century. This patch, Version 8.12, is now
available for general distribution to its independent sales offices for
installation for users of Versions 7 and 8. However, there is no assurance that
Versions 7 and 8, with or without the Year 2000 patch will not create additional
issues for users of the software including, but not limited to, additional costs
for upgraded hardware, additional costs for new operating systems and personnel
training, additional costs for conversion of Version 7 data, and the fact that
Versions 7 and 8 do not take into account current industry and regulatory
requirements. Version 9 will remain the only enhanced and maintained version of
the software.
A class action lawsuit was brought against Medical Manager alleging Year
2000 issues regarding The Medical Manager software in versions prior to Version
9.0. Seven additional lawsuits were also brought against Medical Manager, each
purporting to sue on behalf of those similarly situated and raising essentially
the same issues. In December 1998, Medical Manager preliminarily entered into an
agreement to settle the class action lawsuit, as well as five of the seven other
similar cases. The settlement created a settlement class of all purchasers of
Version 7 and 8 and certain upgrades to Version 9 of The Medical Manager
software, and released Medical Manager from Year 2000 claims arising out of the
sales of these versions of Medical Manager's product. Under the terms of the
settlement, Version 8.12, Medical Manager's upgraded Version of 8.11 software
with the Year 2000 patch, will be licensed without a license fee to Version 7
and 8 users who participate in the settlement. In addition, the settlement also
provides that participating users who purchased a Version 9 upgrade will have
the option to obtain one of four optional modules from Medical Manager without a
license fee, or to elect to take a share of a settlement cash fund. The
settlement required Medical Manager to make a cash payment of $1.455 million.
The settlement was approved by the District Court of New Jersey on March 15,
1999. Pursuant to the settlement, Medical Manager was released from liability
relating to the Year 2000 non-compliance of Versions 7 and 8 by all users of
Version 7 and 8 except 29 users who "opted-out" of the class settlement.
While Medical Manager does not believe costs incurred by Medical Manager to
distribute and install the Year 2000 patch will be material, there can be no
assurance that such costs will not have a material adverse effect on Synetic's
financial condition or results of operations. Additionally, there can be no
assurance that the existence of the Year 2000 patch will not delay or reduce the
migration of users to Version 9 from earlier versions. Further, if Version 9 or
other customers experience significant difficulties as a result of the
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Year 2000 issue, or if Medical Manager encounters difficulties in responding in
a timely manner to customer requests to upgrade to Version 9, there could be a
material adverse impact on Synetic's results of operations, financial condition
or business.
YEAR 2000 -- OPERATIONS. The Year 2000 issue creates risk for Medical Manager
from unforeseen problems in its own computer systems and from third parties with
which Medical Manager deals nationwide. Medical Manager has undertaken a
program, headed by a four-person Year 2000 Compliance Team, to determine that
its systems will operate smoothly as the Year 2000 approaches. This process
began with an inventory of the systems vital to Medical Manager's operations to
identify those systems that may be affected by the Year 2000 issue. In addition,
third party vendors and business partners upon whom Medical Manager relies have
been asked to confirm that their systems will be Year 2000 compliant. All
critical systems have been assessed and a prioritized implementation schedule
has been defined for upgrading those systems which are not currently Year 2000
compliant. The critical systems recognized by the Year 2000 Compliance Team
included financial and accounting systems, human resource systems, customer
support call management systems, telecommunications systems, commercial general
and administrative software used internally, hardware systems, and other
databases including enrollment and serialization databases.
In the second quarter of 1998, Medical Manager completed the upgrade of its
financial and accounting software to a Year 2000 compliant version. All
subsidiaries of Medical Manager have been using the Year 2000 compliant version
of the accounting system since that time. The cost of the upgrade of the
accounting systems was insignificant and, in accordance with Medical Manager
policy, was capitalized to be amortized over its appropriate life.
As of January 1, 1999, Medical Manager internalized the payroll function.
The software package used to process all payroll functions is certified as Year
2000 compliant by the author. The cost of the new human resources system and
database was insignificant and, in accordance with Medical Manager policy, was
capitalized to be amortized over its appropriate life.
Medical Manager uses a software package to assist in recording, assigning
and clearing customer hardware and support calls. In the second quarter of 1998,
Medical Manager purchased a new software package, which is Year 2000 compliant,
to perform these functions. The software was tested concurrently with Medical
Manager's previous support call management software for one month and is now in
use by five subsidiaries of Medical Manager. Medical Manager intends to have all
subsidiaries on the new call management system by the end of 1999. Medical
Manager's previous support software was earmarked for replacement without regard
to the Year 2000 issue, and thus the cost of the system is not considered a part
of Medical Manager's costs of Year 2000 compliance.
Telecommunications systems of Medical Manager include not only voice
communications, but significant data communications such as e-mail and an
internal network providing each subsidiary access to servers located at the
corporate offices. In October of 1998, Medical Manager selected a single
national vendor for all voice and data communications throughout Medical
Manager. This vendor has provided a statement of their Year 2000 general plan
which provided for a March 31, 1999 target completion date to be completely Year
2000 compliant. Currently, all voice communication systems have been upgraded or
installed with the new system. The upgrade or installation of the new data
communication lines has fallen behind the scheduled completion date of March 31,
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1999. However, the system currently in place is already Year 2000 compliant and
the upgrade or installation of the new data communications system is being done
for increased functionality only. A dedicated team is being deployed to each
regional subsidiary of Medical Manager to assist in the implementation of the
new data communications before December 31, 1999. Medical Manager believes that
all systems will be installed and tested prior to December 31, 1999.
As a result of the Year 2000 Compliance Teams efforts, Medical Manager has
noted that a portion of the current in-house personal computers are known to be
non-Year 2000 compliant. Some workstations also have software programs installed
which are not Year 2000 compliant. Medical Manager has defined a minimum
standard Year 2000 compliant workstation with standardized software. To date,
all mission critical workstations have been made Year 2000 compliant with the
industry standard hardware and software, with the exception of one software
package which will be replaced within the next few months. Medical Manager
maintains various non-mission critical workstations which have not been made
Year 2000 compliant. Medical Manager does not intend to take a pro-active
approach to replacing or upgrading these computers until it is necessary. The
costs of upgrading all remaining workstations is estimated to be less than $0.2
million. In addition, Medical Manager is currently completing a testing phase
where all mission critical workstations are being retested to ensure they have
been made Year 2000 compliant.
The Year 2000 Compliance Team has recognized two critical databases used
internally by Medical Manager. The Network Services Client Enrollment database
is currently Year 2000 compliant. The Medical Manager Software Serialization
Database is stored in an internally written database which is not Year 2000
compliant. Medical Manager has scheduled an upgrade of this database to a
completely Year 2000 compliant database package for the third quarter of 1999.
The estimated costs of this upgrade will merely be the cost of salaried
employees which should not exceed $50,000 per quarter through 1999.
The third party relationships identified as critical to Medical Manager's
operations are computer hardware distributors and shipping companies. As part of
a standardization initiative which began in late 1997, Medical Manager has
partnered with three national distributors to supply all hardware and third
party software products sold to clients. All three companies have provided
documents stating that they are Year 2000 ready. In addition, all shipping
companies used by Medical Manager and its vendors have provided documents
stating their Year 2000 readiness.
Medical Manager intends to continue to monitor the Year 2000 compliance of
its internal software and hardware packages, telecommunications systems, and
vendors. In the event that any of Medical Manager's systems, or any of Medical
Manager's vendors' systems, do not meet the Year 2000 requirement by December
31, 1999, Medical Manager could experience difficulties, including but not
limited to, in processing sales and other financial information, customer
support calls, serializations of Medical Manager's product, and orders of
supplies from vendors. This could have a materially adverse effect on Synetic's
financial position, results of operations, or business. Although Medical Manager
expects its systems, and its vendors' systems, to be Year 2000 compliant on or
before December 31, 1999, it cannot predict the success of Medical Manager's
Year 2000 compliance program. Medical Manager has not adopted a contingency plan
to address possible risks to its systems. If Medical Manager experiences a
failure in its Year 2000 preparedness, experienced staff will be redeployed to
address any potential Year 2000 compliance issues.
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RISKS COMMON TO EACH OF SYNETIC'S BUSINESSES
SYNETIC FACES RISKS AS A RESULT OF ITS ONGOING ACQUISITION PROGRAM. Synetic
maintains an acquisition program and intends to concentrate its acquisition
efforts on businesses which are complementary to its core businesses. Such
emphasis is not, however, intended to limit in any manner Synetic's ability to
pursue acquisition opportunities in other related businesses or in other
industries. Synetic anticipates that it may enter into further acquisitions,
joint ventures, strategic alliances or other business combinations. These
transactions may materially change the nature and scope of Synetic's business.
Although Synetic's management will endeavor to evaluate the risks inherent
in any particular transaction, there can be no assurance that Synetic will
properly ascertain all such risks. In addition, no assurances can be given that
Synetic will succeed in consummating any such transactions, that such
transactions, including the business combination between Synetic and Medical
Manager, will ultimately provide Synetic with the ability to offer the products
and services described or that Synetic will be able to successfully manage or
integrate any resulting business.
The success of Synetic's acquisition program will depend on, among other
things:
- the availability of suitable candidates,
- the availability of funds to finance transactions, and
- the availability of management resources to oversee the operation of
resulting businesses.
Financing for such transactions may come from several sources, including,
without limitation:
- cash and cash equivalents on hand,
- marketable securities,
- proceeds from new indebtedness, or
- proceeds from the issuance of additional common stock, preferred stock,
convertible debt or other securities.
The issuance of additional securities, including common stock, could result in:
- substantial dilution of the percentage ownership of Synetic's
stockholders at the time of any such issuance, and
- substantial dilution of Synetic's earnings per share.
The proceeds from any financing may be used for costs associated with
identifying and evaluating prospective candidates, and for structuring,
negotiating, financing and consummating any such transactions and for other
general corporate purposes. Synetic does not intend to seek stockholder approval
for any such transaction or security issuance unless required by applicable law
or regulation.
SYNETIC'S PRINCIPAL BUSINESSES ARE SUBJECT TO LITIGATION. Synetic and each of
its businesses is subject to the risk of litigation.
Litigation by Merck & Co., Inc. and Merck-Medco Managed Care, L.L.C.
against Synetic, CareInsite and certain executives of Synetic. On February 18,
1999, Merck & Co., Inc. and Merck-Medco Managed Care, L.L.C. filed a complaint
in the Superior Court of New Jersey against Synetic, CareInsite, Martin J.
Wygod, Chairman of Synetic, and three
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officers and/or directors of Synetic, Paul C. Suthern, Roger C. Holstein and
Charles A. Mele. The plaintiffs assert that CareInsite, Synetic and the
individual defendants are in violation of certain non-competition,
non-solicitation and other agreements with Merck and Merck-Medco, and seek to
enjoin the defendants from conducting a healthcare e-commerce business and from
soliciting Merck-Medco's customers. The Synetic and Wygod agreements provide an
expiration date of May 24, 1999. The other individuals' agreements provide for
expiration in December 1999, in the case of Mr. Suthern, March 2000, in the case
of Mr. Mele, and September 2002, in the case of Mr. Holstein.
A hearing was held on March 22, 1999 on an application for a preliminary
injunction filed by Merck and Merck-Medco. On April 15, 1999, the Superior Court
denied this application. Synetic believes that Merck's and Merck-Medco's
positions are without merit and Synetic intends to vigorously defend the
litigation. However, the outcome of complex litigation is uncertain and cannot
be predicted at this time. Any unanticipated adverse result could have a
material adverse effect on Synetic's financial condition and results of
operations.
Mammary Implant Litigation. During the year ended June 30, 1988, Porex
began distributing silicone mammary implants in the United States pursuant to a
distribution arrangement with a Japanese manufacturer. Because of costs
associated with 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. 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. 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, as of June 21, 1999, 232
actions and 38 out-of-court claims were pending against Porex. Of the 232
actions, 113 involve implants identified as distributed by Porex and 86 cases
involve implants identified as not having been distributed by Porex. In the
remaining 33 actions, the implants have not been identified. During the fiscal
year ended June 30, 1998, there were 16 implant-related claims made against
Porex by individuals as compared with 24 claims made during the fiscal year
ended June 30, 1997 and 28 claims made during the fiscal year ended June 30,
1996.
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. Synetic does not have
sufficient information to evaluate each case and claim.
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
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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. In
addition, Porex has purchased extended reporting period coverage with respect to
other excess insurance. This coverage also extends indefinitely, replacing
coverage which would by its terms have otherwise expired by December 31, 1997.
Synetic will continue to evaluate the need to purchase further extended
reporting period coverage from excess insurers to the extent such coverage is
reasonably available. Synetic believes that its present 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.
Synetic 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, Synetic believes that the possibility is remote
that pending actions and claims that may be commenced or made in the future
could, individually or in the aggregate, pose a material risk to the financial
position of Synetic or its results of operations, although Synetic cannot assure
you of this.
EACH OF SYNETIC'S HEALTHCARE BUSINESSES IS SUBJECT TO SIGNIFICANT
COMPETITION. Synetic's healthcare businesses operate in highly competitive
environments.
CareInsite. The market for healthcare e-commerce services is rapidly
developing and is becoming increasingly competitive. Several service companies,
some of which may have greater financial, technological and marketing resources
than CareInsite, have announced that they are developing a combination of one or
more healthcare e-commerce services that may be competitive with CareInsite's.
CareInsite expects to compete with various industry participants, including
software vendors, emerging e-commerce companies and electronic data interchange
providers, who operate networks used for electronic communication of business
transactions such as orders, confirmations and invoices between organizations.
These networks are often referred to as EDI networks. Some of CareInsite's
competitors have services that are currently in operation.
Traditional healthcare software vendors such as Medic and IDX primarily
focus on the administrative functions in the healthcare setting. Electronic data
interchange network providers and claims clearinghouses like Envoy, which was
recently acquired by Quintiles Transnational, and NDC provide connectivity to
edit and transmit data on medical and pharmacy claims. These companies are
beginning to offer services which may be competitive with CareInsite's clinical
e-commerce services. Companies like Healtheon and other emerging e-commerce
companies may offer a range of services which may compete with ours. Any
organizations that create stand-alone healthcare software products may migrate
into the healthcare e-commerce business. CareInsite's competitors may be first
to market new services or may also independently develop services and/or
technology that is substantially equivalent to or superior to CareInsite's.
There can be no assurance that such
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companies will not develop and successfully market healthcare e-commerce
products and services in a manner which would have a material adverse effect on
CareInsite's, and thus Synetic's, business, financial condition and results of
operations.
Medical Manager. The market for practice management systems such as The
Medical Manager is highly competitive. Medical Manager's competitors vary in
size and in the scope and breadth of the products and services that they offer.
Medical Manager competes with different companies in each of its target markets.
Many of Medical Manager's competitors have greater financial, development,
technical, marketing and sales resources than Medical Manager. In addition,
other entities not currently offering products and services similar to those
offered by Medical Manager, including claims processing organizations,
hospitals, third-party administrators, insurers, healthcare organizations and
others, may enter certain markets in which Medical Manager competes. There can
be no assurance that future competition will not have a material adverse effect
on Medical Manager's, and thus Synetic's, results of operations, financial
condition or business.
General. Many healthcare industry participants are consolidating to create
integrated healthcare delivery systems with greater market power. As the
healthcare industry consolidates, competition to provide products and services
to industry participants will become more intense and the importance of
establishing a relationship with each industry participant will become greater.
These industry participants may try to use their market power to negotiate price
reductions for Synetic's products and services. If Synetic were forced to reduce
its prices, Synetic's operating results could suffer if it cannot achieve
corresponding reductions in its expenses.
RAPIDLY CHANGING TECHNOLOGY MAY ADVERSELY AFFECT SYNETIC'S HEALTHCARE
BUSINESSES. All businesses which rely on technology, including the healthcare
e-commerce business that Synetic is developing, are subject to, among other
risks and uncertainties:
- rapid technological change;
- changing customer needs;
- frequent new product introductions; and
- evolving industry standards.
Internet technologies are evolving rapidly, and the technology used by any
e-commerce business is subject to rapid change and obsolescence. These market
characteristics are exacerbated by the emerging nature of the market and the
fact that many companies are expected to introduce new Internet products and
services in the near future. In addition, use of the Internet may decrease if
alternative protocols are developed or if problems associated with increased
Internet use are not resolved. As the communications, computer and software
industries continue to experience rapid technological change, Synetic must be
able to quickly and successfully modify its services so that they adapt to such
changes. Synetic cannot assure you that it will not experience difficulties that
could delay or prevent the successful development and introduction of its
healthcare e-commerce services or that it will be able to respond to
technological changes in a timely and cost-effective manner. Moreover,
technologically superior products and services could be developed by
competitors. These factors could have a material adverse effect upon Synetic's
business prospects.
The market for Medical Manager's products is also characterized by rapid
change and technological advances requiring ongoing expenditures for research
and development and the timely introduction of new products and enhancements of
existing products. Medical
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Manager's future success will depend, in part, upon its ability to enhance its
current products, to respond effectively to technological changes, to sell
additional products to its existing client base and to introduce new products
and technologies that address the increasingly sophisticated needs of its
clients. Medical Manager is devoting significant resources to the development of
enhancements to its existing products and the migration of existing products to
new software platforms. There can be no assurance that Medical Manager will
successfully complete the development of new products or the migration of
products to new platforms or that Medical Manager's current or future products
will satisfy the needs of the market for practice management systems. Further,
there can be no assurance that products or technologies developed by others will
not adversely affect Medical Manager's competitive position or render its
products or technologies noncompetitive or obsolete. These factors could have a
material adverse effect upon Synetic's business prospects.
SYNETIC AND ITS BUSINESSES MAY NEED TO EXPAND THEIR MANAGEMENT INFORMATION
SYSTEMS AND PERSONNEL TO MEET THE INCREASED DEMANDS OF THEIR BUSINESS. Although
Synetic's and its businesses' existing management information systems are
sufficient to meet current needs, Synetic may need to acquire new systems to
meet the requirements of expanded operations. These systems need, among other
requirements, to capture complex information. There can be no assurance that
these new management information systems, when installed, will be sufficient to
meet Synetic's needs. In addition, Synetic's businesses may experience
interruptions of service during a transition from existing systems to new ones.
Synetic's ability to achieve its financial and operational objectives also
depends on its and its businesses' ability to continue to hire, retain and
motivate highly qualified technical and customer support personnel. A
competitive environment exists for qualified personnel and Synetic cannot assure
you that it will be able to expand its personnel to meet any increased demands
of its business.
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The success of Synetic's
healthcare-related and porous plastics businesses is dependent to a significant
extent on each business's ability to protect the proprietary and confidential
aspects of its technology. With certain exceptions relating to Porex, the
technology relating to Synetic's operating subsidiaries, including after the
merger, Medical Manager, is not patented and existing copyright laws offer only
limited practical protection. Porex, CareInsite and Medical Manager rely on a
combination of trade secret, copyright and trademark laws, license agreements,
nondisclosure and other contractual provisions and technical measures to
establish and protect their proprietary rights. There can be no assurance that
the legal protections afforded to Porex, CareInsite and Medical Manager or the
steps taken by Porex, CareInsite and Medical Manager will be adequate to prevent
misappropriation of their technology. In addition, these protections do not
prevent independent third-party development of competitive products or services.
Synetic believes that its businesses' products, services, trademarks and other
proprietary rights do not infringe upon the proprietary rights of third parties.
There can be no assurance, however, that third parties will not assert
infringement claims against Synetic's businesses or that any such assertion will
not require Synetic's businesses to enter into a license agreement or royalty
arrangement with the party asserting the claim. As competing healthcare
information systems increase in complexity and overall capabilities and the
functionality of these systems further overlap, providers of such systems may
become increasingly subject to infringement claims. Responding to and defending
any such claims may distract the attention of Synetic's management and otherwise
have a material adverse effect on Synetic's results of operations, financial
condition or business.
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GOVERNMENT REGULATION OF SYNETIC'S PRINCIPAL BUSINESSES COULD ADVERSELY AFFECT
ITS FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Each of Synetic's businesses
is subject to government regulation.
CareInsite. CareInsite's services may be subject to extensive and
frequently changing regulation at federal, state and local levels. The Internet
and its associated technologies are also subject to government regulation. Many
existing laws and regulations, when enacted, did not anticipate the methods of
healthcare e-commerce CareInsite is developing. Synetic believes, however, that
these laws and regulations may nonetheless be applied to CareInsite's healthcare
e-commerce business. Accordingly, CareInsite's healthcare e-commerce business
may be affected by current regulations as well as future regulations
specifically targeted to this new segment of the healthcare industry.
Synetic expects CareInsite to conduct its healthcare e-commerce business in
substantial compliance with all material federal, state and local laws and
regulations governing its operations. However, the impact of regulatory
developments in the healthcare industry is complex and difficult to predict, and
there can be no assurance that CareInsite will not be materially adversely
affected by existing or new regulatory requirements or interpretations. It is
also possible that such requirements or interpretations could limit the
effectiveness of the use of the Internet for the methods of healthcare
e-commerce CareInsite is developing or even prohibit the sale of one or more of
its services. Application of any such regulations or requirements to
CareInsite's business could have a material adverse effect on Synetic's
business, financial condition or results of operations.
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, under the Medical Device Amendments of
1976 to the Federal Food, Drug and Cosmetic Act, which is referred to in this
document as "the FDA Act", and additional regulations promulgated by the Food
and Drug Administration. Future healthcare 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.
Medical Manager. The Food and Drug Administration has jurisdiction under
the 1976 Medical Device Amendments to the FDA Act to regulate computer products
and software as medical devices if they are intended for use in the diagnosis,
cure, mitigation, treatment or prevention of disease in humans. The FDA has
issued a final rule under which manufacturers of medical image storage devices
and related software are required to submit to the FDA premarket notification
applications, which are each referred to in this document as a "510(k)
Application", and otherwise comply with the requirements of the FDA Act
applicable to medical devices. Medical Manager is distributing in the United
States a medical image management device, which is referred to in this document
as the "image module", which was cleared by the FDA on April 4, 1997 and is
manufactured by a third party in accordance with specifications set forth in the
cleared 510(k) Application. Medical Manager has created an interface between The
Medical Manager practice management system and the image module and is marketing
the interface and the image module as the Document Image Module System. Medical
Manager believes that the addition of its practice management system to the
image module does not change the image module's intended use or significantly
change the safety or efficacy of the product such that a new 510(k) Application
is required. The FDA is currently reviewing its policy for the regulation of
computer software, and there is a risk that The Medical Manager
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software could in the future become subject to some or all of the above
requirements, which could have a material adverse effect on Synetic's results of
operations, financial condition or business.
UNCERTAINTY IN HEALTHCARE INDUSTRY; GOVERNMENT HEALTHCARE REFORM PROPOSALS. The
healthcare industry in the United States is subject to changing political,
economic and regulatory influences that may affect the procurement practices and
operations of healthcare organizations. Medical Manager's products are designed
to function within the structure of the healthcare financing and reimbursement
system currently being used in the United States. During the past several years,
the healthcare industry has been subject to increasing levels of government
regulation of, among other things, reimbursement rates and certain capital
expenditures. From time to time, certain proposals to reform the healthcare
system have been considered by Congress. These proposals, if enacted, may
increase government involvement in healthcare, lower reimbursement rates and
otherwise change the operating environment for Synetic's clients. Healthcare
organizations may react to these proposals, and the uncertainty surrounding such
proposals, by curtailing or deferring investments, including those for Medical
Manager's products and services. Synetic cannot predict with any certainty what
impact, if any, such proposals or healthcare reforms might have on its results
of operations, financial condition or business.
POTENTIAL FOR ADVERSE EFFECT ON STOCK PRICE FROM SHARES AVAILABLE FOR FUTURE
SALE. Martin J. Wygod, Synetic's Chairman of the board of directors, and SN
Investors, L.P., a limited partnership the general partner of which is SYNC,
Inc., whose sole stockholder is Mr. Wygod, currently holds 5,167,948 shares of
Synetic's Common Stock. These shares will represent approximately 14.4% of the
outstanding shares of Synetic's Common Stock upon completion of the merger and
the issuance of new shares of Synetic Common Stock to holders of Medical Manager
Common Stock. In addition, certain current members of Medical Manager, including
Michael A. Singer, John H. Kang and Richard W. Mehrlich, will receive shares of
Synetic Common Stock upon completion of the merger representing approximately
10.3%, 0.9% and 3.2%, respectively, of Synetic's Common Stock upon completion of
the merger. The shares held by SN Investors are "restricted securities", within
the meaning of Rule 144 promulgated pursuant to the Securities Act subject to
the volume restrictions of Rule 144 but for which the holding period has
expired. As more fully set forth in "Certain Relationships and Related
Transactions" in Synetic's Form 10-K for the fiscal year ended June 30, 1998,
which is incorporated here by reference, subject to restrictions, SN Investors
may be able to sell without registration under the Securities Act the number of
such shares permitted under Rule 144. Synetic has also granted certain demand
registration rights to Mr. Wygod with respect to the shares of Synetic's Common
Stock held by SN Investors. These rights are assignable to SN Investors. The
shares of Synetic Common Stock to be issued to Messrs. Singer, Kang and Mehrlich
will have the benefit of registration rights upon the demand of these
individuals. See "Registration Rights Agreement." Any sales by SN Investors or
members of Medical Manager's management pursuant to Rule 144 or such
registration rights could have a material adverse effect on the prevailing
market price of Synetic's Common Stock.
As of June 21, 1999, Synetic had issued and outstanding options to purchase
10,850,969 shares of common stock pursuant to stock option agreements and stock
option plans, and warrants which are exercisable into 170,911 additional shares
of Synetic's Common Stock. In addition, in connection with Synetic's acquisition
of Point Plastics, Inc., Synetic issued 832,259 shares of its common stock to
the former stockholders of
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Point Plastics, which may not be sold by such stockholders until July 21, 1999.
The sale of a substantial amount of such additional shares of Synetic's Common
Stock could have a material adverse effect on the market price of Synetic's
Common Stock.
In February 1997, Synetic sold in the aggregate $165 million principal
amount of convertible subordinated debentures due 2007 in a public offering, of
which $159,497,000 million principal amount was outstanding on May 24, 1999. The
convertible debentures are convertible, at the option of the holder, at any time
prior to maturity, unless previously redeemed or repurchased, into shares of
Synetic's Common Stock at a conversion price of $60 per share of Common Stock
(equivalent to a conversion rate of 16.667 shares per $1,000 principal amount of
convertible debentures), subject to adjustment in certain events. Synetic may be
required to issue 2,658,283 additional shares upon the conversion of the
outstanding convertible debentures at their stated conversion price. Synetic is
unable to predict the effect, if any, that the conversion of the debentures into
shares of its Common Stock will have on the market price for the Common Stock
prevailing from time to time.
CERTAIN ANTITAKEOVER EFFECTS COULD AFFECT THE MARKET PRICE OF SYNETIC'S COMMON
STOCK. Provisions in Synetic's Certificate of Incorporation relating to the
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. In addition, the
requirement that Synetic repurchase the convertible debentures, at the option of
the holder, upon the occurrence of a designated event may, in certain
circumstances, make more difficult or discourage a takeover of Synetic. Further,
upon completion of the merger and the issuance of new shares of Synetic Common
Stock to holders of Medical Manager Common Stock, Synetic expects that Messrs.
Wygod, Singer, Kang and Mehrlich will collectively beneficially own
approximately 28.8% of the outstanding shares of Synetic Common Stock. Due to
their ownership of these shares, these individuals may be in a position to
influence the election of Synetic's board of directors, as well as the direction
and future operations of Synetic. Their ownership could also make more difficult
or discourage a takeover of Synetic. Each of these factors could affect the
market price of Synetic Common Stock.
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THE SPECIAL MEETINGS
THE SYNETIC SPECIAL MEETING
GENERAL; DATE, TIME AND PLACE. This Joint Proxy Statement/Prospectus is
being furnished to holders of Synetic Common Stock in connection with the
solicitation of proxies by the Synetic board of directors for use at the Synetic
Special Meeting to be held on July 23, 1999, at Saddle Brook Marriott Hotel,
Garden State Parkway at Interstate 80, Saddle Brook, New Jersey, commencing at
9:30 a.m., local time, and at any adjournment or postponement thereof.
PURPOSES OF THE SYNETIC SPECIAL MEETING. At the Synetic Special Meeting,
stockholders of Synetic will be asked to consider and vote upon:
- a proposal to issue up to 18,202,213 shares of Synetic Common Stock in
exchange for shares of Medical Manager Common Stock pursuant to the
merger agreement;
- as contemplated by the merger agreement, a proposal to amend and restate
Article One of the Synetic Certificate of Incorporation, effective at the
effective time of the merger, as follows:
"The name of this Corporation (hereinafter called the "Corporation") is
MEDICAL MANAGER CORPORATION.";
- a proposal to amend and restate the first paragraph of Article Four of
the Synetic Certificate of Incorporation, effective at the effective time
of the merger, as follows:
"The Corporation shall have the authority, to be exercised by the board
of directors, to issue a total of 310,000,000 shares consisting of
300,000,000 shares of common voting stock of the par value of $0.01 per
share (the "Common Stock") and 10,000,000 shares of preferred stock of
the par value of $0.01 per share (the "Preferred Stock").";
- a proposal to amend and restate Article Nine of the Synetic Certificate
of Incorporation, effective at the effective time of the merger, as
follows:
"The original By-Laws of the Corporation shall be adopted by the
Incorporator. Thereafter, in furtherance and not in limitation of the
power conferred by statute, the board of directors is expressly
authorized to make, repeal, alter, amend and rescind the By-Laws of the
Corporation."; and
- a proposal to grant options to purchase 650,000 shares of Synetic Common
Stock to each of Messrs. Singer and Kang pursuant to their respective
employment agreements.
RECOMMENDATIONS OF THE SYNETIC BOARD OF DIRECTORS. The Synetic board of
directors recommends approval of the issuance of up to 18,202,213 shares of
Synetic Common Stock in exchange for shares of Medical Manager Common Stock in
accordance with the terms of the merger agreement.
The Synetic board of directors recommends the approval of the amendment and
restatement of Article One of the Synetic Certificate of Incorporation, which
would change the name of Synetic to Medical Manager Corporation in accordance
with the terms of the merger agreement.
The Synetic board of directors recommends the approval of the amendment and
restatement of Article Four of the Synetic Certificate of Incorporation which
would
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increase the number of authorized shares of capital stock of Synetic to
310,000,000 with 300,000,000 designated as Synetic Common Stock. This proposed
amendment is intended to ensure that a sufficient number of shares of Synetic
Common Stock remain available following the merger for general corporate
purposes, including issuances pursuant to employee stock option plans, stock
dividends and possible future acquisitions and issuances for the purposes of
raising additional capital. There are no present plans, understandings or
agreements for issuing a material number of additional shares of Synetic Common
Stock except for the issuance in exchange for Medical Manager Common Stock as
described above.
The Synetic board of directors recommends the approval of the amendment and
restatement of Article Nine of the Synetic Certificate of Incorporation in order
to reconcile inconsistencies between Article Nine and Article Six of the Synetic
Certificate of Incorporation and Section 2.1.1 of the Synetic By-laws. Article
Six of the Synetic Certificate of Incorporation states that the number of
directors are determined as provided in the Synetic By-laws. Section 2.1.1 of
the Synetic By-laws provides that the number of directors shall established from
time to time by resolution of the Synetic board of directors. Thus, the last
clause of Article Nine of the Synetic Certificate of Incorporation which states,
"provided that the Board of Directors may not amend the By-Laws to increase the
number of directors above twelve" may be inconsistent with both Article Six of
Synetic Certificate of Incorporation and Section 2.1.1 of the Synetic By-laws.
The board of directors of Synetic recommends amending Article Nine to remove the
last clause thereof to eliminate this potential inconsistency.
The board of directors of Synetic recommends the approval of stock option
grants to purchase 650,000 shares of Synetic Common Stock to be granted to each
of Messrs. Singer and Kang. This approval is necessary in order to comply with
the requirements of the performance based compensation exemption under Section
162(m) of the Code, and therefore maintain the tax deductible status of such
options. The stock options will be granted as contemplated by the employment
agreements dated May 16, 1999 between Synetic and each of Messrs. Singer and
Kang, and will be awarded pursuant to a separate stock option agreement. The
terms and conditions of these stock option grants and the stock option agreement
are described under "The Merger -- Interests of Certain Persons in the
Merger -- Employment Agreements". The proposed stock option grants to Messrs.
Singer and Kang are further subject to the approval of the Stock Option
Committee of the board of directors of Synetic. It is anticipated that the Stock
Option Committee of the board of directors of Synetic will unanimously approve
the grant of these stock options. The board of directors of Synetic believes
that the grant of the stock options to Messrs. Singer and Kang is an important
way to align the interests of these key executive officers with the stockholders
of Synetic and recommends approval of this proposal.
The Synetic board of directors has determined that the merger is fair to,
and in the best interests of, Synetic and its stockholders and has unanimously
approved the merger agreement and the proposal to issue shares of Synetic Common
Stock in connection with the merger, each of the proposals to amend and restate
the Synetic Certificate of Incorporation and, subject to the separate approval
of the stock option committee of the Synetic board of directors, the proposal to
grant options to purchase 650,000 shares of Synetic Common Stock to each of
Messrs. Singer and Kang under their employment agreements. Accordingly, the
Synetic board of directors unanimously recommends that Synetic stockholders vote
FOR these proposals.
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STOCKHOLDERS ENTITLED TO VOTE. The Synetic board of directors has fixed the
close of business on June 21, 1999 as the record date for the determination of
the Synetic stockholders entitled to notice of and to vote at the Synetic
Special Meeting. Accordingly, only holders of record of Synetic Common Stock on
the Synetic record date will be entitled to notice of and to vote at the Synetic
Special Meeting. As of the Synetic record date, there were outstanding and
entitled to vote 20,680,309 shares of Synetic Common Stock (constituting all of
the voting stock of Synetic), which shares were held by approximately 155
holders of record. Each holder of record of shares of Synetic Common Stock on
the Synetic record date is entitled to one vote per share, which may be cast
either in person or by properly executed proxy at the Synetic Special Meeting.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Synetic Common Stock entitled to vote at
the Synetic Special Meeting is necessary to constitute a quorum at the Synetic
Special Meeting.
VOTE REQUIRED. The approval of the proposal to issue shares of Synetic
Common Stock in exchange for shares of Medical Manager Common Stock pursuant to
the merger agreement and the proposal to grant options to purchase 650,000
shares of Synetic Common Stock to each of Messrs. Singer and Kang under their
employment agreements will require the affirmative vote of the majority of the
shares of Synetic Common Stock present in person or by proxy at the Synetic
Special Meeting. The approval of the proposal to issue shares of Synetic Common
Stock pursuant to the merger agreement is required by the rules of Nasdaq
governing corporations with securities listed on the Nasdaq National Market
System and is a condition to the consummation of the merger.
The approval of each of the proposals to amend and restate the Synetic
Certificate of Incorporation with the effect of increasing the number of
authorized shares of Synetic capital stock to 310,000,000 authorized shares of
Synetic capital stock with 300,000,000 designated as Synetic Common Stock,
changing the name of Synetic to Medical Manager Corporation and restating
Article Nine of the Synetic Certificate of Incorporation as stated above will
require the affirmative vote of the majority of the outstanding shares of
Synetic Common Stock.
Shares of Synetic Common Stock represented in person or by properly
executed proxy will be counted for the purpose of determining whether a quorum
is present at the Synetic Special Meeting. Shares that abstain from voting as to
a particular matter will be treated as shares that are present and entitled to
vote at the Synetic Special Meeting for purposes of determining whether a quorum
exists, but will not be counted as votes cast in favor of such matter. If a
broker or nominee holding stock in "street name" indicates on a proxy that it
does not have discretionary authority to vote as to a particular matter,
referred to as "broker non-votes", those shares will be treated as present and
entitled to vote at the Synetic Special Meeting for purposes of determining
whether a quorum exists, but will not be counted as present for purposes of
determining the requisite majority vote necessary to approve the proposal
regarding the issuance of shares and the proposal to grant options to Messrs.
Singer and Kang and will not be counted as votes cast in favor of any of the
proposals to amend and restate the Synetic Certificate of Incorporation.
Accordingly, in determining whether:
- the proposal to issue shares of Synetic Common Stock and the proposal to
grant options to Messrs. Singer and Kang has received the requisite
number of affirmative votes, the failure to vote and abstentions by
shares present will have the same effect as a vote against this proposal,
and broker non-votes will have no effect on the voting on this proposal;
and
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- any of the proposals to amend and restate the Synetic Certificate of
Incorporation have received the requisite number of affirmative votes,
the failure to vote, abstentions and broker non-votes will have the same
effect as a vote against such proposals.
As of June 1, 1999, current directors and executive officers of Synetic and
their affiliates may be deemed to be beneficial owners of approximately
6,227,486 shares of Synetic Common Stock (excluding options not exercised as of
the record date), or approximately 30% of the shares of Synetic Common Stock
entitled to vote at the Synetic Special Meeting. Each of such directors and
executive officers of Synetic has advised Synetic that he or she intends to vote
or direct the vote of all shares of Synetic Common Stock over which he or she
has voting control for approval of the proposal to issue shares of Synetic
Common Stock as well as for approval of the proposal to amend and restate the
Synetic Certificate of Incorporation.
Medical Manager required, as a condition to its entering into the merger
agreement, that Martin J. Wygod agree to vote the shares of Synetic Common Stock
that he controls in favor of the proposal to issue up to 18,202,213 shares of
Synetic Common Stock in exchange for shares of Medical Manager Common Stock
pursuant to the merger agreement and the proposals to amend and restate the
Synetic Certificate of Incorporation. Mr. Wygod did not receive (nor did Synetic
or Medical Manager surrender) any consideration in connection with the agreement
of Mr. Wygod to vote the shares of Synetic Common Stock that he controls in
favor of the above proposals. The shares that Mr. Wygod controls constitute
approximately 26% of the shares entitled to vote at the Synetic Special Meeting.
PROXIES. This Joint Proxy Statement/Prospectus is being furnished to
Synetic stockholders in connection with the solicitation of proxies by, and on
behalf of, the Synetic board of directors for use at the Synetic Special
Meeting, and is accompanied by a form of proxy.
All shares of Synetic Common Stock that are entitled to vote and are
represented at the Synetic Special Meeting by properly executed proxies received
prior to or at the Synetic Special Meeting, and not revoked, will be voted at
the Synetic Special Meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such proxies will be voted for
approval of the proposal to issue shares of Synetic Common Stock, for approval
of the proposals to amend and restate the Synetic Certificate of Incorporation
and for approval of the proposal to grant options to purchase 650,000 shares of
Synetic Common Stock to each of Messrs. Singer and Kang under their employment
agreements.
If any other matters are properly presented at the Synetic Special Meeting
for consideration, including, among other things, consideration of a motion to
adjourn such meeting to another time and/or place (including, without
limitation, for the purposes of soliciting additional proxies or allowing
additional time for the satisfaction of conditions to the merger), the persons
named in the enclosed form of proxy and acting thereunder will have discretion
to vote on such matters in accordance with their best judgment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (1) filing
with the Secretary of Synetic, at or before the taking of the vote at the
Synetic Special Meeting, a written notice of revocation bearing a later date
than the proxy, (2) duly executing a later dated proxy relating to the same
shares and delivering it to the Secretary of Synetic before the taking of the
vote at the Synetic Special Meeting or (3) attending the Synetic Special Meeting
and voting in person (although attendance at the Synetic Special Meeting will
not in and
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of itself constitute a revocation of a proxy). Any written notice of revocation
or subsequent proxy should be sent to Synetic at 669 River Drive, Elmwood Park,
New Jersey 07407, Attention: Secretary, or hand delivered to the Secretary of
Synetic at or before the taking of the vote at the Synetic Special Meeting.
All expenses of Synetic's solicitation of proxies will be borne by Synetic,
and the cost of preparing and mailing this Joint Proxy Statement/Prospectus to
Synetic stockholders and to Medical Manager stockholders will be paid one-half
by Synetic and one-half by Medical Manager. In addition to solicitation by use
of the mails, proxies may be solicited from Synetic stockholders by directors,
officers and employees of Synetic in person or by telephone, telegram or other
means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Synetic has retained Innisfree
M&A Incorporated, a proxy solicitation firm, for assistance in connection with
the solicitation of proxies for the Synetic Special Meeting at a cost $6,500
plus reimbursement of reasonable out-of-pocket expenses. Synetic will also make
arrangements with brokerage houses, custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such brokerage houses, custodians, nominees and fiduciaries, and
Synetic will reimburse such brokerage houses, custodians, nominees and
fiduciaries for their reasonable expenses incurred in connection therewith.
THE MEDICAL MANAGER SPECIAL MEETING
GENERAL; DATE, TIME AND PLACE. This Joint Proxy Statement/Prospectus is
being furnished to holders of Medical Manager Common Stock in connection with
the solicitation of proxies by the Medical Manager Board of Directors for use at
the Medical Manager Special Meeting to be held on July 23, 1999, at 15151
Northwest 99th Street, Alachua, Florida commencing at 10:00 a.m., local time,
and at any adjournment or postponement thereof.
PURPOSES OF THE MEDICAL MANAGER SPECIAL MEETING. At the Medical Manager
Special Meeting, stockholders of Medical Manager will be asked to consider and
vote upon the merger agreement proposal.
RECOMMENDATIONS OF THE MEDICAL MANAGER BOARD OF DIRECTORS. The Medical
Manager board of directors has unanimously approved the merger agreement
proposal and recommends a vote FOR approval of this proposal.
STOCKHOLDERS ENTITLED TO VOTE. The Medical Manager board of directors has
fixed the close of business on June 21, 1999 as the record date for the
determination of the Medical Manager stockholders entitled to notice of and to
vote at the Medical Manager Special Meeting. Accordingly, only holders of record
of Medical Manager Common Stock on the Medical Manager record date will be
entitled to notice of and to vote at the Medical Manager Special Meeting. As of
the Medical Manager record date, there were outstanding and entitled to vote
22,473,766 shares of Medical Manager Common Stock (constituting all of the
voting stock of Medical Manager), which shares were held by approximately 186
holders of record. Each holder of record of shares of Medical Manager Common
Stock on the Medical Manager record date is entitled to one vote per share,
which may be cast either in person or by properly executed proxy at the Medical
Manager Special Meeting. The presence, in person or by properly executed proxy,
of the holders of a majority of the outstanding shares of Medical Manager Common
Stock entitled to vote at the Medical Manager Special Meeting is necessary to
constitute a quorum at the Medical Manager Special Meeting.
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VOTE REQUIRED. The approval of the merger agreement will require the
affirmative vote of the holders of a majority of the outstanding shares of
Medical Manager Common Stock.
Shares of Medical Manager Common Stock represented in person or by properly
executed proxy will be counted for the purpose of determining whether a quorum
is present at the Medical Manager Special Meeting. Shares that abstain from
voting will be treated as shares that are present and entitled to vote at the
Medical Manager Special Meeting for purposes of determining whether a quorum
exists, but will not be counted as votes cast in favor of such matter. If a
broker or nominee holding stock in "street name" indicates on a proxy that it
does not have discretionary authority to vote as to a particular matter,
referred to as "broker non-votes," those shares will be treated as present and
entitled to vote at the Medical Manager Special Meeting for purposes of
determining whether a quorum exists, but will not be counted as votes cast in
favor of such matter.
Accordingly, in determining whether the merger agreement proposal has
received the requisite number of affirmative votes, the failure to vote,
abstentions and broker non-votes will have the same effect as a vote against
this proposal.
As of June 1, 1999, current directors and executive officers of Medical
Manager and their affiliates may be deemed to be beneficial owners of
approximately 8,640,149 shares of Medical Manager Common Stock, or approximately
38% of the shares of Medical Manager Common Stock entitled to vote at the
Medical Manager Special Meeting. Each of such directors and executive officers
of Medical Manager has advised Medical Manager that he intends to vote or direct
the vote of all shares of Medical Manager Common Stock over which he has voting
control for approval of the merger agreement proposal.
Synetic required, as a condition to its entering into the merger agreement,
that Michael A. Singer, John H. Kang and Richard W. Mehrlich agree to vote their
shares of Medical Manager Common Stock in favor of the merger agreement
proposal. Messrs. Singer, Kang and Mehrlich did not receive (nor did Medical
Manager or Synetic surrender) any consideration (other than the consideration
provided under the merger agreement) in connection with their agreement to vote
their shares of Medical Manager Common Stock in favor of the merger agreement.
The shares of Messrs. Singer, Kang and Mehrlich constitute approximately 37% of
the shares entitled to vote at the Medical Manager Special Meeting.
PROXIES. This Joint Proxy Statement/Prospectus is being furnished to
Medical Manager stockholders in connection with the solicitation of proxies by,
and on behalf of, the Medical Manager board of directors for use at the Medical
Manager Special Meeting, and is accompanied by a form of proxy.
All shares of Medical Manager Common Stock that are entitled to vote and
are represented at the Medical Manager Special Meeting by properly executed
proxies received prior to or at the Medical Manager Special Meeting, and are not
revoked, will be voted at the Medical Manager Special Meeting in accordance with
the instructions indicated on such proxies. If no instructions are indicated,
such proxies will be voted for approval of the merger agreement proposal.
If any other matters are properly presented at the Medical Manager Special
Meeting for consideration, including, among other things, consideration of a
motion to adjourn such meeting to another time and/or place (including, without
limitation, for the purposes of soliciting additional proxies or allowing
additional time for the satisfaction of conditions to the merger), the persons
named in the enclosed form of proxy and acting thereunder will have discretion
to vote on such matters in accordance with their best judgment.
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Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (1) filing
with the Secretary of Medical Manager, at or before the taking of the vote at
the Medical Manager Special Meeting, a written notice of revocation bearing a
later date than the proxy, (2) duly executing a later dated proxy relating to
the same shares and delivering it to the Secretary of Medical Manager before the
taking of the vote at the Medical Manager Special Meeting or (3) attending the
Medical Manager Special Meeting and voting in person (although attendance at the
Medical Manager special meeting will not in and of itself constitute a
revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent to Medical Manager at 3001 North Rocky Point Drive East, Suite
400, Tampa, Florida 33607, Attention: Franklyn M. Krieger, Secretary, or hand
delivered to the Secretary of Medical Manager at or before the taking of the
vote at the Medical Manager Special Meeting.
All expenses of Medical Manager's solicitation of proxies will be borne by
Medical Manager, and the cost of preparing and mailing this Joint Proxy
Statement/Prospectus to Medical Manager stockholders and to Synetic stockholders
will be paid one-half by Medical Manager and one-half by Synetic. In addition to
solicitation by use of the mails, proxies may be solicited from Medical Manager
stockholders by directors, officers and employees of Medical Manager in person
or by telephone, telegram or other means of communication. Such directors,
officers and employees will not be additionally compensated, but may be
reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. Medical Manager has retained Innisfree M&A Incorporated, a proxy
solicitation firm, for assistance in connection with the solicitation of proxies
for the Medical Manager Special Meeting at a cost of $6,500 plus reimbursement
of reasonable out-of-pocket expenses. Medical Manager will also make
arrangements with brokerage houses, custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such brokerage houses, custodians, nominees and fiduciaries, and
Medical Manager will reimburse such brokerage houses, custodians, nominees and
fiduciaries for their reasonable expenses incurred in connection therewith.
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THE MERGER
BACKGROUND OF THE MERGER
Since its initial public offering in 1997, Medical Manager has maintained a
strategy to build its core business -- providing physician management
information systems to physicians and healthcare associations and organizations.
In light of the rapid changes in the healthcare information systems industry and
the development and acceptance of Internet-based technology, the board of
Medical Manager initiated in the fall of 1998 a review of various alternatives
to enhance stockholder value. These alternatives included making additional
acquisitions, forming strategic alliances, engaging in a business combination
transaction and developing an Internet-based physician information system. In
October 1998, Medical Manager formally engaged Donaldson, Lufkin & Jenrette to
act as its financial advisor in assisting in analyzing various strategic
transactions.
Since the retention of DLJ, the board of Medical Manager has continuously
reviewed strategic alternatives to increase stockholder value. On March 17,
1999, Martin J. Wygod, Synetic's Chairman and John Kang, Medical Manager's
President met for the first time to better understand each company's business
and to explore a potential business relationship. During the next four weeks,
the senior management of the two companies, with their respective advisors, held
a series of meetings to learn more about each company and to further explore a
potential business relationship between the two companies.
Medical Manager held a board meeting on April 13, 1999, at which management
reviewed its Internet-based system strategy, including a possible relationship
with Synetic. On April 13 and 14, 1999 Messrs. Wygod and Kang met in Tampa,
Florida to discuss the potential synergies of the companies. On April 16, 1999,
members of senior management of the companies met in New York to present the
business strategy of each company and explore the scope of any potential
business relationships. On April 20, 1999, Synetic and Medical Manager executed
a mutual confidentiality agreement.
On April 26, 1999, Mr. Wygod and other members of senior management of
Synetic met with Mr. Kang and Lee Robbins, Chief Financial Officer of Medical
Manager, and a representative of Donaldson, Lufkin & Jenrette in California. At
this meeting a number of possible business relationships were discussed,
including a contractual relationship and a combination of the companies. Through
the end of April, the two companies and their respective legal and financial
advisors held a series of due diligence meetings in Tampa, Florida, Alachua,
Florida and New York City and reviewed each other's businesses, strategies and
documentation produced in response to due diligence inquiries.
On April 29, 1999, the board of Medical Manager reviewed various options
relating to Medical Manager's Internet-based system strategy, including a
possible relationship with Synetic.
On May 3, 1999, Mr. Wygod, Michael Singer, Chief Executive of Medical
Manager, and Mr. Kang met in Houston, Texas to discuss the potential benefits of
a combination transaction, possible business terms of such a transaction and the
philosophies of each company.
On May 6, 1999, Synetic delivered an initial draft of the merger agreement
and related documents to Medical Manager and its legal advisor. Synetic and
Medical Manager, together with their respective advisors, then began to
negotiate the terms of the definitive merger agreement. During this period until
the signing of the merger agreement, senior management of Synetic and Medical
Manager, together with their respective legal
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and financial advisors, held discussions regarding the terms of the potential
transaction and discussed various issues raised by the drafts of the merger
agreement and related documents, including potential exchange ratios. The due
diligence process continued throughout this period.
On May 12, 1999, the Synetic board of directors held a meeting to discuss
the proposed transaction. At the meeting, the board retained PaineWebber to
review the transaction and to render an opinion, if requested, as to whether the
exchange ratio, when agreed to, is fair, from a financial point of view, to
Synetic. The board also received a presentation from Shearman & Sterling, legal
counsel to Synetic, on the status of the negotiations, and an update on the
status of the due diligence process.
On May 14, 1999, the board of Medical Manager met and reviewed details of
the proposed transaction with Synetic, including transaction structure, pricing
issues, termination rights, corporate governance issues, Medical Manager's
continued acquisition program, due diligence matters and the expected timing of
concluding a transaction.
Between May 14, 1999 and May 16, 1999, the final issues under the merger
agreement and related documents were negotiated between management of Synetic
and Medical Manager, and their respective advisors.
On May 15, 1999, the board of Medical Manager met twice to review the terms
of a possible transaction with Synetic. At those meetings, legal and financial
due diligence results were discussed and DLJ made a financial presentation to
the Medical Manager board. The Medical Manager board also reviewed the revised
drafts of the merger agreement and related documents.
On May 16, 1999, the Synetic board and the Medical Manager board met
separately to consider the proposed business combination between the two
companies. At the Synetic board meeting, PaineWebber delivered their oral
opinion to the board (subsequently confirmed in writing) that, as of such date
and based upon its review and assumptions and subject to the limitations
summarized below, the exchange ratio in the merger is fair, from a financial
point of view, to Synetic. At the Medical Manager board meeting, DLJ delivered
its written opinion that, as of such date and based on and subject to the
assumptions, limitations and qualifications in such opinion, the consideration
to be received by holders of Medical Manager's Common Stock was fair, from a
financial point of view, to such stockholders. Following a discussion of the
terms of the merger agreement and related agreements each of the Synetic board
of directors and the Medical Manager board of directors separately approved the
merger and all of the related transactions and documents. Synetic then executed
the merger documents in New York and Medical Manager executed the merger
documents in Alachua, and the two companies issued a joint press release
announcing the merger.
RECOMMENDATION OF THE SYNETIC BOARD OF DIRECTORS; REASONS OF SYNETIC FOR THE
MERGER
At a special meeting held on May 16, 1999, the Synetic board of directors
concluded that the merger is in the best interests of Synetic and its
stockholders and determined to recommend that the stockholders approve the
stockholder proposals relating to the merger. In reaching its conclusion the
Synetic board of directors reviewed with management the terms of the merger
agreement and the related agreements. In addition, the Synetic board of
directors reviewed with its outside counsel its legal obligations, including its
duty of care, in connection with its consideration of the merger. The Synetic
board of directors also reviewed the terms of the merger agreement with
representatives of PaineWebber.
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The Synetic board of directors believes that because of the unique and
complementary attributes of each of Synetic and Medical Manager, the combined
organization will have the components necessary to transform the information
infrastructure of U.S. medical practices and revolutionize the way in which
physicians communicate electronically with payers, suppliers, providers and
patients.
The first version of The Medical Manager physician practice management
software was introduced in 1982 in order to address the financial,
administrative, clinical and practice management needs of physician practices.
Medical Manager's proprietary systems enable physicians and their administrative
staffs to efficiently manage their practices while delivering quality patient
care. The installed base of the Medical Manager software has grown to over
24,000 medical practices nationwide, representing an estimated 120,000
physicians in over 80 practice specialties, making it the most widely installed
physician practice management system in the United States. Synetic, through its
subsidiary CareInsite, is developing for deployment an Internet-based healthcare
electronic commerce network that links physicians, payers, suppliers and
patients. By bringing to physicians' desktops a comprehensive set of
transaction, messaging and content services, which will include the integration
of payer-specific rules and healthcare guidelines with patient-specific
information, the CareInsite system is designed to improve the quality of patient
care, lead to more appropriate use of healthcare resources, gain compliance with
benefit plan guidelines and control healthcare costs.
The Synetic board of directors believes that the combined company will be
distinguished by its ability to integrate the products and services offered by
Medical Manager with those of CareInsite into a suite of products that can
comprehensively address all of the needs of a medical practice. This combined
product offering will enable a medical practice to more effectively and
efficiently serve the needs of patients by utilizing innovative healthcare
network and e-commerce services that leverage Internet technology to enable the
confidential exchange of clinical, administrative and financial information
between physicians and their affiliated patients, payers, providers and
suppliers. The combined company will be able to distribute this suite of
products through the more than 2,000 sales and support personnel that distribute
the Medical Manager software who have a proven ability to demonstrate to
physicians the advantages that technology can bring to their practices and who
provide service, training and support to physician offices nationwide.
Synetic's board also considered that under the terms of the Exclusive
Electronic Gateway and Network Services Agreement between CareInsite and Medical
Manager, which will become effective at the effective time of the merger,
CareInsite will eventually become the exclusive gateway to Medical Manager's
customers for the provision of messaging, content, transaction and web hosting
services. This will provide a substantial step in the achievement of
CareInsite's goal of aggregating physicians as users of its services.
Furthermore, Medical Manager's customers utilize computers in their practices
and may more readily adopt the additional, web-based services that will be
provided by CareInsite and Medical Manager working together.
Other positive factors considered by Synetic's board of directors include:
- the belief that the terms of the merger agreement and the Synetic stock
option agreement are reasonable;
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- historical information concerning Synetic's and Medical Manager's
respective businesses, financial performance and condition, operations,
technology and management;
- the continuity of management achieved through the employment agreements
with key employees of Medical Manager and the expansion of Synetic's
board of directors;
- the expected treatment of the merger as a tax-free reorganization;
- the expected treatment of the merger as a pooling of interests for
financial reporting and accounting purposes;
- the opinion of PaineWebber that, as of the date of its opinion and
subject to the considerations described in that opinion, the exchange
ratio is fair from a financial point of view to Synetic;
- the financial analyses presented to the board by PaineWebber on May 16,
1999 in connection with the delivery of its opinion. For a discussion of
the PaineWebber opinion and such analyses, see "-- Opinion of PaineWebber
Incorporated";
- the rapidly changing healthcare information technology industry and the
likelihood of consolidation and increased competition; and
- the combined respective strengths of Medical Manager and Synetic to
create, operate and achieve utilization of an Internet-based healthcare
electronic commerce network by physicians, payers, suppliers and
patients, including:
- Medical Manager provides immediate access to a physician base
estimated at more than 120,000,
- Medical Manager's installed base of physicians is on a common
platform, which will facilitate the integration and the use of
Internet-based services on a timely basis,
- Medical Manager's base of physicians are high users of electronic data
interchange services and, therefore, will likely be high users of
CareInsite's services.
In its deliberations concerning the merger, the Synetic board of directors
also considered certain potentially negative factors concerning the merger,
including the following:
- the possibility that the merger may not be consummated;
- the risk that the potential benefits of the merger may not be realized;
- the risk that, notwithstanding the efforts of management of the combined
company to retain them, key employees might not remain with the combined
company; and
- other applicable risks described in this Joint Proxy Statement/Prospectus
statement under "Risk Factors".
Synetic's board of directors determined that the potential advantages of
the merger far outweigh the disadvantages. Based on the consideration of the
factors enumerated above and other relevant matters, Synetic's board of
directors unanimously determined that the merger, upon the terms and conditions
set forth in the merger agreement, is in the best interests of Synetic and its
stockholders.
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The foregoing discussion of the factors considered by Synetic's board of
directors is not intended to be exhaustive, but is believed to include all
material factors considered by the Synetic board of directors. In reaching its
decision to approve the merger, Synetic's board of directors did not quantify or
assign any relative weights to the factors considered, and individual directors
may have given different weights to different factors.
THE SYNETIC BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS FAIR TO,
AND IN THE BEST INTERESTS OF, SYNETIC AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE PROPOSAL TO ISSUE SHARES OF SYNETIC COMMON
STOCK IN CONNECTION WITH THE MERGER, EACH OF THE PROPOSALS TO AMEND AND RESTATE
THE SYNETIC CERTIFICATE OF INCORPORATION AND, SUBJECT TO THE SEPARATE APPROVAL
OF THE STOCK OPTION COMMITTEE OF THE SYNETIC BOARD OF DIRECTORS, THE PROPOSAL TO
GRANT OPTIONS TO PURCHASE 650,000 SHARES OF SYNETIC COMMON STOCK TO EACH OF
MESSRS. SINGER AND KANG UNDER THEIR EMPLOYMENT AGREEMENTS. ACCORDINGLY, THE
SYNETIC BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SYNETIC STOCKHOLDERS VOTE
FOR THESE PROPOSALS.
OPINION OF PAINEWEBBER INCORPORATED
THE FULL TEXT OF THE PAINEWEBBER OPINION, DATED MAY 16, 1999, WHICH SETS
FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B TO THIS DOCUMENT.
YOU SHOULD READ THE PAINEWEBBER OPINION CAREFULLY AND IN ITS ENTIRETY. THE
SUMMARY OF THE PAINEWEBBER OPINION INCLUDED IN THIS DOCUMENT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PAINEWEBBER OPINION.
Synetic retained PaineWebber to render an opinion as to whether the
exchange ratio in the merger was fair, from a financial point of view, to
Synetic.
In connection with the consideration by the Synetic board of directors of
the merger agreement, PaineWebber delivered its written opinion, dated May 16,
1999, to the effect that, as of that date, and based upon its review and
assumptions and subject to the limitations summarized below, the exchange ratio
in the merger is fair, from a financial point of view, to Synetic. The
PaineWebber opinion was directed to the Synetic board of directors and does not
constitute a recommendation to any holder of Synetic Common Stock as to how any
such stockholder should vote on the proposals in this Joint Proxy
Statement/Prospectus.
In arriving at its opinion, PaineWebber, among other things:
- reviewed, among other public information, Medical Manager's annual
reports, forms 10-K and related financial information for the three
fiscal years ended December 31, 1998;
- reviewed, among other public information, Synetic's annual reports, forms
10-K and related financial information for the three fiscal years ended
June 30, 1998 and Synetic's forms 10-Q and the related unaudited
financial information for the nine months ended March 31, 1999;
- reviewed certain information, including financial forecasts relating to
the business, earnings, cash flow, assets and prospects of Medical
Manager and Synetic, furnished to PaineWebber by Medical Manager and
Synetic;
- conducted discussions with members of senior management of Medical
Manager and Synetic concerning their respective businesses and prospects;
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<PAGE> 64
- reviewed the historical market prices and trading activity for Medical
Manager Common Stock and Synetic Common Stock and compared them with
those of certain other publicly traded companies which PaineWebber deemed
to be relevant;
- compared the financial position and operating results of Medical Manager
and Synetic with those of certain other publicly traded companies which
PaineWebber deemed to be relevant;
- compared the financial terms of the merger with the financial terms of
certain other mergers and acquisitions which PaineWebber deemed to be
relevant;
- reviewed a preliminary S-1 registration statement, dated March 26, 1999,
for CareInsite, Inc.;
- reviewed a draft of the merger agreement dated May 15, 1999; and
- reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as
PaineWebber deemed necessary, including PaineWebber's assessment of
general economic, market and monetary conditions.
In preparing the PaineWebber opinion, PaineWebber relied on the accuracy
and completeness of all information that was publicly available, supplied or
otherwise made available to PaineWebber by or on behalf of Medical Manager and
Synetic, and PaineWebber did not assume any responsibility to independently
verify such information. With respect to the financial forecasts examined by
PaineWebber, PaineWebber assumed, with Synetic's consent, that they were
reasonably prepared on bases reflecting the best currently available estimates
and good faith judgements of the management of Medical Manager and Synetic as to
the future performance of Medical Manager and Synetic. PaineWebber also relied
upon assurances of the management of Medical Manager and Synetic that they were
unaware of any facts that would make the information or financial forecasts
provided to PaineWebber incomplete or misleading. PaineWebber did not undertake
an independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of Medical Manager or Synetic, nor was PaineWebber furnished with
any such evaluations or appraisals. PaineWebber also assumed the following, with
Synetic's consent:
- The merger will be accounted for under the pooling of interests
accounting treatment.
- The merger will qualify as a tax-free reorganization.
- Any material liabilities, whether contingent or otherwise or known or
unknown, of Medical Manager and Synetic were as set forth in the
consolidated financial statements of Medical Manager and Synetic.
The PaineWebber opinion is based upon economic, monetary and market
conditions existing on the date of the PaineWebber opinion. Furthermore,
PaineWebber expressed no opinion as to the price at which Medical Manager Common
Stock or Synetic Common Stock may trade at any time. The PaineWebber opinion
does not address the relative merits of the merger and any other transactions or
business strategies that may have been discussed by the Synetic board of
directors as alternatives to the merger, or the decision of the Synetic board or
directors to proceed with the merger.
The following paragraphs summarize the significant analyses performed by
PaineWebber in arriving at the PaineWebber opinion.
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<PAGE> 65
HISTORICAL STOCK PERFORMANCE. PaineWebber reviewed trading prices for the
shares of Medical Manager Common Stock. This stock performance review indicated
that for Medical Manager's latest twelve months, referred to in this document as
"LTM", ended May 14, 1999, the low and high closing prices were $12.88 and
$36.50. PaineWebber also reviewed the following Medical Manager stock price
averages over the following periods prior to May 14, 1999 as set forth in the
following table.
<TABLE>
<CAPTION>
TRADING PERIOD AVERAGE PRICE
- -------------- -------------
<S> <C>
Latest 10 days............................ $32.89
Latest 20 days............................ $31.69
Latest 30 days............................ $29.58
Latest 60 days............................ $27.19
Latest 90 days............................ $28.97
Latest 180 days........................... $26.80
</TABLE>
PaineWebber also reviewed trading prices for the shares of Synetic Common
Stock. This stock performance review indicated that for Synetic's LTM ended May
14, 1999, the low and high closing prices were $31.88 and $99.38. PaineWebber
also reviewed the following Synetic stock price averages over the following
periods prior to May 14, 1999:
<TABLE>
<CAPTION>
TRADING PERIOD AVERAGE PRICE
- -------------- -------------
<S> <C>
Latest 10 days............................ $96.07
Latest 20 days............................ $87.84
Latest 30 days............................ $78.81
Latest 60 days............................ $63.47
Latest 90 days............................ $58.12
Latest 180 days........................... $49.28
</TABLE>
SELECTED COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of Medical Manager to the
corresponding data of the selected comparable publicly traded companies. These
companies consisted of:
<TABLE>
<S> <C>
Apache Medical Systems, Inc. MECON, Inc.
Cerner Corporation Medaphis Corporation
Eclipsys Corporation Medirisk, Inc.
HCIA Inc. QuadraMed Corporation
Health Systems Design Corporation Quality Systems, Inc.
IDX Systems Corporation Shared Medical Systems Corporation
InfoCure Corporation Transcend Services, Inc.
</TABLE>
PaineWebber reviewed, among other information, the Medical Manager
comparable companies' multiples of total enterprise value (market value plus
total debt less cash and cash equivalents as of December 31, 1998) to (1) LTM
revenue, (2) LTM earnings before interest, taxes, depreciation and amortization,
referred to in this document as "EBITDA", and (3) LTM earnings before interest
and taxes, referred to in this document as "EBIT". PaineWebber also reviewed,
among other information, the Medical Manager comparable companies' multiples of
market value to (i) LTM net income, (ii) calendar
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year 1999 earnings per share, referred to in this document as "EPS", and (iii)
calendar year 2000 EPS. All calendar year 1999 and 2000 EPS results were based
on publicly available estimates from First Call Research. Additionally, based on
an implicit price of $59.69 for each outstanding share of Medical Manager Common
Stock, PaineWebber calculated Medical Manager transaction multiples. As of May
14, 1999, the selected comparable publicly traded companies' multiples and the
Medical Manager transaction multiples were as follows:
<TABLE>
<CAPTION>
MEDICAL
LOW MEDIAN HIGH MANAGER
----- ------ ----- -------
<S> <C> <C> <C> <C>
LTM revenue................................ 0.32x 1.15x 6.22x 10.10x
LTM EBITDA................................. 4.5x 8.7x 78.5x 47.4x
LTM EBIT................................... 6.9x 14.0x 45.6x 53.9x
LTM net income............................. 11.7x 22.8x 48.7x 82.4x
Calendar year 1999 EPS..................... 8.1x 24.4x 84.4x 56.8x
Calendar year 2000 EPS..................... 6.0x 18.2x 34.7x 43.3x
</TABLE>
SELECTED COMPARABLE PUBLIC COMPANY ANALYSIS. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of Synetic to the corresponding data
of the selected comparable publicly traded companies. PaineWebber assessed
Synetic relative to the selected comparable publicly traded companies in its two
primary business segments: filtration companies and healthcare Internet
technology companies. The companies consisted of:
<TABLE>
<CAPTION>
FILTRATION COMPANIES HEALTHCARE INTERNET TECHNOLOGY COMPANIES
-------------------- ----------------------------------------
<S> <C>
CLARCOR Inc. Claimsnet.com inc.
Donaldson Company Healtheon Corporation
Ionics, Incorporated
Millipore Corporation
Pall Corporation
Pentair, Inc.
Thermo Instrument Systems Inc.
Tredegar Industries, Inc.
</TABLE>
With respect to Synetic and the Synetic filtration comparable companies,
PaineWebber compared multiples of total enterprise value to LTM revenue, EBITDA
and EBIT. PaineWebber also compared multiples of market value to LTM net income,
and estimated 1999 and 2000 calendar year EPS. 1999 and 2000 calendar year
earnings per share were based on the publicly available estimates from First
Call Research. As of May 14, 1999, the selected comparable publicly traded
filtration companies' multiples were as follows:
<TABLE>
<CAPTION>
LOW MEDIAN HIGH SYNETIC
----- ------ ----- -------
<S> <C> <C> <C> <C>
LTM revenue................................. 1.06x 1.34x 2.55x 25.36x
LTM EBITDA.................................. 6.9x 9.2x 20.0x 166.8x
LTM EBIT.................................... 8.6x 13.4x 39.9x 439.1x
LTM net income.............................. 13.4x 19.7x 85.8x 298.3x
Calendar year 1999 EPS...................... 12.7x 17.3x 25.5x 103.2x
Calendar year 2000 EPS...................... 11.3x 14.8x 19.9x 47.2x
</TABLE>
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With respect to Synetic and the selected comparable publicly traded healthcare
Internet technology comparable companies, PaineWebber compared multiples of
total enterprise value to LTM revenue, EBITDA and EBIT and could not draw
meaningful conclusions. PaineWebber also compared multiples of market value to
LTM net income, and estimated 1999 and 2000 calendar year EPS and could not draw
meaningful conclusions.
SELECTED COMPARABLE MERGERS AND ACQUISITIONS ANALYSIS. PaineWebber reviewed
publicly available financial information for selected mergers and acquisitions
involving Internet and information technology companies that are affiliated with
the healthcare sector. The selected mergers and acquisitions PaineWebber
analyzed included:
<TABLE>
<CAPTION>
ACQUIROR TARGET
- -------- ------
<S> <C>
Healtheon Corporation MEDE AMERICA Corporation
Quintiles Transnational Corp. Envoy Corporation
Eclipsys Corporation Transition Systems, Inc.
HBO & Company Access Health, Inc.
McKesson Corporation HBO & Company
QuadraMed Corporation Medicus Systems Corporation
National Data Corporation Physician Support Systems,
Inc.
HBO & Company HPR Inc.
Misys plc MEDIC Computer Systems, Inc.
Cardinal Health, Inc. MediQual Systems, Inc.
IDX Systems Corporation PHAMIS, Inc.
HBO & Company Amisys Managed Care Systems
HBO & Company GMIS, Inc.
</TABLE>
PaineWebber reviewed the consideration paid (based on stock prices on the
day prior to the announcement of the transaction) in the comparable transactions
and calculated multiples of total enterprise value to the target's LTM revenue,
EBITDA and EBIT. PaineWebber also reviewed multiples of the consideration paid
to the target's LTM net income and book value.
<TABLE>
<CAPTION>
IMPLIED
LOW MEDIAN HIGH TRANSACTION MULTIPLES
----- ------ ------ ---------------------
<S> <C> <C> <C> <C>
LTM revenue..................... 1.13x 4.67x 9.46x 10.10x
LTM EBITDA...................... 8.7x 23.3x 52.6x 47.4x
LTM EBIT........................ 11.2x 30.5x 59.9x 53.9x
LTM net income.................. 31.3x 50.5x 494.8x 82.4x
Book value...................... 1.49x 5.48x 16.26x 15.00x
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. PaineWebber analyzed Medical Manager based
on an unlevered discounted cash flow analysis of the projected financial
performance of Medical Manager. Such projected financial performance was based
upon a five-year forecast for Medical Manager provided by Medical Manager
management. The discounted cash flow analysis determined the discounted present
value of the unlevered after-tax cash flows projected to be generated over the
five-year period and then added a terminal value based upon a range of EBITDA
multiples from 12.0x to 15.0x. The unleveraged after-tax cash flows and terminal
value were discounted using a range of discount rates from 10.0% to
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12.0%. The analysis yielded implied exchange ratio values ranging from 0.4887x
to 1.2537x.
PREMIUMS PAID ANALYSIS. PaineWebber reviewed purchase price per share
premiums paid in 24 publicly-disclosed cash and stock merger transactions in
non-financial industries announced from May 14, 1997 to May 14, 1999 with
transaction values between $500 million and $1.5 billion. This analysis
indicated median premiums to the target's closing stock price one day, one week
and one month prior to the announcement of the transaction. The analysis
resulted in the following values:
<TABLE>
<CAPTION>
TRANSACTION
MEDIAN PREMIUM
------ -----------
<S> <C> <C>
One day prior..................................... 21.8% 65.5%
One week prior.................................... 28.6% 98.1%
One month prior................................... 28.1% 121.1%
</TABLE>
PaineWebber also reviewed the purchase price per share premiums paid in the
selected comparable mergers and acquisitions transactions. This analysis
indicated median premiums to the target's closing stock price one day, one week
and one month prior to the announcement of the transaction. The analysis
resulted in the following values:
<TABLE>
<CAPTION>
TRANSACTION
MEDIAN PREMIUM
------ -----------
<S> <C> <C>
One day prior..................................... 36.6% 65.5%
One week prior.................................... 41.8% 98.1%
One month prior................................... 59.8% 121.1%
</TABLE>
PRO FORMA MERGER ANALYSIS. PaineWebber performed an analysis of the
potential pro forma effect of the merger on Synetic's EPS for the fiscal years
2000 through 2004. In performing this analysis, PaineWebber assumed, with
Synetic's consent, that the merger would be accounted for under the pooling of
interests method of accounting. PaineWebber combined the projected operating
results of Synetic with the projected operating results of Medical Manager to
arrive at the combined company projected net income. PaineWebber divided this by
the pro forma fully diluted shares outstanding to arrive at a combined company
fully diluted EPS. PaineWebber then compared the combined company EPS to
Synetic's standalone EPS to determine the pro forma impact on Synetic's EPS.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative methods of financial analyses and
the application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial analysis or summary
description. Accordingly, PaineWebber believes that its analysis must be
considered as a whole and that considering any portion of such analysis and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the PaineWebber
opinion. In its analyses, PaineWebber made numerous assumptions and estimates
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Medical Manager and
Synetic. Any assumptions or estimates contained in these analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. Accordingly, such assumptions and estimates are inherently subject to
substantial uncertainty, and neither Synetic nor PaineWebber assume
responsibility for the accuracy of such assumptions and estimates. In addition,
analyses
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relating to the value of businesses do not purport to be appraisals or to
reflect the prices at which businesses may actually be sold.
Synetic selected PaineWebber to be its financial advisor in connection with
the merger because PaineWebber is a prominent investment banking and financial
advisory firm with experience in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate purposes.
PaineWebber has in the past acted as financial advisor to Synetic,
including in February of 1995, advising Synetic on the redemption of convertible
subordinated debentures due 2001.
Pursuant to an engagement letter between Synetic and PaineWebber dated May
7, 1999, PaineWebber earned a customary fee for rendering the PaineWebber
opinion. Synetic also agreed, under separate agreement, to indemnify
PaineWebber, its affiliates and each of its directors, officers, agents and
employees and each person, if any, controlling PaineWebber or any of its
affiliates against certain liabilities, including liabilities under federal
securities laws.
In the ordinary course of PaineWebber's business, PaineWebber may actively
trade the securities of Medical Manager and Synetic for its own account and for
the accounts of its customers and, accordingly, may at any time hold long or
short positions in such securities.
RECOMMENDATION OF THE MEDICAL MANAGER BOARD OF DIRECTORS; REASONS OF MEDICAL
MANAGER FOR THE MERGER
At a special meeting held on May 16, 1999, the Medical Manager board of
directors concluded that the merger is advisable and in the best interests of
Medical Manager and its stockholders and determined to recommend that the
stockholders approve the merger. In deciding to approve the merger, the Medical
Manager board of directors concluded that holding a portion of a share of
Synetic Common Stock equal to the exchange ratio represented a more favorable
investment opportunity than holding one share of Medical Manager Common Stock.
The Medical Manager board of directors took into account the risks inherent in
each investment. In evaluating the merger, the Medical Manager board of
directors considered all relevant factors and information, including the
following:
- the fact that based on the closing market price for Synetic Common Stock
on the last trading day prior to the execution of the merger agreement,
the exchange ratio of .625 of a share of Synetic Common Stock per share
of Medical Manager Common Stock represented:
- a premium of approximately 65.5% to the $36.06 closing market price
of Medical Manager Common Stock on May 13, 1999, and
- a premium of approximately 101.5% to the $29.63 closing market price
of Medical Manager Common Stock on April 14, 1999, approximately
four weeks prior to the execution of the merger agreement;
- the fact that the adjustment features of the exchange ratio provided
reasonable protection against a decline in the value of Synetic Common
Stock while retaining the ability to benefit from an increase in the
value of Synetic Common Stock;
- the May 16, 1999 oral opinion of Donaldson, Lufkin & Jenrette, which was
subsequently confirmed in writing, to the effect that as of such date the
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consideration to be received by holders of Medical Manager Common Stock
was fair from a financial point of view;
- the financial analyses presented to the board by Donaldson, Lufkin &
Jenrette in connection with the delivery of its opinion. For a discussion
of the Donaldson, Lufkin & Jenrette opinion and such analyses, see
"-- Opinion of Donaldson, Lufkin & Jenrette Securities Corporation";
- the rapidly changing healthcare information technology industry and the
likelihood of consolidation and increased competition;
- the financial condition, assets, results of operations, business and
prospects of Medical Manager and Synetic and the risks inherent in
operating independently;
- the combined respective strengths of Medical Manager and Synetic to
create and operate an Internet-based healthcare electronic commerce
network for use by physicians, payers, suppliers and patients, including:
- Synetic's subsidiary, CareInsite, should be a public company in the
near term, providing greater visibility and valuable currency as it
capitalizes on Internet enthusiasm in the investment community,
- Synetic offers a premier management team which has significant
experience in creating new healthcare distribution networks and has
substantial credibility,
- Medical Manager provides immediate access to a physician base
estimated at more than 120,000, achieving Synetic's five-year
objective through a single transaction,
- Medical Manager's installed base of physicians is on a common
platform, which will facilitate the ultimate conversion to an
Internet-based platform on a timely basis, and
- Medical Manager's base of physicians are high users of electronic
data interchange services and, therefore, will likely be high users
of CareInsite's services;
- the history of the negotiations with respect to the exchange ratio and
the belief of the Medical Manager board of directors that the financial
terms reflected in the merger agreement represented the best financial
terms that could be obtained from Synetic;
- the terms and conditions of the merger agreement, including:
- the nature of the parties' representations, warranties, covenants
and agreements, which the board believed would provide reasonably
adequate certainty that Medical Manager would be able to require
Synetic to complete the merger;
- the provisions that permit Medical Manager to consider additional
bona fide third party offers to acquire Medical Manager and permit
Medical Manager to provide information to and negotiate with such
parties; and
- the termination provisions, including up to $5.0 million in
termination expenses. For a discussion of the terms of the merger
agreement, see "The Merger Agreement";
- the regulatory approvals required to complete the merger and the
prospects for receiving such approvals;
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- the advice of Akerman, Senterfitt & Eidson, P.A., outside legal counsel
to Medical Manager, that the merger is expected to be treated as a
tax-free reorganization for federal income tax purposes. For a discussion
of the tax consequences of the merger, see "-- Material Federal Income
Tax Consequences of the Merger";
- the advice of Medical Manager's independent public accountants that they
concur with Medical Manager management's conclusion that no conditions
exist related to Medical Manager that would preclude Synetic's accounting
for the merger as a pooling of interests for financial accounting
purposes. For a discussion of the accounting treatment of the merger, see
"-- Accounting Treatment"; and
- the potential material adverse effects on Medical Manager's business,
operations and financial condition if the merger was not completed
following public announcement of the merger agreement. These material
adverse effects include the expenses incurred by Medical Manager in
connection with the merger and the possibility of having to pay
termination expenses of Synetic. Other adverse effects include a possible
loss of customers and employees in reaction to the announcement or as a
result of management being distracted from operating the business while
working to complete the merger.
This discussion is not intended to be exhaustive, but it is believed to
include the material factors considered by the Medical Manager board of
directors. In light of the number and variety of information and factors the
board considered, the Medical Manager board of directors did not find it
practicable to, and did not, assign any specific or relative weights to the
factors listed above. In addition, individual directors may have given differing
weights to different factors. For a discussion of the interests of members of
Medical Manager's management and the Medical Manager board of directors in the
merger, see "-- Interests of Certain Persons in the Merger." The Medical Manager
board of directors recognized such interests and determined that such interests
neither supported nor detracted from the fairness of the merger to Medical
Manager's stockholders.
THE MEDICAL MANAGER BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS
FAIR TO, AND IN THE BEST INTERESTS OF, MEDICAL MANAGER AND ITS STOCKHOLDERS AND
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT. ACCORDINGLY, THE MEDICAL MANAGER
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT MEDICAL MANAGER STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE MERGER.
OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
Medical Manager asked Donaldson, Lufkin & Jenrette Securities Corporation,
in its role as financial advisor to Medical Manager's board of directors, to
render an opinion to Medical Manager's board of directors as to the fairness to
Medical Manager's stockholders, from a financial point of view, of the
consideration to be received by such stockholders under the merger agreement.
On May 16, 1999, DLJ delivered its written opinion to Medical Manager's
board of directors that, as of such date and based upon and subject to the
assumptions, limitations and qualifications in such opinion, the consideration
to be received by holders of Medical Manager's Common Stock was fair, from a
financial point of view, to such stockholders. DLJ reconfirmed its May 16, 1999
written opinion by delivery of a written opinion dated June 24, 1999. A COPY OF
DLJ'S JUNE 24, 1999 OPINION IS ATTACHED AS ANNEX C TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. YOU SHOULD READ THIS OPINION FOR THE ASSUMPTIONS MADE, THE
PROCEDURES FOLLOWED, THE MATTERS CONSIDERED AND THE LIMITS OF THE REVIEW MADE
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BY DLJ. DLJ PREPARED ITS OPINION FOR MEDICAL MANAGER'S BOARD OF DIRECTORS. DLJ'S
OPINION ADDRESSES ONLY THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
CONSIDERATION TO BE RECEIVED BY MEDICAL MANAGER'S STOCKHOLDERS UNDER THE MERGER
AGREEMENT. DLJ'S OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER
AS TO HOW SUCH STOCKHOLDER SHOULD VOTE ON THE MERGER.
DLJ did not, and was not requested by Medical Manager's board of directors
to, make any recommendation as to the form or amount of the consideration to be
paid in the merger. These issues were resolved in arm's-length negotiations
between Medical Manager and Synetic.
DLJ's opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
DLJ as of, the date of DLJ's opinion.
Although subsequent developments may affect this opinion, DLJ does not have
any obligation to update, revise or reaffirm its opinion, other than if
requested by Medical Manager pursuant to the terms of DLJ's engagement. DLJ
expressed no opinion as to:
- the price at which Synetic's Common Stock will actually trade at any
time;
- the relative merits of the merger and other business strategies being
considered by Medical Manager's board of directors; or
- the decision of Medical Manager's board of directors to proceed with the
merger.
INFORMATION REVIEWED AND ASSUMPTIONS MADE
In arriving at its opinion, DLJ:
- reviewed the merger agreement;
- reviewed financial and other information that was publicly available or
furnished to it by Medical Manager and Synetic and information provided
during discussions with management of each company, including:
- financial projections of Medical Manager for the period beginning
April 1, 1999 and ending December 31, 2004 prepared by the
management of Medical Manager;
- financial projections of Synetic for the period beginning April 1,
1999 and ending June 30, 2004 provided or otherwise reviewed by the
management of Synetic;
- financial and securities data of Medical Manager and Synetic with
various other companies whose securities are traded in public
markets;
- historical stock prices and trading volumes of Medical Manager's
Common Stock and Synetic's Common Stock;
- prices and premiums paid in certain other business combinations; and
- such other financial studies, analyses and investigations as DLJ
deemed appropriate for purposes of its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
DLJ from public sources, that was provided to DLJ by Medical Manager or Synetic
or its representatives, or that was otherwise reviewed by DLJ. With respect to
the financial projections supplied to, or
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otherwise discussed with DLJ, DLJ assumed that they had been reasonably prepared
on the basis reflecting the best currently available estimates and judgments of
the management of Medical Manager and Synetic as to the future operating and
financial performance of Medical Manager and Synetic, respectively. DLJ did not
assume any responsibility for making an independent evaluation of any assets or
liabilities or for making any independent verification of any of the information
reviewed by DLJ. DLJ assumed the merger will be a tax-free reorganization under
the Internal Revenue Code of 1986, as amended.
FINANCIAL ANALYSES
The following is a summary of the analyses presented by DLJ to Medical
Manager's board of directors on May 16, 1999 in connection with the delivery of
DLJ's opinion. DLJ's analysis assumes a purchase price per share of $59.69,
based on the May 14, 1999 closing price of Synetic of $95.50 and an exchange
ratio of .625 shares of Synetic Common Stock for each share of Medical Manager's
Common Stock. Assuming 23.8 million diluted shares of Medical Manager's Common
Stock outstanding, the transaction price represents, as of the date of DLJ's
opinion, an equity purchase price of $1,419.7 million and a total transaction
value of approximately $1,378.9 million, including the assumption of
approximately $2.7 million of Medical Manager's debt, net of $43.5 million of
Medical Manager's cash.
SELECTED PUBLICLY TRADED COMPANY ANALYSIS. Using publicly available
information, DLJ analyzed, among other things, the trading multiples of nine
selected publicly traded companies in the healthcare information systems
industry, including:
- Cerner Corporation;
- Eclipsys Corporation;
- IDX Systems Corporation;
- IMS Health, Inc.;
- InfoCure Corporation;
- MedQuist Inc.;
- National Data Corporation;
- QuadraMed Corporation; and
- Shared Medical Systems Corporation.
For each company, DLJ analyzed:
- the stock price, equity value and enterprise value as of May 14, 1999,
where enterprise value is defined as the equity value plus the book value
of debt and preferred stock less cash;
- the enterprise value as a multiple of revenues, earning before interest,
taxes, depreciation and amortization, or EBITDA, and earnings before
interest and taxes, or EBIT, for the twelve months prior to announcement
of a transaction; and
- the stock price as a multiple of earnings per share for the calendar
years 1999 and 2000, where the earnings per share estimates were based
upon First Call Research Network consensus research analyst estimates.
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A comparison of the results of this analysis with the multiples implied by
the merger are summarized in the table below:
<TABLE>
<CAPTION>
SELECTED PUBLICLY
TRADED COMPANIES
TRANSACTION -----------------------
MULTIPLES LOW AVERAGE HIGH
----------- ---- ------- ----
<S> <C> <C> <C> <C>
Enterprise value as a multiple of:
Latest twelve months revenue............. 9.4x 1.1x 3.1x 6.8x
Latest twelve months EBITDA.............. 43.9 6.8 15.8 29.6
Latest twelve months EBIT................ 50.1 10.3 23.8 52.6
Stock price as a multiple of:
Calendar year 1999 earnings per share.... 56.8x 8.1x 26.2x 42.9x
Calendar year 2000 earnings per share.... 43.3 6.0 21.1 33.1
</TABLE>
SELECTED MERGER AND ACQUISITION TRANSACTIONS ANALYSIS. Using publicly
available information, DLJ analyzed the implied transaction multiples paid in 29
selected transactions in the healthcare information systems industry since 1994.
For each acquisition, DLJ analyzed:
- the equity purchase price and implied enterprise value at the date of
announcement;
- the implied enterprise value as a multiple of revenues, EBITDA and EBIT
for the twelve months prior to announcement of a transaction; and
- the equity purchase price as a multiple of net income for the current and
subsequent calendar years as of the date of the announcement of a
transaction, where the net income estimates were based upon First Call
Research Network consensus research analyst estimates.
A comparison of the results of this analysis with the multiples implied by
the merger are summarized in the table below:
<TABLE>
<CAPTION>
SELECTED MERGER AND
ACQUISITION TRANSACTIONS
TRANSACTION --------------------------
MULTIPLES LOW AVERAGE HIGH
----------- ----- -------- -----
<S> <C> <C> <C> <C>
Total transaction value as a multiple of:
Latest twelve months revenue............. 9.4x 0.9x 4.8x 10.9x
Latest twelve months EBITDA.............. 43.9 8.6 22.9 45.0
Latest twelve months EBIT................ 50.1 14.5 29.6 43.0
Equity purchase price as a multiple of:
Current calendar year net income......... 56.8x 21.7x 36.8x 48.3x
Subsequent calendar year net income...... 43.3 17.5 28 37.4
</TABLE>
No company or business utilized in the "Selected Publicly Traded Company
Analysis" is identical to Medical Manager. Similarly, no transaction utilized in
the "Selected Merger and Acquisition Transactions Analysis" is identical to the
merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgements concerning differences in
financial and operating characteristics of Medical Manager and other factors
that could affect the public trading value of the companies to which it is being
compared. In evaluating the selected publicly
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traded companies and selected merger and acquisition transactions, DLJ made
judgments and assumptions with regard to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of Medical Manager, such as the impact of competition on
Medical Manager and the industry generally, industry growth and/or technological
change and the absence of any adverse material change in the financial
conditions and prospects of Medical Manager or in the industry or the financial
markets in general. Mathematical analysis (such as determining the mean and
median) is not, in itself, a meaningful method of using comparable company data.
DISCOUNTED CASH FLOW ANALYSIS. DLJ performed a discounted cash flow
analysis of Medical Manager using projections, which were provided to, or
otherwise discussed with, DLJ by the management of Medical Manager. The
discounted cash flow analysis for Medical Manager was performed using discount
rates ranging from 12.0% to 16.0% and estimated terminal EBITDA multiples in
2003 ranging from 11.0x to 13.0x. The analysis yielded implied price per share
values for Medical Manager ranging from $30.85 to $41.36.
PRECEDENT PREMIUMS PAID ANALYSIS. DLJ analyzed the purchase price premiums
paid over the market price prior to announcement in 60 selected mergers and
acquisitions since January 1, 1997 with valuations ranging from $1.0 billion to
$1.5 billion involving companies not necessarily comparable to Medical Manager.
DLJ analyzed the average premiums in these transactions one day prior, one week
prior and four weeks prior to announcement of each transaction, and compared the
results to the purchase premiums implied by the merger to prices one day prior,
one week prior and four weeks prior to the most recent Medical Manager stock
price, as of the date of DLJ's opinion. The results are summarized in the
following table:
<TABLE>
<CAPTION>
MEDICAL
MANAGER TRANSACTION PRECEDENT PREMIUMS PAID
------- ----------- ------------------------
PRICE PREMIUMS LOW AVERAGE HIGH
------- ----------- ---- ------- -----
<S> <C> <C> <C> <C> <C>
Premium paid to price relative:
One day prior (5/13/99)...... $36.06 65.5% (5.2)% 30.0% 114.3%
One week prior (5/7/99)...... 34.25 74.3 0.4 35.7 139.2
Four weeks prior (4/16/99)... 29.63 101.5 4.3 42.2 130.6
</TABLE>
The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ but describes, in summary form, the principal
elements of the presentation of DLJ to Medical Manager's board of directors in
connection with the delivery of DLJ's opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. Each of the analyses conducted by DLJ was
carried out in order to provide a different perspective on the acquisition and
add to the total mix of information available. DLJ did not form a conclusion as
to whether any individual analysis, considered in isolation, supported or failed
to support an opinion as to fairness, from a financial point of view. Rather, in
reaching its conclusion, DLJ considered the results of the analyses in light of
each other and did not place particular reliance or weight on any individual
analysis and ultimately reached its opinion based on the results of all analyses
taken as a whole. Accordingly, notwithstanding the separate factors summarized
above, DLJ believes that its analyses must be considered as a whole and that
selecting portions of its analysis and the factors considered by it, without
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considering all analyses and factors, could create an incomplete or misleading
view of the evaluation process underlying its opinions. The analyses performed
by DLJ are not necessarily indicative of actual values or future results, which
may be significantly more or less favorable than suggested by such analyses.
Pursuant to the terms of DLJ's engagement, Medical Manager has agreed to
pay DLJ for its services in connection with the merger an aggregate financial
advisory fee equal to $4.5 million, assuming a total transaction value of $1.4
billion, including $500,000 for rendering its fairness opinion to the board of
directors of Medical Manager. Medical Manager also has agreed to reimburse DLJ
for travel and other out-of-pocket expenses incurred in performing its services,
including the fees and expenses of its legal counsel and to indemnify DLJ and
related persons against certain liabilities, including liabilities under the
federal securities laws, arising out of DLJ's engagement.
DLJ is an internationally recognized investment banking firm and was
selected by Medical Manager based on DLJ's experience and expertise, as well as
its familiarity with Medical Manager. DLJ regularly engages in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities, private placements and valuations for corporate and
other purposes.
DLJ has advised Medical Manager that, in the ordinary course of business,
DLJ and its affiliates may actively trade or hold the securities of Medical
Manager and Synetic for their own account or for the account of customers and,
accordingly, may at any time hold a long or short position in such securities.
DLJ has, in the past, performed investment banking and other services for
Medical Manager, including lead managing its initial public offering of common
stock on January 30, 1997 and its common stock offering on April 23, 1998, for
which DLJ received usual and customary compensation. In addition, DLJ and its
affiliates may in the future provide investment banking services to Synetic.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
SYNETIC. In considering the recommendations of the Synetic board of
directors regarding approval of the proposal to issue shares of Synetic Common
Stock in connection with the merger, the proposals to amend and restate the
Synetic Certificate of Incorporation and the proposal to grant options to
purchase 650,000 shares of Synetic Common Stock to each of Messrs. Singer and
Kang, Synetic stockholders should be aware of interests that some of the
officers and directors of Synetic, and some of the persons designated by Synetic
to become directors of Synetic, have in the merger that may be different from
your and their interests as stockholders generally. The Synetic board of
directors has recognized such interests and has determined that such interests
neither supported nor detracted from the fairness of the merger to Synetic's
stockholders.
CONTINUING BOARD OF DIRECTORS POSITIONS. The eleven members of the Synetic
board of directors are expected to remain as members of the board of directors
of Synetic as of the effective time of the merger. See "Operation, Governance
and Management of Synetic Following the Merger -- Board of Directors of
Synetic".
MEDICAL MANAGER. In considering the recommendations of the Medical Manager
board of directors regarding approval of the proposal to approve and adopt the
merger agreement, Medical Manager stockholders should be aware of interests that
some of the officers and directors of Medical Manager, and some of the persons
designated by Medical Manager to become directors of Synetic, have in the merger
that may be different from
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your and their interests as stockholders generally. The Medical Manager board of
directors has recognized such interests and has determined that such interests
neither supported nor detracted from the fairness of the merger to Medical
Manager's stockholders.
CONTINUING BOARD OF DIRECTORS POSITIONS. Five members of the Medical
Manager board of directors are expected to become members of the Synetic board
of directors as of the effective time of the merger.
INDEMNIFICATION OF DIRECTORS. Pursuant to the merger agreement, Synetic has
agreed to maintain the indemnification provisions for directors and officers
contained in Medical Manager's Certificate of Incorporation and By-laws and has
agreed to also maintain directors' and officers' liability insurance for such
individuals under certain circumstances. For further details regarding these
arrangements, see "The Merger Agreement -- Indemnification".
STOCK OPTIONS. As of the record date, approximately 524,000 shares of
Medical Manager Common Stock were subject to options granted to executive
officers and directors under Medical Manager's equity based compensation plans.
All such stock options are subject to accelerated vesting upon a change of
control of Medical Manager and will therefore become immediately exercisable at
the effective time of the merger. All outstanding options to purchase Medical
Manager Common Stock under such plans will be assumed by Synetic and will become
options to purchase Synetic Common Stock, with appropriate adjustments to be
made to the number of shares and the exercise price under such options based on
the exchange ratio.
EMPLOYMENT AGREEMENTS. On May 16, 1999, Synetic entered into an employment
agreement with Michael A. Singer effective upon the consummation of the merger.
The term of the agreement is five years subject to automatic monthly renewal.
The employment agreement provides for Mr. Singer's appointment as the sole Vice
Chairman and the Co-Chief Executive Officer of Synetic and as the most senior
executive officer of Medical Manager Research and Development Inc., a Florida
corporation and a wholly owned subsidiary of Medical Manager. The employment
agreement also provides that during the term of his employment, Synetic will use
its best efforts to include Mr. Singer in management's nominees for election,
and recommend his election, as a member of the Synetic board of directors. The
employment agreement provides for an annual base salary of $250,000, subject to
increase in the discretion of the Synetic board of directors.
Mr. Singer's employment agreement may be terminated at any time by Synetic
for "cause". Upon such termination Mr. Singer will receive only base salary that
was earned but unpaid as of the date of termination. "Cause" is defined to
include a willful failure by Mr. Singer to perform his duties under his
employment agreement, a material breach by Mr. Singer of the employment
agreement, Mr. Singer's willful misconduct relating, directly or indirectly, to
Synetic, or his commission of a common law fraud against Synetic or conviction
of a felony. With respect to failure to perform duties or a material breach that
is curable, Mr. Singer must be provided with written notice and an opportunity
to cure the alleged failure or breach.
If Mr. Singer's employment is terminated due to death or "disability" (as
defined in the employment agreement) he will be entitled to the following
severance benefits:
- continuation of his base salary (at the rate in effect at the time of
such termination) for the remainder of the original term under the
employment agreement (or later if the employment agreement has been
extended);
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- continued participation in Synetic's health and welfare benefit plans for
the remainder of the original term under the employment agreement (or
later if the employment agreement has been extended) or until he is
offered comparable coverage with a subsequent employer; and
- accelerated vesting of outstanding stock options granted under the
employment agreement which are not yet vested on the date of termination.
If Mr. Singer's employment is terminated by Synetic without "cause", he
will be entitled to the following severance benefits:
- continuation of his base salary (at the rate in effect at the time of
such termination) for a period commencing on the date of termination and
ending on the later of (i) the second anniversary of the date of
termination and (ii) the fifth anniversary of the effective date of the
employment agreement (or later if the employment agreement has been
extended);
- continued participation in Synetic's health and welfare benefit plans for
a period commencing on the date of termination and ending on the later of
(i) the second anniversary of the date of termination and (ii) the fifth
anniversary of the effective date of the employment agreement (or later
if the employment agreement has been extended), or until he is offered
comparable coverage with a subsequent employer; and
- accelerated vesting of outstanding stock options granted under the
employment agreement which are not yet vested on the date of termination.
In the event that Mr. Singer resigns for "good reason" (as such term is
defined in the employment agreement, generally consisting of a material breach
by Synetic of the employment agreement; a diminution of Mr. Singer's
responsibilities or title; a reduction in Mr. Singer's base salary; a relocation
of Mr. Singer's workplace; a notice of non-renewal of the employment agreement;
a "change in control" that is not approved by a majority of the incumbent
Synetic board of directors; or after Mr. Singer has remained employed by Synetic
for six months following a "change in control" that is approved by a majority of
the incumbent Synetic board of directors), he will receive the same severance
benefits as if his employment had been terminated by Synetic without "cause".
"Change in control" is defined to include the following events:
- when any person becomes the beneficial owner of Synetic's securities
representing more than 50% of the combined voting power of its then
outstanding securities;
- when, during any period of 24 consecutive months during the term of the
employment agreement, the individuals who, at the beginning of such
period, constitute the board of directors of Synetic, cease for any
reason other than death to constitute at least a majority of such board;
- when there is a merger or consolidation of Synetic with any other
corporation, other than a merger or consolidation (i) which would result
in the voting securities of Synetic outstanding immediately prior to such
merger or consolidation continuing to represent 50% or more of the
combined voting power of the securities of Synetic or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, (ii) effected to implement a recapitalization of Synetic
(or similar transaction) in which no person becomes the beneficial owner
of securities of Synetic representing more than 50% of the combined
voting power of the then outstanding securities or (iii) where at least a
majority of the members of the board
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of directors of the corporation resulting from such merger or consolidation were
incumbent members of the Synetic board of directors; or
- when there is a sale or disposition of all or substantially all of
Synetic's assets, or Synetic adopts a plan of complete liquidation.
The employment agreement contains confidentiality obligations that survive
indefinitely and non-solicitation and non-competition obligations that end on
the later of the first anniversary of the date employment has ceased and the
fifth anniversary of the effective time of the merger. The employment agreement
also contains provisions giving Synetic exclusive ownership of any inventions,
discoveries, improvements and the like which were developed or conceived by Mr.
Singer as a result of his employment with Synetic.
On May 16, 1999, Synetic entered into an employment agreement with John H.
Kang effective upon the consummation of the merger. The employment agreement
with Mr. Kang is substantially similar to that for Mr. Singer except that the
employment agreement with Mr. Kang provides:
- for Mr. Kang's appointment as the Co-Chief Executive Officer of Synetic;
- that during the term of the employment Mr. Kang will be eligible to
participate in an annual incentive bonus plan to be established by
Synetic for selected senior executives; and
- that in the event of termination of Mr. Kang's employment by Synetic
other than for "cause", or if Mr. Kang resigns for "good reason" in
addition to the benefits described above under Mr. Singer's employment
agreement, he will be entitled to a bonus equal to the maximum bonus that
would have been payable for the fiscal year in which his employment
terminates.
STOCK OPTION GRANTS. Each of Mr. Singer's and Mr. Kang's employment
agreement also provides that, at the effective time of the merger, each of Mr.
Singer and Mr. Kang will be granted an option to purchase 650,000 shares of
Synetic Common Stock at an exercise price equal to the fair market value at the
effective time of the merger. Subject to certain events, the options will vest
in five equal installments, commencing on the first anniversary of the date of
grant. The options will not be exercisable following the tenth anniversary of
the date of grant and are subject to earlier termination under circumstances the
described above. The employment agreements provide that Messrs. Singer's and
Kang's outstanding and unvested options will immediately become fully vested and
exercisable upon any of the following:
- the six-month anniversary of a change in control that is approved by a
majority of the incumbent members of the Synetic board of directors if
Mr. Singer or Mr. Kang, as the case may be, is still employed by Synetic,
or if prior to the six-month anniversary of a change in control, the date
when his employment is terminated by Synetic without cause or Mr. Singer
or Mr. Kang, as the case may be, resigns for good reason;
- a change in control that is not approved by a majority of the incumbent
members of the Synetic board of directors that occurs during the term of
the employment agreement; or
- prior to the occurrence of a change in control, a material reduction in
Mr. Singer's or Mr. Kang's, as the case may be, title or responsibilities
or a relocation of his
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workplace which remains in effect for 30 days following his written
notice of such event to Synetic.
The stock options will be awarded pursuant to a separate stock option agreement.
The proposed stock option grants to Messrs. Singer and Kang are subject to the
approval of the stock option committee of the board of directors of Synetic. It
is anticipated that the stock option committee of the board of directors of
Synetic will unanimously approve the grant of these stock options.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE STOCK OPTIONS
The stock options will be nonqualified stock options under the Code. The
grant of a nonqualified stock option will not result in the recognition of
taxable income by the executives or in a deduction to Synetic. Upon exercise,
the executive will recognize ordinary income in an amount equal to the excess of
the fair market value of the Synetic Common Stock on the date of exercise over
the exercise price. Synetic is required to withhold tax on the amount of income
so recognized, and a tax deduction is, subject to the provisions of Section
162(m) of the Code, allowable equal to the amount of such income. Gain or loss
upon a subsequent sale of any Synetic Common Stock received upon the exercise of
a nonqualified stock option generally would be taxed as capital gain or loss
(long-term or short-term, depending upon the holding period of the stock sold).
Certain additional rules apply if the exercise price for an option is paid in
shares previously owned by the executive.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of the material anticipated U.S. federal income
tax consequences of the merger to holders of Medical Manager Common Stock who
hold such stock as a capital asset. The term "capital asset" is defined in
Section 1221 of the Internal Revenue Code of 1986. This summary and the opinions
referred to below are based on the Code, Treasury regulations, administrative
rulings and court decisions, all as in effect as of the date hereof and all of
which are subject to change at any time (possibly with retroactive effect). This
summary is not a complete description of all the consequences of the merger and,
in particular, may not address U.S. federal income tax considerations applicable
to stockholders subject to special treatment under U.S. federal income tax law
(including, for example, stockholders who are financial institutions, dealers in
securities, insurance companies, tax-exempt entities, holders who acquired
Medical Manager Common Stock pursuant to the exercise of an employee stock
option or right or otherwise as compensation, holders who hold Medical Manager
Common Stock as part of a hedge, straddle or conversion transaction and
stockholders who are not U.S. persons). For these purposes, a U.S. person is (1)
a citizen of the United States for U.S. federal income tax purposes, (2) a
corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (3) an estate, the income of
which is subject to U.S. federal income tax regardless of the source or (4) a
trust with respect to which a court within the United States is able to exercise
primary supervision over its administration and one or more U.S. persons have
the authority to control all it substantial decisions. In addition, no
information is provided herein with respect to the tax consequences of the
merger under applicable foreign, state or local laws. HOLDERS OF MEDICAL MANAGER
COMMON STOCK ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL INCOME AND OTHER TAX CONSEQUENCES OF THE MERGER TO THEM BASED UPON
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THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING THE EFFECTS
OF STATE, LOCAL AND FOREIGN TAX LAWS.
The obligations of the parties to consummate the merger are conditioned
upon the receipt by Synetic of an opinion from Shearman & Sterling, and the
receipt by Medical Manager of an opinion from Akerman, Senterfitt & Eidson,
P.A., in each case conditioned upon and in reliance upon receipt of
representations contained in certificates of officers of Synetic and Medical
Manager and subject to the qualifications discussed below, to the effect that
the merger will be treated for federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, and Synetic,
Merger Sub and Medical Manager will each be a party to such reorganization
within the meaning of Section 368(b) of the Code. As a reorganization, the
merger will have the following principal U.S. federal income tax consequences:
- no gain or loss will be recognized by Synetic, Merger Sub, Synetic's
direct wholly owned subsidiary participating in the merger, or Medical
Manager as a result of the merger;
- no gain or loss will be recognized by the holders of Medical Manager
Common Stock who exchange their Medical Manager Common Stock for Synetic
Common Stock pursuant to the merger, except with respect to any cash
received in lieu of a fractional share of Synetic Common Stock;
- the aggregate tax basis of the Synetic Common Stock received in the
merger by each holder of Medical Manager Common Stock will be the same as
the aggregate tax basis of the Medical Manager Common Stock surrendered
in exchange therefor, reduced by any amount of tax basis allocable to a
fractional share interest in Synetic Common Stock for which cash is
received; and
- the holding period of Synetic Common Stock received in the merger,
including any fractional share interest, will include the holding period
for the Medical Manager Common Stock surrendered in exchange therefor.
Cash received by a holder of Medical Manager Common Stock in lieu of a
fractional share of Synetic Common Stock will be treated as received in
disposition of such fractional share. A Medical Manager stockholder will
generally recognize capital gain or loss measured by the difference between the
amount of cash received and the portion of the tax basis of his Medical Manager
Common Stock allocable to the fractional share interest. In the case of
individuals, the maximum federal income tax rate applicable to capital gains is
generally as follows:
- the same as ordinary income rates for capital assets held for one year or
less; and
- 20% for capital assets held for more than one year.
Shearman & Sterling and Akerman, Senterfitt & Eidson, P.A. have rendered
their tax opinions as to the tax-free treatment of the merger on the basis of
facts, representations and assumptions set forth or referred to in the opinions
that are intended to be consistent with the state of facts existing at the time
the merger is consummated. Stockholders should be aware that an opinion of
counsel is not binding on the Internal Revenue Service or the courts.
Stockholders should also be aware that the opinions of Shearman & Sterling and
Akerman, Senterfitt & Eidson, P.A. will be based on current law and on various
representations regarding factual matters and various covenants as to future
actions made by Synetic and Medical Manager. If these representations are
incorrect in one or more
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material respects or the covenants are not complied with, the conclusions
reached by counsel in its opinion might be jeopardized.
Under the U.S. backup withholding rules, a holder of Medical Manager Common
Stock may be subject to backup withholding at the rate of 31%, unless the
stockholder (1) is a corporation or comes within various other exempt categories
and, when required, demonstrates this fact or (2) provides a correct taxpayer
identification number, certifies that such stockholder is not subject to backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules will be credited
against the stockholder's federal income tax liability. Synetic may require
holders of Medical Manager Common Stock to establish an exemption from backup
withholding or to make arrangements that are satisfactory to Synetic to provide
for the payment of backup withholding. A stockholder that does not provide
Synetic with its current taxpayer identification number may be subject to
penalties imposed by the IRS.
ACCOUNTING TREATMENT
The merger is intended to qualify as a pooling of interests for accounting
and financial reporting purposes. Synetic has received a letter from Arthur
Andersen LLP, dated as of May 16, 1999, stating that Arthur Andersen believes
that the transactions contemplated by the merger agreement should be treated as
a pooling of interests in conformity with U.S. generally accepted accounting
principles and the rules and regulations of the Commission. Medical Manager has
received a letter from PricewaterhouseCoopers LLP, dated as of May 16, 1999,
stating their concurrence with Medical Manager's management's conclusion that as
of that date no conditions exist with respect to Medical Manager that would
preclude Medical Manager from being a party to a merger accounted for as a
pooling of interests. It is a condition to closing the merger that each of
Synetic and Medical Manager receive a similar letter at the closing from Arthur
Andersen and PricewaterhouseCoopers, respectively. In addition, under the merger
agreement, Synetic and Medical Manager agreed that they will not, and will not
permit any of their affiliates, to take any action that would prevent the merger
from qualifying as a pooling of interests. Under this method of accounting, the
recorded assets and liabilities of Synetic and Medical Manager will be carried
forward to Synetic at their recorded amounts, the operating results of Synetic
will include the operating results of Synetic and Medical Manager for the entire
fiscal year in which the merger occurs and the reported operating results of the
separate companies for prior periods will be combined and restated as the
operating results of Synetic.
REGULATORY APPROVALS
HART-SCOTT-RODINO. The Federal Trade Commission and the Antitrust Division
of the Department of Justice frequently scrutinize the legality under the
antitrust laws of transactions such as the merger. At any time before or after
the merger, the DOJ or the FTC could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, including seeking to
enjoin the merger or seeking divestiture of substantial assets of Synetic or
Medical Manager or their subsidiaries. Private parties and state attorneys
general may also bring an action under the antitrust laws under particular
circumstances. There can be no assurance that a challenge to the merger on
antitrust grounds will not be made or, if such a challenge is made, of the
result.
The HSR Act, and the rules and regulations of the FTC, provide that some
merger transactions, including the merger, may not be consummated until required
information
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and materials have been furnished to the DOJ and the FTC and the applicable
waiting periods have expired or been terminated. On June 11, 1999, Synetic and
Medical Manager filed Pre-Merger Notification and Report Forms with the FTC and
the DOJ under the HSR Act. Unless extended by a request for additional
information, the applicable waiting period under the HSR Act will terminate on
July 11, 1999.
FEDERAL SECURITIES LAWS CONSEQUENCES
All shares of Synetic Common Stock received by Medical Manager stockholders
in the merger will be freely transferable, except that shares of Synetic Common
Stock received by persons who are deemed to be affiliates of Medical Manager
prior to the merger may be resold by them only in transactions permitted by the
resale provisions of Rule 145 promulgated under the Securities Act, or Rule 144
promulgated under the Securities Act in the case of such persons who become
affiliates of Synetic, or otherwise in compliance with, or pursuant to an
exemption from, the registration requirements of the Securities Act. Persons
deemed to be affiliates of Medical Manager or Synetic are those individuals or
entities that control, are controlled by, or are under common control with, such
party and generally include executive officers and directors of such party as
well as principal stockholders of such party. The merger agreement requires
Medical Manager to use its reasonable best efforts to cause each of its
affiliates to execute a written agreement to the effect that such person will
not offer or sell or otherwise dispose of any of the shares of Synetic Common
Stock issued to such person in or pursuant to the merger except in compliance
with the Securities Act and the rules and regulations promulgated by the
Commission thereunder. This Joint Proxy Statement/Prospectus does not cover any
resales of Synetic Common Stock received by affiliates of Medical Manager in the
merger. However, Messrs. Singer, Kang and Mehrlich have been granted
registration rights with regard to Synetic Common Stock to be issued to them in
connection with the merger. See "Registration Right Agreement".
NASDAQ NATIONAL MARKET SYSTEM QUOTATION
It is a condition to the merger that the shares of Synetic Common Stock to
be issued pursuant to the merger agreement be approved for listing on the Nasdaq
National Market System, subject to official notice of issuance. An application
will be filed for listing the shares of Synetic Common Stock to be issued in the
merger on the Nasdaq National Market System.
APPRAISAL RIGHTS
In accordance with the Delaware General Corporation Law, there will be no
appraisal rights available to holders of Medical Manager Common Stock in
connection with the merger.
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THE MERGER AGREEMENT
The following is a summary of the material provisions of the merger
agreement that are not summarized elsewhere in this Joint Proxy
Statement/Prospectus. Such summary is qualified in its entirety by reference to
the merger agreement, a copy of which is attached as Annex A to this Joint Proxy
Statement/Prospectus. Stockholders of Synetic and Medical Manager are urged to
read the merger agreement in its entirety for a more complete description of the
terms and conditions of the merger.
STRUCTURE OF THE MERGER
At the effective time of the merger, Marlin Merger Sub, Inc., a wholly
owned subsidiary of Synetic, will be merged with and into Medical Manager, with
Medical Manager as the surviving corporation and as a wholly owned subsidiary of
Synetic immediately after the merger. At the effective time of the merger,
Synetic will change its name to "Medical Manager Corporation", and Medical
Manager will change its name to "Medical Manager Systems, Inc".
CONVERSION OF SECURITIES
At the effective time of the merger, each issued and outstanding share of
Medical Manager Common Stock, other than shares owned by Medical Manager as
treasury stock and other than shares owned by Synetic or any wholly owned
subsidiary of Synetic or Medical Manager, all of which will be canceled, will be
converted into the right to receive .625 shares, which is referred to as the
"exchange ratio", of Synetic Common Stock below. The exchange ratio is subject
to adjustment as described below. Assuming an exchange ratio of .625 shares of
Synetic Common Stock for each share of Medical Manager Common Stock, and
assuming all Medical Manager stock options are exercised as a result of the
merger, based upon the number of outstanding shares of Synetic Common Stock and
Medical Manager Common Stock as of June 21, 1999, the stockholders of Medical
Manager immediately following the consummation of the merger will own
approximately 42.3% of the outstanding shares of Synetic Common Stock and the
stockholders of Synetic will own approximately 57.7% of the outstanding shares
of Synetic Common Stock immediately following consummation of the merger.
If the average closing price per share of Synetic Common Stock during the
period from and including July 7, 1999 to and including July 20, 1999 is less
than $67.20 but at least $56.00, the exchange ratio will be adjusted upward so
that the value of the Synetic Common Stock to be received for each share of
Medical Manager Common Stock based on such adjusted exchange ratio is equal to
$42.00 based on the average closing price of Synetic Common Stock during such
period. If the average closing price per share of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
less than $56.00, the exchange ratio will be .750 shares of Synetic Common Stock
for each share of Medical Manager Common Stock, unless the board of directors of
Medical Manager exercises its right to terminate the merger. Synetic and Medical
Manager will issue a joint press release announcing the exchange ratio prior to
the opening of trading on July 21, 1999.
No fractional shares of Synetic Common Stock will be issued to any Medical
Manager stockholder upon surrender of certificates previously representing
Medical Manager Common Stock. No dividend or distribution with respect to
Synetic Common Stock will be payable with respect to any fractional share and
such fractional share interests will not entitle their owners to any rights of a
stockholder of Synetic. Promptly after the effective time of the merger, a bank
or trust company to be designated by Synetic
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as the exchange agent will make available to each former holder of Medical
Manager Common Stock the amount, if any, determined by multiplying the
fractional share interest to which such holder would otherwise be entitled by
the closing price for a share of Synetic Common Stock on the Nasdaq National
Market System on the first business day immediately following the effective
time.
Promptly after the effective time of the merger, Synetic will cause the
Exchange Agent to mail letters of transmittal and exchange instructions to each
holder of record of Medical Manager Common Stock to be used to surrender and
exchange certificates formerly evidencing shares of Medical Manager Common Stock
for certificates evidencing the shares of Synetic Common Stock to which such
holder has become entitled. Upon surrender to the Exchange Agent of certificates
formerly representing Medical Manager Common Stock together with a completed
letter of transmittal, each holder of a certificate will receive in exchange
therefor certificates evidencing the number of whole shares of Synetic Common
Stock to which that holder is entitled, any cash that may be payable in lieu of
a fractional share of Synetic Common Stock and any dividends or other
distributions with respect to Synetic Common Stock with a record date after the
effective time declared or made after the effective time. MEDICAL MANAGER
STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE A
TRANSMITTAL FORM. SYNETIC STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES.
After the effective time of the merger, each certificate formerly
representing Medical Manager Common Stock, until so surrendered and exchanged,
shall be deemed, for all purposes, to evidence only the right to receive the
number of whole shares of Synetic Common Stock that the holder of such
certificate is entitled to receive in the merger, any cash payment in lieu of a
fractional share of Synetic Common Stock and any dividend or other distribution
with respect to Synetic Common Stock as described above. The holder of such
unexchanged certificate will not be entitled to receive any dividends or other
distributions payable by Synetic until the certificate has been exchanged.
Subject to applicable laws, following surrender of such certificates, such
dividends and distributions, together with any cash payment in lieu of a
fractional share of Synetic Common Stock, will be paid without interest.
Each share of common stock of Merger Sub issued and outstanding immediately
prior to the effective time of the merger will be converted into one share of
common stock of the surviving corporation in the merger.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various customary representations and
warranties of (1) Medical Manager and (2) Synetic and Merger Sub. These
representations relate to, among other things:
- organization and qualification;
- certificate of incorporation and by-laws;
- capitalization;
- corporate authority to enter into the merger and enforceability of the
merger agreement;
- conflicts under corporate governance documents, required consents or
approvals and violations of any instruments or law caused by the merger;
- possession of governmental permits and compliance with laws;
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- required reports and financial statements and disclosure of liabilities;
- the absence of certain changes, events or litigation;
- employee benefit plans and labor matters;
- contracts and commitments;
- independent dealers (with respect to Medical Manager only);
- accounting and tax matters and past tax compliance;
- intellectual property matters;
- Year 2000 compliance;
- opinion of financial advisors;
- vote required by the stockholders;
- affiliates and Section 203 of the General Corporation Law of State of
Delaware;
- insurance matters; and
- environmental matters.
CERTAIN COVENANTS
Each of Synetic and Medical Manager has agreed that, during the period from
the date of the merger agreement until the effective time of the merger, except
as otherwise consented to in writing by the other party or as contemplated by
the merger agreement, it and each of its respective subsidiaries will carry on
its business in the usual, regular and ordinary course in all material respects
consistent with past practice and use all reasonable best efforts to preserve
current business relationships with employees, customers and suppliers.
The merger agreement contains other covenants with respect to Medical
Manager and Synetic and their respective subsidiaries, that, during the period
from the date of the merger agreement until the effective time of the merger,
limit certain actions, including the declaration and payment of dividends, the
issuance of securities, the amendment of corporate governance documents, the
acquisition of assets, the disposition of assets, increases in the salaries of
certain officers and employees (with respect to Medical Manager), the incurrence
of indebtedness, changes in accounting methods, tax elections and certain
capital expenditures.
NO SOLICITATION
The merger agreement provides that Synetic and Medical Manager will not,
directly or indirectly, through any of their respective officers, directors,
agents and other representatives, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance) any
inquiries or the making of any proposal, that constitutes or may reasonably lead
to any merger, consolidation, share exchange, business combination or other
similar transaction, or any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of more than 15% of the assets of Synetic or Medical Manager
and their respective subsidiaries, or any tender offer or exchange offer for
more than 15% or more of the stock of Synetic or Medical Manager, or any person
that is a group as defined in Section 13(d) of the Exchange Act becoming the
beneficial owner of 15% or more of the other party, or make any public
announcement of the intention or agreement
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to engage in any of the above with a third party, any such proposal or offer
being referred to as a "competing transaction proposal". In addition, Synetic
and Medical Manager have agreed to keep each other informed, on a current basis,
of the status of any such proposals or offers and the status of any such
discussions or negotiations.
The merger agreement would not prevent Synetic or the Synetic board of
directors or Medical Manager or the Medical Manager board of directors from
complying with Rule 14e-2 promulgated under the Exchange Act. In addition, if
the Synetic board of directors or the Medical Manager board of directors
concludes in good faith (after consultation with independent legal counsel) that
a third-party competing transaction proposal would, if consummated, result in a
transaction more favorable to its stockholders than the merger and that such
action could reasonably be deemed to be necessary for it to act in a manner
consistent with its fiduciary duties under applicable law, Synetic or Medical
Manager, as the case may be, would be permitted to engage in discussions or
negotiations with, or provide any information to, any person or entity in
response to an unsolicited third-party competing transaction proposal to the
holders of Synetic Common Stock or Medical Manager Common Stock, as the case may
be. Prior to providing such information to any third party or entering into
discussions or negotiations with any third party, the third party must enter
into a confidentiality/standstill agreement, and Synetic or Medical Manager must
provide reasonable notice to the other in reasonable detail of the terms and
conditions of such competing transaction proposal. If either Synetic or Medical
Manager terminates the merger agreement because of a third-party competing
transaction proposal, it must pay the fees and expenses more fully described
below under "-- Termination Expenses and Alternative Transaction Fees".
STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS
STOCK OPTIONS. All options outstanding, at the effective time of the
merger, under Medical Manager's stock option plans which include: the 1996
Amended and Restated Long-Term Incentive Plan and the 1996 Non-Employee
Directors' Stock Plan will be assumed by Synetic and will be exercisable upon
the same terms and conditions as under the applicable Medical Manager stock
option plan, except that:
- each such substitute option will be exercisable for, and represent the
right to acquire, that whole number of shares of Synetic Common Stock,
rounded to the nearest whole share, equal to the number of shares of
Medical Manager Common Stock subject to such Medical Manager stock option
multiplied by the exchange ratio; and
- the option price per share of Synetic Common Stock shall be an amount
equal to the option price per share of Medical Manager Common Stock
subject to such Medical Manager stock option in effect immediately prior
to the effective time of the merger divided by the exchange ratio,
rounded downward to the nearest full cent.
All options under the above plans will immediately vest and become
exercisable at the effective time of merger.
Synetic has agreed to deliver to each holder of an outstanding Medical
Manager stock option document setting forth that holder's rights pursuant
thereto and such Medical Manager stock option will continue in effect on the
same terms and conditions.
Under the terms of the merger agreement, as soon as practicable after the
effective time of the merger, the shares of Synetic Common Stock subject to
Medical Manager
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stock options will be covered by an effective registration statement on Form S-8
or another appropriate form for so long as such options remain outstanding.
EMPLOYEE BENEFIT PLANS. Synetic has agreed that, for a period of two years
immediately following the effective time of the merger, it will maintain
employee benefit plans, programs and arrangements for the benefit of active and
retired employees of Medical Manager and its subsidiaries that in the aggregate
will provide compensation and benefits that are substantially comparable to the
compensation and benefits provided to such active and retired employees under
the employee benefit plans, programs and arrangements of Medical Manager and its
subsidiaries as in effect immediately prior to the effective time of the merger,
except that changes may be made to such employee benefit plans and arrangements
to the extent necessary or desirable in light of applicable law. Under the
merger agreement, following the effective time of the merger, Synetic will
honor, and cause Medical Manager and its subsidiaries to honor, in accordance
with their terms, the existing employment and severance agreements and severance
and bonus plans which are applicable to any current or former employees or
directors of Medical Manager or any of its subsidiaries.
Employees of Medical Manager and its subsidiaries will receive credit for
purposes of eligibility to participate, vesting and eligibility to receive
benefits under any employee benefit plan, program or arrangement established by
Synetic, Medical Manager or any of their respective subsidiaries for service
accrued prior to the effective time with Medical Manager or any of its
subsidiaries, except that such crediting of service will not operate to
duplicate any benefit or the funding of any such benefit.
Effective as of the effective time of the merger, Synetic has agreed to
establish a discretionary stock option pool consisting of options to purchase
1,800,000 shares of Synetic Common Stock under Synetic's employee stock option
plans to be used for purposes of retaining and incentivizing those key employees
of Medical Manager who are employed by Medical Manager as of the effective time
of the merger. These options will be awarded to participating key employees
based on the joint recommendation of the Co-Chief Executive Officers of Synetic
following the merger, except that no more than 50,000 such options will be
allocated to any one key employee without the consent of the Synetic board of
directors.
CONDITIONS TO THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE MERGER. The
respective obligations of Synetic, Medical Manager and Merger Sub to effect the
merger are subject to the satisfaction or waiver of the following conditions on
or prior to the closing date of the merger:
- MEDICAL MANAGER STOCKHOLDER APPROVAL. The merger agreement having been
duly approved and adopted by the stockholders of Medical Manager;
- SYNETIC STOCKHOLDER APPROVAL. The proposal to issue shares of Synetic
Common Stock having been duly approved by the stockholders of Synetic;
- HSR ACT. The waiting period (and any extension thereof) applicable to the
merger under the HSR Act and other similar laws having expired or been
terminated;
- NO PROCEEDINGS. No governmental order, writ, injunction or decree being
in effect that would make the merger illegal or otherwise prohibit the
consummation of the merger;
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- EFFECTIVE REGISTRATION STATEMENT. The Synetic Registration Statement on
Form S-4 having become effective and not being the subject of a stop
order or proceedings seeking a stop order;
- ACCOUNTANTS' LETTERS. Arthur Andersen LLP, as the independent public
accountants of Synetic, having issued a letter as of the date the Synetic
Registration Statement on Form S-4 becomes effective and as of the
effective time of the merger to the effect that accounting for the merger
as a pooling of interests under applicable accounting standards is
appropriate, and PricewaterhouseCoopers LLP, as the independent public
accountants of Medical Manager, having issued a letter as of the date the
Synetic Registration Statement on Form S-4 becomes effective and as of
the effective time of the merger to the effect that they concur with the
conclusions of Medical Manager's management that no conditions exist with
respect to Medical Manager that would preclude Medical Manager from being
a party to a merger accounted for as a pooling of interests; and
- NASDAQ NATIONAL MARKET SYSTEM LISTING. The shares of Synetic Common Stock
to be issued in the merger having been authorized for listing on the
Nasdaq National Market System.
ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SYNETIC AND MERGER SUB. The
obligations of Synetic and Merger Sub to effect the merger are subject to the
satisfaction or waiver of the following additional conditions:
- REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of Medical Manager set forth in the merger agreement being
true and correct when made and on and as of the effective time of the
merger as if made on and as of such time, except where the failure to be
so true and correct would not have, individually or in the aggregate, a
material adverse effect on Medical Manager, and Synetic having received a
certificate signed by an officer of Medical Manager to such effect;
- COMPLIANCE WITH OBLIGATIONS. Medical Manager having performed in all
material respects all of the obligations required to be performed by it
at or prior to the effective time of the merger, and Synetic having
received a certificate signed by an officer of Medical Manager to such
effect;
- RECEIPT OF TAX OPINION. Synetic having received the opinion of Shearman &
Sterling to the effect that the merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the Code, and that Synetic, Merger Sub and Medical
Manager are each a party to the reorganization within the meaning of
Section 368(b) of the Code;
- RECEIPT OF POOLING AFFILIATE LETTERS. Synetic having received from any
person who is an affiliate of Medical Manager on May 16, 1999, or at any
time after that date until the date the merger becomes effective will be
an affiliate of Medical Manager, an agreement restricting the sale of
their shares of Medical Manager Common Stock and Synetic Common Stock
received in the merger;
- EMPLOYMENT AGREEMENTS. The employment agreements with each of Michael A.
Singer and John H. Kang becoming effective at the effective time of the
merger; and
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- MEDICAL MANAGER MATERIAL ADVERSE EFFECT. There not having occurred any
events or circumstances since May 16, 1999 that would have a material
adverse effect on Medical Manager.
ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF MEDICAL MANAGER. The
obligations of Medical Manager to effect the merger are subject to the
satisfaction or waiver of the following additional conditions:
- REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of Synetic and Merger Sub set forth in the merger agreement
being true and correct when made and on and as of the effective time of
the merger as if made on and as of such time, except where the failure to
be so true and correct would not have, individually or in the aggregate,
a material adverse effect on Synetic, and Medical Manager having received
a certificate signed by an officer of Synetic and Merger Sub to such
effect;
- COMPLIANCE WITH OBLIGATIONS. Synetic having performed in all material
respects all of the obligations required to be performed by it at or
prior to the effective time of the merger, and Medical Manager having
received a certificate signed by an officer of Synetic and Merger Sub to
such effect;
- RECEIPT OF TAX OPINION. Medical Manager having received the opinion of
Akerman, Senterfitt & Eidson, P.A. to the effect that the merger will be
treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code, and that Synetic,
Merger Sub and Medical Manager are each a party to the reorganization
within the meaning of Section 368(b) of the Code;
- RECEIPT OF POOLING AFFILIATE LETTERS. Medical Manager having received
from any person who is an affiliate of Synetic on May 16, 1999, or at any
time after that date until the date merger become effective will be an
affiliate of Synetic, an agreement restricting the sale of their shares
of Synetic Common Stock;
- SYNETIC MATERIAL ADVERSE EFFECT. There not having occurred any events or
circumstances since May 16, 1999 that would have a material adverse
effect on Synetic; and
- EMPLOYMENT AGREEMENTS. The employment agreements between Synetic and each
of Michael A. Singer and John H. Kang not having been terminated by
Synetic.
TERMINATION OF THE MERGER AGREEMENT
Prior to the effective time of the merger, the merger agreement may be
terminated:
- by mutual consent of each of Medical Manager and Synetic;
- by either Medical Manager or Synetic if the merger has not been
consummated by November 30, 1999;
- by either Medical Manager or Synetic, if
- the board of directors of the other party withdraws, modifies or
changes its recommendation of the merger agreement or the merger in
a manner adverse to the terminating party;
- the board of directors of the non-terminating party recommends a
competing transaction proposal;
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- a tender offer for 15% or more of the other party is commenced and
the board of directors of that party fails to recommend against
acceptance of that transaction;
- any person that is a group as defined in Section 13(d) of the
Exchange Act becomes the beneficial owner of 25% or more of the
other party.
- by Synetic, if the merger agreement and the transactions contemplated
thereby fail to receive the requisite vote for approval and adoption at
the Medical Manager stockholders' meeting;
- by Medical Manager, if the proposal to issue up to 18,202,213 shares of
Synetic Common Stock in exchange for shares of Medical Manager Common
Stock pursuant to the merger agreement fails to receive the requisite
vote for approval and adoption at the Synetic stockholder's meeting;
- by either Medical Manager or Synetic upon a breach by the other party of
any representation, warranty, covenant or agreement set forth in the
merger agreement, or if any representation or warranty of the other party
becomes untrue, in either case such that the conditions to closing the
merger would not be satisfied, except that the merger agreement may not
be terminated if the breach is curable by the breaching party through
using its best efforts so long as the breaching party is using its best
efforts to cure the breach;
- by Medical Manager if the average closing price per share of Synetic
Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $56.00, so long as notice is
provided by Medical Manager to Synetic not later than 6:00 PM on the
trading day prior to July 21, 1999; or
- by either Medical Manager or Synetic if there is a final court or
governmental order preventing the consummation of the merger.
TERMINATION EXPENSES AND ALTERNATIVE TRANSACTION FEES
The merger agreement provides for the payment of the agreed-upon amounts of
fees and expenses in the circumstances described below.
TERMINATION EXPENSES. The following fees and expenses are payable in
connection with the termination of the merger agreement in specific
circumstances:
- Synetic will pay expenses of up to a maximum of $5,000,000 to Medical
Manager if the merger agreement is terminated because:
- Synetic's board of directors withdraws, modifies or changes its
recommendation of the merger agreement or the merger in a manner
adverse to Medical Manager;
- the Synetic board of directors recommends a third-party competing
transaction proposal;
- a tender offer for 15% or more of Synetic is commenced and the
Synetic board of directors fails to recommend against acceptance of
that transaction;
- any person that is a group as defined in Section 13(d) of the
Exchange Act becomes the beneficial owner of 25% or more of Synetic,
and no competing transaction proposal exists with respect to
Synetic; or
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- the issuance of Synetic Common Stock is not approved by Synetic's
stockholders at the Synetic Special Meeting, and no competing
transaction proposal exists with respect to Synetic.
- Medical Manager will pay expenses of up to a maximum of $5,000,000 to
Synetic if the merger agreement is terminated because:
- Medical Manager's board of directors withdraws, modifies or changes
its recommendation of the merger agreement or the merger in a manner
adverse to Synetic;
- the board of directors of Medical Manager recommends a third-party
competing transaction proposal;
- a tender offer for 15% or more of Medical Manager is commenced and the
Medical Manager board of directors fails to recommend against
acceptance of that transaction;
- any person that is a group as defined in Section 13(d) of the Exchange
Act becomes the beneficial owner of 25% or more of Medical Manager,
and no competing transaction proposal exists with respect to Medical
Manager; or
- the merger agreement is not approved by Medical Manager's stockholders
at the Medical Manager Special Meeting, and no competing transaction
proposal exists with respect to Medical Manager.
ALTERNATIVE TRANSACTION FEES. The following fees are payable if certain
events to occur in connection with a termination.
- Synetic will pay an alternative transaction fee of $65,000,000 to Medical
Manager plus up to a maximum of $5,000,000 in expenses, when and if the
following requirements have been met:
- Synetic's board of directors withdraws, modifies or changes its
recommendation of the merger agreement or the merger in a manner
adverse to Medical Manager, and a competing transaction proposal
exists at the time with respect to Synetic;
- the board of directors of Synetic recommends a third-party competing
transaction proposal;
- a tender offer for 15% or more of Synetic is commenced and the board
of directors of Synetic fails to recommend against acceptance of that
transaction;
- any person that is a group as defined in Section 13(d) of the Exchange
Act becomes the beneficial owner of 25% or more of Synetic, and a
competing transaction proposal exists at that time with respect to
Synetic; or
- the issuance of Synetic Common Stock is not approved by Synetic's
stockholders at the Synetic Special Meeting, and a competing
transaction proposal has been or is publicly announced at that time
with respect to Synetic.
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- Medical Manager will pay an alternative transaction fee of $42,000,000 to
Synetic plus up to a maximum of $5,000,000 in expenses, when and if the
following requirements have been met:
- Medical Manager's board of directors withdraws, modifies or changes
its recommendation of the merger agreement or the merger in a manner
adverse to Synetic, and a competing transaction proposal exists at
that time with respect to Medical Manager;
- the board of directors of Medical Manager recommends a third-party
competing transaction proposal;
- a tender offer for 15% or more of Medical Manager is commenced and the
board of directors of Medical Manager fails to recommend against
acceptance of that transaction;
- any person that is a group as defined in Section 13(d) of the Exchange
Act becomes the beneficial owner of 25% or more of Medical Manager,
and a competing transaction proposal exists at that time with respect
to Medical Manager; or
- the merger agreement is not approved by Medical Manager's stockholders
at the Medical Manager Special Meeting, and a competing transaction
proposal has been or is publicly announced at that time with respect
to Medical Manager.
EXPENSES
Except as described above under "-- Termination Expenses and Alternative
Transactions Fees", all reasonable out-of-pocket expenses, including all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants, incurred in connection with the merger agreement and the merger
will be paid by the party incurring such expenses, whether or not the merger is
consummated, except that Synetic and Medical Manager each will pay one-half of
all expenses related to the printing, filing and mailing the Synetic
Registration Statement on Form S-4 and the Joint Proxy Statement/ Prospectus and
all Commission and other regulatory filing fees incurred in connection with the
Registration Statement on Form S-4 and the Joint Proxy Statement/Prospectus.
AMENDMENT AND WAIVER
The merger agreement may be amended at any time prior to the effective time
of the merger, upon action taken by the respective boards of directors of
Synetic or Medical Manager; provided, however, that after approval of the merger
agreement by either the stockholders of Synetic or Medical Manager, no amendment
may be made that by law requires further approval by the stockholders of Synetic
or Medical Manager without the further approval of such stockholders. The merger
agreement may only be amended by an instrument in writing signed by the parties.
At any time prior to the effective time of the merger, Synetic or Medical
Manager may extend the time for performance of the obligations or other acts of
the other parties to the merger agreement, may waive inaccuracies in the
representations or warranties contained in the merger agreement or in any
document delivered pursuant to the merger agreement or waive compliance with any
agreement or condition contained therein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
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STOCK OPTION AGREEMENTS
Concurrently with the merger agreement, Synetic and Medical Manager entered
into reciprocal stock option agreements. The options under each agreement will
only become exercisable, as described below, if the merger agreement is
terminated under circumstances involving a competing transaction proposal.
NUMBER OF SHARES
Medical Manager has granted Synetic an option to purchase up to such number
of shares as equals 19.9% of the outstanding shares of Medical Manager Common
Stock at the time the option is first exercised, subject to adjustments to
prevent dilution.
Synetic has granted Medical Manager an option to purchase up to such number
of shares as equals 10.0% of the outstanding shares of Synetic Common Stock at
the time the option is first exercised, subject to adjustments to prevent
dilution.
EXERCISE PRICE
The exercise price on the option granted to Medical Manager is $101.2125.
The exercise price on the option granted to Synetic is $54.0875.
EXERCISABILITY
Each option becomes exercisable only upon a termination of the merger
agreement (and only under circumstances in which an alternative transaction fee
was or would become payable) after:
- the grantor's board of directors withdraws or changes its recommendation
in favor of the merger agreement or the transactions contemplated thereby
and at the time a competing transaction proposal exists; or
- the merger agreement or the proposals in this Joint Proxy
Statement/Prospectus, as applicable, are not approved by the grantor's
stockholders at the appropriate stockholder's meeting and at the time a
competing transaction proposal is or has been publicly announced.
The grantee of the option has the right to receive in cash from the grantor the
profit it would make from exercising the option and selling the shares it would
receive without exercising the option. The cash amount would equal the
difference between the purchase price of the option shares and the higher of
highest price paid by a person in a competing transaction proposal or the
closing price of the grantor's shares on the last trading day immediately prior
to the day the grantee of the option exercises its right to receive the cash
profit.
LIMITATION ON PROCEEDS
The limitation on the total amount of proceeds from the option agreements
and the alternative transaction fee (not including termination expenses) due
under the merger agreement are:
- Proceeds to Medical Manager -- $87,776,000.
- Proceeds to Synetic -- $54,896,000.
See "The Merger -- Termination Expenses and Alternative Transaction Fees".
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<PAGE> 95
REGISTRATION RIGHTS AGREEMENT
The following is a summary of the material provisions of the registration
rights agreement with Michael A. Singer, John H. Kang and Richard W. Mehrlich
regarding the shares of Synetic Common Stock that each will receive in the
merger.
On May 16, 1999, Synetic entered into a registration rights agreement with
Mr. Singer, Mr. Kang and Mr. Mehrlich, who are referred to in this document as
the "rights holders", which gives Mr. Singer, Mr. Kang and Mr. Mehrlich the
right to demand two registrations with the Commission of their shares of Synetic
Common Stock. The first demand registration may be requested by two of the three
rights holders for a number of shares of Synetic Common Stock up to an aggregate
of 50% of the Synetic Common Stock received by each of the rights holders in the
merger, so long as at least 500,000 shares of eligible Synetic Common Stock are
registered. The second demand registration, which may be requested any time
after one year from the date the first demand registration statement becomes
effective, subject to certain restricted periods of sale, may be made by any of
the rights holders for 50% of the Synetic Common Stock received by each of the
rights holders in the merger, so long as at least 100,000 shares of eligible
Synetic Common Stock are registered. Synetic will use its reasonable efforts to
see that a registration statement is made available upon request by the
stockholders named above.
EXCLUSIVE ELECTRONIC GATEWAY
AND NETWORK SERVICE AGREEMENT
In connection with this business combination, Medical Manager and
CareInsite have entered into an agreement, effective on the effective date of
the merger, under which CareInsite will be exclusive provider of certain
network, web hosting and transaction services to Medical Manager. Under this
agreement, CareInsite intends to provide healthcare e-commerce services to
Medical Manager's physician base estimated at more than 120,000 physicians by
integrating those services into Medical Managers's physician practice management
systems. CareInsite intends to use Medical Manager's sales and support network
as a platform from which to distribute, install and support its transaction,
messaging and content services to Medical Manager physicians.
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<PAGE> 96
OPERATION, GOVERNANCE AND MANAGEMENT OF
SYNETIC FOLLOWING THE MERGER
Statements in "Operation, Governance and Management of Synetic Following
the Merger" that are not historical facts are forward-looking statements. The
factors set forth in "Forward-Looking Statements May Prove Inaccurate" could
cause the actual results, performance or achievements of Synetic to be
materially different from any future results, performance or achievements
expressed in or implied by such forward-looking statements.
BUSINESS OF SYNETIC
Following completion of the merger, Synetic will be engaged in three
principal businesses:
- the development and provision of an Internet-based healthcare electronic
commerce network that links physicians, payers, suppliers and patients,
which business will be conducted through Synetic's majority-owned
subsidiary, CareInsite;
- the continued development and provision of comprehensive physician
practice management information systems to independent physicians,
independent practice associations, management service organizations,
physician practice management organizations and other providers of
healthcare services in the United States; and
- the design, manufacture and distribution of porous and solid plastic
components and products for use life sciences, healthcare, industrial and
consumer applications through Porex and the other plastic and filtration
technologies subsidiaries of Synetic.
Synetic believes it will be distinguished by its ability to integrate the
products and services offered by Medical Manager with those of CareInsite into a
suite of products that can comprehensively address all of the needs of a medical
practice and enable it to more effectively and efficiently serve the needs of
patients by utilizing innovative healthcare network and e-commerce services that
leverage Internet technology to enable the confidential exchange of clinical,
administrative and financial information between physicians and their affiliated
patients, payers, providers and suppliers. Synetic will also be able to
distribute this suite of products through the more than 2,000 sales and support
personnel that distribute the Medical Manager software and provide service,
training and support to physician offices nationwide and who have a proven
ability to demonstrate to physicians the advantages that the computer can bring
to their practices.
Under the terms of the Exclusive Electronic Gateway and Network Services
Agreement, which will become effective upon completion of the merger, CareInsite
will eventually become the exclusive gateway to Medical Manager's customers,
presently consisting of an estimated 120,000 physicians, for the provision of
messaging, content, transaction and web hosting services. This will provide a
substantial step in the achievement of CareInsite's goal of aggregating
physicians as users of its services. Furthermore, because these physicians are
already familiar with the use of personal computers, Synetic believes they are
more likely to appreciate and adopt the additional, web-based services that will
be provided by CareInsite and Medical Manager working together.
Porex is pursuing several new contract opportunities available to it in
several areas of its business. Synetic also expects that in the fiscal year
beginning July 1, 1999, Porex will experience additional synergies from the
acquisitions of Point Plastics and The KippGroup
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<PAGE> 97
which were completed during the current fiscal year. Synetic plans to continue
to seek strategic acquisitions and alliances to further expand Porex's business
opportunities.
NAME CHANGE
The Synetic Certificate of Incorporation will, subject to stockholder
approval, be amended to change the name of Synetic to Medical Manager
Corporation, effective as of the closing of the merger.
BOARD OF DIRECTORS OF SYNETIC
Pursuant to the merger agreement, the size of the Synetic board of
directors will be increased to 16 persons. The Synetic board of directors will
elect, effective upon consummation of the merger, five members of the board of
directors of Medical Manager to be members of the Synetic board of directors,
together with the 11 members of the Synetic board of directors, who will
continue as directors after the merger.
It is expected that the Synetic board of directors, immediately following
the effective time of the merger, will consist of the following 16 persons:
SYNETIC DIRECTORS:
<TABLE>
<CAPTION>
POSITION WITH SYNETIC
NAME IMMEDIATELY FOLLOWING THE MERGER
- ---- --------------------------------
<S> <C>
Thomas R. Ferguson Director
Mervyn L. Goldstein, M.D. Director
Ray E. Hannah Director and Co-Chairman of Porex
Technologies Corp.
Roger H. Licht Director
James V. Manning Director
Bernard A. Marden Director
Charles A. Mele Director, Executive Vice
President -- General Counsel and
Secretary
Herman Sarkowsky Director
Paul C. Suthern Director and Chief Executive Officer and
President of CareInsite
Albert M. Weis Director
Martin J. Wygod Director and Chairman of the Board
</TABLE>
MEDICAL MANAGER DIRECTORS:
<TABLE>
<CAPTION>
POSITION WITH SYNETIC
NAME IMMEDIATELY FOLLOWING THE MERGER
- ---- --------------------------------
<S> <C>
Michael A. Singer Director, Vice Chairman, and Co-Chief
Executive Officer of Synetic
John H. Kang Director and Co-Chief Executive Officer of
Synetic
Chris A. Peifer Director
Courtney F. Jones Director
Raymond Kurzweil Director
</TABLE>
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<PAGE> 98
In the event that, prior to the effective time of the merger, any Synetic
director or Medical Manager director designated to serve on the Synetic board of
directors after the effective time of the merger ceases to be a director of
Synetic or Medical Manager, as the case may be, or becomes unable or unwilling
to serve in such position after the effective time, the Synetic board of
directors or the Medical Manager board of directors, as applicable, will
designate another person to serve in such person's stead, such person to be
selected at the discretion of the Synetic board of directors or the Medical
Manager board of directors, as applicable, prior to the effective time of the
merger.
MANAGEMENT OF SYNETIC
Martin J. Wygod will remain the Chairman of the board of directors of
Synetic after the effective time of the merger. Each of Messrs. Singer and Kang
will report directly to the Chairman of Synetic after the effective time of the
merger. The By-laws of Synetic will be amended at the effective time of the
merger to reflect the Chairman's position as an executive officer of Synetic,
the addition of the office of Vice Chairman, and the positions of Co-Chief
Executive Officer.
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<PAGE> 99
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
Synetic's historical fiscal year ends on June 30, while Medical Manager's
historical fiscal year ends on December 31. For purposes of combining Medical
Manager's historical financial data with Synetic's historical financial data in
the pro forma condensed combined statements of operations in this document, the
audited financial data of Synetic for the fiscal years ended June 30, 1996, 1997
and 1998 have been combined with Medical Manager's unaudited financial data for
the twelve months ended June 30, 1996, 1997 and 1998. Medical Manager's
unaudited data for the twelve months ended June 30, 1996, 1997 and 1998 was
derived from Medical Manager's books and records for the appropriate twelve
month periods. Synetic's unaudited financial data for the nine months ended
March 31, 1999 have been combined with Medical Manager's unaudited financial
data for the nine months ended March 31, 1999.
We have included this unaudited pro forma condensed combined summary data
only for the purpose of illustration, and it does not necessarily indicate what
the operating results or financial position would have been if the merger
between Synetic and Medical Manager had been completed at the dates indicated.
Moreover, this data does not necessarily indicate what the future operating
results or financial position of the combined company will be. You should read
this unaudited pro forma condensed combined summary financial data in
conjunction with the "Summary Unaudited Pro Forma Combined Condensed Financial
Information" included elsewhere in this document and with the historical
financial statements of Synetic and Medical Manager and the related notes
thereto, that are incorporated by reference in this document. This unaudited pro
forma combined condensed summary financial data does not reflect any adjustments
to conform accounting practices as a result of the merger or any future merger
related expenses, as discussed in Note 4.
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<PAGE> 100
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1)(6) ADJUSTMENTS COMBINED
------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales.................... $45,128 $50,166 $ -- $95,294
------- ------- -------
Costs and expenses:
Cost of sales.............. 25,108 26,998 -- 52,106
Selling general and
administrative(8)(9).... 14,930 17,013 -- 31,943
Interest and other
income.................. (8,112) (134) -- (8,246)
Interest and other
expenses................ -- 233 -- 233
------- ------- ---- -------
31,926 44,110 -- 76,036
------- ------- ---- -------
Income before provision for
taxes...................... 13,202 6,056 -- 19,258
Provision for taxes.......... 4,617 30 -- 4,647
------- ------- ---- -------
Net income(4)................ $ 8,585 $ 6,026 -- $14,611
======= ======= ==== =======
</TABLE>
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<PAGE> 101
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales...................... $ 52,885 $70,746 $ -- $123,631
-------- ------- ---- --------
Costs and expenses:
Cost of sales................ 29,035 35,768 -- 64,803
Selling general and
administrative(8)(9)...... 20,841 25,652 -- 46,493
Acquired in-progress research
and development costs and
other..................... 37,413(2) -- -- 37,413
Interest and other income.... (12,894) (437) -- (13,331)
Interest and other
expenses.................. 3,116 862 -- 3,978
-------- ------- ---- --------
77,511 61,845 -- 139,356
-------- ------- ---- --------
(Loss) income before provision
for taxes.................... (24,626) 8,901 -- (15,725)
Provision for taxes............ 2,834 2,174 -- 5,008
-------- ------- ---- --------
Net (loss) income(4)........... $(27,460) $ 6,727 $ -- $(20,733)
======== ======= ==== ========
(Loss) income per share --
basic:(5)
Net (loss) income per share.... $ (1.60) $ 0.50 $ (0.81)
======== ======= ========
Weighted average shares
outstanding.................. 17,133 13,494 25,567
======== ======= ========
(Loss) income per share --
diluted:(5)
Net (loss) income per share.... $ (1.60) $ 0.50 $ (0.81)
======== ======= ========
Weighted average shares
outstanding.................. 17,133 13,520 25,567
======== ======= ========
</TABLE>
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<PAGE> 102
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales...................... $ 64,945 $117,665 $ -- $182,610
-------- -------- ----- --------
Costs and expenses:
Cost of sales................ 34,508 59,226 -- 93,734
Selling general and
administrative(8)(9)...... 27,558 37,910 -- 65,468
Interest and other income.... (20,567) (754) -- (21,321)
Interest and other
expenses.................. 8,614 236 -- 8,850
-------- -------- ----- --------
50,113 96,618 -- 146,731
-------- -------- ----- --------
Income before provision for
taxes........................ 14,832 21,047 -- 35,879
Provision for taxes............ 5,788 8,029 -- 13,817
-------- -------- ----- --------
Net income(4).................. $ 9,044 $ 13,018 $ -- $ 22,062
======== ======== ===== ========
Income per share -- basic:(5)
Net income per share........... $ 0.51 $ 0.63 $ 0.72
======== ======== ========
Weighted average shares
outstanding.................. 17,671 20,765 30,649
======== ======== ========
Income per share -- diluted:(5)
Net income per share........... $ 0.46 $ 0.60 $ 0.66
======== ======== ========
Weighted average shares
outstanding.................. 19,834 21,573 33,317
======== ======== ========
</TABLE>
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<PAGE> 103
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF JUNE 30, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
-------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash & cash equivalents..... $ 90,645 $ 45,487 $ -- $136,132
Accounts receivable, net.... 11,071 23,001 -- 34,072
Other current assets........ 27,380 8,223 -- 35,603
-------- -------- ---- --------
Total current assets.......... 129,096 76,711 -- 205,807
-------- -------- ---- --------
Property, plant and equipment,
net......................... 24,409 8,204 -- 32,613
Marketable securities......... 217,067 -- -- 217,067
Capitalized software
development costs........... 4,972 -- -- 4,972
Goodwill and other
intangibles, net............ 12,378 24,356 -- 36,734
Other assets.................. 9,004 1,500 -- 10,504
-------- -------- ---- --------
Total assets.................. $396,926 $110,771 $ -- $507,697
======== ======== ==== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities........... $ 21,027 $ 23,890 -- $ 44,917
Long-term debt, less current
portion..................... 159,500 2,413 -- 161,913
Deferred taxes and other...... 10,173 -- -- 10,173
Stockholders' equity.......... 206,226 84,468 -- 290,694
-------- -------- ---- --------
Total liabilities and
stockholders' equity........ $396,926 $110,771 $ -- $507,697
======== ======== ==== ========
</TABLE>
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<PAGE> 104
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales......................... $68,730 $117,572 $ -- $186,302
------- -------- ---- --------
Costs and expenses:
Cost of sales................... 36,513 58,780 -- 95,293
Selling general and
administrative(8)(9)......... 31,890(3) 37,886 -- 69,776
Litigation costs................ 2,500(10) 2,366(7) -- 4,866
Interest and other income....... (13,669) (1,701) -- (15,370)
Interest and other expenses..... 6,726 70 -- 6,796
------- -------- ---- --------
63,960 97,401 -- 161,361
------- -------- ---- --------
Income before provision for
taxes........................... 4,770 20,171 -- 24,941
Provision for taxes............... 2,517 7,184 -- 9,701
------- -------- ---- --------
Net income(4)..................... $ 2,253 $ 12,987 $ -- $ 15,240
======= ======== ==== ========
Income per share -- basic:(5)
Net income per share.............. $ 0.12 $ 0.58 $ 0.46
======= ======== ========
Weighted average shares
outstanding..................... 18,977 22,363 32,954
======= ======== ========
Income per share -- diluted:(5)
Net income per share.............. $ 0.11 $ 0.56 $ 0.43
======= ======== ========
Weighted average shares
outstanding..................... 21,093 23,194 35,589
======= ======== ========
</TABLE>
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<PAGE> 105
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents............ $ 47,575 $ 43,173 $ -- $ 90,748
Accounts receivable, net........... 15,056 28,836 -- 43,892
Other current assets............... 39,234 10,773 -- 50,007
-------- -------- ---- ---------
Total current assets................. 101,865 82,782 -- 184,647
-------- -------- ---- ---------
Property, plant and equipment, net... 46,707 9,306 -- 56,013
Marketable securities................ 234,493 -- -- 234,493
Capitalized software development
costs.............................. 31,330 -- -- 31,330
Goodwill and other intangibles,
net................................ 112,509 31,665 -- 144,174
Other assets......................... 13,058 2,449 -- 15,507
-------- -------- ---- ---------
Total assets......................... $539,962 $126,202 $ -- $ 666,164
======== ======== ==== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities.................. $ 22,073 $ 25,343 $ -- $ 47,416
Long-term debt, less current
portion............................ 168,965 250 -- 169,215
Deferred taxes and other............. 28,960 -- -- 28,960
Stockholders' equity................. 319,964 100,609 -- 420,573
-------- -------- ---- ---------
Total liabilities and stockholders'
equity............................. $539,962 $126,202 $ -- $ 666,164
======== ======== ==== =========
</TABLE>
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<PAGE> 106
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MEDICAL PRO FORMA PRO FORMA
SYNETIC MANAGER(1) ADJUSTMENTS COMBINED
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales............................ $ 46,710 $83,593 $ -- $130,303
-------- ------- ---- --------
Costs and expenses:
Cost of sales...................... 24,986 42,492 -- 67,478
Selling general and
administrative(8)(9)............ 20,735 27,235 -- 47,970
Interest and other income.......... (15,732) (385) -- (16,117)
Interest and other expenses........ 6,496 207 -- 6,703
-------- ------- ---- --------
36,485 69,549 -- 106,034
-------- ------- ---- --------
Income before provision for taxes.... 10,225 14,044 -- 24,269
Provision for taxes.................. 4,064 5,678 -- 9,742
-------- ------- ---- --------
Net income(4)........................ $ 6,161 $ 8,366 $ -- $ 14,527
======== ======= ==== ========
Income per share -- basic:(5)
Net income per share................. $ 0.35 $ 0.41 $ 0.48
======== ======= ========
Weighted average shares
outstanding........................ 17,652 20,464 30,442
======== ======= ========
Income per share -- diluted:(5)
Net income per share................. $ 0.32 $ 0.39 $ 0.44
======== ======= ========
Weighted average shares
outstanding........................ 19,558 21,202 32,809
======== ======= ========
</TABLE>
- -------------------------
(1) Historical amounts have been adjusted to reflect all acquisitions accounted
for using the pooling of interests method of accounting for all periods.
(2) Relates to write-off of acquired in-process research and development costs
in conjunction with the purchase of Avicenna Systems Corporation and
CareAgents, Inc. and certain software costs.
(3) Includes a write-off of $2,381 of capitalized software costs which relate
to the abandonment of our development efforts with respect to certain of
our products and services. These services were abandoned as a result of
encountering a high risk development issue associated with integrating
those products and services with the acquired Cerner technology.
(4) Amount does not reflect the pro forma effect of future expenses for the
merger. In connection with the merger, Synetic and Medical Manager expect
to incur investment banking, legal, accounting and other related
transaction costs and fees. Additionally, the companies expect to incur
other merger-related costs associated with the integration of the separate
companies. The merger-related expenses will be charged to expense in the
period in which the merger is consummated or in subsequent periods when
incurred. Since the merger has not yet been consummated
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<PAGE> 107
and transition plans are currently being developed, the merger-related
costs cannot be estimated at this time.
The accounting policies of Synetic and Medical Manager are currently being
reviewed from a conformity perspective. The impact of conforming
accounting policies (if any) is not presently estimable. If conforming
adjustments are required, they will be recorded as part of the restatement
of prior periods, as required by the pooling-of-interests accounting
method.
(5) Net earnings per common share amounts assume the conversion of each share
of Medical Manager Common Stock into .625 of a share of Synetic Common
Stock, based on the exchange ratio.
(6) On January 30, 1997 the common stock of Medical Manager began trading on
the Nasdaq National Market System. Prior to this date, there was no
established trading market for Medical Manager Common Stock. As such, no
per share data is presented for periods ending prior to January 30, 1997.
(7) Includes $2,366 ($1,400 after tax) in charges relating to the settlement of
a class action lawsuit alleging that versions of The Medical Manager
software prior to version 9.0 will not properly recognize and process
information relating to dates in and after the year 2000.
(8) Includes $5,761, $7,670, $8,976, $12,358 and $6,584 of research and
development expenses for the years ended June 30, 1996, 1997 and 1998 and
for the nine months ended March 31, 1999 and 1998, respectively.
(9) Includes $5,234, $4,345, $4,739, $10,054 and $5,027 for depreciation and
amortization expenses for the years ended June 30, 1996, 1997 and 1998 and
for the nine months ended March 31, 1999 and 1998, respectively.
(10) Relates to $2,500 ($1,628 after tax) in charges incurred with the Merck
litigation.
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<PAGE> 108
The following description of the capital stock of Synetic is subject to the
Delaware General Corporation Law and to provisions contained in Synetic's
Certificate of Incorporation and By-laws, copies of which are exhibits to
Synetic's Form 10-K for the fiscal year ended June 30, 1998, which is
incorporated by reference into this Joint Proxy Statement/Prospectus. Reference
is made to such exhibits for a detailed description of the provisions thereof
summarized below.
DESCRIPTION OF SYNETIC'S CAPITAL STOCK
AUTHORIZED CAPITAL
The authorized capital stock of Synetic consists of 100,000,000 shares of
common stock, $.01 par value, and 10,000,000 shares of preferred stock, $.01 par
value. Holders of Synetic Common Stock have no preemptive or other subscription
rights.
COMMON STOCK
On June 17, 1999, there were 20,678,743 outstanding shares of Synetic
Common Stock. Synetic believes that its common stock is beneficially held by at
least 400 stockholders.
The holders of Synetic Common Stock are entitled to one vote per share on
all matters submitted to a vote of the stockholders. Holders of Synetic Common
Stock do not have cumulative voting rights. Therefore, holders of more than 50%
of the shares of Synetic Common Stock are able to elect all directors eligible
for election each year. The holders of common stock are entitled to dividends
and other distributions out of assets legally available if and when declared by
the Synetic board of directors. Upon Synetic's liquidation, dissolution or
winding up, the holders of Synetic Common Stock are entitled to share pro rata
in the distribution of all of Synetic's assets remaining available for
distribution after satisfaction of all liabilities, including any prior rights
of any preferred stock which may be outstanding. There are no redemption or
sinking fund provisions applicable to the Synetic Common Stock.
The transfer agent and registrar for the common stock is Registrar &
Transfer Company.
PREFERRED STOCK
There are no shares of preferred stock outstanding. Series of the preferred
stock may be created and issued from time to time by the Synetic board of
directors, with such rights and preferences as they may determine. Because of
its broad discretion with respect to the creation and issuance of any series of
preferred stock without stockholder approval, the Synetic board of directors
could adversely affect the voting power of Synetic Common Stock. The issuance of
preferred stock may also have the effect of delaying, deferring or preventing a
change in control of the company.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Generally, Section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in any business combination
with an interested stockholder for a period of three years following the time
that such stockholder became an interested stockholder, unless, (i) prior to
such time either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder is
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<PAGE> 109
approved by the Synetic board of directors, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding,
for purposes of determining the number of shares outstanding, those shares owned
(A) by persons who are both directors and officers and (B) certain employee
stock plans, or (iii) at or after such time the business combination is approved
by the board and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. A
business combination includes certain mergers, consolidations, asset sales,
transfers and other transactions resulting in a financial benefit to the
interested stockholder. An interested stockholder is a person who, together with
affiliates and associates, owns (or within the preceding three years, did own)
15% or more of the corporation's voting stock.
INDEMNIFICATION
Synetic's By-laws require it to indemnify each of its directors and
officers to the fullest extent permitted by law and limits the liability of
Synetic's directors and officers for monetary damages in certain circumstances.
Article Thirteen of Synetic'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 Synetic 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 Law (involving certain unlawful dividends or
stock repurchase) 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.
COMPARISON OF CAPITAL STOCK
After completion of the merger between Synetic and Medical Manager, the
holders of Medical Manager Common Stock who receive Synetic Common Stock will
become stockholders of Synetic. The rights of holders of Synetic Common Stock
will be governed by the Synetic Certificate of Incorporation and the Synetic
By-laws. As Synetic and Medical Manager are both incorporated under the laws of
the State of Delaware, differences in the rights of stockholders of Synetic and
Medical Manager arise from differences between the Synetic Certificate of
Incorporation and Synetic By-laws and the Medical Manager Certificate of
Incorporation and the Medical Manager By-laws. The following discussion
summarizes the material differences between the rights of holders of Medical
Manager Common Stock and holders of Synetic Common Stock. This summary does not
purport to be complete and is qualified in its entirety by reference to the
Medical Manager Certificate of Incorporation and the Medical Manager By-laws,
the Synetic Certificate of Incorporation and the Synetic By-laws and the
relevant provisions of Delaware law.
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AUTHORIZED CAPITAL STOCK
SYNETIC. The authorized capital stock of Synetic currently consists of
110,000,000 shares of capital stock, consisting of (i) 100,000,000 shares of
Synetic Common Stock and (ii) 10,000,000 shares of Synetic preferred stock, par
value $.01 per share.
MEDICAL MANAGER. The authorized capital stock of Medical Manager currently
consists of 50,500,000 shares of capital stock, consisting of (i) 50,000,000
shares of Medical Manager Common Stock and (ii) 500,000 shares of Medical
Manager preferred stock, par value $0.01 per share.
SPECIAL MEETINGS OF STOCKHOLDERS
SYNETIC. The Synetic Certificate of Incorporation provides that special
meetings of the stockholders may be called by the Synetic board of directors or
by a designated committee of the Synetic board of directors. The Synetic
Certificate of Incorporation also provides that special meetings may be called
by the holders of record of 10% of the outstanding shares of stock entitled to
vote at such meetings. The Synetic By-laws provide that Synetic's Chief
Executive Officer may also call special meetings.
MEDICAL MANAGER. The Medical Manager By-laws provide that the Medical
Manager board of directors, the Chairman of the Board, the Chief Executive
Officer or the President may call a special meeting of stockholders. Special
meetings may not be called by the stockholders themselves.
CLASSIFICATION OF THE BOARD OF DIRECTORS
SYNETIC. The Synetic Certificate of Incorporation provides that each
director is elected by the stockholders at each annual meeting of stockholders
and holds office until the next annual meeting of stockholders and until his
respective successor has been elected and qualified, subject, however, to prior
death, resignation, retirement, disqualification or removal from office.
MEDICAL MANAGER. The Medical Manager Certificate of Incorporation provides
for three classes of directors nearly as equal in number as possible to serve
terms expiring at the third succeeding annual meeting of Medical Manager
stockholders after the election of the members of that class.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
SYNETIC. The Synetic Certificate of Incorporation provides that any
director may be removed, either with or without cause, by the affirmative vote
of the holders of record of a majority of the outstanding shares of stock
entitled to vote. The Synetic Certificate of Incorporation provides that a
vacancy in the Synetic board of directors, whether arising from resignation,
removal (with or without cause), an increase in the number of directors or any
other cause, may be filled by the vote of the majority of the directors then in
office, though less than a quorum. However, if all directorships are vacant or
in the case of the removal of a director by the affirmative vote of the
stockholders of Synetic, then vacancies may be filled by the vote of the
stockholders of Synetic at the next annual meeting or special meeting called for
that purpose.
MEDICAL MANAGER. The Medical Manager Certificate of Incorporation provides
that directors may be removed from office by a vote of the stockholders for
cause. The Medical Manager Certificate of Incorporation provides that any
vacancy on the Medical Manager board of directors resulting from death,
retirement, resignation, disqualification, removal or
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other cause, as well as any vacancy resulting from an increase in the number of
directors which occurs between annual meetings of stockholders at which
directors are elected, will be filled by a majority of the directors remaining
in office, except that those vacancies resulting from directors being removed
from office by a vote of stockholders may be filled by a vote of the
stockholders at the same meeting at which the removal occurred. Directors chosen
to fill vacancies hold office for a term expiring at the end of the next annual
meeting of stockholders at which the terms of the class to which they have been
elected expires.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS
SYNETIC. The Synetic Certificate of Incorporation provides that, in
general, it may be amended by the affirmative vote of a majority of the Synetic
board of directors and the holders of a majority of Synetic's shares. In
general, the By-laws may be amended by the affirmative vote of a majority of the
Synetic board of directors or the holders of a majority of Synetic's shares.
MEDICAL MANAGER. In general, the Medical Manager Certificate of
Incorporation may be amended by an affirmative vote of the Medical Manager board
of directors and the holders of a majority of Medical Manager's shares. Any
amendment to the article of the Medical Manager Certificate of Incorporation
which relates to the Medical Manager board of directors, however, requires the
affirmative vote of 66 2/3% of the outstanding shares of Medical Manager unless
it has been approved by a majority vote of the full Medical Manager board of
directors. If the full Medical Manager board of directors approves such
amendments, only the affirmative vote of a majority of shares is needed. The
Medical Manager By-laws may be amended by the affirmative vote of a majority of
the Medical Manager board of directors or the holders of a majority of Medical
Manager's shares.
STOCKHOLDER PROPOSALS
The Synetic board of directors will consider proposals of stockholders
intended to be presented for action at Synetic's 1999 Annual Meeting of
stockholders. A stockholder proposal must be submitted in writing and be
received at Synetic's principal executive offices, River Drive Center 2, 669
River Drive, Elmwood Park, New Jersey 07407-1361, Attn: Charles A. Mele,
Executive Vice President and General Counsel, no later than August 31, 1999, to
be considered for inclusion in Synetic's proxy statement relating to the 1999
Annual Meeting of stockholders. Any proxy received by Synetic may confer
discretionary authority to vote on any stockholder proposal not received by
Synetic by August 31, 1999.
If the merger is not consummated, Medical Manager will hold a 2000 Annual
Meeting of Stockholders. If such meeting is held, stockholder proposals intended
to be presented at such meeting must be received by Medical Manager a reasonable
time before the solicitation of proxies for such meeting is made for inclusion
in Medical Manager's proxy materials for such meeting.
LEGAL MATTERS
The validity of the shares of Synetic Common Stock offered hereby and
certain legal matters in connection with the federal income tax consequences of
the merger will be passed upon by Shearman & Sterling, New York, New York.
Shearman & Sterling is a limited partner in SN Investors. SN Investors is a
limited partnership, the general partner
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of which is SYNC, Inc., whose sole stockholder is Martin J. Wygod, Chairman of
Synetic. SN Investors currently holds 5,061,857 shares of Synetic Common Stock.
The statements of law under the caption "Risk Factors -- Risks Common to
Each of Synetic's Businesses -- Government regulation of Synetic's principal
businesses could adversely affect its financial condition and results of
operations -- Porex" in this Joint Proxy Statement/Prospectus and under the
caption "Business -- Plastics and Filtration Technologies
Business -- Regulation" in Synetic's 1998 Form 10-K, incorporated by reference
in this Joint Proxy Statement/Prospectus, are based upon the opinion of Kegler,
Brown, Hill & Ritter Co., L.P.A., Columbus, Ohio, special regulatory counsel to
Synetic. Robert D. Marotta, Esq., of counsel to such firm, holds options to
purchase 75,000 shares of Synetic Common Stock.
Certain legal matters in connection with the federal income tax
consequences of the merger will be passed upon for Medical Manager by Akerman,
Senterfitt & Eidson, P.A. Some attorneys employed by Akerman, Senterfitt &
Eidson, P.A. own shares of Medical Manager Common Stock.
EXPERTS
The consolidated financial statements of Synetic, Inc. as of June 30, 1998
and the consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1998, and the
consolidated financial statements and schedule of The KippGroup Incorporated by
reference in this Joint Proxy Statement/ Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants and are incorporated herein in
reliance upon the reports of said firm, given on the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Point Plastics, Inc. and
subsidiaries that are incorporated by reference into this Joint Proxy
Statement/Prospectus have been audited by Linkenheimer LLP, independent public
accountants, indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the report of the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of Medical Manager Corporation as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998, incorporated by reference in this Joint Proxy
Statement/Prospectus, have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
Synetic and Medical Manager are each subject to the informational
requirements of the Exchange Act and, in accordance therewith, file reports,
proxy statements and other information with the Commission. The reports, proxy
statements and other information filed by Synetic and Medical Manager with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, 13th floor, New York, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material also can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, Washington, D.C. 20549, or by calling the Commission at
1-800-SEC-0330. In addition, Synetic and Medical Manager are each required to
file electronic versions of such material with the Commission through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
The Commission maintains a World Wide Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Synetic
Common Stock and Medical Manager Common Stock are listed on the Nasdaq. Reports
and other information concerning Synetic and Medical Manager can also be
inspected at the offices of Nasdaq, Department of NASDR, 1390 Piccard Drive,
Rockville, Maryland 20850, (800-289-9999).
Synetic has filed with the Commission a Registration Statement on Form S-4
under the Exchange Act with respect to the shares of Synetic Common Stock to be
issued pursuant to the merger agreement. This Joint Proxy Statement/Prospectus
does not contain all the information set forth in the Registration Statement.
For further information with respect to Synetic, Medical Manager and the Synetic
Common Stock, reference is hereby made to the Synetic Registration Statement on
Form S-4 (including the exhibits and schedules thereto).
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The Commission allows us to "incorporate by reference" information into
this Joint Proxy Statement/Prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the Commission. Statements contained in this Joint Proxy
Statement/Prospectus or in any document incorporated by reference in this Joint
Proxy Statement/Prospectus as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document (if any) filed
as an exhibit to the Synetic Registration Statement on Form S-4 or such other
document, each such statement being qualified in all respects by such reference.
The information incorporated by reference is deemed to be part of this Joint
Proxy Statement/ Prospectus. This Joint Proxy Statement/Prospectus incorporates
by reference the documents set forth below that Synetic and Medical Manager have
previously filed with the SEC. These documents contain important information
about Synetic and Medical Manager and their finances.
<TABLE>
<CAPTION>
SYNETIC, INC. COMMISSION FILINGS
(FILE NO. 0-17822) PERIOD
- ------------------------------------------------ ----------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended June 30, 1998
Quarterly Report on Form 10-Q Quarterly period ended September 30,
1998
Quarterly Report on Form 10-Q Quarterly period ended December 31, 1998
Quarterly Report on Form 10-Q Quarterly period ended March 31, 1999
Current Report on Form 8-K Dated July 29, 1998
Current Report on Form 8-K Dated February 5, 1999
Current Report on Form 8-K Dated February 26, 1999
Current Report on Form 8-K Dated May 18, 1999
Current Report on Form 8-K Dated June 4, 1999
Proxy Statement of Synetic, Inc. Dated March 12, 1999
</TABLE>
<TABLE>
<CAPTION>
MEDICAL MANAGER CORPORATION COMMISSION
FILINGS (FILE NO. 0-29090) PERIOD
- ------------------------------------------------ ----------------------------------------
<S> <C>
Annual Report on Form 10-K and Amended Annual Year ended December 31, 1998
Report on Form 10-K/A
Quarterly Report on Form 10-Q Quarterly period ended March 31, 1999
Current Report on Form 8-K Dated May 18, 1999
</TABLE>
All documents and reports subsequently filed by Synetic or Medical Manager
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Joint Proxy Statement/Prospectus and prior to the date of the Synetic
Special Meeting and the Medical Manager Special Meeting shall be deemed to be
incorporated by reference in this Joint Proxy Statement/Prospectus and to be
part hereof from the date of filing of such documents or reports. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Joint
Proxy Statement/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 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 Joint Proxy Statement/Prospectus.
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Documents incorporated by reference which are not presented herein or
delivered herewith (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference) are available to any person,
including any beneficial owner, to whom this Joint Proxy Statement/Prospectus is
delivered, on written or oral request, without charge, in the case of documents
relating to Synetic, directed to Synetic, Inc., 669 River Drive, Elmwood Park,
New Jersey 07407, (201-703-3400), Attention: Charles A. Mele, or, in the case of
documents relating to Medical Manager, directed to Medical Manager Corporation,
3001 N. Rocky Point Drive East, Suite 400, Tampa, Florida 33607 (813-287-2990),
Charles Hutchinson, Controller. In order to ensure timely delivery of any of
such documents, any request should be made by July 16, 1999.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SYNETIC,
MEDICAL MANAGER OR ANY OTHER PERSON. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SYNETIC OR
MEDICAL MANAGER SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
By Order of the Board of Directors of Synetic
Charles A. Mele
Secretary
By Order of the Board of Directors of Medical Manager
Frederick B. Karl, Jr.
Vice President, General Counsel and Director
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ANNEX A
AGREEMENT AND PLAN OF MERGER
A-1
<PAGE> 117
AGREEMENT AND PLAN OF MERGER
AMONG
SYNETIC, INC.,
MARLIN MERGER SUB, INC.
AND
MEDICAL MANAGER CORPORATION
DATED AS OF MAY 16, 1999
<PAGE> 118
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
ARTICLE I
THE MERGER
1.01. The Merger.................................................. 2
1.02. Effective Time; Closing..................................... 2
1.03. Effect of the Merger........................................ 2
1.04. Certificate of Incorporation; By-Laws....................... 2
1.05. Directors and Officers...................................... 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities.................................... 3
2.02. Exchange of Certificates.................................... 3
2.03. Stock Transfer Books........................................ 5
2.04. Stock Options............................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEDICAL MANAGER
3.01. Organization and Qualification; Subsidiaries................ 6
3.02. Certificate of Incorporation and By-Laws.................... 7
3.03. Capitalization.............................................. 7
3.04. Authority Relative to Agreement............................. 8
3.05. No Conflict; Required Filings and Consents.................. 8
3.06. Permits and Licenses........................................ 9
3.07. SEC Filings; Financial Statements........................... 9
3.08. Absence of Certain Changes or Events........................ 10
3.09. Absence of Litigation....................................... 10
3.10. Employee Benefit Plans; Labor Matters....................... 10
3.11. Labor Matters............................................... 11
3.12. Dealers..................................................... 12
3.13. Intellectual Property....................................... 12
3.14. Taxes....................................................... 13
3.15. Material Contracts.......................................... 14
3.16. Accounting and Tax Matters.................................. 14
3.17. Year 2000 Compliance........................................ 14
3.18. Opinion of Financial Advisors............................... 15
3.19. Vote Required............................................... 15
3.20. Section 203 of Delaware Law................................. 15
3.21. Affiliates.................................................. 15
3.22. Brokers..................................................... 15
3.23. Environmental Matters....................................... 15
</TABLE>
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<TABLE>
<CAPTION>
SECTION PAGE
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<C> <S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SYNETIC
AND MERGER SUB
4.01. Organization and Qualification; Subsidiaries................ 16
4.02. Certificate of Incorporation and By-Laws.................... 16
4.03. Capitalization.............................................. 16
4.04. Authority Relative to Agreement............................. 17
4.05. No Conflict; Required Filings and Consents.................. 17
4.06. Permits and Licenses........................................ 18
4.07. SEC Filings; Financial Statements........................... 18
4.08. Absence of Certain Changes or Events........................ 19
4.09. Absence of Litigation....................................... 20
4.10. Employee Benefit Plans; Labor Matters....................... 20
4.11. Labor Matters............................................... 21
4.12. Intellectual Property....................................... 21
4.13. Taxes....................................................... 22
4.14. Material Contracts.......................................... 22
4.15. Accounting and Tax Matters.................................. 23
4.16. Year 2000 Compliance........................................ 23
4.17. Opinion of Financial Advisors............................... 23
4.18. Vote Required............................................... 23
4.19. Section 203 of Delaware Law................................. 23
4.20. Affiliates.................................................. 23
4.21. Brokers..................................................... 24
4.22. Environmental Matters....................................... 24
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by Medical Manager Pending the Merger... 24
5.02. Conduct of Business by Synetic Pending the Merger........... 26
5.03. Conduct of Business by Synetic and Medical Manager Pending
the Merger.................................................. 27
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Joint Proxy Statement............... 28
6.02. Stockholders' Meetings...................................... 30
6.03. Appropriate Action; Consents; Filings....................... 30
6.04. Access to Information; Confidentiality...................... 31
6.05. No Solicitation of Competing Transactions................... 31
6.06. Directors' and Officers' Indemnification and Insurance...... 34
6.07. Notification of Certain Matters............................. 34
6.08. Accounting and Tax Treatment................................ 35
</TABLE>
ii
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<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
6.09. Stock Exchange Listing...................................... 35
6.10. Public Announcements........................................ 35
6.11. Synetic's Directors and Officers; CareInsite Board
Representation.............................................. 35
6.12. Employee Benefits Matters................................... 36
6.13. Pooling Affiliates.......................................... 36
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party................. 37
7.02. Conditions to the Obligations of Synetic and Merger Sub..... 37
7.03. Conditions to the Obligations of Medical Manager............ 38
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination................................................. 39
8.02. Effect of Termination....................................... 40
8.03. Amendment................................................... 40
8.04. Waiver...................................................... 41
8.05. Expenses.................................................... 41
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and
Agreements.................................................. 43
9.02. Notices..................................................... 43
9.03. Certain Definitions......................................... 44
9.04. Severability................................................ 44
9.05. Entire Agreement; Assignment................................ 45
9.06. Parties in Interest......................................... 45
9.07. Specific Performance........................................ 45
9.08. Governing Law............................................... 45
9.09. Consent to Jurisdiction..................................... 45
9.10. Headings.................................................... 45
9.11. Counterparts................................................ 46
9.12. WAIVER OF JURY TRIAL........................................ 46
</TABLE>
<TABLE>
<S> <C>
EXHIBITS
Exhibit 5.02(a) Form of Medical Manager Affiliate Letter
Exhibit 5.02(b) Form of Synetic Affiliate Letter
ANNEX A Employee Benefit Matters
</TABLE>
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
LOCATION OF
DEFINED TERM DEFINITION
- ------------ -----------
<S> <C>
Adjusted Synetic Value Section 8.01(i)
affiliate Section 9.03(a)
Agreement Recitals
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.05(b)
business day Section 9.03(c)
Certificate of Merger Section 1.02
Certificates Section 2.02(b)
Code Recitals
Competing Transaction Section 6.05(c)
Confidentiality Agreement Section 6.04(c)
control Section 9.03(d)
Delaware Law Recitals
Effective Time Section 1.02
Environmental Laws Section 3.15(a)
Environmental Permits Section 3.15(b)
ERISA Section 3.10
Exchange Act Section 3.05(b)
Exchange Agent Section 2.02(a)
Exchange Fund Section 2.02(a)
Exchange Ratio Section 2.01(a)
Expenses Section 8.05
Governmental Authority Section 9.03(e)
Hazardous Substances Section 3.15(a)
HSR Act Section 3.05(b)
Interim Financial Statements Section 3.07(a)
IRS Section 3.10
Laws Section 3.05(a)
Medical Manager Recitals
Medical Manager Alternative Transaction Fee Section 8.05(b)
Medical Manager 1998 Balance Sheet Section 3.07(c)
Medical Manager Benefit Plans Section 3.10(a)
Medical Manager Common Stock Section 2.01(a)
Medical Manager Disclosure Schedule Article III
Medical Manager Expense Amount Section 8.05(c)
Medical Manager Financial Advisor Section 3.18
Medical Manager Intellectual Property Section 3.13
Medical Manager Licenses Section 3.13
Medical Manager Material Adverse Effect Section 3.01
Medical Manager Option Section 2.04(a)
</TABLE>
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<TABLE>
<CAPTION>
LOCATION OF
DEFINED TERM DEFINITION
- ------------ -----------
<S> <C>
Medical Manager Permits Section 3.06
Medical Manager Preferred Stock Section 3.03
Medical Manager SEC Reports Section 3.07(a)
Medical Manager Stock Option Agreement Recitals
Medical Manager Stock Option Plans Section 2.04(a)
Medical Manager Superior Proposal Section 6.05(d)
Medical Manager Systems Section 3.18(b)
Medical Manager Year 2000 Plan Section 3.18(a)
Material Contracts Section 3.16(a)
Merger Recitals
Merger Sub Recitals
NASDAQ Section 2.02(e)
person Section 9.03(f)
Proxy Statement Section 6.01(a)
Registration Statement Section 6.01(a)
Representatives Section 6.04(a)
Synetic Recitals
Synetic Alternative Transaction Fee Section 8.05(c)
Synetic 1998 Balance Sheet Section 4.06(c)
Synetic Common Stock Section 2.01(a)
Synetic Disclosure Schedule Article IV
Synetic Expense Amount Section 8.05(b)
Synetic Material Adverse Effect Section 4.01
Synetic Option Section 2.04(a)
Synetic Preferred Stock Section 4.03
Synetic SEC Reports Section 4.06(a)
Synetic Superior Proposal Section 6.05(e)
Synetic Voting Agreements Section 3.20
SEC Recitals
Securities Act Section 3.05(b)
Shares Section 2.01(a)
Stockholders' Meeting Section 6.02
subsidiary/subsidiaries Section 9.03(g)
Surviving Corporation Section 1.01
Tax Section 3.14(a)
Taxes Section 3.14(a)
Terminating Medical Manager Breach Section 8.01(h)
Terminating Synetic Breach Section 8.01(g)
Year 2000 Compliant Section 3.18(b)
</TABLE>
v
<PAGE> 123
AGREEMENT AND PLAN OF MERGER dated as of May 16, 1999 (this "Agreement")
among SYNETIC, INC., a Delaware corporation ("Synetic"), MARLIN MERGER SUB,
INC., a Delaware corporation and a wholly owned subsidiary of Synetic ("Merger
Sub"), and MEDICAL MANAGER CORPORATION, a Delaware corporation ("Medical
Manager").
WHEREAS, the Board of Directors of Medical Manager has (i) determined that
the merger of Merger Sub with and into Medical Manager (the "Merger") pursuant
to the General Corporation Law of the State of Delaware ("Delaware Law") is fair
to Medical Manager and the holders of Shares (as defined in Section 2.01) and is
in the best interests of Medical Manager and such stockholders and (ii) approved
and determined to be advisable this Agreement and the transactions contemplated
hereby and unanimously has recommended that the stockholders of Medical Manager
adopt this Agreement;
WHEREAS, the Board of Directors of Synetic (i) has determined that the
Merger is in the best interests of Synetic and its stockholders and approved and
adopted this Agreement and (ii) has recommended that the stockholders of Synetic
approve the following (the "Synetic Proposals"): (A) the issuance of Synetic
Common Stock (as hereinafter defined) pursuant to the Merger and (B) the change
of the name of Synetic, effective at the Effective Time (defined below) to
"Medical Manager Corporation";
WHEREAS, the Board of Directors of Merger Sub has determined that the
Merger is in the best interests of Merger Sub and its sole stockholder and
Synetic has adopted this Agreement and approved the Merger as the sole
stockholder of Merger Sub;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests" under applicable United States
accounting rules and Securities and Exchange Commission ("SEC") accounting
standards;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Synetic is entering into a Voting Agreement with certain stockholders of Medical
Manager, in the form of Exhibit 1 hereto (the "Medical Manager Voting
Agreement") and Medical Manager is entering into a Voting Agreement with certain
stockholders of Synetic, in the form of Exhibit 2 hereto (the "Synetic Voting
Agreement"), pursuant to which, among other things, such stockholders have
agreed to vote the shares owned by such stockholders in favor of the Merger and
to grant Synetic or Medical Manager, as applicable, irrevocable proxies to vote
such shares;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Synetic and Medical Manager are entering into a stock option agreement in the
form of Exhibit 3 hereto, pursuant to which Synetic will grant Medical Manager
an option to purchase shares of Synetic Common Stock (as defined in Section
2.01(a)), upon the terms and subject to the conditions set forth therein (the
"Synetic Option Agreement");
WHEREAS, concurrently with the execution and delivery of this Agreement,
Synetic and Medical Manager are entering into a stock option agreement (the
"Medical Manager Stock Option Agreement") in the form of Exhibit 4 hereto,
pursuant to which Medical Manager will grant to Synetic an option to purchase
shares of Medical Manager Common Stock (as defined in Section 2.01(a)), upon the
terms and subject to the conditions set forth therein (the "Medical Manager
Option Agreement"); and
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WHEREAS, as an inducement to Synetic to enter into this Agreement,
concurrently with the execution and delivery of this Agreement, each of Michael
A. Singer and John H. Kang are entering into an employment agreement with
Synetic (collectively, the "Employment Agreements"), each to be effective at the
Effective Time (defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained and intending to be legally bound hereby,
Synetic, Merger Sub and Medical Manager hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in Article VII, and in accordance with Section 251 of Delaware Law, at the
Effective Time, Merger Sub shall be merged with and into Medical Manager. As a
result of the Merger, the separate corporate existence of Merger Sub shall cease
and Medical Manager shall be the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as practicable, and in
no event later than five business days after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with,
Section 251 of Delaware Law. The term "Effective Time" means the date and time
of the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware (or such later time as may be agreed by the parties hereto and
specified in the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing will be held at the offices of Akerman,
Senterfitt & Eidson, One Southeast Third Avenue, Miami, Florida (or such other
place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, at the Effective Time, all the
property, rights, privileges, powers and franchises of Medical Manager and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of each of Medical Manager
and Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. (a) Subject to the
terms of Section 6.06, at the Effective Time, the Certificate of Incorporation
of the Surviving Corporation shall be amended and restated in its entirety to be
and read as the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time, except that Article One shall be
amended to provide that "the name of the Corporation is Medical Manager Systems,
Inc."
(b) Subject to the terms of Section 6.06, at the Effective Time, the
By-laws of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Articles of Incorporation of the Surviving Corporation and
such By-laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the
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Surviving Corporation, and the officers of Medical Manager immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, Medical Manager or
the holders of any of the following securities:
(a) Each share of common stock, par value $.01 per share, of Medical
Manager ("Medical Manager Common Stock"; all issued and outstanding shares
of Medical Manager Common Stock being hereinafter collectively referred to
as the "Shares") issued and outstanding immediately prior to the Effective
Time (other than any Shares to be cancelled pursuant to Section 2.01(b))
shall be converted, subject to Section 2.02(e), into the right to receive
(the "Exchange Ratio") (i) if the Average Synetic Stock Price (as defined
below) is equal to or above $67.20, .625 shares of common stock, par value
$.01 per share, of Synetic ("Synetic Common Stock"), (ii) if the Average
Synetic Stock Price is below $67.20 and equal to or above $56.00, such
number of shares of Synetic Common Stock such that, when such number of
shares is multiplied by the Average Synetic Stock Price, the value of
Synetic Common Stock to be received per share of Medical Manager Common
Stock, based upon such Average Synetic Stock Price, shall equal $42.00, and
(iii) if the Average Synetic Stock Price is below $56.00, .750 shares of
Synetic Common Stock. For purposes of this Section 2.01(a), "Average
Synetic Stock Price" means the average of the closing price per share
(expressed in three decimal places) of Synetic Common Stock during the 10
trading day period commencing on (and including) the twelfth trading day
prior to, and ending on (and including) the third trading day prior to, the
date scheduled for the Medical Manager Stockholders' Meeting (as defined
below). Synetic shall issue a press release prior to the opening of trading
on the second day prior to the date scheduled for the Medical Manager
Stockholders' Meeting, announcing the Exchange Ratio as determined pursuant
to this Section 2.01(a).
(b) Each Share held in the treasury of Medical Manager and each Share
owned by Synetic or any direct or indirect wholly owned subsidiary of
Synetic or of Medical Manager immediately prior to the Effective Time shall
be cancelled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
(c) Each share of Common Stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Synetic shall deposit, or shall cause to be deposited, with such
bank or trust company as may be designated by Synetic (the "Exchange Agent"),
for the benefit of the holders of Shares, for exchange in accordance with this
Article II through the Exchange Agent, certificates representing the shares of
Synetic Common Stock (such certificates for shares of Synetic Common Stock,
together with any dividends or distributions with respect thereto and any cash
in lieu of fractional shares of Synetic Common Stock payable pursuant to Section
2.02(e), being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 2.01 in exchange for outstanding Shares. The Exchange Agent
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shall, pursuant to irrevocable instructions, deliver the Synetic Common Stock
contemplated to be issued pursuant to Section 2.01 out of the Exchange Fund.
Except as contemplated by Section 2.02(f) hereof, the Exchange Fund shall not be
used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Synetic shall cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent, and shall be in customary form) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing shares of Synetic Common Stock. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with such letter of
transmittal, duly executed, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Synetic Common Stock which such holder has the right to receive in
respect of the Shares formerly represented by such Certificate (after taking
into account all Shares then held by such holder), cash in lieu of fractional
shares of Synetic Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Shares that
is not registered in the transfer records of Medical Manager, a certificate
representing the proper number of shares of Synetic Common Stock may be issued
to a transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Synetic
Common Stock, cash in lieu of any fractional shares of Synetic Common Stock to
which such holder is entitled pursuant to Section 2.02(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section
2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Synetic Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to Synetic Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Synetic Common Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.02(e), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, Tax (as defined in Section 3.14)
or other applicable Laws (as defined in Section 3.05), following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Synetic Common Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of Synetic Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or other distributions
with a record date after the Effective Time and theretofore paid with respect to
such whole shares of Synetic Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Synetic Common Stock.
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(d) No Further Rights in Medical Manager Common Stock. All shares of
Synetic Common Stock issued upon conversion of the Shares in accordance with the
terms hereof (including any cash paid pursuant to Sections 2.02(c) or (e)) shall
be deemed to have been issued in full satisfaction of all rights pertaining to
such Shares.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of Synetic Common Stock shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Synetic. Each holder
of a fractional share interest shall be paid an amount in cash equal to the
product obtained by multiplying (i) such fractional share interest to which such
holder (after taking into account all fractional share interests then held by
such holder) would otherwise be entitled by (ii) the closing price for a share
of Synetic Common Stock on National Association of Securities Dealers Automated
Quotation System/NMS ("NASDAQ") Composite Transaction Tape on the first business
day immediately following the Effective Time. From time to time after the
Effective Time, as promptly as practicable after the determination of the amount
of cash, if any, to be paid to any holders of fractional share interests who
have surrendered their Certificates to the Exchange Agent, the Exchange Agent
shall so notify Synetic, and Synetic shall deposit such amount with the Exchange
Agent and shall cause the Exchange Agent to forward payments to such holder of
fractional share interests subject to and in accordance with the terms of
Sections 2.02(b) and (c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Medical Manager Common Stock for one (1)
year after the Effective Time shall be delivered to Synetic, upon demand, and
any holders of Medical Manager Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Synetic for the shares of
Synetic Common Stock, any cash in lieu of fractional shares of Synetic Common
Stock to which they are entitled pursuant to Section 2.02(e) and any dividends
or other distributions with respect to Synetic Common Stock to which they are
entitled pursuant to Section 2.02(c). Any portion of the Exchange Fund remaining
unclaimed by holders of Shares as of a date which is immediately prior to such
time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable Law, become the
property of Synetic free and clear of any claims or interest of any person
previously entitled thereto.
(g) No Liability. Neither Synetic nor Medical Manager shall be liable to
any holder of Shares for any such Shares (or dividends or distributions with
respect hereto), or cash delivered to a public official pursuant to any
abandoned property, escheat or similar Law.
(h) Withholding Rights. Each of Surviving Corporation and Synetic shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign Tax Law. To the extent
that amounts are so withheld by the Surviving Corporation or Synetic, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Synetic,
as the case may be.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of Medical Manager shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of Medical
Manager. From and after the Effective Time, the holders of Certificates shall
cease to have any rights with respect to
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such Shares except as otherwise provided herein or by any Laws. On or after the
Effective Time, any Certificates presented to the Exchange Agent or Synetic for
any reason shall be converted into shares of Synetic Common Stock, any cash in
lieu of fractional shares of Synetic Common Stock to which the holders thereof
are entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.02(c).
SECTION 2.04. Stock Options. (a) Prior to the Effective Time, Synetic and
Medical Manager shall take such action as may be necessary to cause each
unexpired and unexercised option to purchase shares of Medical Manager Common
Stock (a "Medical Manager Option") under Medical Manager's 1996 Amended and
Restated Long-Term Incentive Plan and 1996 Non-Employee Directors' Stock Plan
(collectively, the "Medical Manager Stock Option Plans") to be automatically
converted at the Effective Time into an option (a "Substituted Option") to
purchase a number of shares of Synetic Common Stock equal to the number of
shares of Medical Manager Common Stock that could have been purchased (assuming
full vesting) under such Medical Manager Option multiplied by the Exchange Ratio
(rounded to the nearest whole number of shares of Synetic Common Stock) at a
price per share of Synetic Common Stock equal to the per-share option exercise
price specified in the Medical Manager Option divided by the Exchange Ratio
(rounded down to the nearest whole cent). Such Substituted Option shall
otherwise be subject to the same terms and conditions as such Medical Manager
Option. The date of grant of the Substituted Option shall be the date on which
the corresponding Medical Manager Option was granted. At the Effective Time, (i)
all references in the related stock option agreements to Medical Manager shall
be deemed to refer to Synetic and (ii) Synetic shall assume all of Medical
Manager's obligations with respect to Medical Manager Options as so amended. As
promptly as reasonably practicable after the Effective Time, Synetic shall issue
to each holder of an outstanding Medical Manager Option a document evidencing
the foregoing assumption by Synetic.
(b) In respect of each Medical Manager Option assumed by Synetic, and the
shares of Synetic Common Stock underlying such Medical Manager Option, Synetic
shall, as soon as practicable after the Effective Time, file and keep current a
Form S-8 or other appropriate registration statement for as long as Substituted
Options remain outstanding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEDICAL MANAGER
Except as disclosed in a separate disclosure schedule referring to the
specific representations and warranties contained in this Agreement, which has
been delivered by Medical Manager to Synetic prior to the execution of this
Agreement (the "Medical Manager Disclosure Schedule"), Medical Manager hereby
represents and warrants to Synetic and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Medical Manager
is a corporation duly incorporated, validly existing and in good standing under
the laws of Delaware and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
have such power, authority and governmental approvals would not have a Medical
Manager Material Adverse Effect (as defined below). Medical Manager is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the
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properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not have a Medical Manager
Material Adverse Effect. The term "Medical Manager Material Adverse Effect"
means any adverse change or effect that, when taken individually or together
with all other adverse changes and effects, is or is reasonably likely to be
materially adverse to the business, operations, results of operations or
financial condition of Medical Manager and its subsidiaries taken as a whole.
(b) Section 3.01 of the Medical Manager Disclosure Schedule sets forth a
complete and correct list of all Medical Manager's directly or indirectly owned
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by each
holder of such stock.
SECTION 3.02. Certificate of Incorporation and By-Laws. Medical Manager has
heretofore furnished to Synetic a complete and correct copy of the Certificate
of Incorporation and the By-laws, each as amended to date, of Medical Manager.
The Certificates of Incorporation and By-laws (or equivalent organizational
documents) of Medical Manager and its subsidiaries are in full force and effect.
None of Medical Manager or its subsidiaries is in violation of any provision of
its Certificate of Incorporation or By-laws (or equivalent organizational
documents).
SECTION 3.03. Capitalization. The authorized capital stock of Medical
Manager consists of 50,000,000 Shares and 500,000 shares of Preferred Stock, par
value $.01 per share (the "Medical Manager Preferred Stock"). As of March 31,
1999, (a) 22,363,202 Shares were issued and outstanding, all of which were
validly issued, fully paid and nonassessable, (b) no Shares were held in the
treasury of Medical Manager and (c) 1,812,379 Shares were reserved for future
issuance pursuant to outstanding unexercised employee stock options granted
pursuant to the Medical Manager Stock Option Plans. No shares of Medical Manager
Preferred Stock are outstanding. Except for the issuance of Shares pursuant to
the exercise of Medical Manager Options outstanding prior to March 31, 1999, no
shares of capital stock of Medical Manager or any of its subsidiaries have been
issued since March 31, 1999 through the date of this Agreement. Set forth on
Schedule 3.03 of the Medical Manager Disclosure Schedule is a description of the
term and exercise price of each outstanding grant of Medical Manager Options or
any other rights to acquire Shares pursuant to the Medical Manager Stock Option
Plans. Except as set forth in this Section 3.03, as of the date of this
Agreement there are no options, warrants or other rights, agreements (including
registration rights agreements), arrangements or commitments of any character
relating to the issued or unissued capital stock of Medical Manager or any of
its subsidiaries or obligating Medical Manager or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
Medical Manager or any of its subsidiaries. All shares of capital stock of
Medical Manager and its subsidiaries subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of Medical
Manager or any subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Medical Manager or any of its subsidiaries or to provide
funds to, or make any investment (in the form of a loan capital contribution or
otherwise) in, any person. No portion of the business of Medical Manager or any
of its subsidiaries is conducted through any partnership, joint venture, limited
liability company or similar arrangement.
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SECTION 3.04. Authority Relative to Agreement. Medical Manager has all
necessary power and authority to execute and deliver each of this Agreement and
the Medical Manager Option Agreement, to perform its obligations hereunder and
thereunder and to consummate the Merger and the other transactions contemplated
hereby and thereby. The execution and delivery of each of this Agreement and the
Medical Manager Option Agreement by Medical Manager and the consummation by
Medical Manager of the Merger and the other transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of Medical Manager are necessary
to authorize this Agreement or the Medical Manager Option Agreement or to
consummate the Merger and the other transactions contemplated hereby and thereby
(other than, with respect to the Merger, the adoption of this Agreement by the
holders of a majority of the then outstanding Shares and the filing and
recordation of appropriate merger documents as required by Delaware Law). Each
of this Agreement and the Medical Manager Option Agreement has been duly and
validly executed and delivered by Medical Manager and, assuming the due
authorization, execution and delivery by Synetic and Merger Sub, each of this
Agreement and the Medical Manager Option Agreement constitutes a legal, valid
and binding obligation of Medical Manager, enforceable against Medical Manager
in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement and the Medical Manager Option Agreement by
Medical Manager does not, and the performance of this Agreement and the Medical
Manager Option Agreement by Medical Manager will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of Medical Manager or any of
its subsidiaries, (ii) conflict with or violate any domestic (federal, state or
local) or foreign law, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to Medical Manager or any of its subsidiaries
or by which any property or asset of Medical Manager or any of its subsidiaries
is bound or affected or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration, or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Medical Manager or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Medical Manager or any of
its subsidiaries is a party or by which Medical Manager or any of its
subsidiaries or any property or asset of Medical Manager or any of its
subsidiaries is bound or affected, except, in the case of clauses (ii) and
(iii), for any such conflicts, breaches, defaults or other occurrences which
would not have a Medical Manager Material Adverse Effect or would not prevent or
materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement and the Medical Manager
Option Agreement by Medical Manager do not, and the performance of this
Agreement by Medical Manager will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic, foreign or supranational, except for
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act of 1933, as amended (the "Securities Act"),
state securities or "blue sky" laws ("Blue Sky Laws"), the pre-merger
notification arrangements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
filing and recordation of appropriate merger documents as required by Delaware
Law and the rules of the NASDAQ and except where failure to obtain such
consents, approvals,
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authorizations or permits, or to make such filings or notifications, would not
have a Medical Manager Material Adverse Effect or would not prevent or
materially delay the consummation of the Merger.
SECTION 3.06. Permits and Licenses. Each of Medical Manager and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders necessary for Medical Manager or any of its subsidiaries to
own, lease and operate the properties of Medical Manager and its subsidiaries or
to carry on their business as it is now being conducted and contemplated to be
conducted (the "Medical Manager Permits"), and no suspension or cancellation of
any of Medical Manager Permits is pending or, to the best knowledge of Medical
Manager, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Medical Manager Permits would not have a Medical
Manager Material Adverse Effect. None of Medical Manager or any of its
subsidiaries is in conflict with, or in default or violation of, (i) any Laws
applicable to Medical Manager or any of its subsidiaries or by which any
property or asset of Medical Manager or any of its subsidiaries is bound or
affected or (ii) any of the Medical Manager Permits, except for any such
conflicts, defaults or violations that would not have a Medical Manager Material
Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) Medical Manager has
filed all forms, reports and documents required to be filed by it with the SEC
since January 30, 1997, and has heretofore made available to Synetic, in the
form filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal years
ended December 31, 1997 and December 31, 1998, respectively, (ii) its Quarterly
Reports on Form 10-Q for the period ended March 31, 1999, (iii) all proxy
statements relating to Medical Manager's meetings of stockholders (whether
annual or special) held since January 30, 1997 and (iv) all other forms, reports
and other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by Medical Manager with the SEC since
January 30, 1997 and prior to the date hereof (the forms, reports and other
documents referred to in clauses (i), (ii), (iii) and (iv) above being referred
to herein, collectively, as the "Medical Manager SEC Reports"). The Medical
Manager SEC Reports, as well as all forms, reports and documents to be filed by
Medical Manager with the SEC after the date hereof and prior to the Effective
Time, (i) were or will be prepared in accordance with the requirements of the
Securities Act, and the Exchange Act, as the case may be, and the rules and
regulations thereunder, (ii) did not at the time they were filed, or will not at
the time they are filed, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, and (iii) did not at the time they were filed,
or will not at the time they are filed, omit any documents required to be filed
as exhibits thereto.
(b) Each of the financial statements (including, in each case, any notes
thereto) contained in the Medical Manager SEC Reports and each of the financial
statements to be filed by Medical Manager with the SEC after the date hereof and
prior to the Effective Time, was or will be prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented or will fairly present the consolidated
financial position, results of operations and cash flows of Medical Manager and
its subsidiaries as at the respective dates thereof and for the respective
periods indicated therein in accordance with generally accepted accounting
principles
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(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected to be material).
(c) Medical Manager and its subsidiaries have no liabilities or obligations
of any nature, except: (i) as and to the extent set forth on the balance sheet
of Medical Manager as at December 31, 1998, including the notes thereto (the
"Medical Manager 1998 Balance Sheet") or (ii) as would not have a Medical
Manager Material Adverse Effect.
(d) Medical Manager has heretofore furnished to Synetic complete and
correct copies of all amendments and modifications that have not been filed by
Medical Manager with the SEC to all agreements, documents and other instruments
that previously had been filed by Medical Manager with the SEC and are currently
in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since December 31, 1998
to the date of this Agreement, except as contemplated or permitted by this
Agreement or disclosed in any Medical Manager SEC Report filed since December
31, 1998, (a) each of Medical Manager and each of its subsidiaries has conducted
its businesses only in the ordinary course and in a manner consistent with past
practice and (b) there has not been (i) any events or circumstances having a
Medical Manager Material Adverse Effect, (ii) any change by Medical Manager or
any of its subsidiaries in its accounting policies, practices and procedures,
(iii) any entry by Medical Manager or any of its subsidiaries into any
commitment or transaction material to Medical Manager and its subsidiaries taken
as a whole other than in the ordinary course of business consistent with past
practice, (iv) except for those issuances in connection with the exercise of
Medical Manager Options under the Medical Manager Stock Option Plans, any
issuance of capital stock of Medical Manager or any of its subsidiaries, (v) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of Medical Manager or any of its subsidiaries (other than
cash dividends payable by any subsidiary to another subsidiary or Medical
Manager) or any redemption, purchase or other acquisition of any of its or any
of its subsidiaries' securities, or (vi) any increase in the compensation
payable or to become payable to any officers or key employees of Medical Manager
or any of its subsidiaries, except in the ordinary course of business consistent
with past practice, or any increase, other than as required by the contracts
referred to in Section 3.10, in the compensation or benefits under or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan.
SECTION 3.09. Absence of Litigation. Except as disclosed in Medical Manager
SEC Reports, as of the date of this Agreement there is no claim, action,
proceeding or investigation pending or, to the best knowledge of Medical
Manager, threatened against Medical Manager or any of its subsidiaries, or any
property or asset of Medical Manager or any of its subsidiaries, before any
court, arbitrator or Governmental Authority, except as would not have a Medical
Manager Material Adverse Effect. As of the date of this Agreement, none of
Medical Manager, any of its subsidiaries nor any property or asset of Medical
Manager or any of its subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award imposed by any court, arbitration or
Governmental Authority, except as would not have a Medical Manager Material
Adverse Effect.
SECTION 3.10. Employee Benefit Plans; Labor Matters. (a) With respect to
each employee benefit plan, program, arrangement and contract (including,
without limitation, any "employee benefit plan", as defined in Section 3(3) of
the Employee Retirement
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Income Security Act of 1974, as amended ("ERISA")), maintained or contributed to
by Medical Manager or any of its subsidiaries, or with respect to which Medical
Manager or any of its subsidiaries could incur liability under Section 4069,
4201 or 4212(c) of ERISA (the "Medical Manager Benefit Plans"), Medical Manager
has made available to Synetic a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS"),
(ii) such Medical Manager Benefit Plan, (iii) each trust agreement relating to
such Medical Manager Benefit Plan, (iv) the most recent summary plan described
for each Medical Manager Benefit Plan for which a summary plan described is
required, (v) the most recent actuarial report or valuation relating to a
Medical Manager Benefit Plan subject to Title IV of ERISA, if any, and (vi) the
most recent determination letter, if any, issued by the IRS with respect to any
Medical Manager Benefit Plan qualified under Section 401(a) of the Code.
(b) With respect to the Medical Manager Benefit Plans, no event has
occurred and, to the knowledge of Medical Manager, there exists no condition or
set of circumstances, in connection with which Medical Manager or any of its
subsidiaries could be subject to any liability under the terms of such Medical
Manager Benefit Plans, ERISA, the Code or any other applicable Law except as
would not have a Medical Manager Material Adverse Effect. Neither Medical
Manager nor any of its subsidiaries has any actual or contingent liability under
Title IV of ERISA (other than the payment of premiums to the Pension Benefit
Guaranty Corporation) except as would not have a Medical Manager Material
Adverse Effect.
(c) Medical Manager has made available to Synetic (i) copies of all
employment agreements with officers or key employees of Medical Manager or any
of its subsidiaries; (ii) copies of all severance agreements, programs and
policies of Medical Manager or any of its subsidiaries with or relating to its
or its subsidiaries' employees; and (iii) copies of all plans, programs,
agreements and other arrangements of Medical Manager or any of its subsidiaries
with or relating to its or its subsidiaries' employees which contain change in
control provisions. Except as set forth in Section 3.10(c) of the Medical
Manager Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any material payment (including, without limitation, severance,
unemployment compensation, "golden parachute" or otherwise) becoming due to any
director, officer or employee of Medical Manager or any of its subsidiaries from
Medical Manager or any of its affiliates under any Medical Manager Benefit Plan
or otherwise, (ii) materially increase any benefits otherwise payable under any
Medical Manager Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any material benefits.
(d) Except as set forth in Section 3.10(d) of the Medical Manager
Disclosure Schedule or as required by Law, no Medical Manager Benefit Plan
provides retiree medical or retiree life insurance benefits to any person.
SECTION 3.11. Labor Matters. Neither Medical Manager nor any of its
subsidiaries is a party to any collective bargaining or other labor union
contract applicable to persons employed by Medical Manager or any of its
subsidiaries. As of the date of this Agreement, there is no labor dispute,
strike or work stoppage against Medical Manager or any of its subsidiaries
pending or, to the knowledge of Medical Manager, threatened which would
reasonably be expected to interfere with the respective business activities of
Medical Manager or any of its subsidiaries, except where such dispute, strike or
work stoppage would not have a Medical Manager Material Adverse Effect. As of
the date of this Agreement, there is no charge or complaint against Medical
Manager or any of its
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subsidiaries by the National Labor Relations Board or any comparable state
agency pending or threatened in writing, except where such charge or complaint
would not have a Medical Manager Material Adverse Effect.
SECTION 3.12. Dealers. Listed in Section 3.12 of the Medical Manager
Disclosure Schedule are the names of the twenty largest independent dealers by
volume of sales of products and services of Medical Manager and its
subsidiaries, for the twelve-month period ended April 30, 1999. Except as
disclosed in Section 3.12 of the Medical Manager Disclosure Schedule, none of
Medical Manager nor any of its subsidiaries has received any written notice that
any such independent dealer has ceased, or will cease, being an independent
dealer for Medical Manager or any of its subsidiaries, or has substantially
reduced, or will substantially reduce, its volume of sales of products or
services of Medical Manager or its subsidiaries.
SECTION 3.13. Intellectual Property. Except as would not have a Medical
Manager Material Adverse Effect, (a) Section 3.13 of the Medical Manager
Disclosure Schedule sets forth a true and complete list of all i) Software,
registered U.S. and foreign patents and patent applications, registered U.S. and
foreign trademarks and trademark applications, registered U.S. and foreign
copyrights and copyright applications and other Intellectual Property (as
hereinafter defined), in each case owned or controlled by Medical Manager and
material to the business of Medical Manager ("Medical Manager Owned Intellectual
Property"), and ii) licenses of Intellectual Property or Software to Medical
Manager or by Medical Manager to a third party (as hereinafter defined), in each
case that are material to the business of Medical Manager ("Medical Manager
Licensed Intellectual Property"); (b) to the knowledge of Medical Manager, the
conduct of the business of Medical Manager as currently conducted does not
infringe or misappropriate the Intellectual Property rights of any third party,
and no claim has been asserted to Medical Manager that the conduct of the
business of Medical Manager as currently conducted infringes or may infringe or
misappropriate the Intellectual Property rights of any third party; (c) with
respect to each item of the Medical Manager Owned Intellectual Property, Medical
Manager is the sole owner of the entire right, title and interest in and to such
Intellectual Property and without limitation of the foregoing is entitled to use
such Intellectual Property in the continued operation of its business; (d) with
respect to each item of Medical Manager Licensed Intellectual Property, Medical
Manager has the right to use such Medical Manager Licensed Intellectual Property
in the continued operation of its business in accordance with the terms of the
license agreement governing such Medical Manager Licensed Intellectual Property;
(e) to the knowledge of Medical Manager, the Medical Manager Owned Intellectual
Property is valid and enforceable, and has not been adjudged invalid or
unenforceable in whole or part; (f) to the knowledge of Medical Manager, no
person is engaging in any activity that infringes upon the Medical Manager Owned
Intellectual Property; (g) to the knowledge of Medical Manager, each license of
the Medical Manager Licensed Intellectual Property is valid and enforceable, is
binding on all parties to such license, and is in full force and effect; (h) to
the knowledge of Medical Manager, no party to any license of the Medical Manager
Licensed Intellectual Property is in breach thereof or default thereunder; (i)
the Software of Medical Manager is free of all viruses, worms, trojan horses and
other material known contaminants, and does not contain any bugs, errors, or
problems of a material nature that disrupt its operation or have an adverse
impact on the operation of other software programs or operating systems; (j) no
rights in the Software of Medical Manager have been transferred to any third
party except to the customers of Medical Manager to whom Medical Manager has
licensed such Software in the ordinary course of business; and (k) Medical
Manager has the right to use
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all software development tools, library functions, compilers, and other third
party software that is material to the business of Medical Manager, or that is
required to operate or modify the Software of Medical Manager.
"Intellectual Property" means (i) patents, patent applications and
statutory invention registrations, in each case in the United States and all
other countries, (ii) any trademarks, service marks, trade dress, logos, trade
names, corporate names, and other source identifiers, including any
registrations and applications for registration of any of the foregoing in the
United States and any foreign country, (iii) all rights under the copyright laws
of the United States and all other countries, including, without limitation, all
copyrightable works, copyrights, and registrations and applications for
registration thereof, and (iv) all confidential and proprietary information,
including trade secrets and know-how.
"Software" of a party means all material computer software owned,
controlled or licensed by or on behalf of such party and used, manufactured,
distributed, sold, licensed or marketed by such party.
SECTION 3.14. Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
means any and all taxes, fees, levies, duties, tariffs, imposts, and other
charges of any kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any
governmental or taxing authority including, without limitation: taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs' duties, tariffs, and similar charges.
(b) Except as would not have a Medical Manager Material Adverse Effect (i)
each of Medical Manager and each of its subsidiaries has filed all federal,
state, local and foreign tax returns and reports required to be filed by it and
has paid and discharged all Taxes shown as due thereon and has paid all of such
other Taxes as are due, other than such payments as are being contested in good
faith by appropriate proceedings; (ii) neither the IRS nor any other taxing
authority or agency, domestic or foreign, is now asserting or, to the best
knowledge of Medical Manager after due inquiry, threatening to assert against
Medical Manager or any of its subsidiaries any deficiency or claim for
additional Taxes or interest thereon or penalties in connection therewith; (iii)
no waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any federal, state, county, municipal or foreign
income Tax has been granted by Medical Manager or any of its subsidiaries; (iv)
the accruals and reserves for Taxes reflected in Medical Manager 1998 Balance
Sheet and the most recent quarterly financial statements are adequate to cover
all Taxes accruable through the date thereof (including interest and penalties,
if any, thereon) in accordance with generally accepted accounting principles;
(v) no election under Section 341(f) of the Code has been made by Medical
Manager or any of its subsidiaries; (vi) Medical Manager and each of its
subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected and (vii) there are no material
liens for Taxes upon the assets of Medical Manager or any of its subsidiaries,
other than liens for Taxes that are being contested in good faith by appropriate
proceedings.
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SECTION 3.15. Material Contracts. (a) All contracts listed or that would be
required to be listed as an exhibit to Medical Manager's Annual Report on Form
10-K under the rules and regulations of the SEC relating to the business of
Medical Manager and its subsidiaries and any contracts that would be required to
be so listed but for the exception with respect to contracts made in the
ordinary course of business (collectively, the "Medical Manager Material
Contracts") are legal, valid and binding and in full force and effect, except to
the extent they have previously expired in accordance with their terms and
except as would not have a Medical Manager Material Adverse Effect.
(b) Except as would not have a Medical Manager Material Adverse Effect,
none of Medical Manager or any of its subsidiaries nor, to the knowledge of
Medical Manager, any other party thereto, is in breach of, or default under, any
Medical Manager Material Contract. Medical Manager has furnished Synetic with
true and complete copies of all Medical Manager Material Contracts, together
with all amendments, waivers, or other changes thereto.
(c) None of Medical Manager or any of its subsidiaries, is a party to, or
is otherwise bound by, any contract under which such party has granted any
person access to the physician customers of Medical Manager and its subsidiaries
for the purpose or with the effect of providing such physician customers with
content, messaging or transaction services or network or communication
facilities or software for providing such services.
(d) None of Medical Manager or any of its subsidiaries is a party to, or is
otherwise bound by, any contracts and agreements that limit the ability of
Medical Manager or any of its subsidiaries or, after the Effective Time, Synetic
or any of its affiliates, to compete in any line of business or with any person
or in any geographic area or during any period of time, or to solicit any
customer or client.
SECTION 3.16. Accounting and Tax Matters. None of Medical Manager or any of
its affiliates has taken or agreed to take any action that would prevent the
Merger from being effected as a pooling of interests or would prevent the Merger
from constituting a transaction qualifying under Section 368(a) of the Code.
None of Medical Manager or any of its affiliates or agents is aware of any
agreement, plan or other circumstance that would prevent the Merger from being
effected as a pooling of interests or qualifying under Section 368(a) of the
Code, and to the knowledge of Medical Manager, the Merger may be so effected and
will so qualify.
SECTION 3.17. Year 2000 Compliance. (a) Medical Manager has adopted a plan
that it believes will cause Medical Manager Systems (as defined below) to be
Year 2000 Compliant (as defined below) (such plan, as it may be amended,
modified or supplemented from time to time being, the "Medical Manager Year 2000
Plan") in all material respects. Medical Manager has taken, and between the date
of this Agreement and the Effective Time will continue to take, all reasonable
steps to implement the Medical Manager Year 2000 Plan with respect to Medical
Manager Systems. Notwithstanding anything in this Section 3.17 to the contrary,
Medical Manager does not represent or warrant that Medical Manager Systems (or
any other operations, systems, equipment or software of Medical Manager or
Medical Manager Subsidiaries or any of their respective affiliates) are or will
be Year 2000 Compliant at or prior to the Effective Time, regardless of whether
the Medical Manager Year 2000 Plan has or has not been implemented or complied
with.
(b) For purposes of this Section 3.17, (i) "Medical Manager Systems" shall
mean all computer, hardware, software, systems, and equipment (including
embedded microcontrol-
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lers in non-computer equipment) material to or necessary for Medical Manager and
Medical Manager Subsidiaries to carry on their businesses as currently conducted
and shall also include Version 9 of The Medical Manager(R) software; and (ii)
"Year 2000 Compliant" means that Medical Manager Systems will (A) manage,
accept, process, store and output data involving 4-digit year dates and (B)
accurately process date data from, into and between the 20th and 21st centuries
and the years 1999 and 2000 and leap year calculation.
SECTION 3.18. Opinion of Financial Advisors. Medical Manager has received
the written opinion of Donaldson, Lufkin & Jenrette, Inc. (the "Medical Manager
Financial Advisor") on or prior to the date of this Agreement, to the effect
that, as of the date of such opinion, the consideration to be received by the
holders of Medical Manager Common Stock pursuant to this Agreement is fair to
the stockholders of Medical Manager from a financial point of view, and Medical
Manager will promptly, after the date of this Agreement, deliver a copy of such
opinion to Synetic.
SECTION 3.19. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of capital stock of Medical Manager necessary to approve the Merger.
SECTION 3.20. Section 203 of Delaware Law. The Board of Directors of
Medical Manager has approved this Agreement, the Medical Manager Stock Option
Agreement, and the Synetic Voting Agreement and such Synetic approvals are
sufficient to render inapplicable to this Agreement, the Medical Manager Stock
Option Agreement and the Synetic Voting Agreement and the transactions
contemplated hereby and thereby the provisions of Section 203 of Delaware Law.
SECTION 3.21. Affiliates. Section 3.21 of the Medical Manager Disclosure
Schedule sets forth all persons who, as of the date of this Agreement, may be
deemed to be affiliates of Medical Manager under Rule 145 of the Securities Act
or otherwise under applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment. Prior to the date hereof, Medical
Manager has advised such persons of the resale restrictions imposed by
applicable securities Laws and required to cause the Merger to qualify for
pooling-of-interests accounting treatment.
SECTION 3.22. Brokers. No broker, finder or investment banker (other than
Medical Manager Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Medical Manager.
SECTION 3.23. Environmental Matters. (a) To the knowledge of Medical
Manager, Medical Manager is and has at all times been in compliance with all
environmental laws governing Medical Manager and its business, operations,
properties and assets, except as would not have a Medical Manager Material
Adverse Effect.
(b) There are no judgments and no material non-compliance orders, warning
letters, notices of violation, claims, suits, actions, penalties, fines, or
administrative or judicial investigations of any nature or to the knowledge of
Medical Manager proceedings pending or threatened in writing against or
involving Medical Manager, any Governmental Authority or third party with
respect to any environmental laws or licenses issued to Medical Manager, except
as would not have a Medical Manager Material Adverse Effect.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SYNETIC
AND MERGER SUB
Except as disclosed in a separate disclosure schedule referring to the
specific representations and warranties contained in this Agreement, which has
been delivered by Synetic to Medical Manager prior to the execution of this
Agreement (the "Synetic Disclosure Schedule"), Synetic and Merger Sub, jointly
and severally, hereby represent and warrant to Medical Manager that:
SECTION 4.01. Organization and Qualification; Subsidiaries. (a) Each of
Synetic and Merger Sub is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not have a Synetic Material Adverse Effect (as
defined below). Each of Synetic and Merger Sub is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not have a Synetic Material Adverse Effect. The term
"Synetic Material Adverse Effect" means any adverse change or effect that, when
taken individually or together with all other adverse changes and effects, is or
is reasonably likely to be materially adverse to the business, operations,
results of operations or financial condition of Synetic and its subsidiaries
taken as a whole.
(b) Section 4.01 of the Synetic Disclosure Schedule sets forth a complete
and correct list of all Synetic's directly or indirectly owned subsidiaries,
together with the jurisdiction of incorporation of each subsidiary and the
percentage of each subsidiary's outstanding capital stock owned by each holder
of such stock. Merger Sub is a direct, wholly owned subsidiary of Synetic, was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement.
SECTION 4.02. Certificate of Incorporation and By-Laws. Synetic has
heretofore furnished to Medical Manager a complete and correct copy of the
Certificate of Incorporation and the By-laws, each as amended to date, of
Synetic. The Certificates of Incorporation and By-laws (or equivalent
organizational documents) of Synetic and its subsidiaries are in full force and
effect. None of Synetic or its subsidiaries is in violation of any provision of
its Certificate of Incorporation or By-laws (or equivalent organizational
documents).
SECTION 4.03. Capitalization. The authorized capital stock of Synetic
consists of 100,000,000 shares of Synetic Common Stock and 10,000,000 shares of
Preferred Stock, par value $.01 per share ("Synetic Preferred Stock"). As of May
10, 1999, (a) 20,545,011 shares of Synetic Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable, (b)
no shares of Synetic Common Stock were held in the treasury of Synetic, (c) no
shares of Synetic Common Stock were held by subsidiaries of Synetic and (d) as
of May 5, 1999 approximately 10,488,731 shares of Synetic Common Stock subject
to outstanding stock options or stock incentive rights (whether or not
exercisable) were reserved for future issuance pursuant to stock options or
stock incentive rights (collectively "Synetic Options") granted pursuant to
Synetic's stock option
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plans and arrangements (the "Synetic Stock Option Plans"). As of May 10, 1999,
no shares of Synetic Preferred Stock were issued and outstanding. The authorized
capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock,
of which, as of the date of this Agreement, 100 are issued and outstanding.
Except for the issuance of Shares pursuant to the exercise of Synetic Options
outstanding prior to May 10, 1999, no shares of capital stock of Synetic or any
of its subsidiaries have been issued since May 10, 1999 through the date of this
Agreement. Set forth on Schedule 4.03 of the Synetic Disclosure Schedule is a
summary of Synetic Options or any other rights to acquire Shares pursuant to the
Synetic Stock Option Plans outstanding as of May 5, 1999. Except as set forth in
this Section 4.03 and except for the anticipated issuance of CareInsite, Inc.
common stock and CareInsite, Inc. stock options in connection with the initial
public offering of CareInsite, Inc., as of the date of this Agreement, there are
no options, warrants or other rights, agreements (including registration rights
agreements), arrangements or commitments of any character relating to the issued
or unissued capital stock of Synetic or any of its subsidiaries or obligating
Synetic or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, Synetic or any of its subsidiaries. All shares
of capital stock of Synetic and its subsidiaries subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Synetic or any subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Synetic or any of its
subsidiaries or to provide funds to, or make any investment (in the form of a
loan capital contribution or otherwise) in, any person. No portion of the
business of Synetic or any of its subsidiaries is conducted through any
partnership, joint venture, limited liability company or similar arrangement.
SECTION 4.04. Authority Relative to Agreement. Each of Synetic and Merger
Sub has all necessary power and authority to execute and deliver each of this
Agreement and the Synetic Option Agreement, to perform its obligations hereunder
and thereunder and to consummate the Merger and the other transactions
contemplated hereby and thereby. The execution and delivery of each of this
Agreement and the Synetic Option Agreement by Synetic and Merger Sub and the
consummation by Synetic and Merger Sub of the Merger and the other transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Synetic or Merger Sub are necessary to authorize this Agreement or the Synetic
Option Agreement or to consummate the Merger and the other transactions
contemplated hereby and thereby (other than, with respect to the Merger, the
approval of the Synetic Proposals by the holders of a majority of the then
outstanding shares of Synetic Common Stock and the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed by Merger Sub, and each of this Agreement and the
Synetic Option Agreement has been duly and validly executed and delivered by
Synetic and, assuming the due authorization, execution and delivery by Medical
Manager, this Agreement constitutes a legal, valid and binding obligation of
Merger Sub and each of this Agreement and the Synetic Option Agreement
constitutes a legal, valid and binding obligation of Synetic, enforceable
against Synetic and Merger Sub in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement and the Synetic Option Agreement by Synetic and
this Agreement by Merger Sub does not, and the performance of this Agreement and
the Synetic Option Agreement by Synetic and this Agreement by Merger Sub will
not,
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(i) conflict with or violate the Certificate of Incorporation or By-laws of
Synetic or any of its subsidiaries, (ii) conflict with or violate any Law
applicable to Synetic or any of its subsidiaries or by which any property or
asset of Synetic or any of its subsidiaries is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Synetic or
Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Synetic or Merger Sub is a party or by which Synetic or Merger Sub or
any property or asset of either of them is bound or affected, except, in the
case of clauses (ii) and (iii), for any such conflicts, breaches, defaults or
other occurrences which would not have a Synetic Material Adverse Effect, or
would not prevent or materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement and the Synetic Option
Agreement by Synetic and this Agreement by Merger Sub do not, and the
performance of this Agreement and the Synetic Option Agreement by Synetic and
this Agreement by Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic, foreign or supranational, except for
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the HSR Act, filing and recordation of appropriate merger documents as required
by Delaware Law and the rules of the NASDAQ and except where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Synetic Material Adverse Effect or would not
prevent or materially delay the consummation of the Merger.
SECTION 4.06. Permits and Licenses. Each of Synetic and its subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
necessary for Synetic or any of its subsidiaries to own, lease and operate the
properties of Synetic and its subsidiaries or to carry on their business as it
is now being conducted and contemplated to be conducted (the "Synetic Permits"),
and no suspension or cancellation of any of Synetic Permits is pending or, to
the best knowledge of Synetic, threatened, except where the failure to have, or
the suspension or cancellation of, any of the Synetic Permits would not have a
Synetic Material Adverse Effect. None of Synetic or any of its subsidiaries is
in conflict with, or in default or violation of, (i) any Laws applicable to
Synetic or any of its subsidiaries or by which any property or asset of Synetic
or any of its subsidiaries is bound or affected or (ii) any of the Synetic
Permits, except for any such conflicts, defaults or violations that would not
have a Synetic Material Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements. (a) Synetic has filed all
forms, reports and documents required to be filed by it with the SEC since June
30, 1997, and has heretofore made available to Medical Manager, in the form
filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal years
ended June 30, 1997 and June 30, 1998, respectively, (ii) its Quarterly Reports
on Form 10-Q for the period ended March 31, 1999, (iii) all proxy statements
relating to Synetic's meetings of stockholders (whether annual or special) held
since June 30, 1997 and (iv) all other forms, reports and other registration
statements (other than Quarterly Reports on Form 10-Q not referred to in clause
(ii) above) filed by Synetic with the SEC since June 30, 1998, and prior to the
date hereof (the forms, reports and other documents referred to in clauses (i),
(ii), (iii) and (iv) above being referred to herein, collectively, as the
"Synetic SEC Reports"). The Synetic SEC Reports, as well as all forms, reports
and documents to be filed by
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Synetic with the SEC after the date hereof and prior to the Effective Time, (i)
were or will be prepared in accordance with the requirements of the Securities
Act, and the Exchange Act, as the case may be, and the rules and regulations
thereunder, (ii) did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, and (iii) did not at the time they were filed, or will not
at the time they are filed, omit any documents required to be filed as exhibits
thereto.
(b) Each of the financial statements (including, in each case, any notes
thereto) contained in the Synetic SEC Reports and each of the financial
statements to be filed by Synetic with the SEC after the date hereof and prior
to the Effective Time, was or will be prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented or will fairly present the consolidated
financial position, results of operations and cash flows of Synetic and its
subsidiaries as at the respective dates thereof and for the respective periods
indicated therein in accordance with generally accepted accounting principles
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected to be material).
(c) Synetic and its subsidiaries have no liabilities or obligations of any
nature, except: (i) as and to the extent set forth on the balance sheet of
Synetic as at June 30, 1998, including the notes thereto (the "Synetic 1998
Balance Sheet") or (ii) as would not have a Synetic Material Adverse Effect.
(d) Synetic has heretofore furnished to Medical Manager complete and
correct copies of all amendments and modifications that have not been filed by
Synetic with the SEC to all agreements, documents and other instruments that
previously had been filed by Synetic with the SEC and are currently in effect.
SECTION 4.08. Absence of Certain Changes or Events. Since December 31, 1998
to the date of this Agreement, except as contemplated or permitted by this
Agreement or disclosed in any Synetic SEC Report, or forms, reports and other
registration statements filed by CareInsite, Inc. with the SEC, filed since
December 31, 1998, (a) each of Synetic and each of its subsidiaries has
conducted its businesses only in the ordinary course and in a manner consistent
with past practice and (b) there has not been (i) any events or circumstances
having a Synetic Material Adverse Effect, (ii) any change by Synetic or any of
its subsidiaries in its accounting policies, practices and procedures, (iii) any
entry by Synetic or any of its subsidiaries into any commitment or transaction
material to Synetic and its subsidiaries taken as a whole other than in the
ordinary course of business consistent with past practice, (iv) except for those
issuances in connection with the exercise of Synetic Options under the Synetic
Stock Option Plans, any issuance of capital stock of Synetic or any of its
subsidiaries, (v) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Synetic) or any of its
subsidiaries (other than cash dividends payable by any subsidiary to another
subsidiary or Synetic) or any redemption, purchase or other acquisition of any
of its or any of its subsidiaries' securities, or (vi) any increase in the
compensation payable or to become payable to any officers or key employees of
Synetic or any of its subsidiaries, except in the ordinary course of business
consistent with past practice, or any increase, other than as required by the
contracts referred to in Section 4.10, in the compensation or benefits under
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or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan.
SECTION 4.09. Absence of Litigation. Except as disclosed in Synetic SEC
Reports, as of the date of this Agreement there is no claim, action, proceeding
or investigation pending or, to the best knowledge of Synetic, threatened
against Synetic or any of its subsidiaries, or any property or asset of Synetic
or any of its subsidiaries, before any court, arbitrator or Governmental
Authority, except as would not have a Synetic Material Adverse Effect. As of the
date of this Agreement, none of Synetic, any of its subsidiaries nor any
property or asset of Synetic or any of its subsidiaries is subject to any order,
writ, judgment, injunction, decree, determination or award imposed by any court,
arbitration or Governmental Authority, except as would not have a Synetic
Material Adverse Effect.
SECTION 4.10. Employee Benefit Plans; Labor Matters. (a) With respect to
each employee benefit plan, program, arrangement and contract (including,
without limitation, any "employee benefit plan", as defined in Section 3(3) of
ERISA), maintained or contributed to by Synetic or any of its subsidiaries, or
with respect to which Synetic or any of its subsidiaries could incur liability
under Section 4069, 4201 or 4212(c) of ERISA (the "Synetic Benefit Plans"),
Synetic has made available to Medical Manager a true and correct copy of (i) the
most recent annual report (Form 5500) filed with the IRS, (ii) such Synetic
Benefit Plan, (iii) each trust agreement relating to such Synetic Benefit Plan,
(iv) the most recent summary plan described for each Synetic Benefit Plan for
which a summary plan described is required, (v) the most recent actuarial report
or valuation relating to a Synetic Benefit Plan subject to Title IV of ERISA, if
any, and (vi) the most recent determination letter, if any, issued by the IRS
with respect to any Synetic Benefit Plan qualified under Section 401(a) of the
Code.
(b) With respect to the Synetic Benefit Plans, no event has occurred and,
to the knowledge of Synetic, there exists no condition or set of circumstances,
in connection with which Synetic or any of its subsidiaries could be subject to
any liability under the terms of such Synetic Benefit Plans, ERISA, the Code or
any other applicable Law except as would not have a Synetic Material Adverse
Effect. Neither Synetic nor any of its subsidiaries has any actual or contingent
liability under Title IV of ERISA (other than the payment of premiums to the
Pension Benefit Guaranty Corporation) except as would not have a Synetic
Material Adverse Effect.
(c) Synetic has made available to Medical Manager (i) copies of all
employment agreements with officers or key employees of Synetic or any of its
subsidiaries; (ii) copies of all severance agreements, programs and policies of
Synetic or any of its subsidiaries with or relating to its or its subsidiaries'
employees; and (iii) copies of all plans, programs, agreements and other
arrangements of Synetic or any of its subsidiaries with or relating to its or
its subsidiaries' employees which contain change in control provisions. Except
as set forth in Section 4.10(c) of the Synetic Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including, without limitation, severance, unemployment compensation, "golden
parachute" or otherwise) becoming due to any director, officer or employee of
Synetic or any of its subsidiaries from Synetic or any of its affiliates under
any Synetic Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Synetic Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any material benefits.
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(d) Except as set forth in Section 4.10(d) of the Synetic Disclosure
Schedule or as required by Law, no Synetic Benefit Plan provides retiree medical
or retiree life insurance benefits to any person.
SECTION 4.11. Labor Matters. Neither Synetic nor any of its subsidiaries is
a party to any collective bargaining or other labor union contract applicable to
persons employed by Synetic or any of its subsidiaries. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against Synetic or
any of its subsidiaries pending or, to the knowledge of Synetic, threatened
which would reasonably be expected to interfere with the respective business
activities of Synetic or any of its subsidiaries, except where such dispute,
strike or work stoppage would not have a Synetic Material Adverse Effect. As of
the date of this Agreement, there is no charge or complaint against Synetic or
any of its subsidiaries by the National Labor Relations Board or any comparable
state agency pending or threatened in writing, except where such charge or
complaint would not have a Synetic Material Adverse Effect.
SECTION 4.12. Intellectual Property. Except as would not have a Synetic
Material Adverse Effect, (a) Section 4.12 of the Synetic Disclosure Schedule
sets forth a true and complete list of all i) Software, registered U.S. and
foreign patents and patent applications, registered U.S. and foreign trademarks
and trademark applications, registered U.S. and foreign copyrights and copyright
applications, other Intellectual Property, in each case owned or controlled by
Synetic and material to the business of Synetic ("Synetic Owned Intellectual
Property"), and ii) licenses of Intellectual Property or Software to Synetic or
by Synetic to a third party, in each case that are material to the business of
Synetic ("Synetic Licensed Intellectual Property"); (b) to the knowledge of
Synetic, the conduct of the business of Synetic as currently conducted does not
infringe or misappropriate the Intellectual Property rights of any third party,
and no claim has been asserted to Synetic that the conduct of the business of
Synetic as currently conducted infringes or may infringe or misappropriate the
Intellectual Property rights of any third party; (c) with respect to each item
of the Synetic Owned Intellectual Property, Synetic is the sole owner of the
entire right, title and interest in and to such Intellectual Property and
without limitation of the foregoing is entitled to use such Intellectual
Property in the continued operation of its business; (d) with respect to each
item of Synetic Licensed Intellectual Property, Synetic has the right to use
such Synetic Licensed Intellectual Property in the continued operation of its
business in accordance with the terms of the license agreement governing such
Synetic Licensed Intellectual Property; (e) to the knowledge of Synetic, the
Synetic Owned Intellectual Property is valid and enforceable, and has not been
adjudged invalid or unenforceable in whole or part; (f) to the knowledge of
Synetic, no person is engaging in any activity that infringes upon the Synetic
Owned Intellectual Property; (g) to the knowledge of Synetic, each license of
the Synetic Licensed Intellectual Property is valid and enforceable, is binding
on all parties to such license, and is in full force and effect; (h) to the
knowledge of Synetic, no party to any license of the Synetic Licensed
Intellectual Property is in breach thereof or default thereunder; (i) the
Software of Synetic is free of all viruses, worms, trojan horses and other
material known contaminants, and does not contain any bugs, errors, or problems
of a material nature that disrupt its operation or have an adverse impact on the
operation of other software programs or operating systems; (j) no rights in the
Software of Synetic have been transferred to any third party except to the
customers of Synetic to whom Synetic has licensed such Software in the ordinary
course of business; and (k) Synetic has the right to use all software
development tools, library functions, compilers, and other third party
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software that is material to the business of Synetic, or that is required to
operate or modify the Software of Synetic.
SECTION 4.13. Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
means any and all taxes, fees, levies, duties, tariffs, imposts, and other
charges of any kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any
governmental or taxing authority including, without limitation: taxes or other
charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs' duties, tariffs, and similar charges.
(b) Except as described in Section 4.13 of the Synetic Disclosure Schedule
and except as would not have a Synetic Material Adverse Effect, (i) each of
Synetic and each of its subsidiaries has filed all federal, state, local and
foreign tax returns and reports required to be filed by it and has paid and
discharged all Taxes shown as due thereon and has paid all of such other Taxes
as are due, other than such payments as are being contested in good faith by
appropriate proceedings; (ii) neither the IRS nor any other taxing authority or
agency, domestic or foreign, is now asserting or, to the best knowledge of
Synetic after due inquiry, threatening to assert against Synetic or any of its
subsidiaries any deficiency or claim for additional Taxes or interest thereon or
penalties in connection therewith; (iii) no waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any
federal, state, county, municipal or foreign income Tax has been granted by
Synetic or any of its subsidiaries; (iv) the accruals and reserves for Taxes
reflected in the Synetic 1998 Balance Sheet and the most recent quarterly
financial statements are adequate to cover all Taxes accruable through the date
thereof (including interest and penalties, if any, thereon) in accordance with
generally accepted accounting principles; (v) no election under Section 341(f)
of the Code has been made by Synetic or any of its subsidiaries; (vi) Synetic
and each of its subsidiaries has withheld or collected and paid over to the
appropriate governmental authorities or is properly holding for such payment all
Taxes required by law to be withheld or collected and (vii) there are no
material liens for Taxes upon the assets of Synetic or any of its subsidiaries,
other than liens for Taxes that are being contested in good faith by appropriate
proceedings.
SECTION 4.14. Material Contracts. (a) All contracts listed or that would be
required to be listed as an exhibit to Synetic's Annual Report on Form 10-K
under the rules and regulations of the SEC relating to the business of Synetic
and its subsidiaries and any contracts that would be required to be so listed
but for the exception with respect to contracts made in the ordinary course of
business (collectively, the "Synetic Material Contracts") are legal, valid and
binding and in full force and effect, except to the extent they have previously
expired in accordance with their terms and except as would not have a Synetic
Material Adverse Effect.
(b) Except as would not have a Synetic Material Adverse Effect, none of
Synetic or any of its subsidiaries nor, to the knowledge of Synetic, any other
party thereto, is in breach of, or default under, any Synetic Material Contract.
Synetic has furnished Medical Manager with true and complete copies of all
Synetic Material Contracts, together with all amendments, waivers, or other
changes thereto.
(c) None of Synetic or any of its subsidiaries is a party to any contracts
and agreements that limit the ability of Synetic or any of its subsidiaries to
compete in any line
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of business or with any person or in any geographic area or during any period of
time, or to solicit any customer or client.
SECTION 4.15. Accounting and Tax Matters. None of Synetic or any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from being effected as a pooling of interests or would prevent the Merger from
constituting a transaction qualifying under Section 368(a) of the Code. None of
Synetic or any of its affiliates or agents is aware of any agreement, plan or
other circumstance that would prevent the Merger from being effected as a
pooling of interests or qualifying under Section 368(a) of the Code, and to the
knowledge of Synetic, the Merger may be so effected and will so qualify.
SECTION 4.16. Year 2000 Compliance. (a) Synetic has adopted a plan that it
believes will cause Synetic Systems (as defined below) to be Year 2000 Compliant
(as defined below) (such plan, as it may be amended, modified or supplemented
from time to time being, the "Synetic Year 2000 Plan") in all material respects.
Synetic has taken, and between the date of this Agreement and the Effective Time
will continue to take, all reasonable steps to implement the Synetic Year 2000
Plan with respect to Synetic Systems. Notwithstanding anything in this Section
4.16 to the contrary, Synetic does not represent or warrant that Synetic Systems
(or any other operations, systems, equipment or software of Synetic or Synetic
Subsidiaries or any of their respective affiliates) are or will be Year 2000
Compliant at or prior to the Effective Time, regardless of whether the Synetic
Year 2000 Plan has or has not been implemented or complied with.
(b) For purposes of this Section 4.16, (i) "Synetic Systems" shall mean all
computer, hardware, software, systems, and equipment (including embedded
microcontrollers in non-computer equipment) material to or necessary for Synetic
and Synetic Subsidiaries to carry on their businesses as currently conducted;
and (ii) "Year 2000 Compliant" means that Synetic Systems will (A) manage,
accept, process, store and output data involving 4-digit year dates and (B)
accurately process date data from, into and between the 20th and 21st centuries
and the years 1999 and 2000 and leap year calculation.
SECTION 4.17. Opinion of Financial Advisors. Synetic has received the
written opinion of PaineWebber Incorporated (the "Synetic Financial Advisor") on
or prior to the date of this Agreement, to the effect that, as of the date of
such opinion, the Exchange Ratio is fair to Synetic from a financial point of
view, and Synetic will promptly, after the date of this Agreement, deliver a
copy of such opinion to Medical Manager.
SECTION 4.18. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of capital stock of Synetic necessary to approve the transactions
contemplated by this Agreement.
SECTION 4.19. Section 203 of Delaware Law. The Board of Directors of
Synetic has approved this Agreement, the Synetic Stock Option Agreement, and the
Medical Manager Voting Agreement and such Synetic approvals are sufficient to
render inapplicable to this Agreement, the Synetic Stock Option Agreement and
the Synetic Voting Agreement and the transactions contemplated hereby and
thereby the provisions of Section 203 of Delaware Law.
SECTION 4.20 Affiliates. Section 4.20 of the Synetic Disclosure Schedule
sets forth all persons who, as of the date of this Agreement, may be deemed to
be affiliates of Synetic under Rule 145 of the Securities Act or otherwise under
applicable SEC accounting releases with respect to pooling-of-interests
accounting treatment. Prior to the date hereof, Synetic has advised such persons
of the resale restrictions imposed by
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applicable securities Laws and required to cause the Merger to qualify for
pooling-of-interests accounting treatment.
SECTION 4.21. Brokers. No broker, finder or investment banker (other than
Synetic Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of Synetic.
SECTION 4.22. Environmental Matters. (a) To the knowledge of Synetic,
Synetic is and has at all times been in compliance with all environmental laws
governing Synetic and its business, operations, properties and assets, except as
would not have a Synetic Material Adverse Effect.
(b) There are no judgments and no material non-compliance orders, warning
letters, notices of violation, claims, suits, actions, penalties, fines, or
administrative or judicial investigations of any nature or to the knowledge of
Synetic proceedings pending or threatened in writing against or involving
Synetic, any Governmental Authority or third party with respect to any
environmental laws or licenses issued to Synetic, except as would not have a
Synetic Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by Medical Manager Pending the Merger.
Medical Manager covenants and agrees that, between the date of this Agreement
and the Effective Time, except as set forth in Section 5.01 of the Medical
Manager Disclosure Schedule and except as Synetic shall otherwise agree in
advance in writing, the business of Medical Manager and its subsidiaries shall
be conducted only in, and Medical Manager and its subsidiaries shall not take
any action except in, the ordinary course of business and in a manner consistent
with past practice; and Medical Manager and its subsidiaries shall use its
reasonable best efforts to preserve substantially intact its business
organization, to keep available the services of the current officers, employees
and consultants of Medical Manager and its subsidiaries and to preserve the
current relationships of Medical Manager and its subsidiaries with customers,
distributors, dealers, suppliers and other persons with which Medical Manager
and its subsidiaries have significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or as
set forth in Schedule 5.01 of the Medical Manager Disclosure Schedule, between
the date of this Agreement and the Effective Time, Medical Manager will not do,
and will not permit any of its subsidiaries to do, directly or indirectly, any
of the following without the prior written consent of Synetic, which consent
shall not be unreasonably withheld, and Synetic will use its reasonable efforts
to respond to requests for such consent within two business days of receipt of a
written request for such consent and any additional information related to the
subject matter thereof reasonably requested by Synetic:
(a) amend or otherwise change the Certificate of Incorporation or
Bylaws or equivalent organizational documents of Medical Manager or any of
its subsidiaries;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of its or its subsidiaries' capital stock, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
its or its subsidiaries' capital stock or any other ownership interest
(including, without limitation, any phantom interest), of Medical Manager
or any of its subsidiaries (except (A) for the issuance of Shares issuable
pursuant to Medical Manager Options outstanding on the date hereof and
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(B) for the issuance of options representing a maximum of 30,000 Shares in
connection with the hiring and recruitment of new employees, and retention
of current employees, in the ordinary course of business consistent with
past practice, which options will vest in the ordinary course and not at
the Effective Time, and for which each of Arthur Andersen, independent
accountants of Synetic and PricewaterhouseCoopers, independent accountants
of Medical Manager, have concluded in writing to each of Synetic and
Medical Manager that any such issuance of Options, would not disqualify the
Merger from qualifying as a pooling of interests) or (ii) any material
assets of Medical Manager or any of its subsidiaries except for sales in
the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its or its subsidiaries' capital stock other than cash dividends
payable by any Medical Manager subsidiary to another Medical Manager
subsidiary or Medical Manager;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its or its subsidiaries'
capital stock;
(e) (i) except for (A) those acquisitions listed in Section 5.01(e) of
the Medical Manager Disclosure Schedule and (B) provided that, none of the
following acquisitions would prevent or delay the Effective Time, (x) cash
acquisitions of dealers of Medical Manager Software not in excess of
$10,000,000 individually and (y) acquisitions of dealers of Medical Manager
Software the currency for which is Shares as to which no registration
statement is required to be filed or registration rights are granted, and
which Shares will be issued prior to the date on which the Registration
Statement is declared effective by the SEC and which do not exceed
$10,000,000 individually or $25,000,000 in the aggregate in value of
Shares, acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any corporation, partnership, limited
liability company, other business organization or any division thereof, or
any material amount of assets; (ii) except in connection with any
acquisitions permitted pursuant to clause (i) above, incur any indebtedness
for borrowed money, issue any debt securities, assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, agree to amend or otherwise modify in any manner
any agreement or instrument pursuant to which Medical Manager has incurred
indebtedness, or make any loans or advances, except in the ordinary course
of business and consistent with past practice; (iii) authorize any single
capital expenditure which is in excess of $500,000 or capital expenditures
which are, in the aggregate, in excess of $1,000,000 for Medical Manager
and its subsidiaries taken as a whole; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter
set forth in this subsection (e);
(f) increase the compensation payable or to become payable to its
officers, or to any employee with an annual salary in excess of $200,000,
or (except in the ordinary course of business consistent with past
practice) increase the compensation payable to any other employee, or grant
any bonus, severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of Medical
Manager or any of its subsidiaries, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination,
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severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee;
(g) change in any material respect (except as required by the SEC or
changes in United States generally accepted accounting principles which
become effective after the date of this Agreement) any accounting policies,
practices or procedures;
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability; or
(i) enter into any contract that would result in a breach of the
representations and warranties contained in Sections 3.15(c) and 3.15(d) of
this Agreement.
SECTION 5.02. Conduct of Business by Synetic Pending the Merger. Synetic
covenants and agrees that, between the date of this Agreement and the Effective
Time, except as set forth in Section 5.02 of the Synetic Disclosure Schedule and
except as Medical Manager shall otherwise agree in advance in writing, the
business of Synetic and its subsidiaries shall be conducted only in, and Synetic
and its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and Synetic and its
subsidiaries shall use its reasonable best efforts to preserve substantially
intact its business organization, to keep available the services of the current
officers, employees and consultants of Synetic and its subsidiaries and to
preserve the current relationships of Synetic and its subsidiaries with
customers, distributors, suppliers and other persons with which Synetic and its
subsidiaries have significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement or as set forth in
Section 5.02 of the Synetic Disclosure Schedule, between the date of this
Agreement and the Effective Time, Synetic will not do, and will not permit any
of its subsidiaries to do, directly or indirectly, any of the following without
the prior written consent of Medical Manager, which consent shall not be
unreasonably withheld, and Medical Manager will use its reasonable efforts to
respond to requests for such consent within two business days of receipt of a
written request for such consent and any additional information related to the
subject matter thereof reasonably requested by Medical Manager:
(a) except to propose an increase in the number of authorized shares
of Synetic capital stock to 310,000,000 and the change in the name of
Synetic to Medical Manager Corporation at the Synetic Stockholders Meeting
and except as otherwise contemplated by this Agreement or as appropriate in
order to make effective the arrangements contemplated by the Employment
Agreements, amend or otherwise change the Certificate of Incorporation or
Bylaws or equivalent organizational documents of Synetic or any of its
subsidiaries;
(b) except for the issuance of shares of capital stock of Synetic in
connection with any acquisition by Synetic or any of its subsidiaries as
permitted in this Agreement and except for the issuance of common stock or
stock options of CareInsite, Inc. in connection with the anticipated
initial public offering of CareInsite, Inc., issue, sell, pledge, dispose
of, grant, encumber, or authorize the issuance, sale, pledge, disposition,
grant or encumbrance of, (i) any shares of its or its subsidiaries' capital
stock, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of its or its subsidiaries' capital stock or
any other ownership interest (including, without limitation, any phantom
interest), of Synetic or any of its subsidiaries (except (A) for the
issuance of shares of Synetic Common Stock issuable pursuant to Synetic
Options outstanding on the date hereof and (B) in
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connection with the hiring and recruitment of new employees or in the
ordinary course of business consistent with past practice, which options
will vest in the ordinary course and not at the Effective Time, and for
which each of Arthur Andersen, independent accountants of Synetic and
PricewaterhouseCoopers, independent accountants of Medical Manager, have
concluded in writing to each of Synetic and Medical Manager that any such
issuance of options would not disqualify the Merger from qualifying as a
pooling of interests) or (ii) any material assets of Synetic or any of its
subsidiaries except for sales in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its or its subsidiaries' capital stock other than cash dividends
payable by any Synetic subsidiary to another Synetic subsidiary;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its or its subsidiaries'
capital stock;
(e) (i) except for (A) those acquisitions listed in Section 5.02(e) of
the Synetic Disclosure Schedule and (B) provided that none of the following
acquisitions would prevent or delay the Effective Time, cash acquisitions
not in excess of $50,000,000 in the aggregate and acquisitions the currency
for which is Synetic Shares, which do not exceed $50,000,000 in the
aggregate in value of Synetic Common Stock, acquire (including, without
limitation, by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership, limited liability company, other business
organization or any division thereof, or any material amount of assets;
(ii) except in connection with any acquisitions permitted pursuant to
clause (i) above, incur any indebtedness for borrowed money, issue any debt
securities, assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, agree to amend or
otherwise modify in any manner any agreement or instrument pursuant to
which Synetic has incurred indebtedness, or make any loans or advances,
except in the ordinary course of business and consistent with past
practice; (iii) authorize any single capital expenditure which is in excess
of $1,000,000 or capital expenditures which are, in the aggregate, in
excess of $6,000,000 for Synetic and its subsidiaries taken as a whole; or
(iv) enter into or amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this subsection (e);
(f) change in any material respect (except as required by the SEC or
changes in United States generally accepted accounting principles which
become effective after the date of this Agreement) any accounting policies,
practices or procedures; or
(g) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability.
provided, that CareInsite, Inc. shall not be prohibited from taking any action
under this Section 5.02 which the Board of Directors of CareInsite, Inc.
determines is consistent with its contractual or fiduciary duties to the
stockholders of CareInsite, Inc. (other than Synetic).
SECTION 5.03. Conduct of Business by Synetic and Medical Manager Pending
the Merger. Synetic and Medical Manager covenant and agree that, between the
date of this Agreement and the Effective Time, unless the other shall otherwise
agree in writing, neither Synetic nor Medical Manager shall, directly or
indirectly, take any action that
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would be reasonably likely to prevent the Merger's qualification for
pooling-of-interest accounting treatment or would be reasonably likely to
prevent the Merger from constituting a transaction qualifying under Section
368(a) of the Code. As promptly as practicable after the date hereof, but in no
event later than 10 days after the date hereof, Medical Manager shall cause each
person named on Section 3.21 of the Medical Manager Disclosure Schedule, and
Synetic shall cause each person named on Section 4.20 of the Synetic Disclosure
Schedule, to deliver to Synetic a written agreement substantially in the forms
of Exhibit 5.03(a) or 5.03(b) hereto, as applicable.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, (i) Synetic and
Medical Manager shall cooperate in preparing and each shall cause to be filed
with the SEC a joint proxy statement (together with any amendments thereof or
supplements thereto, the "Proxy Statement") relating to the meetings of
Synetic's and Medical Manager's stockholders to be held to consider approval and
adoption of this Agreement and the Synetic Proposals and (ii) Synetic shall
prepare and file with the SEC a registration statement on Form S-4 (together
with all amendments thereto, the "Registration Statement") in which the Proxy
Statement shall be included as a prospectus, in connection with the registration
under the Securities Act of the shares of Synetic Common Stock to be issued to
the stockholders of Medical Manager pursuant to the Merger. Each of Synetic and
Medical Manager shall use its reasonable efforts to cause the Registration
Statement to become effective as promptly as practicable, and, prior to the
effective date of the Registration Statement, Synetic shall use reasonable
efforts to take all or any action required under any applicable federal or state
securities Laws in connection with the issuance of shares of Synetic Common
Stock pursuant to the Merger. Medical Manager shall furnish all information
concerning Medical Manager as Synetic may reasonably request in connection with
such actions and the preparation of the Registration Statement and Proxy
Statement. As promptly as practicable after the Registration Statement shall
have become effective, each of Synetic and Medical Manager shall mail the Proxy
Statement to its stockholders.
(b) (i) The Proxy Statement shall include the recommendation of the Board
of Directors of Synetic to the stockholders of Synetic in favor of approval of
the Synetic Proposals; provided, however, that the Board of Directors of Synetic
may, prior to the date of its Stockholders Meeting, withdraw, modify, or change
any such recommendation to the extent that the Board of Directors of Synetic
determines in good faith that such withdrawal, modification or change is
required in order to comply with its fiduciary duties to Synetic's stockholders
under applicable Law after receiving advice from independent legal counsel (who
may be Synetic's regularly engaged outside legal counsel).
(ii) The Proxy Statement shall include the recommendation of the Board of
Directors of Medical Manager to the stockholders of Medical Manager in favor of
approval and adoption of this Agreement; provided, however, that the Board of
Directors of Medical Manager may, prior to the date of its Stockholders Meeting,
withdraw, modify, or change any such recommendation to the extent that the Board
of Directors of Medical Manager determines in good faith that such withdrawal,
modification or change is required in order to comply with its fiduciary duties
to Medical Manager's stockholders under applicable Law after receiving advice
from independent legal counsel (who may be Medical Manager's regularly engaged
outside legal counsel).
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(c) No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Synetic or Medical Manager without the approval of the
other party, which shall not be unreasonably withheld. Each of Synetic and
Medical Manager will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Synetic Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. Neither Medical Manager nor Synetic shall change or
otherwise take any action after the mailing of such party's Proxy Statement to
its stockholders that would result in a change of the date specified in such
party's Proxy Statement for such party's Stockholder Meeting.
(d) The information supplied by Medical Manager for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Synetic and Medical
Manager, (iii) the time of each of the Stockholders' Meetings (as hereinafter
defined), and (iv) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to Medical
Manager or any Medical Manager Subsidiary, or their respective officers or
directors, should be discovered by Medical Manager which, pursuant to the
Securities Act or Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Medical Manager
shall promptly inform Synetic. All documents that Medical Manager is responsible
for filing with the SEC in connection with the Merger will comply as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act.
(e) The information supplied by Synetic for inclusion in the Registration
Statement and the Proxy Statement (including by incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of Synetic and Medical Manager,
(iii) the time of each of the Stockholders' Meetings, and (iv) the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Synetic or any of its subsidiaries, or
their respective officers or directors, should be discovered by Synetic which,
pursuant to the Securities Act or Exchange Act, should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement,
Synetic shall promptly inform Medical Manager. All documents that Synetic is
responsible for filing with the SEC in connection with the Merger will comply as
to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(f) Synetic and Medical Manager each hereby (i) consents to the use of its
name and, on behalf of its subsidiaries and affiliates, the names of such
subsidiaries and affiliates and to the inclusion of financial statements and
business information relating to such party and its subsidiaries and affiliates
(in each case, to the extent required by applicable securities laws) in any
registration statement or proxy statement prepared by Synetic,
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Medical Manager or any person or entity with which Synetic or Medical Manager,
consistent with their obligations under this Agreement, may enter into a
definitive acquisition agreement prior to the Effective Time, (ii) agrees to use
its best efforts to obtain the written consent of any person or entity retained
by it which may be required to be named (as an expert or otherwise) in such
registration statement or proxy statement; provided, that such party shall not
be required to make any material payment to such person or entity in connection
with such party's efforts to obtain any such consent, and (iii) agrees to
cooperate, and agrees to use its best efforts to cause its subsidiaries and
affiliates to cooperate, with any legal counsel, investment banker, accountant
or other agent or representative retained by any of the parties specified in
clause (i) in connection with the preparation of any and all information
required, as determined after consultation with each party's counsel, to be
disclosed by applicable securities laws in any such registration statement or
proxy statement.
SECTION 6.02. Stockholders' Meetings. Each of Synetic and Medical Manager
shall call and hold a meeting of its stockholders (collectively, the
"Stockholders' Meetings") as promptly as practicable after the date hereof for
the purpose of voting upon in the case of Synetic, the Synetic Proposals and in
the case of Medical Manager, the adoption of this Agreement, and Medical Manager
and Synetic shall use all reasonable efforts to hold the Stockholders' Meetings
on the same day and as soon as practicable after the date on which the
Registration Statement becomes effective. Each of Synetic and Medical Manager
shall use its reasonable efforts to solicit from its stockholders proxies in
favor of the adoption of this Agreement in the case of Medical Manager and the
Synetic Proposals in the case of Synetic and shall take all other action
necessary or advisable to secure the vote of its stockholders required by NASDAQ
or Delaware Law, as applicable, to obtain such approvals; provided, however,
that Synetic or Medical Manager, as applicable, shall not be obligated to
solicit proxies in favor of the adoption of this Agreement in the case of
Medical Manager or in favor of the Synetic Proposals, in the case of Synetic, at
its Stockholders' Meeting to the extent that the Board of Directors of Synetic
or Medical Manager, as applicable, determines in good faith that such failure to
solicit proxies is required in order to comply with its fiduciary duties to its
stockholders under applicable Law after receiving advice to such effect from
independent legal counsel (who may be such party's regularly engaged outside
legal counsel).
SECTION 6.03. Appropriate Action; Consents; Filings. (a) Medical Manager
and Synetic shall use their reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger as promptly as practicable, (ii) obtain from any
Governmental Authorities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained by Synetic or Medical Manager
or any of Synetic's subsidiaries in connection with the authorization, execution
and delivery of this Agreement and the consummation of the Merger, and (iii)
make all necessary filings, and thereafter make any other required submissions,
with respect to this Agreement and the Merger required under (A) the Securities
Act and the Exchange Act, and any other applicable federal or state securities
Laws, (B) the HSR Act and any related governmental request thereunder and (C)
any other applicable Law; provided that Synetic and Medical Manager shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party and its
advisors prior to filing, and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith. Medical Manager and
Synetic shall furnish to each other all information required for any application
or other
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filing to be made pursuant to the rules and regulations of any applicable Law in
connection with the Merger.
(b) (i) Each of Synetic and Medical Manager shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and Synetic and
Medical Manager shall use, and cause each of its subsidiaries to use, its
reasonable best efforts to obtain any third party consents, (A) necessary,
proper or advisable to consummate the Merger, (B) disclosed or required to be
disclosed in the Synetic Disclosure Schedule or Medical Manager Disclosure
Schedule, as the case may be or (C) required to prevent a Synetic Material
Adverse Effect or Medical Manager Material Adverse Effect from occurring prior
to or after the Effective Time.
(ii) In the event that Synetic or Medical Manager shall fail to obtain any
third party consent described in subsection (b)(i) above, it shall use its
reasonable best efforts, and shall take any such actions reasonably requested by
the other party, to minimize any adverse effect upon Medical Manager and
Synetic, their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
SECTION 6.04. Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, to the extent permitted by applicable Law, Synetic
will provide to Medical Manager (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives,
collectively, "Representatives") access to all information and documents which
Medical Manager may reasonably request regarding the business, assets,
liabilities, employees and other aspects of Synetic.
(b) From the date hereof to the Effective Time, to the extent permitted by
applicable Law, Medical Manager will provide to Synetic and its Representatives
access to all information and documents which Synetic may reasonably request
regarding the business, assets, liabilities, employees and other aspects of
Medical Manager.
(c) The parties shall comply with, and shall cause their respective
Representatives to comply with, to the extent permitted by applicable Law, all
of their respective obligations under the Confidentiality Agreement dated April
20, 1999 (the "Confidentiality Agreement") between Medical Manager and Synetic.
(d) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. (a) Medical
Manager shall not, directly or indirectly, through any officer, director, agent
or otherwise, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or take any other action
knowingly to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of Medical Manager or any investment banker, financial advisor, attorney,
accountant or other agent or representative of Medical Manager to take any such
action, and Medical Manager shall notify Synetic as promptly as practicable of
all of the relevant details relating to all inquiries and proposals which
Medical Manager or any such officer, director, employee, investment banker,
financial advisor, attorney, accountant or other agent or representative may
receive relating to any of
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such matters and if such inquiry or proposal is in writing, Medical Manager
shall deliver to Synetic a copy of such inquiry or proposal; provided, however,
that prior to the approval of this Agreement and the Merger by the stockholders
of Medical Manager, nothing contained in this Section 6.05 shall prohibit the
Board of Directors of Medical Manager from (i) furnishing information to, or
entering into discussions or negotiations with, any person that makes an
unsolicited Medical Manager Superior Proposal (as defined below) if, and only to
the extent that, (A) the Board of Directors of Medical Manager determines in
good faith that the failure to do so would cause the Board of Directors of
Medical Manager to breach its fiduciary duties to Medical Manager or its
stockholders under applicable law after receiving advice from independent legal
counsel (who may be Medical Manager's regularly engaged independent legal
counsel) and (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person, Medical Manager (1) provides
reasonable notice to Synetic to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person and provides in
any such notice to Synetic in reasonable detail, the identity of the person
making such proposal and the terms and conditions of such proposal, (2) provides
Synetic with all information to be provided to such person which Synetic has not
previously been provided, and (3) receives from such person or entity an
executed confidentiality/standstill agreement no less favorable to Medical
Manager than the Confidentiality Agreement, (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(iii) failing to make or withdrawing or modifying its recommendation referred to
in Section 6.01 following the making of a Medical Manager Superior Proposal if
the Board of Directors of Medical Manager, after consultation with independent
legal counsel (who may be Medical Manager's regularly engaged independent legal
counsel) determines in good faith that not taking such action is reasonably
likely to constitute a breach by the Board of Directors of Medical Manager of
its obligations to comply with its fiduciary duties to stockholders under
applicable law.
(b) Synetic shall not, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), or take
any other action knowingly to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, directors or
employees of Synetic or any investment banker, financial advisor, attorney,
accountant or other agent or representative of Synetic to take any such action,
and Synetic shall notify Medical Manager as promptly as practicable of all of
the relevant details relating to all inquiries and proposals which Synetic or
any such officer, director, employee, investment banker, financial advisor,
attorney, accountant or other agent or representative may receive relating to
any of such matters and if such inquiry or proposal is in writing, Synetic shall
deliver to Medical Manager a copy of such inquiry or proposal; provided,
however, that prior to the approval of the issuance of Synetic Common Stock in
the Merger by the stockholders of Synetic, nothing contained in this Section
6.05 shall prohibit the Board of Directors of Synetic from (i) furnishing
information to, or entering into discussions or negotiations with, any person
that makes an unsolicited Synetic Superior Proposal (as defined below) if, and
only to the extent that, (A) the Board of Directors of Synetic determines in
good faith that the failure to do so would cause the Board of Directors of
Synetic to breach its fiduciary duties to Synetic or its stockholders under
applicable law after receiving advice from independent legal counsel (who may be
Synetic's regularly engaged independent legal counsel) and
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(B) prior to furnishing such information to, or entering into discussions or
negotiations with, such person, Synetic (1) provides reasonable notice to
Medical Manager to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person and provides in any such
notice to Medical Manager in reasonable detail, the identity of the person
making such proposal and the terms and conditions of such proposal, (2) provides
Medical Manager with all information to be provided to such person which Medical
Manager has not previously been provided, and (3) receives from such person or
entity an executed confidentiality/standstill agreement no less favorable to
Synetic than the Confidentiality Agreement, (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(iii) failing to make or withdrawing or modifying its recommendation referred to
in Section 6.01 following the making of a Synetic Superior Proposal if the Board
of Directors of Synetic, after consultation with independent legal counsel (who
may be Synetic's regularly engaged independent legal counsel) determines in good
faith that not taking such action is reasonably likely to constitute a breach by
the Board of Directors of Synetic of its obligations to comply with its
fiduciary duties to stockholders under applicable law.
(c) For purposes of this Agreement, "Competing Transaction" shall mean any
of the following involving Medical Manager or Synetic, as the case may be: (i)
any merger, consolidation, share exchange, business combination, or other
similar transaction other than transactions specifically permitted pursuant to
Section 5.01 or Section 5.02 of this Agreement, as the case may be; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 15% or
more of the assets of such company and its subsidiaries, taken as a whole, in a
single transaction or series of transactions; provided, however, that the public
offering of shares of CareInsite, Inc. shall be deemed not to constitute a
Competing Transaction; (iii) any tender offer or exchange offer for 15% or more
of the stock of such company or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any person having acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) having been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15% or
more of the stock of such company; or (v) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing.
(d) For purposes of this Agreement, a "Medical Manager Superior Proposal"
means any proposal made by a third party (i) to acquire, directly or indirectly,
including pursuant to a merger, consolidation, share exchange, business
combination, tender offer, exchange offer, or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the Shares then outstanding or all or substantially all
the assets of Medical Manager, (ii) that is otherwise on terms which the Board
of Directors of Medical Manager determines in its good faith judgment (after
having received advice of an independent investment banking firm to be more
favorable to Medical Manager's stockholders than the Merger and (iii) for which,
in the good faith judgment of the Board of Directors of Medical Manager, no
regulatory approvals are required, including antitrust approvals, that could not
reasonably be expected to be obtained.
(e) For purposes of this Agreement, a "Synetic Superior Proposal" means any
proposal made by a third party (i) to acquire, directly or indirectly, including
pursuant to a merger, consolidation, share exchange, business combination,
tender offer, exchange offer, or similar transaction, for consideration
consisting of cash and/or securities, more than 50%
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of the combined voting power of the Shares then outstanding or all or
substantially all the assets of Synetic, (ii) that is otherwise on terms which
the Board of Directors of Synetic determines in its good faith judgment (after
having received advice of an independent investment banking firm of
internationally recognized reputation) to be more favorable to Synetic's
stockholders than the Merger and (iii) for which, in the good faith judgment of
the Board of Directors of Synetic, no regulatory approvals are required,
including antitrust approvals, that could not reasonably be expected to be
obtained.
SECTION 6.06. Directors' and Officers' Indemnification and Insurance. (a)
The Certificate of Incorporation and the By-laws of the Surviving Corporation
shall contain the respective provisions that are set forth, as of the date of
this Agreement, in the Certificate of Incorporation and the By-laws of Medical
Manager and, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at any
time prior to the Effective Time were entitled to indemnification thereunder.
Synetic hereby guarantees the payment and performance of such obligation of the
Surviving Corporation.
(b) The Surviving Corporation shall use commercially reasonable efforts to
maintain in effect for three years from the Effective Time, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Medical Manager's directors' and officers' liability
insurance policy on terms comparable to such existing insurance coverage;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 6.06 more than an amount per year equal to
150% of current annual premiums paid by Medical Manager for such insurance
(which premiums Medical Manager represents and warrants to be not more than
$400,000 in the aggregate) and; provided further that if the annual premiums
exceed such amount, Synetic shall be obligated to use commercially reasonable
efforts to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
(c) This Section 6.06 shall survive the consummation of the Merger, is
intended to benefit the Medical Manager, the Surviving Corporation and each
indemnified party, shall be binding, jointly and severally, on all successors
and assigns of the Surviving Corporation and the Synetic, and shall be
enforceable by the indemnified parties.
SECTION 6.07. Notification of Certain Matters. From and after the date of
this Agreement until the Effective Time, each party hereto shall promptly notify
the other parties hereto of (a) the occurrence, or nonoccurrence, of any event
the occurrence, or non-occurrence of which would be likely to cause (i) any
representations or warranties made in this Agreement, or any information
furnished in the Synetic Disclosure Schedule or the Medical Manager Disclosure
Schedule, not to be accurate either at the time such representation or warranty
is made, or such information is furnished, or at the time of the occurrence or
non-occurrence of such event, or (ii) any condition to the obligations of any
party to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied, or (b) the failure of Medical Manager or Synetic,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement
which would be likely to result in any condition to the obligations of any party
to effect the Merger and the other transactions contemplated by this Agreement
not to be satisfied; provided, however, that the delivery of any notice pursuant
to this Section 6.07 shall not be deemed to be an amendment of this Agreement or
any Section in the Synetic Disclosure Schedule or the Medical Manager Disclosure
Schedule and shall not cure any breach of any representation or warranty
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requiring disclosure of such matter prior to the date of this Agreement. Each
party will notify the other within two business days of making a definitive
determination that any matters notified to it pursuant to this Section 6.07
constitutes a breach of this Agreement that would cause any of the conditions in
Article VII not to be satisfied and that such party intends to invoke such
condition as a basis not to proceed with the closing of the Merger; provided,
that each party agrees to make such determination within a reasonable time after
such notification and after it has a reasonable opportunity to make inquiry
regarding such matter. No delivery of any notice pursuant to this Section 6.07
shall limit or affect the remedies available hereunder to the party receiving
such notice, including the rights of Synetic under Section 7.02(a) and those of
Medical Manager under Section 7.03(a) in the event that a representation or
warranty made by Medical Manager or Synetic herein shall not be true and correct
(giving effect to any standards of materiality set forth in such sections) as of
the date hereof or as of the date when made (if a different date) and as of the
Effective Time.
SECTION 6.08. Accounting and Tax Treatment. (a) The Agreement is intended
to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code and as a
"pooling of interests" for accounting purposes. Each party hereto shall use its
reasonable best efforts to cause the Merger to qualify, and shall not take any
actions which could prevent the Merger from qualifying, for pooling-of-interests
accounting treatment and as a reorganization qualifying under the provisions of
Section 368(a) of the Code.
(b) Each of Synetic and Medical Manager shall use all reasonable efforts to
cause to be delivered to the other an opinion from Akerman, Senterfitt & Eidson,
P.A. and Shearman & Sterling, respectively, addressed to Marlin and River,
respectively, and dated as of the Effective Time and the date of filing of the
Registration Statement, that the Merger will qualify as a reorganization under
the provisions of Section 368(a) of the Code and that no gain or loss will be
recognized by shareholders of Medical Manager as a result of the Merger (except
to the extent that cash is received in lieu of fractional shares).
SECTION 6.09. Stock Exchange Listing. Synetic shall as promptly as
reasonably practicable prepare and submit to NASDAQ a listing application
covering the shares of Synetic Common Stock to be issued in the Merger and shall
use its reasonable best efforts to cause such shares to be approved for listing
on NASDAQ prior to the Effective Time.
SECTION 6.10. Public Announcements. Synetic and Medical Manager shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement and shall not issue any such
press release or make any such public statement without the prior consent of the
other (which consent shall not be unreasonably withheld), except as may be
required by Law or any listing agreement with NASDAQ or the National Association
of Securities Dealers, Inc. to which Synetic or Medical Manager is a party. The
parties have agreed on the text of a joint press release by which Synetic and
Medical Manager will announce the execution of this Agreement.
SECTION 6.11. Synetic's Directors and Officers; CareInsite Board
Representation. (a) The Board of Directors of Synetic shall take all such action
as may be necessary to cause the following individuals to be appointed,
effective as of the Effective Time, to the office specified next to such
person's name:
<TABLE>
<CAPTION>
OFFICE NAME
- ------ ----
<S> <C>
Chairman Martin J. Wygod
Vice-Chairman, Co-CEO Michael A. Singer
</TABLE>
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<TABLE>
<CAPTION>
OFFICE NAME
- ------ ----
<S> <C>
Co-CEO John H. Kang
President To be appointed by Synetic
Board of Directors
Chief Financial Officer James Love
</TABLE>
(b) Synetic will take all action necessary prior to the Effective Time to
increase the number of directors on the Synetic Board of Directors to 16,
effective as of the Effective Time. The Board of Directors of Synetic shall take
all such action as may be necessary to cause the following individuals to be
appointed to the Board of Directors of Synetic effective as of the Effective
Time:
<TABLE>
<S> <C>
Michael A. Singer
John H. Kang
Chris Peifer
Courtney Jones
Ray Kurtzweil
</TABLE>
(c) Synetic shall use its reasonable best efforts, subject to the exercise
by the CareInsite Board of Directors of its fiduciary duties, to cause either
Michael A. Singer or John Kang (as directed by the Medical Manager Board of
Directors) to be appointed to the Board of Directors of CareInsite, Inc.
effective as of the Effective Time.
SECTION 6.12. Employee Benefits Matters. Annex A hereto sets forth certain
agreements among the parties hereto with respect to employee benefits matters
and is incorporated herein by this reference.
SECTION 6.13. Pooling Affiliates. (a) Not fewer than 30 days after the
date of this Agreement, Medical Manager shall deliver to Synetic a list of names
and addresses of those persons who will be, in Medical Manager's reasonable
judgment, at the record date for the Medical Manager Stockholders' Meeting,
affiliates within the meaning of Rule 145 of the rules and regulations
promulgated under the Securities Act or applicable SEC accounting releases with
respect to pooling-of-interests accounting treatment (each such person, a
"Pooling Affiliate") of Medical Manager. Medical Manager shall provide Synetic
with such information and documents as Synetic shall reasonably request for
purposes of reviewing such list. Medical Manager shall use its reasonable best
efforts to deliver or cause to be delivered to Synetic, prior to the Effective
Time, an affiliate letter in the form attached hereto as Exhibit 5.03(a),
executed by each of the Pooling Affiliates of Medical Manager identified in the
foregoing list.
(b) Not more than 30 days after the date of this Agreement, Synetic shall
deliver to Medical Manager a list of names and addresses of those persons who
will be, in Synetic's reasonable judgment, at the record date for the Medical
Manager Stockholders' meeting, Pooling Affiliates of Synetic. Synetic shall
provide Medical Manager such information and documents as Medical Manager shall
reasonably request for purposes of reviewing such list. Synetic shall use its
reasonable best efforts to deliver or cause to be delivered to Medical Manager,
prior to the Effective Time, an affiliate letter in the form attached hereto as
Exhibit 5.03(b), executed by each of the Pooling Affiliates of Synetic
identified in the foregoing list.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The obligations
of Medical Manager, Synetic and Merger Sub to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
a majority of the stockholders of Medical Manager in accordance with
Delaware Law and Medical Manager's Certificate of Incorporation;
(b) the issuance of Synetic Common Stock shall have been approved by
the affirmative vote of a majority of the stockholders of Synetic in
accordance with Delaware Law and Synetic's Certificate of Incorporation.
(c) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(d) no Governmental Entity or court of competent jurisdiction located
or having jurisdiction in the United States shall have enacted, issued,
promulgated, enforced or entered any Law, rule, regulation, executive order
or Order which is then in effect and has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger;
(e) the Registration Statement shall have been declared effective, and
no stop order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(f) Synetic shall have received the opinion of Arthur Andersen LLP,
independent accountants to Synetic and PricewaterhouseCoopers LLP,
independent accountants to Medical Manager, dated as of the date on which
the Registration Statement shall become effective and the Effective Time,
to the effect that the Merger qualifies for pooling-of-interests accounting
treatment if consummated in accordance with this Agreement; and
(g) the shares of Synetic Common Stock issuable to Medical Manager's
stockholders in the Merger shall have been authorized for listing on
NASDAQ, subject to official notice of issuance.
SECTION 7.02. Conditions to the Obligations of Synetic and Merger Sub. The
obligations of Synetic and Merger Sub to consummate the Merger are subject to
the satisfaction of the following further conditions:
(a) each of the representations and warranties of Medical Manager
contained in this Agreement shall be true and correct as of the Effective
Time as though made on and as of the Effective Time (except to the extent
expressly made as of an earlier date, in which case as of such date),
except where the failure to be so true and correct would not have,
individually or in the aggregate, a Medical Manager Material Adverse
Effect, and Synetic shall have received a certificate of an officer of
Medical Manager to such effect;
(b) Medical Manager shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and
Synetic shall have received a certificate of an officer of Medical Manager
to that effect;
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(c) Synetic shall have received the opinion of Shearman & Sterling, in
form and substance reasonably satisfactory to Synetic, to the effect that
the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of section 368(a) of the
Code, and Synetic, Merger Sub and Medical Manager will each be a party to
the reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of Medical Manager and Synetic;
(d) Synetic shall have received from any person who is as of the date
of this Agreement, or at any time between the date of this Agreement and
the Effective Time, an affiliate of Medical Manager (pursuant to Rule 145
under the Securities Act or otherwise under applicable SEC accounting
releases with respect to pooling-of-interests accounting treatment) a
signed agreement substantially in the form of Exhibit 5.03(a) hereto;
(e) each of the Employment Agreements shall become effective at the
Effective Time; and
(f) there shall not have occurred any events or circumstances since
the date of this Agreement that would have a Medical Manager Material
Adverse Effect.
SECTION 7.03. Conditions to the Obligations of Medical Manager. The
obligations of Medical Manager to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) each of the representations and warranties of Synetic and Merger
Sub contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where failure to be so true and correct would not have,
individually or in the aggregate, a Synetic Material Adverse Effect, and
Medical Manager shall have received a certificate of an officer of Synetic
and Merger Sub to such effect;
(b) each of Synetic and Merger Sub shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and Medical Manager shall have received a certificate of an
officer of Synetic and Merger Sub to that effect;
(c) Medical Manager shall have received the opinion of Akerman,
Senterfitt & Eidson, P.A., in form and substance reasonably satisfactory to
Medical Manager, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization qualifying under the provisions of
section 368(a) of the Code, and Synetic, Merger Sub and Medical Manager
will each be a party to such reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of Synetic and
Medical Manager;
(d) Medical Manager shall have received from any person who is as of
the date of this Agreement, or at any time between the date of this
Agreement and the Effective Time, an affiliate of Synetic (pursuant to Rule
145 under the Securities Act or otherwise under applicable SEC accounting
releases with respect to pooling-of-
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interests accounting treatment) a signed agreement substantially in the
form of Exhibit 5.03(b) hereto;
(e) there shall not have occurred any events or circumstances since
the date of this Agreement that would have a Synetic Material Adverse
Effect; and
(f) Synetic shall not have terminated either of the Employment
Agreements.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Synetic and Medical Manager;
(b) by either Synetic or Medical Manager, if either (i) the Effective
Time shall not have occurred on or before November 30, 1999; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur by such time; or (ii) there shall be
any Order which is final and nonappealable preventing the consummation of
the Merger;
(c) by Medical Manager, if (i) the Board of Directors of Synetic
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Medical Manager or shall have resolved to do
so, (ii) the Board of Directors of Synetic shall have recommended to the
stockholders of Synetic a Competing Transaction or shall have resolved to
do so, (iii) a tender offer or exchange offer for 15% or more of the
outstanding shares of capital stock of Synetic is commenced, and the Board
of Directors of Synetic fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange
offer by its stockholders) or (iv) any person (excluding any person who is
an affiliate of Medical Manager on the date of this Agreement) or "group"
(within the meaning of Section 13(d) of the Exchange Act) shall become the
beneficial owner of 25% or more of the outstanding capital stock of
Synetic;
(d) by Synetic, if (i) the Board of Directors of Medical Manager
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Synetic or shall have resolved to do so, (ii)
the Board of Directors of Medical Manager shall have recommended to the
shareholders of Medical Manager a Competing Transaction or shall have
resolved to do so, (iii) a tender offer or exchange offer for 15% or more
of the outstanding shares of capital stock of Medical Manager is commenced,
and the Board of Directors of Medical Manager fails to recommend against
acceptance of such tender offer or exchange offer by its shareholders
(including by taking no position with respect to the acceptance of such
tender offer or exchange offer by its shareholders) or (iv) any person
(excluding any person who is an affiliate of Synetic on the date of this
Agreement) "group" (within the meaning of Section 13(d) of the Exchange
Act) shall become the beneficial owner of 25% or more of the outstanding
capital stock of Medical Manager;
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(e) by either Medical Manager or Synetic, if the issuance of Synetic
Common Stock shall fail to receive the requisite vote for approval and
adoption at the Synetic Stockholders' Meeting;
(f) by either Medical Manager or Synetic, if this Agreement shall fail
to receive the requisite vote for approval and adoption at the Medical
Manager Stockholders' Meeting;
(g) by Medical Manager, upon a breach of any representation, warranty,
covenant or agreement on the part of Synetic or Merger Sub set forth in
this Agreement, or if any representation or warranty of Synetic shall have
become untrue, in either case such that the conditions set forth in Section
7.03(a) or (b) would not be satisfied (a "Terminating Synetic Breach");
provided, however, that, if such Terminating Synetic Breach is curable by
Synetic through the exercise of its best efforts and for so long as Synetic
continues to exercise such best efforts, Medical Manager may not terminate
this Agreement under this Section 8.01(g);
(h) by Synetic, upon breach of any representation, warranty, covenant
or agreement on the part of Medical Manager set forth in this Agreement, or
if any representation or warranty of Medical Manager shall have become
untrue, in either case such that the conditions set forth in Sections
7.02(a) or (b) would not be satisfied ("Terminating Medical Manager
Breach"); provided, however, that, if such Terminating Medical Manager
Breach is curable by Medical Manager through best efforts and for so long
as Medical Manager continues to exercise such best efforts, Synetic may not
terminate this Agreement under this Section 8.01(h);
(i) by Medical Manager, if the Average Synetic Stock Price, as
determined pursuant to Section 2.01(a), is less than $56; provided, that
such termination shall be effective only if notice thereof is delivered by
Medical Manager to Synetic not later than 6:00 p.m. on the trading day
prior to the date scheduled for the Medical Manager Stockholders' Meeting;
or
(j) by either Synetic or Medical Manager, if any Governmental Entity
shall have issued an Order or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have
become final and nonappealable.
SECTION 8.02. Effect of Termination. Subject to Section 8.05 hereof, in the
event of termination of this Agreement pursuant to Section 8.01, this Agreement
shall forthwith become void, there shall be no liability under this Agreement on
the part of Synetic or Medical Manager or any of their respective officers or
directors and all rights and obligations of each party hereto shall cease;
provided, however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
approval and adoption of this Agreement by either the stockholders of Synetic or
Medical Manager, there shall not be any amendment that by Law requires further
approval by the stockholders of Synetic or Medical Manager without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
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SECTION 8.04 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in this Section 8.05, all
Expenses (as defined below) incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, whether or not the Merger or any other transaction is
consummated, except that Medical Manager and Synetic each shall pay one-half of
all Expenses relating to printing, filing and mailing the Registration Statement
and the Proxy Statement and all SEC and other regulatory filing fees incurred in
connection with the Registration Statement and the Proxy Statement. "Expenses"
as used in this Agreement shall include all reasonable out-of-pocket expenses
(including, without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the Synetic Option Agreement, the Medical Manager Option
Agreement, the preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement, the solicitation of stockholder approvals,
the filing of any required notices under the HSR Act or other similar
regulations and all other matters related to the closing of the Merger and the
other transactions contemplated by this Agreement.
(b) Medical Manager agrees that:
(i) if (A) Synetic shall terminate this Agreement pursuant to Section
8.01(d) and (B) at the time of the occurrence of the circumstance
permitting termination pursuant to such Section, there shall exist a
Competing Transaction with respect to Medical Manager, or
(ii) if (A) Synetic or Medical Manager shall terminate this Agreement
pursuant to Section 8.01(f) due to the failure of Medical Manager's
stockholders to approve this Agreement and (B) at or prior to the time of
such failure to so approve this Agreement a Competing Transaction with
respect to Medical Manager shall have been made public,
then Medical Manager shall pay to Synetic an amount equal to the sum of
$42,000,000 (the "Medical Manager Alternative Transaction Fee") and all of
Synetic's Expenses, up to a maximum of $5,000,000 (the "Synetic Expense
Amount"). Medical Manager and Synetic agree that if, in circumstances in which
the Medical Manager Alternative Transaction Fee is not payable, Synetic shall
terminate this Agreement pursuant to Section 8.01(d) or Medical Manager or
Synetic shall terminate this Agreement pursuant to Section 8.01(f), then Medical
Manager shall pay to Synetic an amount equal to all of Synetic's Expenses up to
an amount equal to the Synetic Expense Amount.
(c) Synetic agrees that:
(i) if (A) Medical Manager shall terminate this Agreement pursuant to
Section 8.01(c) and (B) at the time of the occurrence of the circumstance
permitting termination pursuant to such Section, there shall exist a
Competing Transaction with respect to Synetic, or
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(ii) if (A) Medical Manager or Synetic shall terminate this Agreement
pursuant to Section 8.01(e) due to the failure of Synetic's stockholders to
approve this Agreement and (B) at or prior to the time of such failure to
so approve this Agreement a Competing Transaction with respect to Synetic
shall have been made public,
then Synetic shall pay to Medical Manager an amount equal to the sum of
$65,000,000 (the "Synetic Alternative Transaction Fee") and all of Medical
Manager's Expenses, up to a maximum of $5,000,000 (the "Medical Manager Expense
Amount"). Synetic and Medical Manager agree that if, in circumstances in which
the Synetic Alternative Transaction Fee is not payable, Medical Manager shall
terminate this Agreement pursuant to Section 8.01(c) or Synetic or Medical
Manager shall terminate this Agreement pursuant to Section 8.01(e), then Synetic
shall pay to Medical Manager an amount equal to all of Medical Manager's
Expenses up to an amount equal to the Medical Manager Expense Amount.
(d) Each of Medical Manager and Synetic agrees that the agreements
contained in Sections 8.05(b) and (c) are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. Each of Medical Manager and Synetic agrees that the payments provided
for in Sections 8.05(b) and (c) shall be the sole and exclusive remedies of the
parties upon a termination of this Agreement pursuant to Sections 8.01(c), (d),
(e) and (f), as the case may be, and such remedies shall be limited to the sums
stipulated in Sections 8.05(b) and (c), regardless of the circumstances giving
rise to such termination; provided, however, that nothing herein shall relieve
any party from liability for any willful breach of any representation, warranty,
covenant or other agreement in this Agreement occurring prior to termination.
(e) Any payment of a Medical Manager Alternative Transaction Fee pursuant
to Section 8.05(b) shall be made to Synetic on the next business day after
termination of this Agreement. Payment of Expenses pursuant to Section 8.05(b)
shall be made not later than five business days after delivery to Medical
Manager by Synetic of notice of demand for payment and an itemization setting
forth in reasonable detail all Expenses of Synetic (which itemization may be
supplemented and updated from time to time by Synetic until the 60th day after
Synetic delivers such notice of demand for payment). All payments to Synetic
under this Section 8.05 shall be made by wire transfer of immediately available
funds to an account designated by Synetic.
(f) Any payment of a Synetic Alternative Transaction Fee required to be
made pursuant to Section 8.05(c) shall be made to Medical Manager on the next
business day after termination of this Agreement. Payment of Expenses pursuant
to Section 8.05(c) shall be made not later than five business days after
delivery to Synetic by Medical Manager by notice of demand for payment and an
itemization setting forth in reasonable detail all Expenses of Medical Manager
(which itemization may be supplemented and updated from time to time by Synetic
until the 60th day after Medical Manager delivers such notice of demand for
payment). All payments to Medical Manager under this Section 8.05 shall be made
by wire transfer of immediately available funds to an account designated by
Medical Manager.
(g) In the event that Medical Manager or Synetic, as the case may be, shall
fail to pay any amount payable pursuant to this Section 8.05 when due, the other
party's "Expenses" shall be deemed to include (i) the costs and expenses
actually incurred or accrued by such other party (including, without limitation,
fees and expenses of counsel) in connection with the collection under and
enforcement of this Section 8.05, together with
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(ii) interest on such unpaid amounts, commencing on the date that such amounts
became due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in The City of New York, as such bank's Base
Rate plus 2.00%.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be, except that this Section 9.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to Synetic or Merger Sub:
Synetic, Inc.
669 River Drive
Elmwood Park, New Jersey 07407
Telecopier No.: (201) 703-3426
Attention: Charles A. Mele, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 848-7179
Attention: Creighton O'M. Condon, Esq.
if to Medical Manager:
Medical Manager Corporation
3001 N. Rocky Point Drive East, Suite 400
Tampa, Florida 33607
Telecopier No.: (313) 289-6420
Attention: Frederick B. Karl, Jr.
with copies to:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131-1704
Telecopier No.: (305) 374-5095
Attention: Stephen K. Roddenberry, Esq.
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SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or any person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any such
shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "Governmental Authority" means any United States (federal, state
or local) or foreign government, or governmental, regulatory or
administrative authority, agency or commission;
(f) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either above or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the
stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate
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in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement (including the
Exhibits, the Medical Manager Disclosure Schedule and the Synetic Disclosure
Schedule which are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein) and the Confidentiality Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law or otherwise,
except that Synetic and Merger Sub may assign all or any of their rights and
obligations hereunder to any affiliate of Synetic provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 6.06 (which is intended to be for the benefit of
the persons covered thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware.
SECTION 9.09. Consent to Jurisdiction. (a) Each of Synetic, Medical Manager
and Merger Sub hereby irrevocably submits to the exclusive jurisdiction of the
courts of the State of Delaware and to the jurisdiction of the United States
District Court for the State of Delaware, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of Synetic,
Medical Manager and Merger Sub hereby irrevocably agrees that all claims in
respect to such action or proceeding may be heard and determined exclusively in
any Delaware state or federal court. Each of Synetic, Medical Manager and Merger
Sub agrees that a final judgment in any action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(b) Each of Synetic, Medical Manager and Merger Sub irrevocably consents to
the service of the summons and complaint and any other process in any other
action or proceeding relating to the transactions contemplated by this
Agreement, on behalf of itself or its property, by personal delivery of copies
of such process to such party. Nothing in this Section 9.09 shall affect the
right of any party to serve legal process in any other manner permitted by law.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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SECTION 9.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF SYNETIC, MEDICAL MANAGER AND
MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SYNETIC, MEDICAL
MANAGER OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Synetic, Medical Manager and Merger Sub have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SYNETIC, INC., a Delaware corporation
By: /s/ JAMES R. LOVE
-----------------------------------
Name: James R. Love
Title: EVP
MEDICAL MANAGER CORPORATION,
a Delaware corporation
By: /s/ MICHAEL A. SINGER
-----------------------------------
Name: Michael A. Singer
Title: CEO
MARLIN MERGER SUB, INC.,
a Delaware corporation
By: /s/ PAUL C. SUTHERN
-----------------------------------
Name: Paul C. Suthern
Title: Chief Executive Officer
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ANNEX A TO THE AGREEMENT AND PLAN OF MERGER
EMPLOYEE BENEFIT MATTERS
1. General. Synetic hereby agrees that, for a period of two years
immediately following the Effective Time, it shall, or shall cause the Surviving
Corporation and its subsidiaries to, maintain employee benefit plans, programs
and arrangements for the benefit of active and retired employees of the
Surviving Corporation and its subsidiaries that in the aggregate will provide
compensation and benefits that are substantially comparable to the compensation
and benefits provided to such active and retired employees under the employee
benefit plans, programs and arrangements of Medical Manager and its subsidiaries
as in effect immediately prior to the Effective Time; provided, however, that
changes may be made to such employee benefit plans and arrangements to the
extent necessary or desirable in light of applicable Law. From and after the
Effective Time, Synetic shall honor, and shall cause the Surviving Corporation
and its subsidiaries to honor, in accordance with their terms, all existing
employment and severance agreements and severance and bonus plans which are
applicable to any current or former employees or directors of Medical Manager or
any of its subsidiaries and that have been disclosed or made available to
Synetic.
2. Service Recognition. Employees of the Surviving Corporation and its
subsidiaries shall receive credit for purposes of eligibility to participate,
vesting and eligibility to receive benefits under any employee benefit plan,
program or arrangement established or maintained by Synetic, the Surviving
Corporation or any of their respective subsidiaries for service accrued or
deemed accrued prior to the Effective Time with Medical Manager or any of its
subsidiaries; provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of any such benefit.
3. Stock Option Pool. Effective as of the Effective Time, Synetic shall
establish a discretionary stock option pool consisting of options to purchase
1,800,000 shares of River Common Stock under River's employee stock option plans
(the "Discretionary Options"), to be used for purposes of retaining and
incentivizing those key employees of Marlin who are employed by Marlin as of the
Effective Time. The Discretionary Options shall be awarded to participating key
employees based on the joint recommendation of the Co-Chief Executive Officers
of River; provided that no more than 50,000 Discretionary Options shall be
allocated to any one key employee.
<PAGE> 171
ANNEX B
OPINION OF PAINEWEBBER INCORPORATED
B-1
<PAGE> 172
Investment Banking Division
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
212 713-2000
PAINEWEBBER
May 16, 1999
Confidential
Board of Directors
Synetic, Inc.
River Drive Center 2
669 River Drive
Elmwood Park, NJ 07407-1361
Gentlemen:
Medical Manager Corporation (the "Company") and Synetic, Inc. (the "Parent
Company") propose to enter into a strategic merger agreement (the "Agreement")
pursuant to which a wholly-owned subsidiary of the Parent Company will be merged
with and into the Company in a transaction (the "Merger") in which each share of
the Company's common stock (the "Shares") will be converted into the right to
receive (i) if the Average Parent Company Stock Price (defined below) is equal
to or above $67.20, 0.625 shares of common stock of the Parent Company, (ii) if
the Average Parent Company Stock Price is below $67.20, and equal to or above
$56.00, such number of shares of the Parent Company common stock such that, when
such number of shares is multiplied by the Average Parent Company Stock Price,
the value of the Parent Company common stock to be received per share of Company
common stock, based upon such Average Parent Company Stock Price, shall equal
$42.00, and (iii) if the Average Parent Company Stock Price is below $56.00,
0.750 shares of the Parent Company common stock (the "Exchange Ratio"), shares
of common stock of the Parent Company (the "Parent Company Shares"). The
"Average Parent Company Stock Price" means the average of the closing price per
share (expressed in three decimal places) of the Parent Company Common Stock
during the ten trading day period commencing on (and including) the twelfth
trading day prior to, and ending on (and including) the third trading day prior
to, the date scheduled for the Company stockholders' meeting.
You have asked us whether or not, in our opinion, the Exchange Ratio in the
Merger is fair to the Parent Company from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the three fiscal years ended December 31,
1998;
(2) Reviewed the Parent Company's Annual Reports, Forms 10-K and related
financial information for the three fiscal years ended June 30, 1998,
and the Parent Company's Form 10-Q and the related unaudited financial
information for the nine months ended March 31, 1999;
(3) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company and the Parent Company, furnished to us by the Company and the
Parent Company;
1
<PAGE> 173
(4) Conducted discussions with members of senior management of the Company
and the Parent Company concerning their respective businesses and
prospects;
(5) Reviewed the historical market prices and trading activity for the
Shares and the Parent Company Shares and compared them with that of
certain publicly traded companies which we deemed to be relevant;
(6) Compared the results of operations and financial position of the
Company and the Parent Company with that of certain companies which we
deemed to be relevant;
(7) Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(8) Reviewed a preliminary S-1 registration statement, dated March 26,
1999, for CareInsite, Inc.;
(9) Reviewed a draft of the Agreement dated May 15, 1999; and
(10) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company and
the Parent Company, and we have not assumed any responsibility to independently
verify such information. With respect to the financial forecasts examined by us,
we have assumed that they were reasonably prepared and reflect the best
currently available estimates and good faith judgments of the management of the
Company and the Parent Company, respectively, as to the future performance of
the Company and the Parent Company, respectively. We have also relied upon
assurances of the management of the Company and the Parent Company,
respectively, that they are unaware of any facts that would make the information
or financial forecasts provided to us incomplete or misleading. We have not made
any independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of the Company or the Parent Company nor have we been furnished
with any such evaluations or appraisals. We have also assumed, with your
consent, that (i) the Merger will be accounted for under the
pooling-of-interests method of accounting, (ii) the Merger will be a tax free
reorganization and (iii) any material liabilities (contingent or otherwise,
known or unknown) of the Company and the Parent Company are as set forth in the
consolidated financial statements of the Company and the Parent Company,
respectively. No opinion is expressed herein as to the price at which the
securities to be issued in the Merger to the shareholders of the Company may
trade at any time subsequent to the consummation of the Merger. Our opinion is
based on economic, monetary and market conditions existing on the date hereof.
This opinion is directed to the Board of Directors of the Parent Company
and does not constitute a recommendation to any shareholder of the Parent
Company as to how any such shareholder should vote on the Merger. This opinion
does not address the relative merits of the Merger and any other transactions or
business strategies discussed by the Board of Directors of the Parent Company as
alternatives to the Merger or the decision of the Board of Directors of the
Parent Company to proceed with the Merger.
In the ordinary course of business, PaineWebber Incorporated may trade in
the securities of the Company and the Parent Company for our own account and for
the
2
<PAGE> 174
accounts of our customers and, accordingly, may at any time hold long or short
positions in such securities.
In the past, PaineWebber Incorporated and its affiliates have provided
investment banking and other financial services to the Parent Company and have
received fees for rendering these services.
On the basis of, and subject to the foregoing, we are of the opinion that
the Exchange Ratio in the Merger is fair to the Parent Company from a financial
point of view.
This opinion has been prepared for the information of the Board of
Directors of the Parent Company in connection with the Merger and shall not be
reproduced, summarized, described or referred to, provided to any person or
otherwise made public or used for any other purpose without the prior written
consent of PaineWebber Incorporated, provided, however, that this letter may be
reproduced in full in the Proxy Statement related to the Merger.
Very truly yours,
PAINEWEBBER INCORPORATED
/s/ PaineWebber Incorporated
3
<PAGE> 175
ANNEX C
OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
C-1
<PAGE> 176
LOGO
June 24, 1999
Board of Directors
Medical Manager Corporation
3001 North Rocky Point Drive East
Suite 400
Tampa, FL 33607
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to holders of common stock, par value $0.01 per share, of Medical Manager
Corporation (the "Company") ("Company Common Stock") of the consideration to be
received by such holders pursuant to the terms of the Agreement and Plan of
Merger, dated as of May 16, 1999 (the "Agreement"), among Synetic, Inc.
("Synetic"), Marlin Acquisition Corporation, a wholly owned subsidiary of
Synetic ("Merger Sub"), and the Company, pursuant to which Merger Sub will be
merged (the "Merger") with and into the Company.
Pursuant to the Agreement, each share of common stock of the Company will
be converted, subject to certain exceptions, into the right to receive a number
of shares (the "Exchange Ratio") of common stock, $0.01 par value per share, of
Synetic ("Synetic Common Stock"), as set forth below: (i) if the Average Synetic
Stock Price (as defined below) is equal to or above $67.20, 0.625 shares of
Synetic Common Stock, (ii) if the Average Synetic Stock Price is below $67.20
and equal to or above $56.00, such number of shares of Synetic Common Stock such
that, when such number of shares is multiplied by the Average Synetic Stock
Price, the value of Synetic Common Stock to be received per share of Company
Common Stock, based upon such Average Synetic Stock Price, shall equal $42.00,
and (iii) if the Average Synetic Stock Price is below $56.00, 0.750 shares of
Synetic Common Stock. "Average Stock Price" means the average of the closing
price per share (expressed in three decimal places) of Synetic Common Stock
during the 10-day trading period commencing on (and including) the twelfth
trading day prior to, and ending on (and including) the third trading day prior
to, the date scheduled for the Company's stockholders' meeting to be held to
vote on the Merger. The Company shall have a right to terminate the Agreement in
the event the Average Stock Price is less than $56.00.
In arriving at our opinion, we have reviewed the Agreement, dated May 16,
1999, and Stock Option Agreements, dated May 16, 1999, between Synetic and the
Company. We also have reviewed financial and other information that was publicly
available or furnished to us by the Company and Synetic including information
provided during discussions with their respective managements. Including in the
information provided during discussions with the respective managements were (i)
certain financial projections of the Company for the period beginning April 1,
1999 and ending December 31, 2004 prepared by the management of the Company and
(ii) certain financial projections of Synetic for the period beginning April 1,
1999 and ending June 30, 2004 prepared or otherwise reviewed by the management
of Synetic. In addition, we have compared certain financial and securities data
of the Company and Synetic with various other companies whose securities are
traded in public markets, reviewed the historical stock prices and trading
volumes of Company Common Stock and Synetic Common Stock, reviewed prices and
premiums paid in certain other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion.
<PAGE> 177
Medical Manager Corporation
Page 2 June 24, 1999
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or Synetic or
their respective representatives, or that was otherwise reviewed by us. With
respect to the financial projections supplied to, or otherwise discussed with
us, we have relied on representations that they have been reasonably prepared on
the basis reflecting the best currently available estimates and judgments of the
management of the Company and Synetic as to the future operating and financial
performance of the Company and Synetic, respectively. We have not assumed any
responsibility for making an independent evaluation of any assets or liabilities
or for making any independent verification of any of the information reviewed by
us. We have assumed the Merger will be a tax-free reorganization under the
Internal Revenue Code of 1996, as amended.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion, other than as provided in the engagement letter
dated October 15, 1998 between DLJ and the Company. We are expressing no opinion
as to the price at which Synetic Common Stock will actually trade at any time.
Our opinion does not address the relative merits of the Merger and the other
business strategies being considered by the Company's Board of Directors, nor
does it address the Board's decision to proceed with the Merger. Our opinion
does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company in the past, including lead managing
the Company's initial public offering of common stock on January 30, 1997 and
common stock offering on April 23, 1998, for which DLJ received usual and
customary compensation.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by holders of Company
Common Stock pursuant to the Agreement is fair to such holders from a financial
point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: Craig Callen Signature
-----------------------------------
Craig R. Callen
Managing Director
<PAGE> 178
ANNEX D
FORM OF PROPOSED AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SYNETIC,
INC.
D-1
<PAGE> 179
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
(SECOND)
OF
SYNETIC, INC.
SYNETIC, INC., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is SYNETIC, INC. The date of filing of its
original Certificate of Incorporation with the Secretary of State was May 17,
1989. The corporation previously filed an Amended and Restated Certificate of
Incorporation on April 9, 1998.
2. This Amended and Restated Certificate of Incorporation (Second)
restates and integrates and further amends the Amended and Restated Certificate
of Incorporation of this corporation by deleting Article One, the first sentence
of Article Four and the second sentence of Article Nine and by substituting in
lieu thereof new provisions for the deleted provisions as set forth below.
3. The text of the Amended and Restated Certificate of Incorporation as
amended or supplemented heretofore is further amended hereby to read as herein
set forth in full:
ARTICLE ONE
The name of this Corporation (hereinafter called the "Corporation") is
MEDICAL MANAGER CORPORATION.
ARTICLE TWO
The address, including street, number, city and county, of the registered
office of the Corporation in the State of Delaware is 1209 Orange Street, City
of Wilmington, County of New Castle; and the name of the registered agent of the
Corporation in the State of Delaware at such address is The Corporation Trust
Company.
ARTICLE THREE
The nature of the business and of the purposes to be conducted and promoted
by the Corporation are to conduct any lawful business, to promote any lawful
purpose and to engage in any lawful act or activity for which a corporation may
be organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The Corporation shall have authority, to be exercised by the Board of
Directors, to issue a total of 310,000,000 shares consisting of 300,000,000
shares of common voting stock of the par value of $0.01 per share (the "Common
Stock") and 10,000,000 shares of preferred stock of the par value of $0.01 per
share (the "Preferred Stock"). Shares of the Preferred Stock shall be designated
as the Board of Directors may determine and may be issued in series by the Board
of Directors as hereinafter provided in paragraph (d) below.
<PAGE> 180
The relative rights and preferences of the shares of capital stock of the
Corporation shall be as follows:
(a) Except as set forth in paragraph (c) below covering elections of
directors, each holder of Common Stock shall at every meeting of
stockholders of the Corporation be entitled to one vote in person or by
proxy for each share of Common Stock held by such holder and each holder of
Preferred Stock with voting rights shall be entitled to such voting rights
as specified pursuant to paragraph (d)(vii), below.
(b) Subject to the rights, if any, of the holders of the Preferred
Stock, or any series thereof, the holders of the Common Stock are entitled
to the entire voting power, all dividends declared and paid by the
Corporation and all assets of the Corporation in the event of any
liquidation, dissolution, or winding up of the Corporation.
(c) At each election for directors, each holder of Common Stock
entitled to vote at such election shall be entitled to one vote in person
or by proxy for each share of stock held by such holder.
(d) The Preferred Stock may be divided into and issued from time to
time in one or more series. All shares of the Preferred Stock shall be of
equal rank and shall be identical, except with respect to the particulars
that may be fixed by the Board of Directors as hereinafter provided
pursuant to authority that is hereby expressly vested in the Board of
Directors; provided, however, that each share of a given series of the
Preferred Stock shall be identical in all respects with the other shares of
such series. Before any shares of the Preferred Stock of any particular
series shall be issued, the Board of Directors shall fix and determine, in
the manner provided by law, the following particulars with respect to the
share of such series:
(i) the distinctive designation of such series and the number of
shares of Preferred Stock that shall constitute such series, which
number may be increased (except where otherwise provided by the Board of
Directors in creating such series) or decreased (but not below the
number of shares of such series then issued) from time to time by the
Board of Directors by resolution;
(ii) the dividend or rate of divided payable with respect to shares
of Preferred Stock of such series, the time of payment of any dividend,
whether dividends shall be cumulative and, if so, the conditions under
which and the date from which dividends shall be accumulated;
(iii) the redemption provisions applicable to the shares of
Preferred Stock of such series, if any, and if applicable, the time or
times when, the price or prices at which, and the other terms and
conditions under which the shares of Preferred Stock of such series
shall be redeemable;
(iv) the amount payable on shares of Preferred Stock of such series
in the event of any voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Corporation, which shall not be deemed
to include the merger or consolidation for the Corporation or a sale,
lease or conveyance of all or part of the assets of the Corporation;
(v) the purchase, retirement or sinking fund provisions, if any,
for the redemption or purchase of shares of Preferred Stock of such
series;
(vi) the rights, if any, of the holders of shares of Preferred
Stock of such series to convert such shares into or exchange such shares
for shares of the
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<PAGE> 181
Common Stock or shares of any other series of the Preferred Stock and
the terms and conditions of such conversion or exchange;
(vii) the extent of voting rights of the shares of Preferred Stock
of such series or the absence thereof; and
(viii) such other terms, limitations, rights and preferences, if
any, of such series as the Board of Directors may lawfully fix under the
laws of the State of Delaware as in effect at the time of creation of
such series.
ARTICLE FIVE
To the fullest extent permitted by law, so long as the Corporation is
controlled by, or under common control with, Medco Containment Services, Inc., a
Delaware corporation ("Medco," which term shall include any successor to Medco),
(i) directors or officers of the Corporation who are also directors or officers
of Medco shall be obligated to present a potential acquisition which may be made
by either the Corporation or Medco of a business engaged in the design,
manufacture or distribution of porous materials to the Corporation and may
present such acquisition to Medco only if such acquisition has been rejected by
the Board of Directors of the Corporation, (ii) directors or officers of the
Corporation who are also directors or officers of Medco shall have no obligation
to present a potential acquisition which may be made by either the Corporation
or Medco of a business engaged in medical cost containment or health care claims
processing to the Corporation unless the Board of Directors of Medco has
rejected such acquisition or has determined that such acquisition should be
presented to the Corporation for consideration and (iii) directors or officers
of the Corporation who are also directors or officers of Medco shall have no
obligation to present a potential acquisition which may be made by either the
Corporation or Medco of a business which is not engaged in the design,
manufacture or distribution of porous materials to the Corporation. For purposes
of this Article Five, Medco shall include all subsidiary corporations and other
entities in which Medco owns (directly or indirectly) more than 50% of the
outstanding voting capital stock or voting power.
ARTICLE SIX
The number of directors which shall constitute the whole Board of Directors
of the Corporation shall be determined in the By-Laws as provided therein. The
directors of the Corporation shall be elected by the stockholders entitled to
vote thereon at each annual meeting of stockholders and shall hold office until
the next annual meeting of stockholders and until their respective successors
shall have been elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. The term of
office of each director in office at the time this amendment to Article Six of
the Certificate of Incorporation of the Corporation becomes effective shall
expire at the time of the opening of the polls for the election of directors at
the next annual meeting of stockholders of the Corporation held after the time
this amendment to Article Six becomes effective.
ARTICLE SEVEN
The power to fill vacancies on the Board of Directors (whether by reason of
resignation, removal with or without cause, the creation of new directorships or
otherwise) shall be vested in the Board of Directors, except as provided below,
and vacancies may be
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<PAGE> 182
filled by a majority of the directors then in office, although less than a
quorum, unless all directorships are vacant, in which case the stockholders
shall fill the then existing vacancies. Any director chosen by the Board of
Directors to fill a vacancy shall hold office only until the next election of
directors by stockholders and until that director's successor shall be elected
and shall have qualified. In the case of removal of a director by the
affirmative vote of the stockholders pursuant to Article Ten of this Certificate
of Incorporation, the vacancy created by such removal shall be filled by the
affirmative vote of the holders of record of a majority of the outstanding
shares of stock entitled thereon. Should the stockholders entitled to vote
thereon fail to elect a director to fill a vacancy caused by the removal of a
director by the affirmative vote of the stockholders pursuant to Article Ten of
this Certificate of Incorporation, such vacancy shall be filled by the Board of
Directors as provided herein.
ARTICLE EIGHT
Special meetings of the stockholders of the Corporation for any purpose may
be called at any time by the Board of Directors, or by a committee of the Board
of Directors which has been duly designated by the Board of Directors and whose
powers and authority, as provided in a resolution of the Board of Directors or
in the By-Laws of the Corporation, include the power to call such meetings.
Special meetings may also be called upon request, in writing, of the holders of
record of ten percent of the outstanding shares of stock entitled to vote at
such meeting.
ARTICLE NINE
The original By-Laws of the Corporation shall be adopted by the
Incorporator. Thereafter, in furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
repeal, alter, amend and rescind the By-Laws of the Corporation.
ARTICLE TEN
The election of directors need not be by written ballot unless required by
the By-Laws of the Corporation. Any director may be removed, either for or
without cause, at any time, by the affirmative vote of the holders of record of
a majority of the outstanding shares of stock entitled to vote, and the vacancy
in the Board of Directors caused by any such removal shall be filled as provided
herein; provided, that where the holders of any class or series of Preferred
Stock are entitled to elect one or more directors the provisions of the
Certificate of Designation of such class or series of Preferred Stock shall
apply, in respect of removal, with or without cause, of a director or directors
so elected.
ARTICLE ELEVEN
The Corporation may indemnify, to the fullest extent permitted by the
General Corporation Law of the State of Delaware and as provided in the By-Laws
of the Corporation, any and all persons whom it shall have the power to
indemnify from and against any and all expenses, liabilities or other matters.
4
<PAGE> 183
ARTICLE TWELVE
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation or in the By-Laws, in
the manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation.
ARTICLE THIRTEEN
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty by such director as a director; provided, however, that this Article
Thirteen shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Corporation 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 Title 8 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of director of
the Corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended. No amendment to or
repeal of this Article Thirteen shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring at the time of or
prior to such amendment or repeal.
4. This amendment to the Amended and Restated Certificate of Incorporation
was duly adopted in accordance with the provisions of Section 242 and Section
245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said SYNETIC, INC. has caused this Certificate to be
signed by , its , on this day of
, 1999.
SYNETIC, INC.
By
Name:
Title:
5
<PAGE> 184
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides, in summary, that directors and officers of Delaware
corporations such as the Registrant are entitled, under certain circumstances,
to be indemnified against all expenses and liabilities (including attorneys'
fees) incurred by them as a result of suits brought against them in their
capacity as a director or officer if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful, provided that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the Registrant,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper. Any such indemnification may be made by the company only as authorized
in each specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct. Article Eleven of the Registrant's Certificate
of Incorporation and Section 6.5 of the Registrant's By-laws entitles officers,
directors and controlling persons of the Registrant to indemnification to the
full extent permitted by Section 145 of the DGCL, as the same may be
supplemented or amended from time to time.
Article Thirteen of the Registrant's Certificate of Incorporation provides
that no director shall have any personal liability to the Registrant 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
Registrant 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 DGCL (involving certain unlawful dividends or stock
repurchase) 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.
Reference is made to the Form of Indemnification Agreement between the
Registrant and its directors and officers filed as Exhibit 10.1 to this
Registration Statement pursuant to which the registrant 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.
The Registrant has purchased certain liability insurance for its officers
and directors as permitted by Section 145(g) of the DGCL.
II-1
<PAGE> 185
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are exhibits to the Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of May 16, 1999,
among Synetic, Inc., Marlin Merger Sub, Inc. and Medical
Manager Corporation (attached as Annex A to the Joint Proxy
Statement/Prospectus).
3.1 Amended and Restated Certificate of Incorporation of
Synetic, Inc. (incorporated by reference to Exhibit 3.1 of
Synetic, Inc.'s Current Report on Form 8-K dated April 9,
1998).
3.2 Form of Proposed Amended and Restated Certificate of
Incorporation of Synetic, Inc. (attached as Annex D to the
Joint Proxy Statement/Prospectus).
3.3 By-Laws of Synetic, Inc., as amended (incorporated by
reference to Exhibit 3.2 to Synetic, Inc.'s Current Report
on Form 8-K dated April 9, 1998).
4.1 Specimen Common Stock Certificate of Synetic, Inc.
(incorporated by reference to Exhibit 4.1 to Synetic, Inc.'s
Registration Statement on Form S-1 (No. 33-28654)).
4.2 Form of Indenture between Synetic, Inc. and United States
Trust Company of New York, including form of Convertible
Subordinated Debenture due 2007 (incorporated by reference
to Exhibit 4.2 to the Synetic, Inc.'s Registration Statement
on Form S-3 (No. 333-21041)).
4.3 Registration Rights Agreement, dated as of May 16, 1999,
between Synetic, Inc. and certain Stockholders.
5.1 Opinion of Shearman & Sterling as to the legality of the
securities being registered.
8.1 Opinion of Shearman & Sterling as to the material United
States federal income tax consequences of the merger.
8.2 Opinion of Akerman, Senterfitt & Eidson, P.A. as to the
material United States federal income tax consequences of
the merger.
10.1 Form of Indemnification Agreement between Synetic, Inc. and
the directors and officers of Synetic, Inc. (incorporated by
reference to Exhibit 10.6 to Synetic, Inc.'s Registration
Statement on Form S-1 (No. 33-28654)).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Linkenheimer LLP.
23.5 Consent of Shearman & Sterling (included in Exhibit 5.1 and
Exhibit 8.1 to this Registration Statement).
23.6 Consent of Kegler, Brown, Hill & Ritter Co., L.P.A.
23.7 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 8.2 to this Registration Statement).
23.8 Consent of PaineWebber Incorporated.
23.9 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
</TABLE>
II-2
<PAGE> 186
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
99.1 Voting Agreement, dated as of May 16, 1999, by Martin J.
Wygod and Medical Manager Corporation.
99.2 Voting Agreement, dated as of May 16, 1999, by certain
Stockholders of Medical Manager Corporation and Synetic,
Inc.
99.3 Stock Option Agreement, dated as of May 16, 1999, between
Synetic, Inc. and Medical Manager Corporation.
99.4 Stock Option Agreement, dated as of May 16, 1999, between
Medical Manager Corporation and Synetic, Inc.
99.5 Form of Stock Option Agreement, between Synetic, Inc. and
each of Messrs. Kang and Singer, as Participant.
99.6 Form of proxy card for the Special Meeting of Stockholders
of Synetic, Inc.
99.7 Form of proxy card for the Special Meeting of Stockholders
of Medical Manager Corporation.
99.8 Form of Chairman Letter to the stockholders of Synetic, Inc.
99.9 Form of Chairman Letter to the stockholders of Medical
Manager Corporation.
99.10 Form of Notice of Special Meeting of Stockholders of
Synetic, Inc.
99.11 Form of Notice of Special Meeting of Stockholders of Medical
Manager Corporation.
99.12 Opinion of PaineWebber, Inc. (attached as Annex B to the
Joint Proxy Statement/Prospectus).
99.13 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation. (attached as Annex C to the Joint Proxy
Statement/Prospectus).
*99.14 Consents of persons named to become directors of the
Registrant who have not signed this Registration Statement.
</TABLE>
- ---------------
* Previously filed.
(b) Not applicable.
(c) The respective opinions of PaineWebber, Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation are included as Annex B and Annex C,
respectively, to this Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is
II-3
<PAGE> 187
a part of this Registration Statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the issuer undertakes that
such reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Securities Act and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the Registration Statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Joint Proxy
Statement/Prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE> 188
SIGNATURES OF SYNETIC, INC.
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Borough of Elmwood Park, State of New Jersey, on this 24th day of June, 1999.
SYNETIC, INC.
By: /s/ PAUL C. SUTHERN
------------------------------------
Paul C. Suthern
President and Chief Executive
Officer
POWER OF ATTORNEY
The undersigned Directors and Officers of Synetic, Inc. hereby constitute
and appoint Paul C. Suthern and Charles A. Mele, and each of them acting singly,
as true and lawful attorneys-in-fact for the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, to sign and file with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act"), any and all
amendments (including post-effective amendments) and exhibits to this
Registration Statement, any related registration statement and its amendments
and exhibits filed pursuant to Rule 462(b) under the Securities Act and any and
all applications and other documents to be filed with the Securities and
Exchange Commission pertaining to the registration of the securities covered
hereby or under any related registration statement or any amendment hereto or
thereto, with full power and authority to do and perform each and every act and
thing requisite and necessary or desirable, hereby ratifying and confirming all
that each of such attorneys-in-fact or their substitutes shall lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PAUL C. SUTHERN President and Chief Executive June 24, 1999
- --------------------------------------------------- Officer; Director (Principal
Paul C. Suthern Executive Officer)
/s/ JAMES R. LOVE Executive Vice President -- June 24, 1999
- --------------------------------------------------- Finance and Administration
James R. Love and Chief Financial Officer
(Principal Financial Officer)
/s/ KIRK G. LAYMAN Senior Vice June 24, 1999
- --------------------------------------------------- President -- Finance, Chief
Kirk G. Layman Accounting Officer and
Assistant Secretary
(Principal Accounting
Officer)
</TABLE>
II-5
<PAGE> 189
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Executive Vice President -- June 24, 1999
- --------------------------------------------------- General Counsel and
Charles A. Mele Secretary; Director
* Director June 24, 1999
- ---------------------------------------------------
Mervyn L. Goldstein
* Director June 24, 1999
- ---------------------------------------------------
Ray E. Hannah
* Director June 24, 1999
- ---------------------------------------------------
Roger H. Licht
* Director June 24, 1999
- ---------------------------------------------------
Bernard A. Marden
* Director June 24, 1999
- ---------------------------------------------------
James V. Manning
* Director June 24, 1999
- ---------------------------------------------------
Herman Sarkowsky
/s/ ALBERT M. WEIS Director June 24, 1999
- ---------------------------------------------------
Albert M. Weis
/s/ MARTIN J. WYGOD Director June 24, 1999
- ---------------------------------------------------
Martin J. Wygod
------------------------
* /s/ PAUL C. SUTHERN As Attorney-in-Fact June 24, 1999
- ---------------------------------------------------
Paul C. Suthern
</TABLE>
II-6
<PAGE> 190
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of May 16, 1999,
among Synetic, Inc., Marlin Merger Sub, Inc. and Medical
Manager Corporation (attached as Annex A to the Joint Proxy
Statement/Prospectus).
3.1 Amended and Restated Certificate of Incorporation of
Synetic, Inc. (incorporated by reference to Exhibit 3.1 of
Synetic, Inc.'s Current Report on Form 8-K dated April 9,
1998).
3.2 Form of Proposed Amended and Restated Certificate of
Incorporation of Synetic, Inc. (attached as Annex D to the
Joint Proxy Statement/Prospectus).
3.3 By-Laws of Synetic, Inc., as amended (incorporated by
reference to Exhibit 3.2 to Synetic, Inc.'s Current Report
on Form 8-K dated April 9, 1998).
4.1 Specimen Common Stock Certificate of Synetic, Inc.
(incorporated by reference to Exhibit 4.1 to Synetic, Inc.'s
Registration Statement on Form S-1 (No. 33-28654)).
4.2 Form of Indenture between Synetic, Inc. and United States
Trust Company of New York, including form of Convertible
Subordinated Debenture due 2007 (incorporated by reference
to Exhibit 4.2 to the Synetic, Inc.'s Registration Statement
on Form S-3 (No. 333-21041)).
4.3 Registration Rights Agreement, dated as of May 16, 1999,
between Synetic, Inc. and certain Stockholders.
5.1 Opinion of Shearman & Sterling as to the legality of the
securities being registered.
8.1 Opinion of Shearman & Sterling as to the material United
States federal income tax consequences of the merger.
8.2 Opinion of Akerman, Senterfitt & Eidson, P.A. as to the
material United States federal income tax consequences of
the merger.
10.1 Form of Indemnification Agreement between Synetic, Inc. and
the directors and officers of Synetic, Inc. (incorporated by
reference to Exhibit 10.6 to Synetic, Inc.'s Registration
Statement on Form S-1 (No. 33-28654)).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of Linkenheimer LLP.
23.5 Consent of Shearman & Sterling (included in Exhibit 5.1 and
Exhibit 8.1 to this Registration Statement).
23.6 Consent of Kegler, Brown, Hill & Ritter Co., L.P.A.
23.7 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 8.2 to this Registration Statement).
23.8 Consent of PaineWebber Incorporated.
23.9 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
99.1 Voting Agreement, dated as of May 16, 1999, by Martin J.
Wygod and Medical Manager Corporation.
99.2 Voting Agreement, dated as of May 16, 1999, by certain
Stockholders of Medical Manager Corporation and Synetic,
Inc.
</TABLE>
II-7
<PAGE> 191
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
99.3 Stock Option Agreement, dated as of May 16, 1999, between
Synetic, Inc. and Medical Manager Corporation.
99.4 Stock Option Agreement, dated as of May 16, 1999, between
Medical Manager Corporation and Synetic, Inc.
99.5 Form of Stock Option Agreement, between Synetic, Inc. and
each of Messrs. Kang and Singer, as Participant.
99.6 Form of proxy card for the Special Meeting of Stockholders
of Synetic, Inc.
99.7 Form of proxy card for the Special Meeting of Stockholders
of Medical Manager Corporation.
99.8 Form of Chairman Letter to the stockholders of Synetic, Inc.
99.9 Form of Chairman Letter to the stockholders of Medical
Manager Corporation.
99.10 Form of Notice of Special Meeting of Stockholders of
Synetic, Inc.
99.11 Form of Notice of Special Meeting of Stockholders of Medical
Manager Corporation.
99.12 Opinion of PaineWebber, Inc. (attached as Annex B to the
Joint Proxy Statement/ Prospectus).
99.13 Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation. (attached as Annex C to the Joint Proxy
Statement/Prospectus).
*99.14 Consents of persons named to become directors of the
Registrant who have not signed this Registration Statement.
</TABLE>
- ---------------
* Previously filed.
II-8
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 16, 1999,
BETWEEN SYNETIC, INC. AND CERTAIN STOCKHOLDERS.
<PAGE> 2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Between
SYNETIC, INC.
and
STOCKHOLDERS
Dated as of May 16, 1999
================================================================================
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of May 16, 1999 (this
"Agreement"), between Synetic, Inc., a Delaware corporation ("Synetic"), and the
individuals who are signatories hereto (each such person being referred to as a
"Stockholder" and collectively as the "Stockholders"). This Agreement shall be
effective as of the Closing.
ARTICLE I
DEFINITIONS
1.01 Definitions. Unless otherwise defined herein, terms defined in
the Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
of this Agreement, among Synetic, Medical Manager Corporation, a Delaware
corporation ("Medical Manager"), and Marlin Merger Sub, Inc., a Delaware
corporation, are used herein as therein defined. In addition, the following
terms, as used herein, have the following meanings:
(a) "Minimum Registrable Number" means (i) for the First
Demand Registration (as hereinafter defined), 500,000 shares of Synetic
Common Stock, as such number may be adjusted to give effect to any Synetic
Common Stock issued or issuable with respect to any shares of Registrable
Securities by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization and any other securities issued pursuant to any other pro
rata distribution with respect to such Synetic Common Stock and (ii) for
the Second Demand Registration (as hereinafter defined), 100,000 shares of
Synetic Common Stock, as such number may be adjusted to give effect to any
Synetic Common Stock issued or issuable with respect to any shares of
Registrable Securities by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization and any other securities issued
pursuant to any other pro rata distribution with respect to such Synetic
Common Stock.
(b) "Maximum Registrable Amount" means, for each Stockholder,
fifty percent (50%) of the total Registrable Securities held by such
Stockholder.
(c) "Registrable Securities" means (i) the Synetic Common
Stock issued to the Stockholders pursuant to the Merger Agreement in
consideration for the Medical Manager Capital Stock (the "Initial Shares")
and (ii) any other securities issued by Synetic as a dividend or other
distribution or stock split with respect to, or in exchange for or in
replacement of, such Synetic Common Stock; provided, however, that the
term Registrable Securities shall not include Synetic Common Stock that
ceases to be Registrable Securities pursuant to Section 2.01. Upon the
effectiveness of this Agreement, the amount of Registrable Securities held
by a Stockholder will be set forth
<PAGE> 4
opposite such Stockholder's name on Schedule A attached hereto.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.01. Registrable Securities. The registration rights
provided herein apply to Registrable Securities, but with respect to any
particular Registrable Security, only so long as such security continues to be a
Registrable Security. Any Registrable Security will cease to be a Registrable
Security when (i) a registration statement covering such Registrable Security
has been declared effective by the SEC and (A) remains effective for thirty (30)
days or (B) such Registrable Security has been sold or otherwise transferred by
the Stockholder thereof, (ii) it is freely tradeable pursuant to Rule 144 under
the Securities Act (or any similar provision then in force), or (iii) it shall
have ceased to be outstanding.
SECTION 2.02. Demand Registration. (a) At any time after the Closing
Date but not later than the date which is sixty (60) days after the Closing
Date, not less than two Stockholders (the "Initiating Stockholders") may request
in a written notice that Synetic file with the SEC a registration statement
under the Securities Act (or a similar document pursuant to any other statute
then in effect corresponding to the Securities Act), covering the registration
of any or all Registrable Securities, up to and including the Maximum
Registrable Amount for each Initiating Stockholder, held by such Initiating
Stockholders (a "Demand Registration", the first such Demand Registration being
the "First Demand Registration"), provided that there must be included in such
registration at least the Minimum Registrable Number of shares of Registrable
Securities. Following receipt of any notice under this Section 2.02(a), Synetic
shall (i) within five (5) business days notify the other Stockholder of such
request in writing, (ii) within thirty (30) days cause to be filed under the
Securities Act a registration statement to register the resale of all
Registrable Securities, up to and including the Maximum Registrable Amount for
each such Stockholder, that the Initiating Stockholders and such other
Stockholder, given such notice, have requested be registered and (iii) use its
reasonable best efforts to cause the registration to be declared effective by
the SEC as soon as possible.
(b) At any time not less than one (1) year after the effective date
of the First Demand Registration, any Stockholder may request a second Demand
Registration in the manner set forth in Section 2.02(a) above for the balance of
such Stockholder's then Registrable Securities (the "Second Demand
Registration"), provided that there must be included in such registration at
least the Minimum Registrable Number of shares of Registrable Securities and
there shall not be included in such registration in excess of of the Maximum
Registrable Amount. Following receipt of any notice under this Section 2.02(b),
Synetic shall (i) within five (5) business days notify the other Stockholder(s)
of such request in writing and (ii) within thirty (30) days cause to be filed
under the Securities Act a registration statement to register the resale of all
Registrable Securities that the Stockholders, given such notice, have requested
be registered and (iii) uses its reasonable best efforts to cause the
registration to be declared effective by the SEC as soon as possible.
2
<PAGE> 5
(c) In the event the First Demand Registration is made prior to the
expiration of the "pooling period" referred to in the affiliate letter attached
as Exhibit 5.03 to the Merger Agreement, and such pooling restrictions shall be
reasonably expected to be in effect at the time the registration statement is
declared effective by the SEC or at the time that the Stockholders resell such
Registrable Securities, then Synetic shall publicly disclose, through the filing
of a Form 8-K with the SEC or otherwise, the consolidated financial statements
of the combined operations of Synetic and Medical Manager covering a period of
at least thirty (30) days of post-merger operations.
(d) The right of any Stockholder to include its Registrable
Securities in any Demand Registration shall be conditioned upon such
Stockholder's participation in an underwritten offering and the inclusion of
such Stockholder's Registrable Securities in such underwritten offering. Such
underwriter or underwriters shall be selected by a Synetic and shall be a
nationally recognized underwriter, provided that any Stockholder shall have the
right to object to such underwriter or underwriters, so long as such right shall
not be unreasonably invoked. All Stockholders proposing to distribute
Registrable Securities shall enter into an underwriting agreement in customary
form (including, without limitation, customary indemnities) with the underwriter
or underwriters, provided that no Stockholder shall be required to make any
representations or warranties to or agreements with Synetic or the underwriters
other than representations, warranties or agreements regarding such Stockholder,
the Registrable Securities of such Stockholder and any other representations
customarily required by the underwriter or underwriters and customary in
transactions of this type. If any Stockholder of Registrable Securities
disapproves of the terms of the underwriting, such Stockholder may elect to
withdraw all of its Registrable Securities from such underwriting by written
notice to Synetic. The securities so withdrawn shall be withdrawn from
registration.
(e) Synetic shall not be obligated to effect and pay for more than a
total of two (2) Demand Registrations pursuant to this Agreement; provided that
a Demand Registration requested pursuant to this Section 2.02 shall not be
deemed to have been effected for purposes of this Section 2.02(e) unless (i) it
has been declared effective by the SEC and remains effective for the applicable
period specified in Section 3.01(a) hereof and (ii) the offering of Registrable
Securities pursuant to such registration is not subject to any stop order,
injunction or other order or requirement of the SEC (other than any such stop
order, injunction, or other requirement of the SEC prompted by any act or
omission of Stockholders of Registrable Securities).
(f) Notwithstanding any provision of this Agreement to the contrary,
in the event a Second Demand Registration is requested in accordance with this
Section 2.02, and if Synetic shall furnish to the Stockholders a certificate
signed by the Chairman of the Board of Synetic stating that in the good faith
judgment of the Board of Directors of Synetic, such Second Demand Registration
would require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed material
transaction involving Synetic, then Synetic's obligation to file a registration
statement pursuant to the Second Demand Registration shall be deferred for a
period not to exceed ninety (90) days.
3
<PAGE> 6
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.01. Filings; Information. Whenever required under Section
2.02 to file a registration statement and use its reasonable efforts to effect
the registration of any Registrable Securities:
(a) Synetic shall prepare and file with the SEC a registration
statement on any form for which Synetic then qualifies and which counsel
for Synetic shall deem appropriate and available for the sale of the
Registrable Securities to be registered thereunder and use its reasonable
efforts to cause such registration statement to become and remain
effective for the lesser of (i) the period of the distribution
contemplated thereby and (ii) thirty (30) days.
(b) Synetic shall, as expeditiously as reasonably possible, prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such
registration statement.
(c) Synetic shall, if requested, furnish to each and each managing
underwriter copies of the prospectus (including any preliminary
prospectus) included in such registration statement and each amendment or
supplement thereto (including, in each case, all exhibits thereto) as they
may reasonably request in order to facilitate the sale of the Registrable
Securities.
(d) After the filing of the registration statement, Synetic will
notify the Stockholders of any stop order issued or, to the knowledge of
Synetic, threatened to be issued, by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove it
if entered.
(e) At any time when a prospectus relating to the sale of the
Registrable Securities is required by law to be delivered in connection
with sales of the Registrable Securities, Synetic shall deliver, as
promptly as practicable, a written notice (a "Suspension Notice") to each
of the Stockholders specifying the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Each Stockholder agrees that, upon
receipt of such Suspension Notice from Synetic, such Stockholder will
forthwith discontinue the offer and sale of Registrable Securities
pursuant to the registration statement covering such Registrable
Securities until receipt of the copies of
4
<PAGE> 7
such supplemented or amended prospectus (which shall be delivered to each
Stockholder within the Suspension Period) and, if so directed by Synetic,
the Stockholder will deliver to Synetic all copies, other than permanent
file copies then in the Stockholder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of
such Suspension Notice. In the event Synetic shall give such Suspension
Notice, (i) as soon as the information becomes available in a form such
that it may be included in an amendment or supplement to the prospectus,
Synetic shall use reasonable efforts to amend or supplement such
prospectus in order to set forth or reflect such event or state of facts;
it being understood that in the event that Synetic determines in good
faith that the disclosure of such information would be seriously
detrimental to Synetic or its Stockholders, Synetic shall be permitted to
delay the filing of such an amendment or supplement to the prospectus for
a period of up to ninety (90) days (but in no event shall such delay of
filing prolong the Suspension Period) and (ii) Synetic will furnish copies
of such amendment or supplement to the prospectus to the Stockholders and
Synetic shall extend the period during which such registration statement
shall be maintained effective as provided in Section 2.02 hereof by the
number of days during the period from and including the date of the giving
of such Suspension Notice to the date upon which Synetic provides to the
Stockholder such supplemented or amended prospectus.
(f) Synetic will cause all such Registrable Securities to be listed
on each securities exchange or market on which similar securities issued
by Synetic are then listed.
(g) Synetic may require each Stockholder promptly to furnish in
writing to Synetic such information as Synetic may from time to time
reasonably request or as may be legally required in connection with such
registration.
(h) Synetic shall enter into customary agreements containing
customary indemnities and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the
Registrable Securities to be so included in the registration statement.
(i) Synetic will do any and all other acts and things that may be
reasonably necessary or advisable to register or qualify for sale in such
jurisdictions the Registrable Securities owned by the Stockholders;
provided, however, that Synetic shall not be required (i) to qualify to do
business in any jurisdiction where it is not then so qualified, (ii) to
subject itself to taxation in any such jurisdiction or (iii) to consent to
general service of process in any jurisdiction where it is not then
subject to service of process.
(j) Synetic will do any and all other acts and things that may be
reasonably necessary to cooperate and assist in the marketing of the
Registrable Securities.
SECTION 3.02. Registration Expenses. In connection with the
registration rights, the Stockholders shall be responsible for any discounts,
commissions and fees of underwriters, selling brokers, dealer managers or
similar industry professionals that may be
5
<PAGE> 8
payable in connection with the sale of their securities and for the fees and
expenses of counsel to the Stockholders and any stock transfer tax or other tax
imposed on any Stockholders by reason of the transfer of the Synetic Common
Stock. Synetic will pay all other expenses incurred in connection with such
registration, including, but not limited to: (i) the fees and expenses of
preparing the Registration Statement, including all registration and filing fees
with the SEC, (ii) fees and expenses of compliance with securities or blue sky
laws (including the reasonable fees and disbursements of Synetic's counsel in
connection with blue sky qualification of the securities), (iii) printing
expenses, (iv) the fees and expenses incurred in connection with the listing of
the securities, (v) fees and expenses of counsel for Synetic and independent
certified public accountants for Synetic and (vi) the reasonable fees and
expenses of any additional experts retained by Synetic in connection with such
registration. Synetic shall also pay its own internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties) relating to any Demand Registration.
ARTICLE IV
INDEMNIFICATION
SECTION 4.01. Indemnification by Synetic. Synetic agrees to
indemnify and hold harmless the Stockholders from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if Synetic shall have furnished any amendments or supplements
thereto) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon written information furnished to Synetic
by or on behalf of any Stockholder expressly for use in the preparation of the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment thereto); provided, however, that the foregoing indemnity agreement
with respect to any prospectus shall not inure to the benefit of a Stockholder
if a copy of the current prospectus was not provided to a purchaser of the
Registrable Securities and such current prospectus would have cured the defect
giving rise to such loss, claim, damage or liability or for any sales occurring
after Synetic has informed the Stockholder in writing under Section 3.01(d) and
prior to the delivery by Synetic of any supplement or amendment to such
prospectus.
SECTION 4.02. Indemnification by the Stockholders. Each Stockholder
requesting or joining in a registration shall severally and not jointly
indemnify and hold harmless Synetic, each of its directors and officers, each
person, if any, who controls Synetic within the meaning of the Securities Act or
the Exchange Act, and each agent and any underwriter for Synetic (within the
meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which Synetic or any such director, officer,
controlling person, agent or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based
6
<PAGE> 9
upon any untrue statement or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission in such registration
statement, preliminary or final prospectus, or amendments or supplements thereto
was made, in reliance upon and in conformity with written information furnished
by or on behalf of such Stockholder expressly for use in connection with such
registration.
SECTION 4.03. Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, however, that the failure to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice) and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest may exist between such indemnified and indemnifying parties
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party. The
indemnified party may participate in such defense at such party's expense;
provided, however, that the indemnifying party shall pay such expense if the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such claim or litigation therefrom. Whether or not
such defense is assumed by the indemnifying party, the indemnifying party will
not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving of the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation. No indemnified party shall consent to entry of any judgment
or settle any claim or litigation without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other such
indemnified party with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such counsel or
counsels.
SECTION 4.04. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity provision
provided for in this Section 4.04 is for any reason held to be unavailable to
the indemnified parties although applicable in accordance with its terms, the
indemnifying party shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the indemnified party, as incurred; provided that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be
7
<PAGE> 10
entitled to contribution from any Person that was not guilty of such fraudulent
misrepresentation. The indemnifying party shall contribute to such aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement in such proportion as shall be appropriate to reflect
the relative fault of the indemnifying party, on the one hand, and of the
indemnified parties on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party, on the one hand,
and of the indemnified parties, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party, on the one hand, or
by or on behalf of the indemnified parties on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Synetic and the Stockholders agree that it
would not be just and equitable if contribution pursuant to this Section 4.04
were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations.
8
<PAGE> 11
ARTICLE V
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 5.01):
(a) if to Synetic:
Synetic, Inc.
669 River Drive
Elmwood Park, New Jersey 07497
Telecopier No.: (201) 703-3401
Attention: Charles A. Mele, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 848-7179
Attention: Creighton O'M. Condon, Esq.
(b) if to a Stockholder, to the address and numbers set forth next
to such Stockholder's signature on the signature page hereof.
with copies to:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Telecopier No.: (305) 374-5095
Attention: Stephen K. Roddenberry, Esq.
SECTION 5.02. Transfer of Registration Rights; Assignment. The
registration rights of any Stockholder under this Agreement with respect to any
Registrable Securities are not transferable or assignable. Synetic may assign
its rights and obligations hereunder in connection with any merger of Synetic
with or into another corporation or entity or the sale of all or substantially
all the assets of Synetic to another corporation or entity, provided that the
surviving or acquiring corporation or entity shall assume all obligations of
Synetic hereunder.
9
<PAGE> 12
SECTION 5.03. Governing Law. This Agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
SECTION 5.04. Consent to Jurisdiction. (a) Each of the parties
hereto hereby irrevocably submits to the exclusive jurisdiction of the courts of
the State of Delaware and to the jurisdiction of the United States District
Court for the State of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and each of the parties hereto
hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Delaware state or
federal court. Each of parties hereto agrees that a final judgment in any action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto irrevocably consents to the service
of the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such party. Nothing in this Section 5.04 shall affect the right of any party
to serve legal process in any other manner permitted by law.
SECTION 5.05. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 5.06. Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
SECTION 5.07. Further Assurances. Each party shall provide (at the
expense of the requesting party) such further documents or instruments
reasonably requested by any other party as may be necessary or desirable to
effect the purpose and intention of this Agreement and carry out its provisions,
whether before or after its termination.
SECTION 5.08. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 5.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the terms of this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as
10
<PAGE> 13
possible in a mutually acceptable manner in order that the terms of this
Agreement be consummated as originally contemplated to the fullest extent
possible.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
11
<PAGE> 14
IN WITNESS WHEREOF, Synetic, Inc. and the Stockholders have caused
this Agreement to be executed and delivered as of the date first written above.
SYNETIC, INC., a Delaware corporation
By: /s/ James R. Love
------------------------------------
Name: James R. Love
Title: EVP
Addresses: STOCKHOLDERS:
c/o Medical Manager Corporation
3001 N. Rocky Point Drive East,
Suite 400
Tampa, Florida 33607 /s/ Michael A. Singer
------------------------------------
Michael A. Singer
c/o Medical Manager Corporation
3001 N. Rocky Point Drive East,
Suite 400
Tampa, Florida 33607 /s/ John H. Kang
------------------------------------
John H. Kang
c/o Medical Manager Corporation
3001 N. Rocky Point Drive East,
Suite 400
Tampa, Florida 33607 /s/ Richard W. Mehrlich
------------------------------------
Richard W. Mehrlich
12
<PAGE> 15
SCHEDULE A
REGISTRABLE SECURITIES OF EACH Stockholder
<TABLE>
<CAPTION>
Stockholder Registrable Securities
----------- ----------------------
<S> <C>
1. Michael A. Singer
2. John H. Kang
3. Richard W. Mehrlich
</TABLE>
<PAGE> 1
EXHIBIT 5.1
OPINION OF SHEARMAN & STERLING AS TO THE LEGALITY OF THE
SECURITIES BEING REGISTERED.
<PAGE> 2
[SHEARMAN & STERLING LETTERHEAD]
June 24, 1999
Synetic, Inc.
River Drive Center II
669 River Drive
Elmwood Park, NJ 07407
Ladies and Gentlemen:
We have acted as special counsel to Synetic, Inc., a Delaware
corporation ("Synetic"), in connection with the Registration Statement on Form
S-4 (the "Registration Statement") being filed by Synetic on the date hereof
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to 18,202,213 shares of common stock, par value $.01 per
share, of Synetic (the "Common Stock"). The Common Stock is being registered in
connection with the merger (the "Merger") of Marlin Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Synetic ("Merger Sub"), with and
into Medical Manager Corporation, a Delaware corporation ("Medical Manager"),
pursuant to the Agreement and Plan of Merger, dated as of May 16, 1999, among
Synetic, Merger Sub and Medical Manager (the "Agreement"). The Common Stock is
described in the Joint Proxy Statement/Prospectus (the "Prospectus") included in
the Registration Statement, to which this opinion is an exhibit.
In that connection, we have reviewed signed copies of the
Registration Statement and the Pre-Effective Amendment No. 1 thereto, a copy of
the Prospectus, and original, or copies certified or otherwise identified to our
satisfaction, of such other documents, corporate records, certificates and other
instruments as we have deemed necessary or appropriate for purposes of this
opinion. In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents, certificates and instruments submitted to us
as originals and the conformity with the originals of all documents submitted to
us as copies.
<PAGE> 3
Synetic, Inc. 2 June 24, 1999
Based upon the foregoing, we are of the opinion that the
shares of Common Stock to which the Registration Statement relates have been
duly authorized and, when issued in connection with the Merger as contemplated
by the Agreement, will be validly issued, fully paid and non-assessable under
Delaware corporate law.
Our opinions expressed above are limited to the General
Corporation Law of the State of Delaware and we do not express any opinion
herein concerning any other law.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"LEGAL MATTERS" contained in the Prospectus.
Very truly yours,
/s/ Shearman & Sterling
<PAGE> 1
EXHIBIT 8.1
OPINION OF SHEARMAN & STERLING AS TO THE MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER.
<PAGE> 2
[SHEARMAN & STERLING LETTERHEAD]
June 24, 1999
Synetic, Inc.
River Drive Center 2
669 River Drive
Elmwood Park, N.J. 07407
Agreement and Plan of Merger by and among
Synetic, Inc., Marlin Merger Sub, Inc. and Medical Manager Corporation
dated as of May 16, 1999
Ladies and Gentlemen:
You have requested our opinion as to certain United States
federal income tax consequences of the contemplated merger (the "Merger") of
Marlin Merger Sub, Inc. ("Merger Subsidiary"), a Delaware corporation and a
direct wholly-owned subsidiary of Synetic, Inc. ("Parent"), a Delaware
corporation, with and into Medical Manager Corporation (the "Company"), a
Delaware corporation. The Merger will be consummated pursuant to the Agreement
and Plan of Merger by and among Parent, Merger Subsidiary and the Company dated
as of May 16, 1999 (the "Merger Agreement"). Unless otherwise defined,
capitalized terms used herein have the meanings assigned to them in the Merger
Agreement. At your request, in connection with the filing of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger.
In connection with rendering our opinion, we have reviewed the
Merger Agreement, including the Exhibits thereto, the Joint Proxy
Statement/Prospectus constituting part of the Registration Statement on Form S-4
filed by Parent and the Company with the Securities and Exchange Commission on
June 18, 1999, as it may be amended through the date hereof, and such other
documents and corporate records as we have deemed necessary or appropriate as a
basis therefor. We have assumed that the representations and warranties
contained in the Merger Agreement were true, correct and complete when made and
will continue to be true, correct and complete through the Effective Time, and
that the parties have complied with and, if applicable,
<PAGE> 3
2
will continue to comply with the covenants contained in the Merger Agreement. We
have assumed that the Merger will be consummated in accordance with the terms of
the Merger Agreement and the laws of the State of Delaware. We also have assumed
that statements as to factual matters contained in the Joint Proxy
Statement/Prospectus are true, correct and complete, and will continue to be
true, correct and complete through the Effective Time. Finally, we have relied
on the representations made by Parent, Merger Subsidiary and the Company and
covenants contained in tax certificates attached hereto as Exhibits A and B,
dated June 23, 1999, and we have assumed that such representations will continue
to be true, correct and complete through the Effective Time and that such
covenants will be complied with in all material respects.
Based upon the foregoing, in reliance thereon and subject
thereto, and based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder, judicial decisions,
revenue rulings and revenue procedures of the Internal Revenue Service, and
other administrative pronouncements, all as in effect on the date hereof, and
assuming that the Merger and related transactions will be consummated in
accordance with the terms of the Merger Agreement, it is our opinion that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code, and that each of Parent, Merger Subsidiary and the Company will be a
party to such reorganization within the meaning of Section 368(b) of the Code.
It is also our opinion that the discussion set forth under the caption "Material
Federal Income Tax Consequences of the Merger" in the Joint Proxy
Statement/Prospectus, insofar as such discussion constitutes statements of
United States federal income tax law or legal conclusions, subject to the
assumptions, limitations and qualifications set forth therein, is a fair and
accurate summary of such matters. There can be no assurance that contrary
positions may not be asserted by the Internal Revenue Service.
No opinion is expressed as to any matter not specifically
addressed above, including the accuracy of the representations or reasonableness
of the assumptions relied upon by us in rendering the opinion set forth above.
Our opinion is based on current United States federal income tax law and
administrative practice and we do not undertake to advise you as to any future
changes in United States federal income tax law or administrative practice that
may affect our opinion unless we are specifically retained to do so. We consent
to the use of this opinion as an Exhibit to the Registration Statement and to
the reference to Shearman & Sterling under the caption "Material Federal Income
Tax Consequences of the Merger" in the Proxy Statement/Prospectus.
Very truly yours,
/s/ Shearman & Sterling
-----------------------
<PAGE> 4
EXHIBIT A
MEDICAL MANAGER REPRESENTATION LETTER
June 23, 1999
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022-4676
Ladies and Gentlemen:
On behalf of Medical Manager Corporation (the "Company"), the
undersigned, in connection with the opinion to be delivered by you pursuant to
section 7.02(c) of the Agreement and Plan of Merger (the "Agreement"; terms used
but not defined herein have the meanings ascribed to them in the Agreement)
dated as of May 16, 1999 among Marlin Merger Sub, Inc. ("Merger Subsidiary"), a
direct wholly-owned subsidiary of Synetic, Inc. ("Parent"), Parent and the
Company, hereby certifies that, to the extent the facts relate to the Company to
his knowledge and after due diligence, and to the extent otherwise without
knowledge to the contrary,
1. The Merger will be consummated in compliance with the terms
of the Agreement and, except for waivers and modifications disclosed to Shearman
& Sterling, none of the material terms and conditions therein have been waived
or modified, and the Company has no plan or intention to waive or modify any of
such terms and conditions.
2. Except as otherwise disclosed to Shearman & Sterling, the
representations and warranties with respect to the Company contained in Article
III of the Agreement are true and correct in all material respects.
3. The fair market value of the Parent Common Stock and other
consideration received by each shareholder of the Company will be approximately
equal to the fair market value of the Company Common Stock exchanged in the
Merger.
4. At least 50 percent of the value of the shareholders'
proprietary interests in the Company will be preserved as a proprietary interest
in Parent received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to the stock of the Company; (ii) a redemption or acquisition of stock
of the Company is made by the Company or a person related to the Company; (iii)
Parent or a person related to Parent acquires stock of the Company for
consideration other than Parent stock; or (iv) Parent redeems its stock issued
in the Merger. Any reference to Parent or the Company includes a reference to
any successor or predecessor of such corporation, except that
<PAGE> 5
2
the Company is not treated as a predecessor of Parent. A corporation will be
treated as related to another corporation if they are both members of the same
affiliated group within the meaning of Section 1504 of the Code (without regard
to the exceptions in Section 1504(b)) or they are related as described in
Section 304(a)(2) of the Code (disregarding Treas. Reg. Section 1.1502-80(b)),
in either case whether such relationship exists immediately before or
immediately after the acquisition. Each partner of a partnership will be treated
as owning or acquiring any stock owned or acquired, as the case may be, by the
partnership (and as having paid any consideration paid by the partnership to
acquire such stock) in accordance with that partner's interest in the
partnership. As used in this representation letter, the term "partnership" shall
have the same meaning given to it in Section 7701(a)(2) of the Code.
5. Following the Merger, the Company will hold at least 90
percent of the fair market value of its net assets and at least 70 percent of
the fair market value of its gross assets and at least 90 percent of the fair
market value of Merger Subsidiary's net assets and at least 70 percent of the
fair market value of the Merger Subsidiary's gross assets held immediately prior
to the Merger. For purposes of this representation, amounts paid by the Company
or Merger Subsidiary to shareholders who receive cash or other property, amounts
used by the Company or Merger Subsidiary to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends) made by the
Company will be included as assets of the Company or Merger Subsidiary,
respectively, immediately prior to the Merger.
6. The Company has no present plan or intention to issue
additional shares of its stock that, assuming the Merger is consummated, would
result in Parent losing control of the Company within the meaning of section
368(c) of the Internal Revenue Code. For this purpose, the term "control" means
the ownership of stock possessing at least 80 percent of the total combined
voting power of all classes of stock entitled to vote and at least 80 percent of
the total number of shares of all other classes of stock of the corporation.
7. Except as otherwise provided in the Agreement, each of the
Parent, Merger Subsidiary, the Company and the shareholders of the Company will
pay their respective expenses, if any, incurred in connection with the Merger.
8. There is no intercorporate indebtedness existing between
Parent and the Company, or between Merger Subsidiary and the Company, that was
issued, acquired or will be settled at a discount.
9. Following the Merger, Company will continue its historic
business or use a significant portion of its historic assets in a business.
10. Except for transfers permitted under Section 368(a)(2)(C)
of the Internal Revenue Code and Treasury Regulations Section 1.368-1(d),
Company has no plan or intention to liquidate; to merge after the Merger with or
into another corporation; to sell or issue stock
<PAGE> 6
3
of Company after the Merger to persons other than Parent; to sell or otherwise
dispose of any of its assets or of any of the assets acquired from Merger
Subsidiary, except for dispositions made in the ordinary course of business; or
to reaquire directly, or indirectly through any of its subsidiaries, any of the
stock of Parent.
11. At the time of the Merger, the Company will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the Company that, if
exercised or converted, would affect Parent's acquisition or retention of
control of the Company, as defined in section 368(c) of the Internal Revenue
Code.
12. The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
13. On the date of the Merger, the fair market value of the
assets of the Company will exceed its liabilities plus the amount of
liabilities, if any, to which the assets are subject.
14. The Company is not under the jurisdiction of a court in a
Title 11 or similar case, within the meaning of section 368(a)(3)(A) of the
Internal Revenue Code.
15. In the Merger, shares of Company stock representing
control of the Company, as defined in section 368(c) of the Code, will be
exchanged solely for voting stock of Parent; for purposes of this
representation, shares of Company stock exchanged for cash or other property
originating with Parent will be treated as outstanding Company stock on the date
of the Merger.
16. None of the compensation received by any
shareholder-employees of the Company will be separate consideration for, or
allocable to, any of the shares of Company Common Stock.
I understand that Shearman & Sterling, as counsel for Synetic,
Inc., will rely on this representation letter in rendering its opinion
concerning certain of the federal income tax consequences of the Merger, and I
hereby commit to inform them if, for any reason, any of the foregoing
representations ceases to be true prior to the Effective Time.
MEDICAL MANAGER CORPORATION
BY: /s/ Frederick B. Karl
-------------------------------
Name: Frederick B. Karl, Jr.
Title: Vice President & General
Counsel
<PAGE> 7
EXHIBIT B
SYNETIC, INC. REPRESENTATION LETTER
June 23, 1999
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022-4676
Ladies and Gentlemen:
On behalf of Synetic, Inc. ("Parent") and Marlin Merger Sub,
Inc. ("Merger Subsidiary"), a direct wholly-owned subsidiary of Parent, the
undersigned, in connection with the opinion to be delivered by you pursuant to
section 7.02(c) of the Agreement and Plan of Merger (the "Agreement"; terms used
but not defined herein have the meanings ascribed to them in the Agreement)
dated as of May 16, 1999 among Merger Subsidiary, Parent, and Medical Manager
Corporation (the "Company"), hereby certifies that, to the extent the facts
relate to Parent and Merger Subsidiary to his knowledge and after due diligence,
and to the extent otherwise without knowledge to the contrary,
1. The Merger will be consummated in compliance with the terms
of the Agreement and, except for waivers and modifications disclosed to Shearman
& Sterling, none of the material terms and conditions therein have been waived
or modified, and Parent has no plan or intention to waive or modify any of such
terms and conditions except as otherwise disclosed to Shearman & Sterling.
2. Except as otherwise disclosed to Shearman & Sterling, each
of the representations and warranties of Synetic and Merger Sub contained in the
Merger Agreement are true and correct as of the date hereof as though made on
and as of the date hereof (except to the extent expressly made as of an earlier
date, in which case as of such date), except where failure to be so true and
correct would not have, individually or in the aggregate, a Synetic Material
Adverse Effect.
3. The fair market value of the Parent Common Stock and other
consideration received by each shareholder of the Company will be approximately
equal to the fair market value of the Company Common Stock exchanged in the
Merger.
4. At least 50 percent of the value of the shareholders'
proprietary interests in the Company will be preserved as a proprietary interest
in Parent received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to the stock of the Company; (ii) a redemption or acquisition of stock
of the Company is made by the Company or a person related to the Company; (iii)
Parent or a
<PAGE> 8
2
person related to Parent acquires stock of the Company for consideration other
than Parent stock; or (iv) Parent redeems its stock issued in the Merger. Any
reference to Parent or the Company includes a reference to any successor or
predecessor of such corporation, except that the Company is not treated as a
predecessor of Parent. A corporation will be treated as related to another
corporation if they are both members of the same affiliated group within the
meaning of Section 1504 of the Code (without regard to the exceptions in Section
1504(b)) or they are related as described in Section 304(a)(2) of the Code
(disregarding Treas. Reg. Section 1.1502-80(b)), in either case whether such
relationship exists immediately before or immediately after the acquisition.
Each partner of a partnership will be treated as owning or acquiring any stock
owned or acquired, as the case may be, by the partnership (and as having paid
any consideration paid by the partnership to acquire such stock) in accordance
with that partner's interest in the partnership. As used in this representation
letter, the term "partnership" shall have the same meaning given to it in
Section 7701(a)(2) of the Code.
5. Following the Merger, the Company will hold at least 90
percent of the fair market value of its net assets and at least 70 percent of
the fair market value of its gross assets and at least 90 percent of the fair
market value of Merger Subsidiary's net assets and at least 70 percent of the
fair market value of the Merger Subsidiary's gross assets held immediately prior
to the Merger. For purposes of this representation, amounts paid by the Company
or Merger Subsidiary to shareholders who receive cash or other property, amounts
used by the Company or Merger Subsidiary to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends) made by the
Company will be included as assets of the Company or Merger Subsidiary,
respectively, immediately prior to the Merger.
6. Prior to the Merger, Parent will be in control of Merger
Subsidiary within the meaning of section 368(c) of the Code. For this purpose,
the term "control" means the ownership of stock possessing at least 80 percent
of the total combined voting power of all classes of stock entitled to vote and
at least 80 percent of the total number of shares of all other classes of stock
of the corporation.
7. Parent has no present plan or intention to cause the
Company to issue additional shares of its stock that, assuming the Merger is
consummated, would result in Parent losing control of the Company within the
meaning of section 368(c) of the Internal Revenue Code.
8. Parent has no plan or intention to reacquire any of its
stock issued in the Merger.
9. Except for transfers described in Section 368(a)(2)(C) of
the Internal Revenue Code and Treasury Regulations Section 1.368-1(d), Parent
has no plan or intention to liquidate Company; to merge Company with or into
another corporation; to sell or otherwise dispose of the stock of Company; or to
cause Company to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Subsidiary, except for dispositions made in the
ordinary course of business.
<PAGE> 9
3
10. Merger Subsidiary will have no liabilities assumed by
Company, and will not transfer to Company any assets subject to liabilities, in
the Merger.
11. Except as otherwise provided in the Agreement, each of the
Parent, Merger Subsidiary, the Company and the shareholders of the Company will
pay their respective expenses, if any, incurred in connection with the Merger.
12. There is no intercorporate indebtedness existing between
Parent and the Company, or between Merger Subsidiary and the Company, that was
issued, acquired or will be settled at a discount.
13. Following the Merger, Parent will cause Company to
continue its historic business or use a significant portion of its historic
assets in a business.
14. Neither Parent nor Merger Subsidiary is an investment
company as defined in section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue
Code.
15. On the date of the Merger, the fair market value of the
assets of the Company will exceed its liabilities plus the amount of
liabilities, if any, to which the assets are subject.
16. The Company is not under the jurisdiction of a court in a
Title 11 or similar case, within the meaning of section 368(a)(3)(A) of the
Internal Revenue Code.
17. In the Merger, shares of Company stock representing
control of the Company, as defined in section 368 (c) of the Code, will be
exchanged solely for voting stock of Parent; for purposes of this
representation, shares of Company stock exchanged for cash or other property
originating with Parent will be treated as outstanding Company stock on the date
of the Merger.
18. None of the compensation received by any
shareholder-employees of the Company will be separate consideration for, or
allocable to, any of the shares of Company Common Stock held by such
shareholder-employees.
19. Parent does not own, nor has it owned during the past five
years, any shares of stock of Company.
20. The payment of cash in lieu of fractional shares of Parent
Common Stock will be solely for purposes of avoiding the expense and
inconvenience to Parent of issuing fractional shares and does not represent
separately bargained for consideration.
21. Parent has not adopted or modified any stock repurchase
program in connection with the Merger.
<PAGE> 10
4
I understand that Shearman & Sterling, as counsel for Synetic,
Inc., will rely on this representation letter in rendering its opinion
concerning certain of the federal income tax consequences of the Merger, and I
hereby commit to inform them if, for any reason, any of the foregoing
representations ceases to be true prior to the Effective Time.
SYNETIC, INC.
BY: David C. Amburgey
----------------
Name: David C. Amburgey
Title: Vice President
<PAGE> 1
EXHIBIT 8.2
OPINION OF AKERMAN, SENTERFITT & EIDSON, P.A. AS TO THE MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER.
<PAGE> 2
[AKERMAN, SENTERFITT S. EIDSON, P.A. LETTERHEAD]
June 24, 1999
Medical Manager Corporation
3001 N. Rocky Point Drive East
Suite 400
Tampa, Florida 33607
Re: Agreement and Plan of Merger by and among
Synetic, Inc., Marlin Merger Sub, Inc. and Medical Manager Corporation
dated as of May 16, 1999
Ladies and Gentlemen:
You have requested our opinion as to certain United States federal income
tax consequences of the contemplated merger (the "Merger") of Marlin Merger
Sub, Inc. ("Merger Subsidiary"), a Delaware corporation and a direct
wholly-owned subsidiary of Synetic, Inc. ("Parent"), a Delaware corporation,
with and into Medical Manager Corporation (the "Company"), a Delaware
corporation. The Merger will be consummated pursuant to the Agreement
and Plan of Merger by and among Parent, Merger Subsidiary and the Company dated
as of May 16, 1999 (the "Merger Agreement"). Unless otherwise defined,
capitalized terms used herein have the meanings assigned to them in the Merger
Agreement. At your request, in connection with the filing of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger.
In connection with rendering our opinion, we have reviewed the Merger
Agreement, including the Exhibits thereto, the Joint Proxy Statement/Prospectus
constituting part of the Registration Statement on Form S-4 filed by Parent and
the Company with the Securities and Exchange Commission on June 18, 1999, as it
may be amended through the date hereof, and such other documents and corporate
records as we have deemed necessary or appropriate as a basis therefor. We have
assumed that the representations and warranties contained in the Merger
Agreement are true, correct and complete as of the date hereof and will
continue to be true, correct and complete through the Effective Time, and that
the parties have complied with and, if applicable, will continue to comply with
the covenants contained in the Merger Agreement. We have assumed that the
Merger will be consummated in accordance with the terms of the Merger Agreement
and the laws of the State of Delaware. We also have assumed that statements as
to factual matters contained
<PAGE> 3
Medical Manager Corporation
June 24, 1999
Page 2
in the Joint Proxy Statement/Prospectus are true, correct and complete, and
will continue to be true, correct and complete through the Effective Time.
Finally, we have relied on the representations and covenants made by Parent,
Merger Subsidiary and the Company contained in tax certificates attached hereto
as Exhibits A and B, and we have assumed that such representations will
continue to be true and correct through the Effective Time and that the
covenants contained in the tax certificates will be complied with in all
material respects.
Based upon the foregoing, in reliance thereon and subject thereto, and
based upon the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury Regulations promulgate thereunder, judicial decisions, revenue rulings
and revenue procedures of the Internal Revenue Service, and other
administrative pronouncements, all as in effect on the date hereof, and
assuming that the Merger and related transactions will be consummated in
accordance with the terms of the Merger Agreement, it is our opinion that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code, and that each of Parent, Merger Subsidiary and the Company will be a
party to such reorganization within the meaning of Section 368(b) of the Code.
It is also our opinion that the discussion set forth under the caption
"Material Federal Income Tax Consequences of the Merger" in the Joint Proxy
Statement/Prospectus, insofar as such discussion constitutes statements of
United States federal income tax law or legal conclusions, subject to the
assumptions, limitations and qualifications set forth therein, is a fair and
accurate summary of such matters. There can be no assurance that contrary
positions may not be asserted by the Internal Revenue Service.
No opinion is expressed as to any matter not specifically addressed above,
including the accuracy of the representations or reasonableness of the
assumptions relied upon by us in rendering the opinion set forth above. Our
opinion is based on current United States federal income tax law and
administrative practice and we do not undertake to advise you as to any future
changes in United States federal income tax law or administrative practice that
may affect our opinion unless we are specifically retained to do so. We consent
to the use of this opinion as an Exhibit to the Registration Statement, and to
the reference to Akerman, Senterfitt & Eidson, P.A. under the caption "Material
Federal Income Tax Consequences of the Merger" and elsewhere in the Joint Proxy
Statement/Prospectus.
Very truly yours,
/s/ Akerman, Senterfitt & Eidson, P.A.
--------------------------------------
Akerman, Senterfitt & Eidson, P.A.
<PAGE> 4
EXHIBIT "A"
TAX OPINION CERTIFICATE
SYNETIC, INC. and MARLIN MERGER SUB, INC.
June 23, 1999
This TAX OPINION CERTIFICATE, made by the management of Synetic, Inc.
("Parent") to Akerman, Senterfitt & Eidson, provides certain representations
that Akerman, Senterfitt & Eidson, P.A. will be relying upon in the issuance
of an opinion as to certain federal income tax consequences arising from the
consummation of the merger of Marlin Merger Sub, Inc. ("Merger Subsidiary"), a
newly created and direct, wholly-owned subsidiary of Parent, with and into
Medical Manager Corporation (the "Company") (the "Merger"). Capitalized terms
used herein without definition have the respective meanings specified in the
Agreement and Plan of Merger, dated as of May 16, 1999, between Parent, Merger
Subsidiary and the Company (the "Merger Agreement").
The undersigned hereby certifies that he/she is an officer of Parent duly
authorized to make the representations below on behalf of Parent and Merger
Subsidiary. The undersigned hereby represents that the following matters are
true on the date hereof and the following matters may be assumed to be true on
the date the Merger is to be consummated:
The following representations are made in connection with the Merger:
1. The Merger will be consummated in compliance with the terms of the
Merger Agreement and, except for waivers and modifications disclosed to
Akerman, Senterfitt & Eidson, none of the material terms and conditions
therein have been waived or modified, and Parent has no plan or intention to
waive or modify any of such terms and conditions except as otherwise disclosed
to Akerman, Senterfitt & Eidson.
2. Except as otherwise disclosed to Akerman, Senterfitt & Eidson, the
representations and warranties of Parent and Merger Subsidiary contained in the
Merger Agreement are true and correct as of the date hereof as though made on
and as of the date hereof (except to the extent expressly made as of an earlier
date, in which case as of such date), except where failure to be so true and
correct would not have, individually or in the aggregate, a Synetic Material
Adverse Effect.
3. The fair market value of the Parent Common Stock and other
consideration received by each shareholder of the Company will be approximately
equal to the fair market value of the Company Common Stock exchanged in the
Merger.
4. At least 50 percent of the value of the shareholders' proprietary
interests in the Company will be preserved as a proprietary interest in Parent
received in exchange for Company
<PAGE> 5
Common Stock. For purposes of this representation, proprietary interests will
not be preserved to the extent that, in connection with the Merger: (i) an
extraordinary distribution is made with respect to the stock of the Company;
(ii) a redemption or acquisition of stock of the Company is made by the Company
or a person related to the Company; (iii) Parent or a person related to Parent
acquires stock of the Company for consideration other than Parent stock; or
(iv) Parent redeems its stock issued in the Merger. Any reference to Parent or
the Company includes a reference to any successor or predecessor of such
corporation, except that the Company is not treated as a predecessor of Parent.
A corporation will be treated as related to another corporation if they are
both members of the same affiliated group within the meaning of Section 1504 of
the Code (without regard to the exceptions in Section 1504(b)) or they are
related as described in Section 304(a)(2) of the Code (disregarding Treas. Reg.
Section 1.1502-80(b)), in either case whether such relationship exists
immediately before or immediately after the acquisition. Each partner of a
partnership will be treated as owning or acquiring any stock owned or acquired,
as the case may be, by the partnership (and as having paid any consideration
paid by the partnership to acquire such stock) in accordance with that
partner's interest in the partnership. As used in this representation letter,
the term "partnership" shall have the same meaning given to it in Section
7701(a)(2) of the Code.
5. Following the Merger, the Company will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets and at least 90 percent of the fair market value of
the Merger Subsidiary's net assets and at least 70 percent of the fair market
value of the Merger Subsidiary's gross assets held immediately prior to the
Merger. For purposes of this representation, amounts paid by the Company or
Merger Subsidiary to shareholders to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends) made by
the Company will be included as assets of the Company or Merger Subsidiary,
respectively, immediately prior to the Merger.
6. Prior to the Merger, Parent will be in control of Merger Subsidiary
within the meaning of section 368(c) of the Code. For this purpose, the term
"control" means the ownership of stock possession at least 80 percent of the
total combined voting power of all classes of stock entitled to vote and at
least 80 percent of the total number of shares of all other classes of stock
of the corporation.
7. Parent has no present plan or intention to cause the Company to issued
additional shares of its stock that, assuming Merger is consummated, would
result in Parent losing control of the Company within the meaning of section
368(c) of the Internal Revenue Code.
8. Parent has no plan or intention to reacquire any of its stock issued in
the Merger.
9. Except for transfers described in Section 368(a)(2)(C) of the Internal
Revenue Code and Treasury Regulations Section 1.368-1(d), Parent has no plan or
intention to liquidate; to merger Company with or into another corporation; to
sell or otherwise dispose of the stock of the Company; or cause Company to sell
or otherwise dispose of any of its assets or of any of the assets acquired form
Merger Subsidiary, except for dispositions made in the ordinary course of
business.
-2-
<PAGE> 6
10. Merger Subsidiary will have no liabilities assumed by Company, and
will not transfer to Company any assets subject to liabilities, in the Merger.
11. Except as otherwise provided in the Agreement, each of the Parent,
Merger Subsidiary, the Company and the shareholders of the Company will pay
their respective expenses, if any, incurred in connection with the Merger.
12. Following the Merger, Parent will cause Company to continue its
historic business or use a significant portion of its historic assets in a
business.
13. Neither Parent nor Merger Subsidiary is an investment company as
defined in section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
14. On the date of the Merger, the fair market value of the assets of the
Company will exceed its liabilities plus the amount of liabilities, if any, to
which the assets are subject.
15. There is no intercorporate indebtedness existing between Parent and
the Company, or between Merger Subsidiary and the Company, that was issued,
acquired or will be settled at a discount.
16. The Company is not under the jurisdiction of a court in a Title 11 or
similar case, within the meaning of section 368(a)(3)(A) of the Internal
Revenue Code.
17. In the Merger, shares of Company stock representing control of
the Company, as defined in section 368(c) of the Code, will be exchange solely
for voting stock of Parent; for purposes of this representation, shares of
Company stock exchanged for cash or other property originating with Parent will
be treated as outstanding Company stock on the date of the Merger.
18. None of the compensation received by any shareholder-employees of the
Company will be separate consideration for, or allocable to, any of the shares
of the Company common Stock held by such shareholders-employees.
19. Parent does not own, nor has it owned during the past five years, any
shares of stock of Company.
20. The payment of cash in lieu of fractional shares of the Parent Common
Stock will be solely for purposes of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained
for consideration.
21. Parent has not adopted or modified any stock repurchase program in
connection with the Merger.
-3-
<PAGE> 7
I understand that Akerman, Senterfitt & Eidson, P.A., as counsel for
Medical Manager Corporation, will rely on this representation letter in
rendering its opinion concerning certain of the federal income tax consequences
of the Merger, and I hereby commit to inform them if, for any reason, any of the
foregoing representations ceases to be true prior to the Effective Time.
SYNETIC, INC.
By: /s/ DAVID C. AMBURGEY
---------------------
Name: David C. Amburgey
Title: Vice President
<PAGE> 8
EXHIBIT "B"
TAX OPINION CERTIFICATE
MEDICAL MANAGER CORPORATION
June 23, 1999
This TAX OPINION CERTIFICATE, made by the management of Medical Manager
Corporation (the "Company") to Akerman, Senterfitt & Eidson, provides certain
representations that Akerman, Senterfitt & Eidson will be relying upon in the
issuance of an opinion as to certain federal income tax consequences arising
from the consummation of the merger of Marlin Merger Sub, Inc. ("Merger
Subsidiary"), a newly-created and direct, wholly-owned subsidiary of Synetic,
Inc. (the "Parent"), with and into the Company (the "Merger"). Capitalized terms
used herein without definition have the respective meanings specified in the
Agreement and Plan of Merger, dated as of May 16, 1999, between Parent, Merger
Subsidiary, and the Company (the "Merger Agreement").
The undersigned hereby certifies that he/she is an officer of the Company duly
authorized to make the representations below on behalf of the Company. The
undersigned hereby represents that the following matters are true on the date
hereof and the following matters may be assumed to be true on the date the
Merger is to be consummated:
The undersigned representations are made in connection with the Merger:
1. The Merger will be consummated in compliance with the terms of the
Merger Agreement and, except for waivers and modifications disclosed to Akerman,
Senterfitt & Eidson, none of the material terms and conditions therein have been
waived or modified, and the Company has no plan or intention to waive or modify
any of such terms and conditions.
2. Except as otherwise disclosed to Akerman, Senterfitt & Eidson, the
representations and warranties with respect to the Company contained in Article
III of the Merger Agreement are true and correct in all material respects.
3. The fair market value of the Parent Common Stock and other
consideration received by each shareholder of the Company will be approximately
equal to the fair market value of the Company Common Stock exchanged in the
Merger.
4. At least 50 percent of the value of the shareholders' proprietary
interests in the Company will be preserved as a proprietary interest in Parent
received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to the stock of the Company; (ii) a redemption or acquisition of stock
of the Company is made by
<PAGE> 9
the Company or a person related to the Company; (iii) Parent or a person related
to Parent acquires stock of the Company for consideration other than Parent
stock; or (iv) Parent redeems its stock issued in the Merger. Any reference to
Parent or the Company includes a reference to any successor or predecessor of
such corporation, except that the Company is not treated as a predecessor of
Parent. A corporation will be treated as related to another corporation if they
are both members of the same affiliated group within the meaning of Section 1504
of the Code (without regard to the exceptions in Section 1504 (b)) or they are
related as described in Section 304(a)(2) of the Code (disregarding Treas. Reg.
Section 1.1502-80(b)), in either case whether such relationship exists
immediately before or immediately after the acquisition. Each partner of a
partnership will be treated as owning or acquiring any stock owned or acquired,
as the case may be, by the partnership (and as having paid any consideration
paid by the partnership to acquire such stock) in accordance with that partner's
interest in the partnership. As used in this representation letter, the term
"partnership" shall have the same meaning given to it in Section 7701(a)(2) of
the Code.
5. Following the Merger, the Company will hold at least 90 percent of
the fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of the Merger Subsidiary's net assets and at least 70 percent of the fair
market value of the Merger Subsidiary's gross assets held immediately prior to
the Merger. For purposes of this representation, amounts paid by the Company or
Merger Subsidiary to shareholders to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends) made by the
Company will be included as assets of the Company or Merger Subsidiary,
respectively, immediately prior to the Merger.
6. The Company has no present plan or intention to issue additional
shares of its stock that, assuming the Merger is consummated, would result in
Parent losing control of the Company within the meaning of section 368(c) of the
Internal Revenue Code. For this purpose, the term "control" means the ownership
of stock possession at least 80 percent of the total number of shares of all
other classes of stock of the corporation.
7. Except as otherwise provided in the Agreement, each of the Parent,
Merger Subsidiary, the Company and the shareholders of the Company will pay
their respective expenses, if any, incurred in connection with the Merger.
8. There is no intercorporate indebtedness existing between Parent and
the Company, or between Merger Subsidiary of the Company, that was issued,
acquired or will be settled at a discount.
9. Following the Merger, Company will continue its historic business or
use a significant portion of its historic assets in a business.
10. Except for transfers permitted under Section 368(a)(2)(C) of the
Internal Revenue Code and Treasury Regulations Section 1.368-1(d), Company has
no plan or intention to liquidate; to merger after the Merger with or into
another corporation; to sell or issue stock of Company after the Merger to
persons other than Parent; to sell or otherwise dispose of any of its assets or
of any of the assets of acquired form Merger Subsidiary, except for dispositions
made in the ordinary course
- 2 -
<PAGE> 10
of business; or to reacquire directly, or indirectly through any of its
subsidiaries, any of the stock of Parent.
11. At the time of the Merger, the Company will not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in the Company that, if
exercised or converted, would affect Parent's acquisition or retention of
control of the Company, as defined in section 368(c) of the Internal Revenue
Code.
12. The Company is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
13. On the date of the Merger, the fair market value of the assets of
the Company will exceed its liabilities plus the amount of liabilities, if any,
to which the assets are subject.
14. The Company is not under the jurisdiction of a court in a Title 11
or similar case, within the meaning of section 368(a)(3)(A) of the Internal
Revenue Code.
15. In the Merger, shares of Company stock representing control of the
Company, as defined in section 368(c) of the Code, will be exchanged solely for
voting stock of Parent; for purposes of this representation, shares of Company
stock exchanged for cash or other property originating with Parent will be
treated as outstanding Company stock on the date of the Merger.
16. None of the compensation received by any shareholder-employees of
the Company will be separate consideration for, or allocable to, any of the
shares of the Company Common Stock.
I understand that Akerman, Senterfitt & Eidson, P.A., as counsel for
Medical Manager Corporation, will rely on this representation letter in
rendering its opinion concerning certain of the federal income tax consequences
of the Merger, and I hereby commit to inform them if, for any reason, any of the
foregoing representations ceases to be true prior to the Effective Time.
MEDICAL MANAGER CORPORATION
By: /s/ Frederick B. Karl, Jr.
---------------------------------------
Name: Frederick B. Karl, Jr.
Title: Vice President & General Counsel
- 3 -
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated August
14, 1998 included in Synetic, Inc.'s Form 10-K for the fiscal year ended June
30, 1998 and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New York, New York
June 23, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ARTHUR ANDERSEN LLP.
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report for the KippGroup dated
March 19, 1999 included in Synetic, Inc.'s Form 8-K, for the year ended December
31, 1998, and to all references to our Firm in this registration statement.
/s/ Arthur Andersen LLP
Orange County, California
June 23, 1999
<PAGE> 1
EXHIBIT 23.4
CONSENT OF LINKENHEIMER LLP.
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated April 2, 1998 on our audit of the consolidated
financial statements of POINT PLASTICS, INC. AND SUBSIDIARY included in Synetic,
Inc.'s Form 8-K dated July 29, 1998, into this registration statement on Form
S-4 and to all references to our Firm in this registration statement.
Very truly yours,
LINKENHEIMER LLP
BY: /s/ Linkenheimer LLP
-----------------------------------
Santa Rosa, California
June 23, 1999
<PAGE> 1
EXHIBIT 23.6
CONSENT OF KEGLER, BROWN, HILL & RITTER CO., L.P.A.
<PAGE> 2
CONSENT OF KEGLER, BROWN, HILL & RITTER CO., LPA.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4, filed with the Securities and Exchange Commission, of
Synetic Inc.'s Annual Report on Form 10K for the fiscal year ended June 30,
1998. We also consent to all references to our firm included in this
Registration Statement.
Columbus, Ohio
June 23, 1999
Very truly yours,
KEGLER, BROWN, HILL & RITTER CO. LPA
By: /s/ Jack A. Bjerke
------------------------------------
Jack A. Bjerke, Vice President
<PAGE> 1
EXHIBIT 23.8
CONSENT OF PAINEWEBBER INCORPORATED
<PAGE> 2
[PAINEWEBBER LETTERHEAD]
Consent to Use of
Fairness Opinion in S-4
Registration Statement
-----------------------
We hereby consent to the use of our opinion letter dated May 16, 1999 to
the Board of Directors of Synetic, Inc. included as Appendix B to the Proxy
Statement/Prospectus which forms a part of the Registration Statement on Form
S-4 relating to the proposed merger of Marlin Merger Sub, Inc., a wholly owned
subsidiary of Synetic, Inc., with and into Medical Manager Corporation and to
the references to such opinion in such Proxy Statement/Prospectus under the
caption "The Merger -- Opinion of PaineWebber Incorporated". In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations issued by the Securities and Exchange Commission
thereunder.
Very truly yours,
PAINEWEBBER INCORPORATED
By /s/ Declan P. Quirke
-----------------------------
Declan P. Quirke
Managing Director
June 23, 1999
New York, New York
<PAGE> 1
EXHIBIT 23.9
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION.
<PAGE> 2
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
June 24, 1999
Medical Manager Corporation
3001 North Rocky Point Drive East
Suite 400
Tampa, FL 33607
Ladies and Gentlemen:
We hereby consent to (i) the inclusion of our opinion letter, dated as of
June 24, 1999, to the Board of Directors of Medical Manager Corporation (the
"Company") as Annex C to the Joint Proxy Statement/Prospectus of the Company and
Synetic, Inc. ("Synetic"), which forms a part of this Registration Statement on
Form S-4 filed with the Securities and Exchange Commission on the date hereof
(the "Joint Proxy Statement/Prospectus"); and (ii) all references to DLJ in the
sections captioned "Summary -- Opinions of Financial Advisors"; "The Merger --
Background of the Merger"; "The Merger -- Recommendation of the Medical Manager
Board of Directors; Reasons of Medical Manager for the Merger"; and "The Merger
- -- Opinion of Donaldson, Lufkin & Jenrette Securities Corporation" of the Joint
Proxy Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under, and we do not
admit that we are "experts" for purposes of, the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Donaldson, Lufkin & Jenrette Securities Corporation
---------------------------------------------------------
<PAGE> 1
EXHIBIT 99.1
VOTING AGREEMENT, DATED AS OF MAY 16, 1999, BY MARTIN J. WYGOD
AND MEDICAL MANAGER CORPORATION.
<PAGE> 2
VOTING AGREEMENT
By
MARTIN J. WYGOD,
(Stockholder)
and
MEDICAL MANAGER CORPORATION
Dated as of May 16, 1999
<PAGE> 3
VOTING AGREEMENT
VOTING AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
by MARTIN J. WYGOD (the "Stockholder"), to and for the benefit of MEDICAL
MANAGER CORPORATION, a Delaware Corporation ("Medical Manager").
WHEREAS, as of the date hereof, the Stockholder owns of record
and beneficially or has the power to vote 5,379,948 shares of common stock (the
"Synetic Common Stock"), par value $.01 per share, of SYNETIC, INC., a Delaware
corporation ("Synetic") (such shares, together with any shares of Synetic Common
Stock acquired by the Stockholder prior to the termination of this Agreement
being referred to herein as the "Stockholder's Shares");
WHEREAS, concurrently with the execution of this Agreement,
Medical Manager, MARLIN MERGER SUB, INC., a Delaware corporation and
wholly-owned subsidiary of Synetic ("Merger Sub"), and Synetic are entering into
an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms used and not otherwise defined herein shall have
the respective meanings assigned to them in the Merger Agreement), pursuant to
which, upon the terms and subject to the conditions thereof, Merger Sub will be
merged with and into Medical Manager (the "Merger"); and
WHEREAS, as a condition to the willingness of Synetic, Medical
Manager and Merger Sub to enter into the Merger Agreement, Medical Manager has
requested the Stockholder to agree, and in order to induce Medical Manager to
enter into the Merger Agreement, the Stockholder is willing to agree to vote in
favor of the issuance of additional shares of Synetic Common Stock and the
election of Medical Manager's nominees to the Synetic Board of Directors, upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree as follows:
Section 1. Voting of Stockholder's Shares. Until the
termination of this Agreement in accordance with the terms hereof, the
Stockholder hereby agrees that, at the Synetic Stockholders' Meeting or any
other meeting of the stockholders of Synetic, however called, and in any action
by written consent of the stockholders of Synetic, the Stockholder will vote all
of his respective Stockholder's Shares (a) in favor of the issuance of
additional shares of Synetic Common Stock and the election of Medical Manager's
nominees to the Synetic Board of Directors, (b) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of Synetic under the Merger Agreement or which
would result in any of the conditions to the Merger Agreement not being
fulfilled and (c) in favor of any other matter necessary to the consummation of
the transactions contemplated by the Merger Agreement (including, without
limitation, the stock option grants
<PAGE> 4
2
described therein) and considered and voted upon by the stockholders of Synetic
(or any class thereof). In addition, the Stockholder agrees that it will, upon
request by Medical Manager, furnish written confirmation, in form and substance
reasonably acceptable to Medical Manager, of such Stockholder's vote in favor of
the issuance of additional shares of Synetic Common Stock and the election of
Medical Manager's nominees to the Synetic Board of Directors. The Stockholder
acknowledges receipt and review of a copy of the Merger Agreement.
Notwithstanding the foregoing, this Agreement shall not otherwise limit or
affect in any way the Stockholder's rights with respect to the election of
directors of Synetic.
Section 2. Proxy. The Stockholder, by this Agreement, does
hereby constitute and appoint Medical Manager, or any nominee of Medical
Manager, with full power of substitution, as the Stockholder's irrevocable proxy
and attorney-in-fact to vote the Stockholder's Shares as indicated in Section 1
in the event the Stockholder fails to comply with his obligations under such
section. The Stockholder intends this proxy to be irrevocable and coupled with
an interest and will take such further action and execute such other instruments
as may be necessary to effectuate the intent of this proxy and hereby revokes
any proxy previously granted by it with respect to his Stockholder's Shares.
Section 3. Transfer of Stockholder's Shares. The Stockholder
represents and warrants that it has no present intention of taking action to,
prior to the termination of this Agreement in accordance with the terms hereof,
and shall not, directly or indirectly, (a) sell, assign, transfer (including by
operation of law), pledge, encumber or otherwise dispose of any of the
Stockholder's Shares, (b) deposit any of the Stockholder's Shares into a voting
trust or enter into a voting agreement or arrangement with respect to the
Stockholder's Shares or grant any proxy or power of attorney with respect
thereto which is inconsistent with this Agreement or (c) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect sale, assignment, transfer (including by operation of law) or other
disposition of any Stockholder's Shares.
Section 4. Representations and Warranties of Stockholder. The
Stockholder hereby represents and warrants to Medical Manager with respect to
itself and his ownership of his Stockholder's Shares as follows:
(a) The Stockholder has all legal capacity to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) The Stockholder is the record or beneficial owner of his
Stockholder's Shares and is the lawful owner of such Stockholder's
Shares free and clear of any liens, claims, charges, encumbrances or
voting agreements and commitments of every kind, other than this
Agreement. The Stockholder does not own or hold any rights to acquire
any additional Stockholder's Shares or other securities of Synetic or
any interest therein or
<PAGE> 5
3
any voting rights with respect to any additional Stockholder's Shares
or any other securities of Synetic.
(c) This Agreement has been duly executed and delivered by the
Stockholder.
(d) This Agreement constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency or other similar requirements of Law affecting
the enforcement of creditor's rights generally and by general
principles of equity.
Section 5. No Solicitation. The Stockholder agrees that it
will not, nor will it authorize or permit any of his agents and representatives,
other than in accordance with the Merger Agreement, to, directly or indirectly,
(a) initiate, solicit, negotiate or encourage (including by way of furnishing
information) or take any other action to facilitate any inquiries, offers or
proposals that constitute, or could reasonably be expected to lead to a
Competing Transaction, (b) agree to or recommend any Competing Transaction, or
(c) engage in negotiations or discussions with any third party concerning, or
provide any non-public information to any person or entity relating to, any
Competing Transaction. From and after the execution of this Agreement, the
Stockholder shall promptly (but in any event within 24 hours) notify Medical
Manager after receipt of any unsolicited inquiries, offers or proposals with
respect to a potential or proposed Competing Transaction (a "Competing
Proposal") or any indication of interest or request for information relating to
Synetic or its subsidiaries in connection with a Competing Proposal that the
Stockholder receives in his capacity as a Stockholder of Synetic. Such notice to
Medical Manager shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact. Notwithstanding anything to the contrary in
the foregoing, nothing herein shall restrict or otherwise limit the Stockholder
from performing his fiduciary obligations solely in his capacity as a director
of Synetic.
Section 6. Termination. This Agreement shall terminate upon
the earliest to occur of (i) the Effective Time or (ii) the termination of the
Merger Agreement in accordance with the terms thereof; provided that the
provisions of Sections 7 and 8 of this Agreement shall survive any termination
of this Agreement; and provided further that no such termination shall relieve
any party of liability for a breach hereof prior to termination.
Section 7. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
<PAGE> 6
4
Section 8. Miscellaneous.
(a) All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly made or given upon receipt) by
delivery in person, by facsimile, by courier service or by registered
or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance
herewith):
if to Medical Manager:
Medical Manager Corporation
3001 N. Rocky Point Drive East, Suite 400
Tampa, Florida 33607
Attention: Frederick B. Karl, Jr.
Facsimile: (813) 289-6420
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Attention: Stephen K. Roddenberry, Esq.
Facsimile: (305) 374-5095
if to the Stockholder:
c/o Synetic, Inc.
669 River Drive
Elmwood Park, New Jersey 07407
Attention: Charles A. Mele, Esq.
Facsimile: (201) 703-3401
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon, Esq.
Facsimile: (212) 848-7179
<PAGE> 7
5
(b) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and
oral, between the parties with respect thereto. This Agreement may not
be amended, modified or rescinded except by an instrument in writing
signed by each of the parties hereto.
(c) If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible to the fullest extent permitted by
applicable law in a mutually acceptable manner in order that the terms
of this Agreement remain as originally contemplated to the fullest
extent possible.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, provided that no party may assign, delegate or
otherwise transfer any of its rights, interests or obligations under
this Agreement (except as set forth herein) without the prior written
consent of the other parties hereto.
(e) This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. All actions and
proceedings arising out of or relating to this Agreement shall be heard
and determined exclusively in the courts of the State of Delaware and
the United States District Court for the State of Delaware.
(f) This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same instrument.
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above.
/s/ Martin J. Wygod
------------------------------------
Martin J. Wygod
Agreed and Acknowledged:
MEDICAL MANAGER CORPORATION,
a Delaware corporation
/s/ Michael A. Singer
- -----------------------------------
By: Michael A. Singer
Its: CEO
<PAGE> 1
EXHIBIT 99.2
VOTING AGREEMENT, DATED AS OF MAY 16, 1999, BY CERTAIN STOCKHOLDERS OF
MEDICAL MANAGER CORPORATION AND SYNETIC, INC.
<PAGE> 2
VOTING AGREEMENT
By
STOCKHOLDERS OF MEDICAL MANAGER CORPORATION,
(Stockholders)
and
SYNETIC, INC.
Dated as of May 16, 1999
<PAGE> 3
VOTING AGREEMENT
VOTING AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
by the parties identified on Schedule A hereto (each, a "Stockholder" and
collectively, the "Stockholders"), to and for the benefit of Synetic, Inc., a
Delaware corporation ("Synetic").
WHEREAS, as of the date hereof, each of the Stockholders owns
of record and beneficially or has the power to vote the number of shares of
common stock (the "Medical Manager Common Stock"), par value $.01 per share, of
Medical Manager Corporation, a Delaware corporation ("Medical Manager") set
forth opposite such Stockholder's name on Schedule A hereto (such shares,
together with any shares of Medical Manager Common Stock acquired by the
Stockholders prior to the termination of this Agreement being referred to herein
as the "Shares");
WHEREAS, concurrently with the execution of this Agreement,
Synetic, MARLIN MERGER SUB, a Delaware corporation and wholly-owned subsidiary
of Synetic ("Merger Sub"), and Medical Manager are entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement";
capitalized terms used and not otherwise defined herein shall have the
respective meanings assigned to them in the Merger Agreement), pursuant to
which, upon the terms and subject to the conditions thereof, Merger Sub will be
merged with and into Medical Manager (the "Merger"); and
WHEREAS, as a condition to the willingness of Medical Manager,
Synetic and Merger Sub to enter into the Merger Agreement, Synetic has requested
the Stockholders to agree, and in order to induce Synetic and Merger Sub to
enter into the Merger Agreement, the Stockholders are willing to agree to vote
in favor of adopting the Merger Agreement and approving the Merger, upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. Voting of Shares. Until the termination of this
Agreement in accordance with the terms hereof, each Stockholder hereby agrees
that, at the Medical Manager Stockholders' Meeting or any other meeting of the
stockholders of Medical Manager, however called, and in any action by written
consent of the stockholders of Medical Manager, each Stockholder will vote all
of its respective Shares (a) in favor of adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated by the Merger
Agreement, (b) against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
Medical Manager under the Merger Agreement or which would result in any of the
conditions to the Merger Agreement not being fulfilled and (c) in favor of any
other matter necessary to the consummation of the
<PAGE> 4
2
transactions contemplated by the Merger Agreement and considered and voted upon
by the stockholders of Medical Manager (or any class thereof). In addition, each
Stockholder agrees that it will, upon request by Synetic, furnish written
confirmation, in form and substance reasonably acceptable to Synetic, of such
Stockholder's vote in favor of the Merger Agreement and the Merger. Each
Stockholder acknowledges receipt and review of a copy of the Merger Agreement.
Notwithstanding the foregoing, this Agreement shall not limit or affect in any
way any Stockholder's rights with respect to the election of directors of
Medical Manager.
Section 2. Proxy. Each Stockholder, by this Agreement, does
hereby constitute and appoint Synetic, or any nominee of Synetic, with full
power of substitution, as such Stockholder's irrevocable proxy and
attorney-in-fact to vote the Shares as indicated in Section 1 in the event such
Stockholder fails to comply with its obligations under such section. Each
Stockholder intends this proxy to be irrevocable and coupled with an interest
and will take such further action and execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy
previously granted by it with respect to its Shares.
Section 3. Transfer of Shares. Each Stockholder represents and
warrants that it has no present intention of taking action to, prior to the
termination of this Agreement in accordance with the terms hereof, and shall
not, directly or indirectly, (a) sell, assign, transfer (including by operation
of law), pledge, encumber or otherwise dispose of any of the Shares, (b) deposit
any of the Shares into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares or grant any proxy or power of attorney
with respect thereto which is inconsistent with this Agreement or (c) enter into
any contract, option or other arrangement or undertaking with respect to the
direct or indirect sale, assignment, transfer (including by operation of law) or
other disposition of any Shares.
Section 4. Representations and Warranties of Stockholder. Each
Stockholder hereby represents and warrants to Synetic with respect to itself and
its ownership of its Shares as follows:
(a) Such Stockholder has all legal capacity to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) Such Stockholder is the record or beneficial owner of its
Shares and is the lawful owner of such Shares free and clear of any
liens, claims, charges, encumbrances or voting agreements and
commitments of every kind, other than this Agreement. Such Stockholder
does not own or hold any rights to acquire any additional Shares or
other securities of Medical Manager or any interest therein or any
voting rights with respect to any additional Shares or any other
securities of Medical Manager.
(c) This Agreement has been duly executed and delivered by
such Stockholder.
<PAGE> 5
3
(d) This Agreement constitutes the valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency or other similar requirements of Law affecting
the enforcement of creditor's rights generally and by general
principles of equity.
Section 5. No Solicitation. Each Stockholder agrees that it
will not, nor will it authorize or permit any of its agents and representatives,
other than in accordance with the Merger Agreement, to, directly or indirectly,
(a) initiate, solicit, negotiate or encourage (including by way of furnishing
information) or take any other action to facilitate any inquiries, offers or
proposals that constitute, or could reasonably be expected to lead to a
Competing Transaction, (b) agree to or recommend any Competing Transaction, or
(c) engage in negotiations or discussions with any third party concerning, or
provide any non-public information to any person or entity relating to, any
Competing Transaction. From and after the execution of this Agreement, each
Stockholder shall promptly (but in any event within 24 hours) notify Synetic
after receipt of any unsolicited inquiries, offers or proposals with respect to
a potential or proposed Competing Transaction (a "Competing Proposal") or any
indication of interest or request for information relating to Medical Manager or
its subsidiaries in connection with a Competing Proposal that such Stockholder
receives in its capacity as a Stockholder of Medical Manager. Such notice to
Synetic shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact. Notwithstanding anything to the contrary in the
foregoing, nothing herein shall restrict or otherwise limit any of the
Stockholders from performing their fiduciary obligations solely in their
capacity as directors of Medical Manager.
Section 6. Termination. This Agreement shall terminate upon
the earliest to occur of (i) the Effective Time or (ii) the termination of the
Merger Agreement in accordance with the terms thereof; provided that the
provisions of Sections 7 and 8 of this Agreement shall survive any termination
of this Agreement; and provided further that no such termination shall relieve
any party of liability for a breach hereof prior to termination.
Section 7. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 8. Miscellaneous.
(a) All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly made or given upon receipt) by
delivery in person, by facsimile, by courier service or by registered
or certified mail (postage prepaid, return receipt requested) to
<PAGE> 6
4
the respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in
accordance herewith):
if to Synetic:
Synetic, Inc.
669 River Drive
Elmwood Park, New Jersey 07407
Attention: Charles A. Mele, Esq.
Facsimile: (201) 703-3401
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon, Esq.
Facsimile: (212) 848-7179
if to Stockholders:
At the address set forth opposite such Stockholder's name
on Schedule A
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Attention: Stephen K. Roddenberry, Esq.
Facsimile: (305) 374-5095
(b) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and
oral, between the parties with respect thereto. This Agreement may not
be amended, modified or rescinded except by an instrument in writing
signed by each of the parties hereto.
(c) If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement
<PAGE> 7
5
so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in a
mutually acceptable manner in order that the terms of this Agreement
remain as originally contemplated to the fullest extent possible.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, provided that no party may assign, delegate or
otherwise transfer any of its rights, interests or obligations under
this Agreement (except as set forth herein) without the prior written
consent of the other parties hereto.
(e) This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. All actions and
proceedings arising out of or relating to this Agreement shall be heard
and determined exclusively in the courts of the State of Delaware and
the United States District Court for the State of Delaware.
(f) This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same instrument.
<PAGE> 8
6
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above.
/s/ Michael A. Singer
------------------------------------
Michael A. Singer
/s/ John H. Kang
------------------------------------
John H. Kang
/s/ Richard W. Mehrlich
------------------------------------
Richard W. Mehrlich
Agreed and Acknowledged:
SYNETIC, INC., a Delaware corporation
/s/ Jim Love
- -------------------------------------
By: Jim Love
Its: EVP
<PAGE> 9
SCHEDULE A
STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Shares of
Medical Manager Common
Name of Stockholder Address Stock
- --------------------------- ------- Owned of
Record and Beneficially
-----------------------
<S> <C> <C>
1. Michael A. Singer c/o Medical Manager Corporation 5,895,000
3001 N. Rocky Point Drive East,
Suite 400
Facsimile: (813) 289-6420
2. John H. Kang c/o Medical Manager Corporation 518,114
3001 N. Rocky Point Drive East,
Suite 400
Facsimile: (813) 289-6420
3. Richard W. Mehrlich c/o Medical Manager Corporation 1,812,783
3001 N. Rocky Point Drive East,
Suite 400
Facsimile: (813) 289-6420
</TABLE>
<PAGE> 1
EXHIBIT 99.3
STOCK OPTION AGREEMENT, DATED AS OF MAY 16, 1999,
BETWEEN SYNETIC, INC. AND MEDICAL MANAGER CORPORATION
<PAGE> 2
================================================================================
STOCK OPTION AGREEMENT
Between
SYNETIC, INC.,
(Grantee)
and
MEDICAL MANAGER CORPORATION,
(Issuer)
Dated as of May 16, 1999
================================================================================
<PAGE> 3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
between SYNETIC, INC., a Delaware corporation ("Grantee"), and MEDICAL MANAGER
CORPORATION, a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and MARLIN MERGER SUB, INC., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to
enter into, simultaneously herewith, an Agreement and Plan of Merger (the
"Merger Agreement"; terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for, among other things, the merger
of Merger Sub with and into Issuer; and
WHEREAS, as a condition to the willingness of Grantee to enter into
the Merger Agreement, Grantee has required that Issuer agree, and in order to
induce Grantee to enter into the Merger Agreement, Issuer has agreed, to grant
Grantee an option to purchase up to such number of newly issued or treasury
shares of common stock, par value $0.01 per share, of Issuer ("Issuer Common
Stock") as equals 19.9% of the issued and outstanding shares of Issuer Common
Stock at the first time of exercise of the Stock Option (as defined below), in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. Grant of Stock Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Stock Option") to purchase up to such number of shares of Issuer
Common Stock as equals 19.9% of the issued and outstanding shares of Issuer
Common Stock at the first time of exercise of the Stock Option (the "Option
Shares") at a cash purchase price (the "Purchase Price") per Option Share equal
to the product of (a) the average of the closing prices per share of Synetic
Common Stock during the five trading day period beginning on the first business
day following the date of the announcement of the Merger and (b) the Exchange
Ratio.
<PAGE> 4
2
SECTION 1.02. Exercise of Stock Option. (a) Subject to the
conditions set forth in Section 1.03 and to any additional requirements of any
applicable foreign, federal, state or local laws, statutes, ordinances,
regulations, rules, codes, judgments, orders, decrees or other requirement or
rule of law ("Laws"), the Stock Option may be exercised by Grantee, in whole or
in part, if Grantee has not materially breached the Merger Agreement, at any
time or from time to time after the occurrence of an Exercise Event (as defined
below); provided that, except as provided in the last sentence of this Section
1.02(a), the Stock Option shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Time, (ii) 18 months after the
occurrence of an Exercise Event (unless prior thereto the Stock Option shall
have been exercised in full) and (iii) the termination of the Merger Agreement
in circumstances which do not constitute an Exercise Event. Notwithstanding the
termination of the Stock Option, Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Stock Option in
accordance with the terms hereof prior to the termination of the Stock Option.
The termination of the Stock Option shall not affect any rights hereunder which
by their terms extend beyond the date of such termination. The periods related
to the exercise of the Stock Option and the other rights of Grantee hereunder
shall be extended only (i) to the extent necessary to obtain all regulatory
approvals required for the exercise of such rights, and for the expiration of
all statutory waiting periods, and (ii) to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act by reason of such exercise.
Notwithstanding anything to the contrary contained in this Section 1.02, a
portion of the Stock Option may be exercised pursuant to Section 1.02(c) hereof
and a portion may be exercised pursuant to Section 1.02(d) hereof at the Closing
(as defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement
upon the occurrence of any event as a result of which Grantee is entitled to
receive the Medical Manager Alternative Transaction Fee pursuant to Section
8.05(b) of the Merger Agreement.
(c) In the event Grantee wishes to exercise the Stock Option,
Grantee shall send a written notice (a "Stock Exercise Notice") to Issuer
specifying the total number of Option Shares Grantee wishes to purchase, the
denominations of the certificate or certificates evidencing such Option Shares
that Grantee wishes to receive, a date (subject to the earlier satisfaction or
waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which
shall be a business day (as such term is used in the Merger Agreement) which is
not earlier than the fifth business day after delivery of such notice, and place
for the closing of such purchase in, Miami, Florida (a "Closing").
(d) If at any time the Stock Option is then exercisable pursuant to
the terms of Section 1.02(a) hereof, Grantee may elect, in lieu of exercising
the Stock Option to purchase Option Shares as provided in Section 1.02(a)
hereof, to send a written notice to Issuer (a "Cash Exercise Notice") specifying
a date not earlier than the fifth business day after delivery of such notice, on
which date Issuer shall pay to Grantee an amount in cash equal to the Spread (as
<PAGE> 5
3
defined below) multiplied by such number of Option Shares as Grantee shall
specify in the Cash Exercise Notice. As used in this Agreement, "Spread" shall
mean the excess, if any, over the Purchase Price of the higher of (x) if
applicable, the highest price per share of Issuer Common Stock paid or to be
paid by any person in a Competing Transaction (the "Competing Purchase Price")
and (y) the closing price of the shares of Issuer Common Stock on the National
Association of Securities Dealers Automated Quotation System/NMS ("NASDAQ") on
the last trading day immediately prior to the date of the Cash Exercise Notice
(for purposes of this Section 1.02) or the Repurchase Notice (for purposes of
Section 6.01) (the "Closing Price"). If the Competing Purchase Price includes
any property other than cash, the Competing Purchase Price shall be the sum of
(i) the fixed cash amount, if any, included in the Competing Purchase Price plus
(ii) the fair market value of such other property. If such other property
consists of securities with an existing public trading market, the average of
the closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) for such securities in their principal public
trading market on the five trading days ending five days prior to the date of
the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase
Notice (for purposes of Section 6.01) shall be deemed to equal the fair market
value of such property. If such other property consists of something other than
cash or securities with an existing public trading market and, as of the payment
date for the Spread, agreement on the value of such other property has not been
reached, the Competing Purchase Price shall be deemed to be the amount of any
cash included in the Competing Purchase Price plus the fair market value of such
other property (as determined by a nationally recognized investment banking firm
jointly selected by Grantee and Issuer). For this purpose, the parties shall use
their reasonable commercial efforts to cause any determination of the fair
market value of such other property to be made within three business days after
the date of delivery of the Cash Exercise Notice (for purposes of this Section
1.02) or the Repurchase Notice (for purposes of Section 6.01). Upon exercise of
its right to receive the Spread pursuant to this Section 1.02(e), the
obligations of Issuer to deliver Option Shares pursuant to Section 1.03 shall be
terminated with respect to such number of Option Shares subject to the Cash
Exercise Notice.
SECTION 1.03. Conditions to Closing. The obligation of Issuer to
deliver Option Shares or pay the Spread, as applicable, upon any exercise of the
Stock Option is subject to the conditions that:
(a) all waiting periods, if any, under the HSR Act applicable to the
issuance of Option Shares hereunder shall have expired or have been
terminated, and all consents, approvals, orders or authorizations of, or
registrations, declarations or filings, with any governmental body,
agency, official or authority, if any, required in connection with the
issuance of Option Shares hereunder, the failure of which to have obtained
or made would have the effect of making the issuance of Option Shares
hereunder illegal, shall have been obtained or made, as the case may be;
and
<PAGE> 6
4
(b) there shall be no preliminary or permanent injunction or other
final, non-appealable judgment by a court of competent jurisdiction
preventing or prohibiting such exercise of the Stock Option, the delivery
of the Option Shares or payment of the Spread in respect of such exercise.
SECTION 1.04. Closings. At each Closing, (i) in the event of a
Closing pursuant to Section 1.02(c), Issuer shall deliver to Grantee a
certificate or certificates evidencing the applicable number of Option Shares
(in the denominations specified in the Stock Exercise Notice), and Grantee shall
purchase each such Option Share from Issuer at the Purchase Price, or (ii) in
the event of a Closing pursuant to Section 1.02(d), Issuer shall deliver to
Grantee cash in an amount determined pursuant to Section 1.02(d). All payments
made pursuant to this Agreement shall be made by wire transfer of immediately
available funds to an account designated in writing by Grantee to Issuer. Upon
delivery by Grantee to Issuer of the Stock Exercise Notice and the tender of the
applicable cash as described above in this Section 1.04, Grantee shall be deemed
to be the holder of record of the shares of Issuer Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then be actually delivered to Grantee or that Issuer shall have
failed to designate the bank account described above in this Section 1.04.
Certificates evidencing Option Shares delivered hereunder may, at Issuer's
election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR AN EXEMPTION
THEREFROM.
Issuer shall, upon the written request of the holder thereof, issue such holder
a new certificate evidencing such Option Shares without such legend in the event
(x) such Option Shares have been registered pursuant to the Securities Act, (y)
such Option Shares have been sold in reliance on and in accordance with Rule 144
under the Securities Act or (z) such holder shall have delivered to Issuer an
opinion of counsel, which opinion shall, in Issuer's reasonable judgment, be
satisfactory in form and substance to Issuer, to the effect that subsequent
transfers of such Option Shares may be effected without registration under the
Securities Act.
SECTION 1.05. Adjustments upon Share Issuances, Changes in
Capitalization, Etc. (a) In the event of any change in Issuer Common Stock or in
the number of outstanding shares of Issuer Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or similar
transaction or any other extraordinary change in the corporate or capital
structure of Issuer (including, without limitation, the declaration or
<PAGE> 7
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payment of an extraordinary dividend of cash, securities or other property), the
type and number of shares or securities to be issued by Issuer upon exercise of
the Stock Option shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if Grantee had exercised the Stock Option immediately prior to such
event or the record date therefor, as applicable, and had elected (to the
fullest extent it would have been permitted to elect) to receive such
securities, cash or other property.
(b) In the event that Issuer shall enter into an agreement (other
than the Merger Agreement) (i) to consolidate with or merge into any person,
other than Merger Sub or any other subsidiary of Grantee, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Merger Sub or any other subsidiary of Grantee, to
merge into Issuer and Issuer shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of Issuer
Common Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or then outstanding
shares of Issuer Common Stock shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the surviving corporation or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any person, other than Grantee or any of its subsidiaries, then, and in each
such case, proper provision shall be made in the agreements governing such
transaction so that Grantee shall receive upon exercise of the Stock Option the
number and class of shares or other securities or property that Grantee would
have received in respect of Issuer Common Stock if Grantee had exercised the
Stock Option immediately prior to such transaction or the record date therefor,
as applicable, and had elected (to the fullest extent it would have been
permitted to elect) to receive such securities, cash or other property.
(c) The provisions of this Agreement, including, without limitation,
Sections 1.01, 1.02, 1.04, 3.01 and 3.02, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ISSUER
Issuer hereby represents and warrants to Grantee as follows:
SECTION 2.01. Authority Relative to This Agreement. Issuer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by Issuer
of this Agreement and the
<PAGE> 8
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consummation by Issuer of the transactions contemplated hereby are within
Issuer's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by Issuer and, assuming the due authorization, execution and delivery
by Grantee, constitutes a valid and binding agreement of Issuer enforceable
against Issuer in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
SECTION 2.02. Authority to Issue Shares. Issuer has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof until its obligation to deliver shares of
Issuer Common Stock upon the exercise of the Stock Option terminates, shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and Issuer
shall take all necessary corporate action to authorize and reserve and permit it
to issue all additional shares of Issuer Common Stock or other securities which
may be issued pursuant to Section 1.05, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
SECTION 2.03. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Issuer of this Agreement and the
consummation by Issuer of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (insofar as such action or filing relates to Issuer) other than (i)
compliance with any applicable requirements of the HSR Act, (ii) compliance with
any applicable requirements of the Exchange Act and (iii) such other consents,
approvals and filings which, if not obtained or made, would not, individually or
in the aggregate, have a material adverse effect on Issuer or materially impair
the ability of Issuer to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Issuer of this
Agreement and the consummation by Issuer of the transactions contemplated hereby
do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Issuer or
any Issuer subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 2.03(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Issuer or any Issuer subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Issuer
or any Issuer subsidiary or to a loss of any benefit to which Issuer or any
Issuer subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Issuer or any Issuer subsidiary or any license,
franchise, permit or
<PAGE> 9
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other similar authorization held by Issuer or any Issuer subsidiary or (iv)
result in the creation or imposition of any lien, claim, charge or encumbrance
on any asset of Issuer or any Issuer subsidiary other than, in the case of each
of (ii) and (iii), any such items that, individually or in the aggregate, would
not have a material adverse effect on Issuer or materially impair the ability of
Issuer to consummate the transactions contemplated by this Agreement.
SECTION 2.04. Board Action. The Board of Directors of Issuer has
taken all action necessary to ensure that the restrictions on business
combinations contained in Section 203 of the Delaware Law will not apply to, or
as a result of, the purchase by Grantee pursuant to this Agreement of shares of
Issuer Common Stock. To the knowledge of Issuer, no other state takeover statute
is applicable to, or as a result of, the purchase by Grantee pursuant to this
Agreement of shares of Issuer Common Stock.
ARTICLE III
COVENANTS OF ISSUER
SECTION 3.01. Listing; Other Action. (a) Issuer shall, at its
expense, use its reasonable best efforts to cause the Option Shares to be
approved for listing on NASDAQ, subject to notice of issuance, as promptly as
practicable following an Exercise Event, and shall provide prompt notice to
NASDAQ of the issuance of each Option Share, except to the extent the delivery
of the Option Shares can be satisfied with shares of Issuer Common Stock held in
treasury by Issuer.
(b) Issuer shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereunder, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Authorities. Without limiting the generality of the foregoing, Issuer shall,
when required in order to effect the transactions contemplated hereunder, make
all necessary filings, and thereafter make any other required or appropriate
submissions, under the HSR Act and shall supply as promptly as practicable to
the appropriate Governmental Authority any additional information and
documentary material that may be requested pursuant to the HSR Act.
SECTION 3.02. Registration. (a) In the event that Grantee shall
desire to sell any of the Option Shares within two years after the purchase of
such Option Shares pursuant hereto, and such sale requires, in the opinion of
counsel to Grantee (which opinion shall be, in the reasonable judgment of Issuer
and its counsel, satisfactory in form and substance to Issuer and its counsel)
registration of such Option Shares under the Securities Act, Issuer shall
<PAGE> 10
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cooperate with Grantee and any underwriters in registering such Option Shares
for resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and state
securities laws and entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided,
however, that Issuer shall not be required to have declared effective more than
one registration statement hereunder and shall be entitled to delay the filing
or effectiveness of any registration statement for up to 90 days if the offering
would, in the judgment of the Board of Directors of Issuer, require premature
disclosure of any material corporate development or otherwise interfere with or
adversely affect any pending or proposed offering of securities of Issuer or any
other material transaction involving Issuer. Grantee agrees to use all
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee shall acquire beneficially more
than 5% of the then outstanding voting power of Issuer.
(b) If Issuer at any time after the exercise of the Stock Option
proposes to register any shares of Issuer Common Stock under the Securities Act
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Grantee of its intention to do so
and, upon the written request of Grantee given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Grantee), Issuer will cause all such shares for which Grantee requests
participation in such registration, to be so registered and included in such
underwritten public offering; provided, however, that Issuer may elect not to
cause any such shares to be so registered (i) if the underwriters in good faith
object for valid business reasons or (ii) in the case of a registration solely
to implement an employee benefit plan or a registration statement filed on Form
S-4 of the Securities Act (or any successor form thereto); provided further that
Issuer may make an election pursuant to clause (i) not more than two times.
(c) If the Issuer Common Stock is registered pursuant to the
provisions of this Section 3.02, Issuer agrees (i) to furnish copies of the
registration statement and prospectus relating to the Option Shares covered
thereby in such numbers as Grantee may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Issuer Common Stock meeting the requirements of such securities laws, and to
furnish Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. Issuer
shall bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and
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accountants for Issuer, except that Grantee shall pay the fees and disbursements
of its counsel and the underwriting fees and selling commissions applicable to
the shares of Issuer Common Stock sold by Grantee. Issuer shall indemnify and
hold harmless Grantee, its affiliates and its officers and directors from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable attorney's fees) arising out of or
based upon any statements contained in, omissions or alleged omissions from,
each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by Grantee, its affiliates and its officers and other
representatives expressly for use in any registration statement (or any
amendment thereto) or any preliminary prospectus filed pursuant to this Section
3.02. Issuer shall also indemnify and hold harmless each underwriter and each
person who controls any underwriter within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable attorney's fees) arising
out of or based upon any statements contained in, omissions or alleged omissions
from, each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by the underwriters expressly for use in any registration
statement (or any amendment thereto) or any preliminary prospectus filed
pursuant to this Section 3.02.
SECTION 3.03. Profit Limitation. (a) Within 15 days of the receipt
of cash proceeds by Grantee from the disposition of the Stock Option, or in
payment of the Spread pursuant to Section 1.02(d) hereof, or from the sale of
Option Shares (or any other securities into which such shares are converted or
exchanged), including any repurchase of such shares pursuant to Section 6.01,
that results in Total Profit (as defined below) exceeding the Maximum Total
Profit Amount (as defined below), Grantee shall remit an amount in cash to the
Issuer so that Grantee's Total Profit shall no longer exceed the Maximum Total
Profit Amount; provided, however, that nothing in this Agreement shall affect
the ability of Grantee to receive, nor relieve Issuer of its obligation to pay,
any payment provided for in Section 8.05 of the Merger Agreement. If Total
Profit received by Grantee exceeds the Maximum Total Profit Amount following
receipt of such a payment pursuant to Section 8.05 of the Merger Agreement,
Grantee shall be obligated to remit an amount in cash to the Issuer so that
Grantee's Total Profit shall no longer exceed the Maximum Total Profit Amount,
such remittance to be made within 15 days of the latest of (i) the date of
receipt of such payment, (ii) the date of receipt of the cash proceeds by
Grantee from the sale of Option Shares (or securities into which such Option
Shares are converted or exchanged) and (iii) the date of receipt of the cash
proceeds from disposition of the Option.
<PAGE> 12
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(b) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of any excess of (i) the sum of (A) the aggregate net cash
proceeds received by Grantee pursuant to Issuer's repurchase of Option Shares
pursuant to Section 6.01 hereof, plus (B) the aggregate net cash proceeds
received by Grantee pursuant to Section 1.02(d) hereof, plus (C) the aggregate
net cash proceeds received by Grantee pursuant to the sale of Option Shares (or
any other securities into which such shares are converted or exchanged) to any
unaffiliated party, over (ii) the sum of (A) Grantee's aggregate purchase price
for all Option Shares purchased by Grantee plus (B) the aggregate cash amount
remitted to the Issuer by Grantee pursuant to Section 3.03(a).
(c) As used herein, the term "Maximum Total Profit Amount" shall
mean $54,896,000 minus the aggregate amount actually received by the Grantee in
payment of the Medical Manager Alternative Transaction Fee pursuant to Section
8.05 of the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GRANTEE
Grantee hereby represents and warrants to Issuer as follows:
SECTION 4.01. Authority Relative to This Agreement. Grantee is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by
Grantee of this Agreement and the consummation by Grantee of the transactions
contemplated hereby are within Grantee's corporate powers and have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by Grantee and, assuming the due authorization,
execution and delivery by Issuer, constitutes a valid and binding agreement of
Grantee enforceable against Issuer in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 4.02. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Grantee of this Agreement and the
consummation by Grantee of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority (insofar as such action or filing relates to Grantee)
other than (i) compliance with any applicable requirements of the HSR Act,
<PAGE> 13
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(ii) compliance with any applicable requirements of the Exchange Act, (iii)
approvals and authorizations of self-regulatory and governmental organizations
in the securities and commodities field and (iv) such other consents, approvals
and filings which, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on Grantee or materially impair the
ability of Grantee to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Grantee of this
Agreement and the consummation by Grantee of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Grantee or
any Grantee subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 4.02(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Grantee or any Grantee subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Grantee
or any Grantee subsidiary or to a loss of any benefit to which Grantee or any
Grantee subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Grantee or any Grantee subsidiary or any license,
franchise, permit or other similar authorization held by Grantee or any Grantee
subsidiary or (iv) result in the creation or imposition of any lien, claim,
charge or encumbrance on any asset of Grantee or any Grantee subsidiary other
than, in the case of each of (ii) and (iii), any such items that, individually
or in the aggregate, would not have a material adverse effect on Grantee or
materially impair the ability of Grantee to consummate the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF GRANTEE
Grantee hereby covenants and agrees as follows:
SECTION 5.01. Distribution. Grantee shall acquire the Option Shares
for investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act and
applicable state securities and Blue Sky Laws.
<PAGE> 14
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ARTICLE VI
REPURCHASE ELECTION
SECTION 6.01. Repurchase Election. (a) Grantee shall have the
option, at any time and from time to time commencing upon the first occurrence
of an Exercise Event in which the consideration to be received by Issuer or its
stockholders, as the case may be, pursuant to a Competing Transaction consists
in whole or in part of shares of capital stock of a third party and ending on
the tenth business day after the first mailing to Issuer's stockholders of a
proxy statement, tender offer statement or other disclosure or offering document
relating to such Competing Transaction, to send a written notice to Issuer (a
"Repurchase Notice") that it will require Issuer (or any successor entity
thereof) to pay to Grantee the Repurchase Fee (as defined below) as provided in
Section 6.01(b) below, upon delivery by Grantee of the shares of Issuer Common
Stock acquired hereunder with respect to which Grantee then has beneficial
ownership. The date on which Grantee delivers the Repurchase Notice under this
Section 6.01 is referred to as the "Repurchase Request Date". The "Repurchase
Fee" shall be equal to the sum of the following:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Stock Option with respect to
which Grantee then has beneficial ownership; and
(ii) subject to the maximum amounts specified in Section 3.03, the
Spread, multiplied by the number of shares of Issuer Common Stock with
respect to which the Stock Option has been exercised and with respect to
which Grantee then has beneficial ownership.
(b) If Grantee exercises its rights under this Section 6.01, within
five business days after the Repurchase Request Date, (i) Issuer shall pay by
wire transfer to Grantee the Repurchase Fee in immediately available funds to an
account designated in writing by Grantee to Issuer, and (ii) Grantee shall
surrender to Issuer certificates evidencing the shares of Issuer Common Stock
acquired hereunder with respect to which Grantee then has beneficial ownership,
and Grantee shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever.
(c) Issuer shall use best efforts to ensure that it can fully
perform all of its obligations under this Section 6.01 under applicable Law.
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(d) If and to the extent that Issuer is unable to perform any of its
obligations under this Section 6.01 under applicable Law, Issuer shall make no
distribution on any of its stock until such time as it has fully performed any
such obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment; No Waiver. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Issuer and Grantee or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 7.02. Fees and Expenses. Except as otherwise provided herein
or in Section 8.05 of the Merger Agreement, all costs and expenses (including,
without limitation, all fees and disbursements of counsel, accountants,
investment bankers, experts and consultants to a party) incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
SECTION 7.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly made or given upon receipt) by delivery
in person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at their
addresses as specified in Section 9.02 of the Merger Agreement.
SECTION 7.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
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SECTION 7.05. Assignment; Binding Effect; Benefit. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights, interests or
obligations under this Agreement without the prior written consent of the other
parties hereto.
SECTION 7.06. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof, that the parties hereto would
not have an adequate remedy at law for money damages in such event and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
SECTION 7.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
SECTION 7.08. Consent to Jurisdiction. (a) Synetic and Medical
Manager hereby irrevocably submits to the exclusive jurisdiction of the courts
of the State of Delaware and to the jurisdiction of the United States District
Court for the State of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and Synetic and Medical Manager
hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Delaware state or
federal court. Synetic and Medical Manager agree that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Synetic and Medical Manager irrevocably consent to the service
of the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such party. Nothing in this Section 7.08 shall affect the right of any party
to serve legal process in any other manner permitted by law.
SECTION 7.09. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE> 17
15
SECTION 7.11. Waiver of Jury Trial. Each of the parties hereto
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the parties hereto in the
negotiation, administration, performance and enforcement thereof.
SECTION 7.12. Entire Agreement. This Agreement and, to the extent
referred to herein, the Merger Agreement, constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect thereto; provided, however, that any capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by both parties hereto.
<PAGE> 18
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
ISSUER:
MEDICAL MANAGER CORPORATION, a
Delaware corporation
/s/ Michael A. Singer
---------------------------------
By: Michael A. Singer
Its: CEO
GRANTEE:
SYNETIC, INC., a Delaware corporation
/s/ James R. Love
---------------------------------
By: James R. Love
Its: EVP
<PAGE> 1
EXHIBIT 99.4
STOCK OPTION AGREEMENT, DATED AS OF MAY 16, 1999,
BETWEEN MEDICAL MANAGER CORPORATION AND SYNETIC, INC.
<PAGE> 2
================================================================================
STOCK OPTION AGREEMENT
Between
MEDICAL MANAGER CORPORATION,
(Grantee)
and
SYNETIC, INC.,
(Issuer)
Dated as of May 16, 1999
================================================================================
<PAGE> 3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 16, 1999 (this "Agreement"),
between MEDICAL MANAGER CORPORATION, a Delaware corporation ("Grantee"), and
SYNETIC, INC., a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and MARLIN MERGER SUB, INC., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub"), propose to
enter into, simultaneously herewith, an Agreement and Plan of Merger (the
"Merger Agreement"; terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for, among other things, the merger
of Merger Sub with and into Grantee; and
WHEREAS, as a condition to the willingness of Grantee to enter into
the Merger Agreement, Grantee has required that Issuer agree, and in order to
induce Grantee to enter into the Merger Agreement, Issuer has agreed, to grant
Grantee an option to purchase up to such number of newly issued or treasury
shares of common stock, par value $0.01 per share, of Issuer ("Issuer Common
Stock") as equals 10% of the issued and outstanding shares of Issuer Common
Stock at the first time of exercise of the Stock Option (as defined below), in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. Grant of Stock Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Stock Option") to purchase up to such number of shares of Issuer
Common Stock as equals 10% of the issued and outstanding shares of Issuer Common
Stock at the first time of exercise of the Stock Option (the "Option Shares") at
a cash purchase price (the "Purchase Price") per Option Share equal to the
average of the closing prices per share of Synetic Common Stock during the five
trading day period beginning on the first business day following the date of the
announcement of the Merger.
<PAGE> 4
2
SECTION 1.02. Exercise of Stock Option. (a) Subject to the
conditions set forth in Section 1.03 and to any additional requirements of any
applicable foreign, federal, state or local laws, statutes, ordinances,
regulations, rules, codes, judgments, orders, decrees or other requirement or
rule of law ("Laws"), the Stock Option may be exercised by Grantee, in whole or
in part, if Grantee has not materially breached the Merger Agreement, at any
time or from time to time after the occurrence of an Exercise Event (as defined
below); provided that, except as provided in the last sentence of this Section
1.02(a), the Stock Option shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Time, (ii) 18 months after the
occurrence of an Exercise Event (unless prior thereto the Stock Option shall
have been exercised in full) and (iii) the termination of the Merger Agreement
in circumstances which do not constitute an Exercise Event. Notwithstanding the
termination of the Stock Option, Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Stock Option in
accordance with the terms hereof prior to the termination of the Stock Option.
The termination of the Stock Option shall not affect any rights hereunder which
by their terms extend beyond the date of such termination. The periods related
to the exercise of the Stock Option and the other rights of Grantee hereunder
shall be extended only (i) to the extent necessary to obtain all regulatory
approvals required for the exercise of such rights, and for the expiration of
all statutory waiting periods, and (ii) to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act by reason of such exercise.
Notwithstanding anything to the contrary contained in this Section 1.02, a
portion of the Stock Option may be exercised pursuant to Section 1.02(c) hereof
and a portion may be exercised pursuant to Section 1.02(d) hereof at the Closing
(as defined below).
(b) An "Exercise Event" shall occur for purposes of this Agreement
upon the occurrence of any event as a result of which Grantee is entitled to
receive the Synetic Alternative Transaction Fee pursuant to Section 8.05(c) of
the Merger Agreement.
(c) In the event Grantee wishes to exercise the Stock Option,
Grantee shall send a written notice (a "Stock Exercise Notice") to Issuer
specifying the total number of Option Shares Grantee wishes to purchase, the
denominations of the certificate or certificates evidencing such Option Shares
that Grantee wishes to receive, a date (subject to the earlier satisfaction or
waiver of the conditions set forth in Section 1.03) (a "Closing Date"), which
shall be a business day (as such term is used in the Merger Agreement) which is
not earlier than the fifth business day after delivery of such notice, and place
for the closing of such purchase in Miami, Florida (a "Closing").
(d) If at any time the Stock Option is then exercisable pursuant to
the terms of Section 1.02(a) hereof, Grantee may elect, in lieu of exercising
the Stock Option to purchase Option Shares as provided in Section 1.02(a)
hereof, to send a written notice to Issuer (a "Cash Exercise Notice") specifying
a date not earlier than the fifth business day after delivery of such notice, on
which date Issuer shall pay to Grantee an amount in cash equal to the Spread (as
<PAGE> 5
3
defined below) multiplied by such number of Option Shares as Grantee shall
specify in the Cash Exercise Notice. As used in this Agreement, "Spread" shall
mean the excess, if any, over the Purchase Price of the higher of (x) if
applicable, the highest price per share of Issuer Common Stock paid or to be
paid by any person in a Competing Transaction (the "Competing Purchase Price")
and (y) the closing price of the shares of Issuer Common Stock on the National
Association of Securities Dealers Automated Quotation System/NMS ("NASDAQ") on
the last trading day immediately prior to the date of the Cash Exercise Notice
(for purposes of this Section 1.02) or the Repurchase Notice (for purposes of
Section 6.01) (the "Closing Price"). If the Competing Purchase Price includes
any property other than cash, the Competing Purchase Price shall be the sum of
(i) the fixed cash amount, if any, included in the Competing Purchase Price plus
(ii) the fair market value of such other property. If such other property
consists of securities with an existing public trading market, the average of
the closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) for such securities in their principal public
trading market on the five trading days ending five days prior to the date of
the Cash Exercise Notice (for purposes of this Section 1.02) or the Repurchase
Notice (for purposes of Section 6.01) shall be deemed to equal the fair market
value of such property. If such other property consists of something other than
cash or securities with an existing public trading market and, as of the payment
date for the Spread, agreement on the value of such other property has not been
reached, the Competing Purchase Price shall be deemed to be the amount of any
cash included in the Competing Purchase Price plus the fair market value of such
other property (as determined by a nationally recognized investment banking firm
jointly selected by Grantee and Issuer). For this purpose, the parties shall use
their reasonable commercial efforts to cause any determination of the fair
market value of such other property to be made within three business days after
the date of delivery of the Cash Exercise Notice (for purposes of this Section
1.02) or the Repurchase Notice (for purposes of Section 6.01). Upon exercise of
its right to receive the Spread pursuant to this Section 1.02(e), the
obligations of Issuer to deliver Option Shares pursuant to Section 1.03 shall be
terminated with respect to such number of Option Shares subject to the Cash
Exercise Notice.
SECTION 1.03. Conditions to Closing. The obligation of Issuer to
deliver Option Shares or pay the Spread, as applicable, upon any exercise of the
Stock Option is subject to the conditions that:
(a) all waiting periods, if any, under the HSR Act applicable to the
issuance of Option Shares hereunder shall have expired or have been
terminated, and all consents, approvals, orders or authorizations of, or
registrations, declarations or filings, with any governmental body,
agency, official or authority, if any, required in connection with the
issuance of Option Shares hereunder, the failure of which to have obtained
or made would have the effect of making the issuance of Option Shares
hereunder illegal, shall have been obtained or made, as the case may be;
and
<PAGE> 6
4
(b) there shall be no preliminary or permanent injunction or other
final, non-appealable judgment by a court of competent jurisdiction
preventing or prohibiting such exercise of the Stock Option, the delivery
of the Option Shares or payment of the Spread in respect of such exercise.
SECTION 1.04. Closings. At each Closing, (i) in the event of a
Closing pursuant to Section 1.02(c), Issuer shall deliver to Grantee a
certificate or certificates evidencing the applicable number of Option Shares
(in the denominations specified in the Stock Exercise Notice), and Grantee shall
purchase each such Option Share from Issuer at the Purchase Price, or (ii) in
the event of a Closing pursuant to Section 1.02(d), Issuer shall deliver to
Grantee cash in an amount determined pursuant to Section 1.02(d). All payments
made pursuant to this Agreement shall be made by wire transfer of immediately
available funds to an account designated in writing by Grantee to Issuer. Upon
delivery by Grantee to Issuer of the Stock Exercise Notice and the tender of the
applicable cash as described above in this Section 1.04, Grantee shall be deemed
to be the holder of record of the shares of Issuer Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Issuer Common
Stock shall not then be actually delivered to Grantee or that Issuer shall have
failed to designate the bank account described above in this Section 1.04.
Certificates evidencing Option Shares delivered hereunder may, at Issuer's
election, contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 OR AN EXEMPTION
THEREFROM.
Issuer shall, upon the written request of the holder thereof, issue such holder
a new certificate evidencing such Option Shares without such legend in the event
(x) such Option Shares have been registered pursuant to the Securities Act, (y)
such Option Shares have been sold in reliance on and in accordance with Rule 144
under the Securities Act or (z) such holder shall have delivered to Issuer an
opinion of counsel, which opinion shall, in Issuer's reasonable judgment, be
satisfactory in form and substance to Issuer, to the effect that subsequent
transfers of such Option Shares may be effected without registration under the
Securities Act.
SECTION 1.05. Adjustments upon Share Issuances, Changes in
Capitalization, Etc. (a) In the event of any change in Issuer Common Stock or in
the number of outstanding shares of Issuer Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or similar
transaction or any other extraordinary change in the corporate or capital
structure of Issuer (including, without limitation, the declaration or
<PAGE> 7
5
payment of an extraordinary dividend of cash, securities or other property), the
type and number of shares or securities to be issued by Issuer upon exercise of
the Stock Option shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if Grantee had exercised the Stock Option immediately prior to such
event or the record date therefor, as applicable, and had elected (to the
fullest extent it would have been permitted to elect) to receive such
securities, cash or other property.
(b) In the event that Issuer shall enter into an agreement (other
than the Merger Agreement) (i) to consolidate with or merge into any person,
other than Merger Sub or any other subsidiary of Grantee, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Merger Sub or any other subsidiary of Grantee, to
merge into Issuer and Issuer shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of Issuer
Common Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or then outstanding
shares of Issuer Common Stock shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the surviving corporation or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any person, other than Grantee or any of its subsidiaries, then, and in each
such case, proper provision shall be made in the agreements governing such
transaction so that Grantee shall receive upon exercise of the Stock Option the
number and class of shares or other securities or property that Grantee would
have received in respect of Issuer Common Stock if Grantee had exercised the
Stock Option immediately prior to such transaction or the record date therefor,
as applicable, and had elected (to the fullest extent it would have been
permitted to elect) to receive such securities, cash or other property.
(c) The provisions of this Agreement, including, without limitation,
Sections 1.01, 1.02, 1.04, 3.01 and 3.02, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.05.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ISSUER
Issuer hereby represents and warrants to Grantee as follows:
SECTION 2.01. Authority Relative to This Agreement. Issuer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by Issuer
of this Agreement and the
<PAGE> 8
6
consummation by Issuer of the transactions contemplated hereby are within
Issuer's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by Issuer and, assuming the due authorization, execution and delivery
by Grantee, constitutes a valid and binding agreement of Issuer enforceable
against Issuer in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
SECTION 2.02. Authority to Issue Shares. Issuer has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof until its obligation to deliver shares of
Issuer Common Stock upon the exercise of the Stock Option terminates, shall have
reserved, all the Option Shares issuable pursuant to this Agreement, and Issuer
shall take all necessary corporate action to authorize and reserve and permit it
to issue all additional shares of Issuer Common Stock or other securities which
may be issued pursuant to Section 1.05, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, shall be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
SECTION 2.03. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Issuer of this Agreement and the
consummation by Issuer of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (insofar as such action or filing relates to Issuer) other than (i)
compliance with any applicable requirements of the HSR Act, (ii) compliance with
any applicable requirements of the Exchange Act and (iii) such other consents,
approvals and filings which, if not obtained or made, would not, individually or
in the aggregate, have a material adverse effect on Issuer or materially impair
the ability of Issuer to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Issuer of this
Agreement and the consummation by Issuer of the transactions contemplated hereby
do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Issuer or
any Issuer subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 2.03(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Issuer or any Issuer subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Issuer
or any Issuer subsidiary or to a loss of any benefit to which Issuer or any
Issuer subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Issuer or any Issuer subsidiary or any license,
franchise, permit or
<PAGE> 9
7
other similar authorization held by Issuer or any Issuer subsidiary or (iv)
result in the creation or imposition of any lien, claim, charge or encumbrance
on any asset of Issuer or any Issuer subsidiary other than, in the case of each
of (ii) and (iii), any such items that, individually or in the aggregate, would
not have a material adverse effect on Issuer or materially impair the ability of
Issuer to consummate the transactions contemplated by this Agreement.
SECTION 2.04. Board Action. The Board of Directors of Issuer has
taken all action necessary to ensure that the restrictions on business
combinations contained in Section 203 of the Delaware Law will not apply to, or
as a result of, the purchase by Grantee pursuant to this Agreement of shares of
Issuer Common Stock. To the knowledge of Issuer, no other state takeover statute
is applicable to, or as a result of, the purchase by Grantee pursuant to this
Agreement of shares of Issuer Common Stock.
ARTICLE III
COVENANTS OF ISSUER
SECTION 3.01. Listing; Other Action. (a) Issuer shall, at its
expense, use its reasonable best efforts to cause the Option Shares to be
approved for listing on NASDAQ, subject to notice of issuance, as promptly as
practicable following an Exercise Event, and shall provide prompt notice to
NASDAQ of the issuance of each Option Share, except to the extent the delivery
of the Option Shares can be satisfied with shares of Issuer Common Stock held in
treasury by Issuer.
(b) Issuer shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated hereunder, including, without
limitation, using its best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Authorities. Without limiting the generality of the foregoing, Issuer shall,
when required in order to effect the transactions contemplated hereunder, make
all necessary filings, and thereafter make any other required or appropriate
submissions, under the HSR Act and shall supply as promptly as practicable to
the appropriate Governmental Authority any additional information and
documentary material that may be requested pursuant to the HSR Act.
SECTION 3.02. Registration. (a) In the event that Grantee shall
desire to sell any of the Option Shares within two years after the purchase of
such Option Shares pursuant hereto, and such sale requires, in the opinion of
counsel to Grantee (which opinion shall be, in the reasonable judgment of Issuer
and its counsel, satisfactory in form and substance to Issuer and its counsel)
registration of such Option Shares under the Securities Act, Issuer shall
<PAGE> 10
8
cooperate with Grantee and any underwriters in registering such Option Shares
for resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and state
securities laws and entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided,
however, that Issuer shall not be required to have declared effective more than
one registration statement hereunder and shall be entitled to delay the filing
or effectiveness of any registration statement for up to 90 days if the offering
would, in the judgment of the Board of Directors of Issuer, require premature
disclosure of any material corporate development or otherwise interfere with or
adversely affect any pending or proposed offering of securities of Issuer or any
other material transaction involving Issuer. Grantee agrees to use all
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee shall acquire beneficially more
than 5% of the then outstanding voting power of Issuer.
(b) If Issuer at any time after the exercise of the Stock Option
proposes to register any shares of Issuer Common Stock under the Securities Act
in connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Grantee of its intention to do so
and, upon the written request of Grantee given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Grantee), Issuer will cause all such shares for which Grantee requests
participation in such registration, to be so registered and included in such
underwritten public offering; provided, however, that Issuer may elect not to
cause any such shares to be so registered (i) if the underwriters in good faith
object for valid business reasons or (ii) in the case of a registration solely
to implement an employee benefit plan or a registration statement filed on Form
S-4 of the Securities Act (or any successor form thereto); provided further that
Issuer may make an election pursuant to clause (i) not more than two times.
(c) If the Issuer Common Stock is registered pursuant to the
provisions of this Section 3.02, Issuer agrees (i) to furnish copies of the
registration statement and prospectus relating to the Option Shares covered
thereby in such numbers as Grantee may from time to time reasonably request and
(ii) if any event shall occur as a result of which it becomes necessary to amend
or supplement any registration statement or prospectus, to prepare and file
under the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 90 days a prospectus covering the
Issuer Common Stock meeting the requirements of such securities laws, and to
furnish Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. Issuer
shall bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and
<PAGE> 11
9
accountants for Issuer, except that Grantee shall pay the fees and disbursements
of its counsel and the underwriting fees and selling commissions applicable to
the shares of Issuer Common Stock sold by Grantee. Issuer shall indemnify and
hold harmless Grantee, its affiliates and its officers and directors from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable attorney's fees) arising out of or
based upon any statements contained in, omissions or alleged omissions from,
each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by Grantee, its affiliates and its officers and other
representatives expressly for use in any registration statement (or any
amendment thereto) or any preliminary prospectus filed pursuant to this Section
3.02. Issuer shall also indemnify and hold harmless each underwriter and each
person who controls any underwriter within the meaning of either the Securities
Act or the Exchange Act against any and all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable attorney's fees) arising
out of or based upon any statements contained in, omissions or alleged omissions
from, each registration statement filed pursuant to this Section 3.02; provided,
however, that this provision shall not apply to any loss, liability, claim,
damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Issuer by the underwriters expressly for use in any registration
statement (or any amendment thereto) or any preliminary prospectus filed
pursuant to this Section 3.02.
SECTION 3.03. Profit Limitation. (a) Within 15 days of the receipt
of cash proceeds by Grantee from the disposition of the Stock Option, or in
payment of the Spread pursuant to Section 1.02(d) hereof, or from the sale of
Option Shares (or any other securities into which such shares are converted or
exchanged), including any repurchase of such shares pursuant to Section 6.01,
that results in Total Profit (as defined below) exceeding the Maximum Total
Profit Amount (as defined below), Grantee shall remit an amount in cash to the
Issuer so that Grantee's Total Profit shall no longer exceed the Maximum Total
Profit Amount; provided, however, that nothing in this Agreement shall affect
the ability of Grantee to receive, nor relieve Issuer of its obligation to pay,
any payment provided for in Section 8.05 of the Merger Agreement. If Total
Profit received by Grantee exceeds the Maximum Total Profit Amount following
receipt of such a payment pursuant to Section 8.05 of the Merger Agreement,
Grantee shall be obligated to remit an amount in cash to the Issuer so that
Grantee's Total Profit shall no longer exceed the Maximum Total Profit Amount,
such remittance to be made within 15 days of the latest of (i) the date of
receipt of such payment, (ii) the date of receipt of the cash proceeds by
Grantee from the sale of Option Shares (or securities into which such Option
Shares are converted or exchanged) and (iii) the date of receipt of the cash
proceeds from disposition of the Option.
<PAGE> 12
10
(b) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of any excess of (i) the sum of (A) the aggregate net cash
proceeds received by Grantee pursuant to Issuer's repurchase of Option Shares
pursuant to Section 6.01 hereof, plus (B) the aggregate net cash proceeds
received by Grantee pursuant to Section 1.02(d) hereof, plus (C) the aggregate
net cash proceeds received by Grantee pursuant to the sale of Option Shares (or
any other securities into which such shares are converted or exchanged) to any
unaffiliated party, over (ii) the sum of (A) Grantee's aggregate purchase price
for all Option Shares purchased by Grantee plus (B) the aggregate cash amount
remitted to the Issuer by Grantee pursuant to Section 3.03(a).
(c) As used herein, the term "Maximum Total Profit Amount" shall
mean $87,776,000 minus the aggregate amount actually received by the Grantee in
payment of the Synetic Alternative Transaction Fee pursuant to Section 8.05 of
the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GRANTEE
Grantee hereby represents and warrants to Issuer as follows:
SECTION 4.01. Authority Relative to This Agreement. Grantee is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The execution, delivery and performance by
Grantee of this Agreement and the consummation by Grantee of the transactions
contemplated hereby are within Grantee's corporate powers and have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by Grantee and, assuming the due authorization,
execution and delivery by Issuer, constitutes a valid and binding agreement of
Grantee enforceable against Issuer in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 4.02. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Grantee of this Agreement and the
consummation by Grantee of the transactions contemplated hereby require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority (insofar as such action or filing relates to Grantee)
other than (i) compliance with any applicable requirements of the HSR Act, (ii)
compliance with any applicable requirements of the Exchange Act, (iii) approvals
and
<PAGE> 13
11
authorizations of self-regulatory and governmental organizations in the
securities and commodities field and (iv) such other consents, approvals and
filings which, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on Grantee or materially impair the
ability of Grantee to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Grantee of this
Agreement and the consummation by Grantee of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws (or equivalent organizational documents) of Grantee or
any Grantee subsidiary, (ii) assuming receipt of or compliance with all matters
referred to in Section 4.02(a), contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Grantee or any Grantee subsidiary, (iii)
constitute a breach of or a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Grantee
or any Grantee subsidiary or to a loss of any benefit to which Grantee or any
Grantee subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon Grantee or any Grantee subsidiary or any license,
franchise, permit or other similar authorization held by Grantee or any Grantee
subsidiary or (iv) result in the creation or imposition of any lien, claim,
charge or encumbrance on any asset of Grantee or any Grantee subsidiary other
than, in the case of each of (ii) and (iii), any such items that, individually
or in the aggregate, would not have a material adverse effect on Grantee or
materially impair the ability of Grantee to consummate the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF GRANTEE
Grantee hereby covenants and agrees as follows:
SECTION 5.01. Distribution. Grantee shall acquire the Option Shares
for investment purposes only and not with a view to any distribution thereof in
violation of the Securities Act, and shall not sell any Option Shares purchased
pursuant to this Agreement except in compliance with the Securities Act and
applicable state securities and Blue Sky Laws.
<PAGE> 14
12
ARTICLE VI
REPURCHASE ELECTION
SECTION 6.01. Repurchase Election. (a) Grantee shall have the
option, at any time and from time to time commencing upon the first occurrence
of an Exercise Event in which the consideration to be received by Issuer or its
stockholders, as the case may be, pursuant to a Competing Transaction consists
in whole or in part of shares of capital stock of a third party and ending on
the tenth business day after the first mailing to Issuer's stockholders of a
proxy statement, tender offer statement or other disclosure or offering document
relating to such Competing Transaction, to send a written notice to Issuer (a
"Repurchase Notice") that it will require Issuer (or any successor entity
thereof) to pay to Grantee the Repurchase Fee (as defined below) as provided in
Section 6.01(b) below, upon delivery by Grantee of the shares of Issuer Common
Stock acquired hereunder with respect to which Grantee then has beneficial
ownership. The date on which Grantee delivers the Repurchase Notice under this
Section 6.01 is referred to as the "Repurchase Request Date". The "Repurchase
Fee" shall be equal to the sum of the following:
(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Stock Option with respect to
which Grantee then has beneficial ownership; and
(ii) subject to the maximum amounts specified in Section 3.03, the
Spread, multiplied by the number of shares of Issuer Common Stock with
respect to which the Stock Option has been exercised and with respect to
which Grantee then has beneficial ownership.
(b) If Grantee exercises its rights under this Section 6.01, within
five business days after the Repurchase Request Date, (i) Issuer shall pay by
wire transfer to Grantee the Repurchase Fee in immediately available funds to an
account designated in writing by Grantee to Issuer, and (ii) Grantee shall
surrender to Issuer certificates evidencing the shares of Issuer Common Stock
acquired hereunder with respect to which Grantee then has beneficial ownership,
and Grantee shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever.
(c) Issuer shall use best efforts to ensure that it can fully
perform all of its obligations under this Section 6.01 under applicable Law.
<PAGE> 15
13
(d) If and to the extent that Issuer is unable to perform any of its
obligations under this Section 6.01 under applicable Law, Issuer shall make no
distribution on any of its stock until such time as it has fully performed any
such obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment; No Waiver. (a) Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Issuer and Grantee or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 7.02. Fees and Expenses. Except as otherwise provided herein
or in Section 8.05 of the Merger Agreement, all costs and expenses (including,
without limitation, all fees and disbursements of counsel, accountants,
investment bankers, experts and consultants to a party) incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
SECTION 7.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly made or given upon receipt) by delivery
in person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at their
addresses as specified in Section 9.02 of the Merger Agreement.
SECTION 7.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
<PAGE> 16
14
SECTION 7.05. Assignment; Binding Effect; Benefit. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights, interests or
obligations under this Agreement without the prior written consent of the other
parties hereto.
SECTION 7.06. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof, that the parties hereto would
not have an adequate remedy at law for money damages in such event and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
SECTION 7.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
SECTION 7.08. Consent to Jurisdiction. (a) Synetic and Medical
Manager hereby irrevocably submits to the exclusive jurisdiction of the courts
of the State of Delaware and to the jurisdiction of the United States District
Court for the State of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and Synetic and Medical Manager
hereby irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Delaware state or
federal court. Synetic and Medical Manager agree that a final judgment in any
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Synetic and Medical Manager irrevocably consent to the service
of the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such party. Nothing in this Section 7.08 shall affect the right of any party
to serve legal process in any other manner permitted by law.
SECTION 7.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE> 17
15
SECTION 7.11. Waiver of Jury Trial. Each of the parties hereto
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the parties hereto in the
negotiation, administration, performance and enforcement thereof.
SECTION 7.12. Entire Agreement. This Agreement and, to the extent
referred to herein, the Merger Agreement, constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect thereto; provided, however, that any capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by both parties hereto.
<PAGE> 18
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
ISSUER:
SYNETIC, INC., a Delaware corporation
/s/ James R. Love
----------------------------------
By: James R. Love
Its: EVP
GRANTEE:
MEDICAL MANAGER CORPORATION, a Delaware
corporation
/s/ Michael A. Singer
----------------------------------
By: Michael A. Singer
Its: CEO
<PAGE> 1
EXHIBIT 99.5
FORM OF STOCK OPTION AGREEMENT, BETWEEN
SYNETIC, INC. AND EACH OF MESSRS. KANG AND SINGER, AS PARTICIPANT
<PAGE> 2
STOCK OPTION AGREEMENT dated as of [ ], 1999 (the "Agreement")
between SYNETIC, INC., a Delaware corporation (the "Company"), and the other
party signatory hereto (the "Participant").
WHEREAS, Section 4 of the Employment Agreement dated as of May
16, 1999 (the "Employment Agreement") between the Company and the Participant,
provides for the granting to the Participant of nonqualified stock options to
purchase 650,000 shares of common stock, $.01 par value, of the Company (the
"Common Shares") upon the terms and conditions hereinafter set forth and in the
Employment Agreement, subject to stockholder approval and the consummation of
the transactions contemplated by the Agreement and Plan of Merger, dated as of
May 16, 1999 (the "Merger Agreement"), among the Company, Marlin Merger Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company, and
Medical Manager Corporation, a Delaware corporation; and
WHEREAS, the Company intends that such options comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Section 162(m) of the Internal Revenue Code of 1986,
as amended;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. Confirmation of Grant of Options; Effectiveness. Pursuant
to a determination by the Stock Option Committee (the "Committee") of the Board
of Directors of the Company (the "Board"), the Company hereby confirms that the
Participant has been granted, effective as of the date hereof (the "Date of
Grant"), and subject to the terms and conditions of this Agreement and the
Employment Agreement and approval by the Company's stockholders at the special
meeting called for approval of the Merger (as defined in the Merger Agreement),
the number of nonqualified stock options (the "Options") specified at the foot
of the signature page hereof. Each such Option shall entitle the Participant to
purchase, upon payment of the Option Price specified at the foot of the
signature page hereof, one Common Share. The Options shall be exercisable as
hereinafter provided. In the event that the transactions contemplated by the
Merger Agreement are not consummated, the Options shall be null and void.
2. Certain Restrictions. None of the Options may be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed of, except
by will or the laws of descent and distribution. During the Participant's
lifetime, an Option shall be exercisable only by the Participant or by the
Participant's guardian or legal representative. Each transferee of an Option by
will or the laws of descent and distribution shall, as a condition to the
transfer thereof, execute an agreement pursuant to which it shall become a party
to this Agreement. Any attempt to sell,
<PAGE> 3
2
transfer, assign, pledge or otherwise encumber or dispose of any Option contrary
to the provisions of this Agreement, and any levy, attachment or similar process
upon any Option shall be null and void and without effect, and the Board or the
Committee may, in its discretion, upon the happening of any such event,
terminate the Options as of the date of such event.
3. Terms and Conditions of Options. The Options evidenced
hereby are subject to the following terms and conditions:
(a) Vesting. Subject to Section 3(b), the Participant's
Options shall vest and become exercisable ("Vested Options") in accordance with
the following schedule:
<TABLE>
<CAPTION>
Anniversary of % of Options
Date of Grant Exercisable
------------- -----------
<S> <C>
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
</TABLE>
(b) Option Period. (i) The Options shall not be exercisable
following the tenth anniversary of the Date of Grant, and shall be subject to
earlier termination as provided below.
(ii) In the event that the Participant's employment with the
Company and its subsidiaries terminates for any reason, the Participant (or the
Participant's estate) shall be entitled to exercise the Options which have
become Vested Options as of the date of termination, for a period of 30 days
following the date of termination; provided, however, that any Options which
become Vested Options as of the date of termination of the Employment Period (as
defined in the Employment Agreement) pursuant to Section 3(b)(iii) shall remain
exercisable on the terms and conditions specified in Section 3(b)(iii). Any
Options which have not become Vested Options as of the date of termination shall
terminate and be cancelled without any consideration being paid therefor.
(iii) In the event that the Employment Period is terminated
(A) as a result of the Participant's death or the Participant becoming Disabled
(as defined in the Employment Agreement), (B) by the Company without Cause (as
defined in the Employment Agreement) or (C) by the Participant for Good Reason
(as defined in the Employment Agreement), the Options shall be fully vested and
exercisable as of the date on which the Employment Period terminates, and shall
remain exercisable in accordance with the terms and conditions of Section 5.2,
5.3 or 5.5 of the Employment Agreement, respectively. In the event that the
Employment Period terminates pursuant to the preceding sentence, the 30-day
period specified in Section 3(b)(ii)
<PAGE> 4
3
shall commence at the end of the Applicable Period or the Severance Period (as
defined in the Employment Agreement), as the case may be. Notwithstanding the
foregoing provisions of this Section 3(b)(iii), the Options shall cease to be
exercisable on the occurrence of any circumstance or event that would constitute
Cause, including, without limitation, a breach of the covenants contained in
Section 6 of the Employment Agreement.
(iv) In the event that a Change in Control (as defined in the
Employment Agreement) occurs during the Employment Period, the Options shall be
subject to any applicable terms and conditions of Section 4(b) or 4(c) of the
Employment Agreement.
(v) In the event that, prior to the occurrence of a Change in
Control, (A) a material reduction in the Participant's title or
responsibilities, as set forth in Section 1.2(a) of the Employment Agreement,
occurs, (B) the Participant provides written notice detailing such material
reduction to the Company within 30 days after such material reduction occurs and
(C) such material reduction remains in effect 30 days after such written notice
is provided to the Company, the Options shall become fully vested and
exercisable upon the expiration of the 30- day period described in this clause
(C).
(c) Notice of Exercise. Subject to Sections 3(d), 3(f) and
5(b) hereof, the Participant may exercise any or all of the Vested Options (to
the extent not forfeited) by giving written notice to the Vice President of
Finance of the Company at its principal business office. The date of exercise of
a Vested Option shall be the later of (i) the date on which the Vice President
of Finance of the Company receives such written notice or (ii) the date on which
the conditions provided in Sections 3(d), 3(f) and 5(b) hereof are satisfied.
(d) Payment. Prior to the issuance of a certificate pursuant
to Section 3(g) hereof evidencing Common Shares, the Participant shall have paid
to the Company the Option Price of all Common Shares purchased pursuant to
exercise of such Options, in cash or by certified r official bank check, and all
applicable tax withholding obligations as provided in Section 5(b) of this
Agreement. The Option Price may also be payable by a "cashless" exercise
procedure through a broker and approved by the Committee.
(e) Shareholder Rights. The Participant shall have no rights
as a shareholder with respect to any Common Shares issuable upon the exercise of
an Option until a certificate or certificates evidencing such shares shall have
been issued to the Participant, and no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which the record date
is prior to the date upon which the Participant shall become the holder of
record thereof.
(f) Limitation on Exercise. (i) The Common Shares issued upon
exercise of the Options shall be issued only to the Participant or a person
permitted to exercise the Options pursuant to Section 3(b)(ii). Each share
certificate representing Common Shares purchased upon
<PAGE> 5
4
exercise of the Options shall bear a legend stating that the Common Shares
evidenced thereby may not be sold or transferred except in compliance with the
Securities Act of 1933, as amended (the "1933 Act") and the provisions of this
Agreement. The certificate(s) may be made subject to a stop transfer order
placed with the Company's transfer agent.
(ii) The Options shall not be exercisable unless and until (A)
a registration statement under the 1933 Act has been duly filed and declared
effective pertaining to the Common Shares subject to such Options and such
Common Shares shall have been qualified under applicable state "blue sky" laws,
or (B) the Committee in its sole discretion determines that such registration
and qualification is not required as a result of the availability of an
exemption from such registration and qualification under such laws. The Company
shall use all reasonable efforts to file a registration statement with the
Securities and Exchange Commission on Form S-8 with respect to the Common Shares
subject to an Option on or prior to the date on which such Option becomes
exercisable. The Company shall have no obligation to issue any Common Shares
pursuant to the exercise of an Option if the Company reasonably determines at
the time of such exercise that the issuance of Common Shares at such time would
violate applicable law with respect to insider trading or otherwise, or then
existing policies of the Company applicable to employees of the Company or its
Subsidiaries holding options to purchase Common Shares.
(g) Issuance of Certificate. As soon as practicable following
the exercise of any Options, a certificate evidencing the number of Common
Shares issued in connection with such exercise shall be issued in the name of
the Participant.
4. Representations and Warranties. The Participant is aware of
and familiar with the restrictions imposed on the transfer of any Options. The
Participant represents that this Agreement has been duly executed and delivered
by the Participant and constitutes a legal, valid and binding agreement of the
Participant, enforceable against the Participant in accordance with its terms,
except as limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and by general
principles of equity. It shall be a further condition to the Company's
obligation to issue and deliver to the Participant certificates for Common
Shares upon exercise of an Option that the Participant deliver to the Company in
writing a representation that the Participant is exercising such Option for his
own account and, unless the Common Shares are then registered under the 1933
Act, for investment only and not with a view to distribution and that the
Participant will not make any sale, transfer or other disposition of any Common
Shares purchased except (i) pursuant to the registration thereof under the 1933
Act, (ii) pursuant to an opinion of counsel satisfactory in form and substance
to the Company that the sale, transfer or other disposition may be made without
registration, or (iii) pursuant to a "no-action" letter from the Securities and
Exchange Commission. The Participant has been advised and understands that the
Common Shares must be held indefinitely unless they are registered for resale
under the 1933 Act or an exemption from registration is available.
<PAGE> 6
5
5. Miscellaneous.
(a) No Rights to Grants or Continued Employment. Neither this
Agreement nor any action taken or omitted to be taken hereunder or thereunder
shall be deemed to create or confer on the Participant any right to be retained
in the employ of the Company or any of its subsidiaries or affiliates, or to
interfere with or to limit in any way the right of the Company or any of its
subsidiaries or affiliates to terminate the employment of the Participant at any
time. The Participant shall have no rights in the benefits conferred by the
Options or in any Common Shares except to the extent the Options are exercised
while vested and exercisable and otherwise in accordance with the terms of this
Agreement. Termination of the Options by reason of cessation of employment shall
not give rise to any claim for damages by the Participant under this Agreement
or the Employment Agreement and shall be without prejudice to any rights or
remedies which the Company or any of its subsidiaries or affiliates may have
against the Participant.
(b) Tax Withholding. The Company and its subsidiaries shall
have the right to require the Participant to remit to the Company, prior to the
delivery of any certificates evidencing Common Shares pursuant to the exercise
of an Option, any amount sufficient to satisfy any federal, state or local tax
withholding requirements. With the consent of the Company in its sole
discretion, prior to the Company's determination of such withholding liability,
the Participant may make an irrevocable election to satisfy, in whole or in
part, such obligation to remit taxes by directing the Company to withhold Common
Shares that would otherwise be received by the Participant. Such election may be
denied by the Company in its sole discretion, or may be made subject to certain
conditions specified by the Company, including, without limitation, conditions
intended to avoid the imposition of liability against the Participant under
Section 16(b) of the Exchange Act.
(c) No Restriction on Right of Company to Effect Corporate
Changes. This Agreement shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the capital structure or
business of the Company, or any merger or consolidation of the Company, or any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Shares or the rights thereof or which are convertible into or
exchangeable for Common Shares, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of the assets or business of
the Company, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(d) Notice of Exercise. Notwithstanding any other provision of
this Agreement, the Company may, from time to time, require reasonable notice of
the Participant's intent to exercise all or a portion of the Options in order
for the Company to comply with any applicable securities laws, including,
without limitation, Regulation M under the Exchange Act.
<PAGE> 7
6
The Company shall not be liable for any adverse change in the market value of
the Common Shares during any such notice period.
6. Adjustment.
(a) The number and price per Common Share covered by any
Option, and any other rights under any Option, shall be appropriately adjusted,
as deemed appropriate by the Board or the Committee, as the case may be (whose
good faith determination shall be absolute and binding on the Participant), to
reflect any subdivision (stock split) or consolidation (reverse split) of the
issued Common Shares, or any other recapitalization of the Company, or any
business combination or other transaction involving the Company, which shall
substantially affect the rights of holders of Common Shares. The Committee or
the Board, as the case may be, shall provide for appropriate adjustment of the
Options in the event of stock dividends or distributions of assets or securities
of other companies owned by the Company to stockholders relating to Common
Shares for which the record date is prior to the date the Common Shares
purchased by exercise of the Options are issued or transferred, except that no
such adjustment shall be made for stock dividends of 10% or less (cumulatively,
in the aggregate) or cash dividends.
(b) In the event of a change in the presently authorized
Common Shares which is limited to a change of all of its presently authorized
Common Shares into the same number of shares without par value, or any change of
all of the then authorized Common Shares with par value into the same number of
shares with a different par value, the shares resulting from any such change
shall be deemed to be Common Shares for purposes hereof, and no change in the
number of Common Shares covered by the Options or in the Option Price shall take
place.
7. Survival; Assignment.
(a) All agreements, representations and warranties made herein
and in any certificates delivered pursuant hereto shall survive the issuance to
the Participant of the Options and the Common Shares and, notwithstanding any
investigation heretofore or hereafter made by the Participant or the Company or
on the Participant's or the Company's behalf, shall continue in full force and
effect. Without the prior written consent of the Company, the Participant may
not assign any of his rights hereunder except by will or the laws of descent and
distribution. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the heirs and permitted successors
and assigns of such party; and all agreements herein by or on behalf of the
Company, or by or on behalf of the Participant, shall bind and inure to the
benefit of the heirs and permitted successors and assigns of such parties
hereto.
(b) The Company shall have the right to assign to any of its
affiliates any of its rights, or to delegate to any of its affiliates any of its
obligations, under this Agreement.
<PAGE> 8
7
8. Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or sent by certified
or registered mail, return receipt requested, postage prepaid, addressed, if to
the Participant, to his attention at the most recent mailing address that the
Company has on record and, if to the Company, to it at River Drive Center 2, 669
River Drive, Elmwood Park, New Jersey 07407-1361, Telecopier No.: (201) 703-
3401, Attention: Vice President of Finance. All such notices shall be
conclusively deemed to be received and shall be effective, if sent by hand
delivery, upon receipt, or if sent by registered or certified mail, on the fifth
day after the day on which such notice is mailed.
9. Waiver. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
10. Source of Rights. This Agreement and the Employment
Agreement shall be the sole and exclusive source of any and all rights which the
Participant, and the Participant's personal representatives or heirs at law, may
have in respect of the Options as granted hereunder. In the event of any
conflict between the provisions of the Employment Agreement and of this
Agreement, the provisions of the Employment Agreement shall prevail.
11. Captions. The captions contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
12. Interpretation and Construction. The good faith
interpretation and construction by the Board or by the Committee of any
provision of this Agreement or any provision of the Employment Agreement
relating to the Options shall be final and conclusive and binding on the parties
hereto.
13. Entire Agreement; Governing Law. This Agreement and the
Employment Agreement set forth the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same agreement. The headings
of sections and subsections herein are included solely for convenience of
reference and shall not affect the meaning of any of the provisions of this
Agreement. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey without reference to the choice of law
provisions of New Jersey law.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Participant has executed this
Agreement, both as of the day and year first above written.
<PAGE> 9
8
SYNETIC, INC.
By:_________________________________
Name:
Title:
PARTICIPANT
____________________________________
[NAME]
Number of Options: 650,000
Option Price: [FAIR MARKET VALUE ON DATE OF GRANT]
<PAGE> 1
EXHIBIT 99.6
FORM OF PROXY CARD FOR THE SPECIAL MEETING OF STOCKHOLDERS OF SYNETIC, INC.
<PAGE> 2
REVOCABLE PROXY
SYNETIC, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
SPECIAL MEETING OF STOCKHOLDERS -- JULY 23, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SYNETIC, INC.
The undersigned hereby appoints Kirk G. Layman, Charles A. Mele and Paul
C. Suthern, and each of them, as the true and lawful agents and proxies of the
undersigned, with full power of substitution, to represent the undersigned and
to vote all shares of stock which the undersigned is entitled in any capacity
to vote at the Special Meeting of Stockholders of Synetic Inc. ("Synetic") to
be held at the Saddle Brook Marriott Hotel, Garden State Parkway at Interstate
80 in Saddle Brook, New Jersey, commencing at 9:30 A.M., local time, on July
23, 1999 and at any and all adjournments or postponements thereof, on the
matters set forth below, and, in their discretion, upon all matters incident to
the conduct of the Special Meeting and upon such other matters as may properly
be brought before the meeting. This Proxy revokes all prior proxies given by
the undersigned. This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If no direction is made,
this Proxy will be voted FOR Proposal 1, FOR Proposal 2, FOR Proposal 3, FOR
Proposal 4 and FOR Proposal 5.
The Synetic Board of Directors recommends a vote FOR each of the following
Proposals:
1. A proposal to issue up to 18,202,213 shares of Synetic Common Stock in
exchange for shares of Medical Manager Common Stock pursuant to the Agreement
and Plan of Merger, dated as of May 16, 1999, among Synetic, Martin Merger Sub,
Inc., a wholly owned subsidiary of Synetic and Medical Manager Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
2. A proposal to amend and restate Article One of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, as follows: "The
name of this Corporation (hereinafter called the "Corporation") is MEDICAL
MANAGER CORPORATION."
FOR AGAINST ABSTAIN
/ / / / / /
3. A proposal to amend and restate the first paragraph of Article Four of the
Synetic Certificate of Incorporation, effective at the effective time of the
merger, as follows: "The Corporation shall have the authority, to be exercised
by the board of directors, to issue a total of 310,000,000 shares consisting of
300,000,000 shares of common voting stock of the par value of $0.01 per share
(the "Common Stock") and 10,000,000 shares of preferred stock of the par value
of $0.01 per share (the "Preferred Stock")."
FOR AGAINST ABSTAIN
/ / / / / /
4. A proposal to amend and restate Article Nine of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, as follows: "The
original By-Laws of the Corporation shall be adopted by the Incorporator.
Thereafter, in furtherance and not in limitation of the power conferred by
statute, the board of directors is expressly authorized to make, repeal, alter,
amend and rescind the By-Laws of the Corporation."
FOR AGAINST ABSTAIN
/ / / / / /
5. A proposal to grant options to purchase 650,000 shares of Synetic Common
Stock to each of Michael A. Singer and John H. Kang pursuant to their
respective employment agreements.
FOR AGAINST ABSTAIN
/ / / / / /
Please be sure to sign and date
this Proxy in the box below. Date ______________
Stockholder sign above _______________Co-holder (if any) sign above
<PAGE> 3
- - Detach above card, sign, date and mail in postage paid envelope provided. -
SYNETIC, INC.
- -----------------------------------------------------------------------------
This proxy revokes all prior proxies given by the above signed and, when
properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If no direction is given, this proxy, when properly
executed will be voted for each proposal set forth hereon and in the discretion
of the proxies on all other matters that may properly come before the Special
Meeting. The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Stockholders and the Joint Proxy Statement/Prospectus (with all
enclosures and attachments) related to the Special Meeting.
Please sign name exactly as imprinted (do not print). Please include any
changes in address. If shares are held jointly EACH holder should sign.
Executors, administrators, trustees, guardians and others signing in a
representative capacity should indicate the capacity in which they sign. An
authorized officer may sign on behalf of a corporation and should indicate the
name of the corporation and his or her capacity.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- -----------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 99.7
FORM OF PROXY CARD FOR THE SPECIAL MEETING OF STOCKHOLDERS
OF MEDICAL MANAGER CORPORATION.
<PAGE> 2
FORM OF PROXY CARD FOR THE SPECIAL MEETING OF STOCKHOLDERS
OF MEDICAL MANAGER CORPORATION.
PROXY
MEDICAL MANAGER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Michael A. Singer and John H. Kang, each with power of substitution, are
hereby authorized to vote all shares of common stock which the undersigned would
be entitled to vote if personally present at the Special Meeting of Stockholders
of Medical Manager Corporation to be held at 15151 Northwest 99th Street in
Alachua, Florida on July 23, 1999, or any postponements or adjournments thereof,
as indicated on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 SET FORTH ON THE REVERSE SIDE.
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting Stockholders and the Joint Proxy Statement/Prospectus furnished
herewith.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 3
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
SPECIAL MEETING OF STOCKHOLDERS
MEDICAL MANAGER CORPORATION
July 23, 1999
[PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED]
Please mark your
[X] votes as indicated
in this example
A vote FOR proposal 1 is recommended by the Board of Directors.
1. To approve and adopt the Merger Agreement dated May 16, 1999 by and between
Medical Manager Corporation and Synetic, Inc. and the transactions
contemplated by the Merger Agreement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Change of Address and or Comments, Mark Here
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.
SIGNATURE(s) DATE , 1999
---------------- ------------------------- ---------------
Signature if Jointly Held
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. IF ACTING AS ATTORNEY, EXECUTOR, TRUSTEE, OR
IN ANY REPRESENTATIVE CAPACITY, SIGN NAME AND TITLE.
<PAGE> 1
EXHIBIT 99.8
FORM OF CHAIRMAN LETTER TO THE
STOCKHOLDERS OF SYNETIC, INC.
<PAGE> 2
[SYNETIC, INC. LOGO]
669 RIVER DRIVE
ELMWOOD PARK, NEW JERSEY 07407
June 24, 1999
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Synetic, Inc. to be held at the Saddle Brook Marriott Hotel, Garden State
Parkway at Interstate 80 in Saddle Brook, New Jersey, on July 23, 1999, at 9:30
a.m., local time. Synetic has entered into an agreement with Medical Manager
Corporation pursuant to which the businesses of Synetic and Medical Manager will
be combined to form an organization with the components we believe are necessary
to transform the information infrastructure of America's practicing physicians,
with the goal of revolutionizing the way in which physicians can communicate
electronically with payers, suppliers, providers and patients.
The transaction is structured as a merger, in which each share of Medical
Manager Common Stock will be converted into the right to receive .625 shares of
Synetic Common Stock if the average closing price of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
greater than or equal to $67.20. If the average closing price per share of
Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $67.20 but at least $56.00, the exchange
ratio will be adjusted upward so that the value of the Synetic Common Stock to
be received for each share of Medical Manager Common Stock based on such
adjusted exchange ratio is equal to $42.00 based on the average closing price of
Synetic Common Stock during such period. If the average closing price per share
of Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $56.00, the exchange ratio will be .750
shares of Synetic Common Stock for each share of Medical Manager Common Stock,
unless the board of directors of Medical Manager exercises its right to
terminate the merger. Synetic and Medical Manager will issue a joint press
release announcing the exchange ratio prior to the opening of trading on July
21, 1999. As a result of this transaction, Medical Manager will become a wholly
owned subsidiary of Synetic. At the Synetic Special Meeting, you will be asked
to consider and vote on the following matters in connection with the merger:
- the issuance of up to 18,202,213 shares of Synetic Common Stock to
current Medical Manager stockholders in the merger;
- as contemplated by the merger agreement, the amendment and restatement of
Article One of the Synetic Certificate of Incorporation, effective at the
effective time of the merger, with the effect of changing the name of
Synetic to "Medical Manager Corporation";
- the amendment and restatement of Article Four of the Synetic Certificate
of Incorporation, effective at the effective time of the merger, with the
effect of increasing the number of authorized shares of capital stock of
Synetic to 310,000,000, with 300,000,000 designated as Synetic Common
Stock;
- the amendment and restatement of Article Nine of the Synetic Certificate
of Incorporation, effective at the effective time of the merger, with the
effect of deleting the last clause of Article Nine which states "provided
that the Board of Directors may not amend the By-Laws to increase the
number of directors above twelve"; and
- the grant of options to purchase 650,000 shares of Synetic Common Stock
to each of Messrs. Michael A. Singer, Chairman and Chief Executive
Officer, and John H. Kang, President, of Medical Manager, under their
employment agreements.
The accompanying Joint Proxy Statement/Prospectus presents the details of this
proposed strategic merger.
SYNETIC'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE ISSUANCE OF
SHARES OF SYNETIC COMMON STOCK TO CURRENT MEDICAL MANAGER STOCKHOLDERS IN THE
MERGER REFERRED TO ABOVE, THE AMENDMENTS AND RESTATEMENTS OF THE SYNETIC
CERTIFICATE OF INCORPORATION REFERRED TO ABOVE AND, SUBJECT TO THE SEPARATE
APPROVAL OF THE STOCK OPTION COMMITTEE OF SYNETIC'S BOARD OF DIRECTORS, THE
GRANT OF OPTIONS TO EACH OF MESSRS. SINGER AND KANG REFERRED TO ABOVE AND
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THESE PROPOSALS.
The merger of Synetic and Medical Manager will create an organization with
the components we believe are necessary to transform the information
infrastructure of America's practicing physicians, with the goal of
revolutionizing the way in which physicians can communicate electronically with
payers, suppliers, providers and patients.
If you have questions about the merger or would like additional copies of
the accompanying Joint Proxy Statement/Prospectus, you should contact: Risa
Fisher, Director of Investor Relations, at (201)703-3400. Even if you plan to
attend the Synetic Special Meeting in person, please complete, sign, date and
promptly return the enclosed proxy card in the enclosed postage-prepaid
envelope.
Sincerely,
Martin J. Wygod
Chairman of the Board
<PAGE> 1
EXHIBIT 99.9
FORM OF CHAIRMAN LETTER TO THE
STOCKHOLDERS OF MEDICAL MANAGER CORPORATION.
<PAGE> 2
[MEDICAL MANAGER CORPORATION LOGO]
3001 N. Rocky Point Drive East, Suite 400
Tampa, Florida 33607
June 24, 1999
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Medical Manager Corporation to be held at 15151 Northwest 99th Street in
Alachua, Florida, on July 23, 1999, at 10:00 a.m., local time. Medical Manager
has entered into an agreement with Synetic, Inc. pursuant to which the
businesses of Medical Manager and Synetic will be strategically combined to form
an organization with the components we believe are necessary to transform the
information infrastructure of America's practicing physicians, with the goal of
revolutionizing the way in which physicians can communicate electronically with
payers, suppliers, providers and patients.
The transaction is structured as a merger, in which each share of Medical
Manager Common Stock will be converted into the right to receive .625 shares of
Synetic Common Stock if the average closing price of Synetic Common Stock during
the period from and including July 7, 1999 to and including July 20, 1999 is
greater than or equal to $67.20. If the average closing price per share of
Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $67.20 but at least $56.00, the exchange
ratio will be adjusted upward so that the value of the Synetic Common Stock to
be received for each share of Medical Manager Common Stock based on such
adjusted exchange ratio is equal to $42.00 based on the average closing price of
Synetic Common Stock during such period. If the average closing price per share
of Synetic Common Stock during the period from and including July 7, 1999 to and
including July 20, 1999 is less than $56.00, the exchange ratio will be .750
shares of Synetic Common Stock for each share of Medical Manager Common Stock,
unless the board of directors of Medical Manager exercises its right to
terminate the merger. Synetic and Medical Manager will issue a joint press
release announcing the exchange ratio prior to the opening of trading on July
21, 1999. As a result of this transaction, Medical Manager will become a wholly
owned subsidiary of Synetic. Synetic Common Stock is traded on the Nasdaq
National Market System under the symbol "SNTC". On June 23, 1999 the stock
closed at $70.3125 per share.
At the Medical Manager Special Meeting you will be asked to approve the
merger. The accompanying Joint Proxy Statement/Prospectus presents the details
of this proposed strategic merger. The merger cannot be completed without the
approval of the holders of a majority of the outstanding common stock of Medical
Manager.
MEDICAL MANAGER'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE MERGER.
If you have questions about the merger or would like additional copies of
the accompanying Joint Proxy Statement/Prospectus, you should contact: Charles
Hutchinson, Controller of Medical Manager, (813) 287-2990, extension 102. Even
if you plan to attend the Medical Manager Special Meeting in person, please
complete, sign, date and promptly return the enclosed proxy card in the enclosed
postage-prepaid envelope.
Sincerely,
Michael A. Singer
Chairman and Chief Executive Officer
<PAGE> 1
EXHIBIT 99.10
FORM OF NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF SYNETIC, INC.
<PAGE> 2
[SYNETIC, INC. LOGO]
669 RIVER DRIVE
ELMWOOD PARK, NEW JERSEY 07407
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 23, 1999
To the Stockholders of Synetic:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Synetic,
Inc. will be held at Saddle Brook Marriott Hotel, Garden State Parkway at
Interstate 80 in Saddle Brook, New Jersey on July 23, 1999, at 9:30 a.m., local
time, for the following purposes:
1. To consider and vote upon a proposal to issue up to 18,202,213 shares
of Synetic Common Stock in exchange for shares of Medical Manager
Common Stock pursuant to the merger agreement between Synetic and
Medical Manager. As a result of this transaction, Medical Manager will
become a wholly owned subsidiary of Synetic.
2. To consider and vote upon a proposal, as contemplated by the merger
agreement, regarding the amendment and restatement of Article One of
the Synetic Certificate of Incorporation, effective at the effective
time of the merger, with the effect of changing the name of Synetic to
"Medical Manager Corporation".
3. To consider and vote upon a proposal, regarding the amendment and
restatement of Article Four of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the
effect of increasing the number of authorized shares of capital stock
of Synetic to 310,000,000, with 300,000,000 designated as Synetic
Common Stock.
4. To consider and vote upon a proposal, regarding the amendment and
restatement of Article Nine of the Synetic Certificate of
Incorporation, effective at the effective time of the merger, with the
effect of deleting the last clause of Article Nine which states
"provided that the Board of Directors may not amend the By-Laws to
increase the number of directors above twelve."
5. To consider and vote upon a proposal to grant options to purchase
650,000 shares of Synetic Common Stock to each of Messrs. Michael A.
Singer and John H. Kang under the terms of their employment agreements.
A copy of the merger agreement and of the proposed Amended and Restated
Certificate of Incorporation of Synetic are attached as Annex A and Annex D,
respectively, to the accompanying Joint Proxy Statement/Prospectus.
Only stockholders of record at the close of business on June 21, 1999 will
be entitled to vote at the Synetic Special Meeting. The stock transfer books
will not be closed.
All stockholders are cordially invited to attend the Synetic Special
Meeting in person. However, to ensure your representation at the Synetic Special
Meeting, you are urged to complete, sign, date and return the enclosed proxy
card in the enclosed postage-prepaid envelope as promptly as possible.
By Order of the Board of Directors,
Charles A. Mele
Secretary
Elmwood Park, New Jersey
June 24, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SYNETIC SPECIAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE> 1
EXHIBIT 99.11
FORM OF NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
MEDICAL MANAGER CORPORATION.
<PAGE> 2
[MEDICAL MANAGER CORPORATION LOGO]
3001 N. ROCKY POINT DRIVE EAST, SUITE 400
TAMPA, FLORIDA 33607
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 23, 1999
To the Stockholders of Medical Manager Corporation:
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Medical
Manager Corporation will be held at 15151 Northwest 99th Street in Alachua,
Florida on July 23, 1999, at 10:00 a.m., local time, to consider and vote upon a
proposal to approve and adopt the merger agreement between Medical Manager and
Synetic, Inc. pursuant to which Medical Manager will merge with a subsidiary of
Synetic, with Medical Manager becoming a wholly owned subsidiary of Synetic.
A copy of the merger agreement is attached as Annex A to the accompanying
Joint Proxy Statement/Prospectus.
Only stockholders of record at the close of business on June 21, 1999 will
be entitled to vote at the Medical Manager Special Meeting. The stock transfer
books will not be closed.
All stockholders are cordially invited to attend the Medical Manager
Special Meeting in person. However, to ensure your representation at the Medical
Manager Special Meeting, you are urged to complete, sign, date and return the
enclosed proxy card in the enclosed postage-prepaid envelope as promptly as
possible.
By Order of the Board of Directors,
Frederick B. Karl, Jr.
Vice President and General Counsel
Tampa, Florida
June 24, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEDICAL MANAGER SPECIAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
