SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of Earliest Event Reported): February 5, 1999
SYNETIC, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-17822 22-2975182
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
669 River Drive, River Drive Center II 07407
Elmwood Park, NJ (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (201) 703-3400
Exhibit Index Appears on page 4.
<PAGE>
2
Item 5. Other Events.
(a) Description of Capital Stock
Following is a description of the capital stock of the
Company. The description of the capital stock of the Company is subject to the
Delaware General Corporation Law and to provisions contained in the Company's
Certificate of Incorporation and By-Laws, copies of which are exhibits to the
Company's Form 10-K for the fiscal year ended June 30, 1998. Reference is made
to such exhibits for a detailed description of the provisions thereof summarized
below.
The Company has authorized the issuance of 100,000,000 shares
of common stock, $0.01 par value, and 10,000,000 shares of preferred stock,
$0.01 par value. Holders of common stock have no preemptive or other
subscription rights.
Common Stock
On January 25, 1999, there were 19,903,751 outstanding shares
of common stock. The Company believes that its common stock is beneficially held
by at least 400 stockholders.
The holders of common stock are entitled to one vote per share
on all matters submitted to a vote of the stockholders. Holders of common stock
do not have cumulative voting rights. Therefore, holders of more than 50% of the
shares of 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 board
of directors. Upon liquidation, dissolution or winding up, the holders of common
stock are entitled to share pro rata in the distribution of all of 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 common
stock.
The transfer agent and registrar for the common stock is
Registrar & Transfer Company.
<PAGE>
3
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 Company's
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 Board of Directors
could adversely affect the voting power of 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
(the "DGCL") prohibits a publically 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 approved by the board of directors of the corporation, (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 662/3% 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
The Company'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 its directors and stockholders for monetary damages in certain
circumstances.
Article Thirteen of the Company's certificate of incorporation
provides that no director shall have any personal liability to the Company or
its stockholders for any monetary damages for breach of fiduciary duty as a
director, provided that such provision does not limit or eliminate the liability
of any director (i) for breach of such director's duty of loyalty to the Company
or its
<PAGE>
4
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.
Reference is made to the Form of Indemnification Agreement
between Synetic and its directors and officers filed as Exhibit 10.6 to the
Company's Form 10-K for the fiscal year ended June 30, 1998 pursuant to which
the Company has agreed to indemnify such directors and officers to the fullest
extent permitted by Delaware law, as the same may be amended from time to time.
(b) Other Events
Synetic, Inc. issued on February 5, 1999 the press release
attached hereto as Exhibit 99.1. Such press release is incorporated herein by
reference.
Exhibit Index
Exhibit No. Description
- ----------- -----------
3.1 Amended and Restated Certificate of Incorporation of Synetic, Inc.*
3.2 By-Laws of Synetic, Inc.*
99.1 Press Release, dated February 5, 1999
- --------
* Incorporated by reference from the Company's Current Report on Form 8-K
dated April 9, 1998.
<PAGE>
5
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has been duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SYNETIC, INC.
By: /s/ Charles A. Mele
---------------------------------
Name: Charles A. Mele
Executive Vice President
and General Counsel
FOR IMMEDIATE RELEASE
Contact: David J. Schlanger
Senior Vice President -- Corporate Development
(201) 703-3400
ELMWOOD PARK, NEW JERSEY, February 5, 1999 --- Synetic, Inc.
(NASDAQ: SNTC) announced today that Synetic has recently been informed of Merck
& Co., Inc.'s position that Synetic's healthcare communication business and
Martin J. Wygod, Synetic's Chairman, are in violation of certain non-competition
agreements with Merck and Merck-Medco Managed Care L.L.C. These agreements
expire by their terms on May 24, 1999. Synetic has also been informed of Merck's
position that the non-competition agreements of certain officers of Synetic are
binding upon Synetic and would therefore have the effect of extending the
expiration of the non-competition agreement between Synetic and Merck and
Merck-Medco until as late as September 2002.
Synetic believes that Merck and Merck-Medco's positions are
without merit. In the event litigation occurs, Synetic intends to vigorously
assert appropriate claims for any damages caused by Merck and Merck-Medco,
including damages caused by any improper attempts to restrain future
competition. No assurance can be given, however, that litigation concerning
these matters would not have a material adverse effect on Synetic.
Certain statements contained in this press release are forward
looking statements that involve risks and uncertainties including, but not
limited to, risks associated with the non-competition agreements with Merck and
Merck-Medco described above. These statements are based on the Company's current
beliefs which may be different from those described or implied by such forward
looking statements. The Company expressly disclaims any intent or obligation to
update these forward looking statements.
