<PAGE>
As filed with the Securities and Exchange Commission on November 27, 1996.
Registration No. 333-
===============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
PREMIER RESEARCH WORLDWIDE, LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 8734 22-3264604
(State or jurisdiction of Primary Standard Industrial
Incorporation or organization) Classification Code Number (I.R.S. Employer Identification No.)
</TABLE>
124 SOUTH 15TH STREET
PHILADELPHIA, PA 19102
(215) 972-0420
(Address, including zip code,
and telephone number, including
area code, of registrant's
principal executive offices)
JOEL MORGANROTH, M.D. President
124 SOUTH 15TH STREET
PHILADELPHIA, PA 19102
(215) 972-0420
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
JAMES H. CARLL, ESQUIRE MORRIS CHESTON, JR. , ESQUIRE
ARCHER & GREINER, P.C. BALLARD SPAHR ANDREWS & INGERSOLL
ONE CENTENNIAL SQUARE 1735 MARKET STREET, 51st FLOOR
HADDONFIELD, NJ 08033 PHILADELPHIA, PA 19103
(609) 795-2121 (215) 864-8609
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1922, 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, please 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(c) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Title of each Proposed Proposed
class of Amount maximum maximum Amount of
securities to be being offering price aggregate registration
registered registered per share(1) offering price(1) fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $. 01 par value 3,162,500(2) $16.00 $50,600,000 $15,331.80
--------- ------ ----------- ----------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457 under the Securities Act of 1933, as amended.
(2) Includes up to 412,500 additional shares of Common Stock which the
Underwriter has the right to purchase to cover over-allotments, if any.
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>
PREMIER RESEARCH WORLDWIDE, LTD.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Location or
Form S-1 Caption Heading in Prospectus
- -------- ------- ----------------------
<S> <C> <C>
1 Forepart of Registration Facing Page; Front Cover Page;
Statement and Outside Front
Cover Page of Prospectus...
2 Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus... Cover Pages; Additional
Information;
3 Summary Information, Risk Prospectus Summary; Risk
Factors and Ratio of Earnings to Factors;
Fixed Charges
4 Use of Proceeds... Use of Proceeds;
5 Determination of Offering Risk Factors; Underwriting
Price...
6 Dilution... Dilution;
7 Selling Security Holders... Principal and Selling
Stockholders;
8 Plan of Distribution... Front Cover Page;
Underwriting;
9 Description of Securities to be Description of Capital Stock;
Registered...
10 Interests of Named Experts and Legal Matters; Experts
Counsel...
11 Information with Respect to
Registrant...
(a) Description of Business... Business;
(b) Description of Property... Business;
(c) Legal Proceedings Not applicable;
</TABLE>
i
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Location or
Form S-1 Caption Heading in Prospectus
- -------- ------- ----------------------
<S> <C> <C>
(d) Market Price of and Risk Factors; Management;
Dividends on the Shares Eligible for Future
Registrant's Common Equity Sale; Dividend Policy;
and Related Stockholder Principal and Selling
Matters... Stockholders; Underwriting;
(e) Financial Statements... Financial Statements;
(f) Selected Financial Data... Selected Financial Data;
(g) Supplemental Financial Management's Discussion and
Information... Analysis of Financial Condition
and Results of Operations;
(h) Management's Discussion Management's Discussion and
and Analysis of Financial Analysis of Financial Condition
Condition and Results of and Results of Operations;
Operations...
(i) Disagreements with Not Applicable;
Accountants...
(j) Directors and Executive Management;
Officers...
(k) Executive Compensation... Management;
(l) Security Ownership of Principal and Selling
Certain Beneficial Owners... Stockholders;
(m) Certain Relationships and Certain Relationships;
Related Transactions...
12 Disclosure of Commission Not Applicable;
Position on Indemnification for
Securities Act Liabilities...
</TABLE>
ii
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
SUBJECT TO COMPLETION, DATED NOVEMBER 27, 1996
LOGO
2,750,000 SHARES
PREMIER RESEARCH WORLDWIDE
COMMON STOCK
Of the 2,750,000 shares of Common Stock offered hereby, 2,000,000 shares
are being sold by Premier Research Worldwide, Ltd. (the "Company") and
750,000 shares are being sold by the Selling Stockholder. The Company will
not receive any of the proceeds from the sale of the shares by the Selling
Stockholder. See "Principal and Selling Stockholders." Prior to this
offering, there has been no public market for the Common Stock of the
Company. It currently is estimated that the initial public offering price
will be between $14.00 and $16.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company is applying for listing of the Common Stock on
the Nasdaq National Market under the symbol "PRWW."
The shares of Common Stock offered hereby involve a high degree of risk.
See "Risk Factors" beginning on page 6 of this Prospectus for a discussion of
certain factors that should be considered by prospective investors in
purchasing the shares of Common Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================
Price to Underwriting Proceeds to Proceeds to Selling
Public Discount (1) Company (2) Stockholder
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share ... $ $ $ $
- ---------------------------------------------------------------------------------------------
Total (3) ... $ $ $ $
=============================================================================================
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $600,000.
(3) The Company and the Selling Stockholder have granted the Underwriters a
30-day option to purchase up to 412,500 additional shares of Common Stock
solely to cover over-allotments, if any. If the Underwriters exercise
this option in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Stockholder will be $ ,
$ , $ and $ , respectively. See "Underwriting."
The shares of Common Stock are offered by the several Underwriters named
herein, subject to prior sale, when, as and if delivered to and accepted by
the Underwriters, and subject to their right to reject orders in whole or in
part. It is expected that delivery of the certificates representing such
shares will be made against payment therefor at the offices of Montgomery
Securities on or about , 1997.
MONTGOMERY SECURITIES
FURMAN SELZ
GENESIS MERCHANT GROUP SECURITIES
, 1997
<PAGE>
--------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements, including Notes thereto,
appearing elsewhere in this Prospectus. This Prospectus contains certain
statements of a forward-looking nature relating to future events or the future
financial performance of the Company. Such statements are only predictions and
actual events or results may differ materially from those indicated by such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed under "Risk Factors." All references to
the "Company" in this Prospectus refer to Premier Research Worldwide, Ltd., a
Delaware corporation, and its subsidiaries and predecessors. Except as otherwise
noted, all information in this Prospectus (i) reflects a 2,201-for-one stock
split effected on November 26, 1996, (ii) reflects the mandatory conversion of
PREMIER, Inc.'s minority interest in Premier Research, LLC into 330,150 shares
of Common Stock of the Company upon closing of this offering, and (iii) assumes
no exercise of the Underwriters' over-allotment option.
THE COMPANY
Premier Research Worldwide, Ltd. (the "Company") is a clinical research
organization ("CRO") providing a broad range of integrated product
development services to its clients in the pharmaceutical, biotechnology and
medical device industries. The Company complements the research and
development departments of its clients by offering high quality clinical
research services on an as-needed basis, thereby providing a variable cost
alternative to certain fixed costs typically associated with internal product
development. Over the last three years, the Company has built a base of over
100 clients, including 23 of the 25 largest pharmaceutical companies in the
world. In the first nine months of 1996, the Company performed services under
96 contracts for 62 clients. The Company's services include centralized
diagnostic testing, clinical trial management, clinical data management,
biostatistical analysis, Phase I clinical research, health care economics and
outcomes research and regulatory affairs services.
Throughout its history, the Company has been an innovator in the use of
new technologies that speed product development and regulatory review. For
example, the Company created and filed the first computer-assisted new drug
application ("CANDA") with the United States Food & Drug Administration
("FDA"). The Company's technology is designed to simplify and make more
efficient the collection, transfer, analysis and preparation of clinical
trial data. The Company believes that its proprietary technology links all
facets of clinical development, produces cost advantages, facilitates
superior levels of service, improves the quality of clinical research, and
enhances the Company's global capabilities.
All of the Company's services are designed to help clients reduce their
product development time in a cost-effective manner. In 1977, the Company's
predecessor, Cardio Data Systems, began providing diagnostic testing services
used to evaluate the safety and efficacy of new drugs. Today, the Company
provides these services, which include electrocardiograms ("ECGs"), Holter
monitoring, pulmonary function testing, blood and urine sampling, and other
tests, on a centralized basis. To take advantage of the potential synergies and
cross-selling opportunities with its centralized diagnostic testing services,
the Company added clinical trial management capabilities in September 1995 by
forming a limited liability company with PREMIER, Inc., which is owned 65% by
the Company and 35% by PREMIER, Inc. Upon the closing of this offering, PREMIER,
Inc.'s minority interest will convert into 330,150 shares of Common Stock of the
Company. Although a substantial majority of the Company's net revenues is still
derived from centralized diagnostic testing services, the Company today has the
capacity to provide the full range of CRO services on a global basis.
The Company believes that its affiliation with PREMIER, Inc. will improve
its ability to market and enhance its clinical research services to its
clients. PREMIER, Inc. is the largest voluntary healthcare alliance in the
United States, with 1,800 affiliated hospitals and institutions, located in
all 50 states, representing over 300,000 hospital beds. PREMIER, Inc.
negotiated, on behalf of the alliance, group purchases of approximately $6
billion of medical devices, supplies and pharmaceuticals in 1995, and expects
to negotiate group purchases of approximately $10 billion in 1996. The
Company seeks to leverage its strategic
3
<PAGE>
relationship with PREMIER, Inc. in the following ways: (i) PREMIER, Inc. has
agreed to introduce the Company to all pharmaceutical and device companies
that sell or propose to sell products to the alliance; (ii) PREMIER, Inc. has
agreed to include as a standard provision in all of its future drug and
device group purchasing agreements that the pharmaceutical or device company
consider using the Company's services in its clinical trials; (iii) the
Company is the exclusive CRO for the trial management organization being
developed by PREMIER, Inc. with the assistance of the Company; and (iv) the
Company has access to PREMIER, Inc.'s databases, which should facilitate the
Company's ability to identify specific patient populations, investigators and
sites and to offer pharmacoeconomic and outcomes data to its clients.
The global pharmaceutical and biotechnology industries spent an estimated
$35 billion in 1995 on research and development, of which the Company
estimates $20 billion was spent on the types of services offered by the
Company. Of this amount, approximately $2.5 billion was outsourced to CROs.
The Company believes that the following trends will lead to increased
outsourcing of product development activities by pharmaceutical,
biotechnology and medical device companies: (i) clients in these industries
are increasingly seeking faster product development times in order to
maximize the period of patent protection and marketing exclusivity; (ii) as
these companies respond to cost containment pressures, they are looking to
develop their products as inexpensively as possible and therefore are taking
advantage of the variable cost structure of outsourcing to CROs versus the
fixed cost structure of internal development; (iii) as increasingly complex
and stringent regulatory requirements have added to the volume of data
required for regulatory filings, the demand for comprehensive capabilities to
collect, analyze and prepare clinical data for regulatory submission is
growing; (iv) as pharmaceutical and biotechnology companies are developing
more advanced therapeutics for complex chronic diseases, these companies are
looking to outsource to CROs with product development expertise in
specialized therapeutic areas; (v) biotechnology companies are developing an
increasing number of new drugs submitted for regulatory review and continue
to depend largely on outside sources for clinical research services; (vi) the
shift by pharmaceutical, biotechnology and medical device companies from
making sequential filings of registration packages to simultaneous filings in
several countries is creating growing demand for CROs with an international
presence and experience in preparing such filings; and (vii) the need for
sophisticated data management is increasing.
The Company's objective is to accelerate its clients' product development
timelines. The Company's strategies for meeting this objective include: (i)
using innovative technology to accelerate and improve product development;
(ii) providing comprehensive product development services, including
centralized diagnostic testing services; (iii) expanding its capacity for
global product development services; (iv) developing its strategic
relationship with PREMIER, Inc.; and (v) pursuing strategic acquisitions.
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Common Stock offered by the Company ............... 2,000,000 shares
Common Stock offered by the Selling Stockholder .... 750,000 shares
Common Stock to be outstanding after the offering .. 6,732,150 shares(1)
Use of proceeds ................................... To fund capital expenditures, geographic
expansion, possible future acquisitions,
working capital and other general corporate
purposes
Proposed Nasdaq National Market symbol ............ PRWW
</TABLE>
- ------
(1) Excludes (i) 521,637 shares of Common Stock reserved for issuance upon
the exercise of outstanding options at an average exercise price of
$2.26, (ii) 18,804 shares of Common Stock reserved for issuance upon
exercise of outstanding options at an assumed initial public offering
price of $15.00, and (iii) 490,000 shares reserved for future grant under
the Company's 1996 Stock Option Plan. See "Management -- Stock Option
Plans" and Note 8 of Notes to Consolidated Financial Statements.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1991(1) 1992(1) 1993(1) 1994(1) 1995
--------- --------- --------- --------- ---------
Statement of Operations Data:
Revenues ............................ $6,544 $8,083 $10,245 $12,910 $12,218
Less: Reimbursed costs .............. -- -- -- -- (154)
--------- --------- --------- --------- ---------
Net revenues ........................ 6,544 8,083 10,245 12,910 12,064
--------- --------- --------- --------- ---------
Costs and expenses:
Direct costs ...................... 1,256 1,971 2,428 3,473 4,124
Selling, general and administrative 2,928 4,017 7,278 7,245 6,375
Depreciation and amortization ..... 925 688 785 1,197 1,013
--------- --------- --------- --------- ---------
Total costs and expenses ............ 5,109 6,676 10,491 11,915 11,512
--------- --------- --------- --------- ---------
Income (loss) before income taxes and
minority interest ................. 1,435 1,407 (246) 995 552
Minority interest in limited
liability company's (income) loss . -- -- -- -- 48
--------- --------- --------- --------- ---------
Income (loss) before income taxes ... 1,435 1,407 (246) 995 600
Income tax provision (benefit) (2) .. 579 562 (69) 415 259
--------- --------- --------- --------- ---------
Net income (loss) (3) ............... $ 856 $ 845 $ (177) $ 580 $ 341
========= ========= ========= ========= =========
Pro forma net income (4) ............ $ 313
=========
Pro forma net income per share (4) .. $ .07
=========
Shares used in computing pro forma
net income per share (4) .......... 4,757
=========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-----------------------------
<S> <C> <C>
1995 1996
-------- ---------
Statement of Operations Data:
Revenues ............................ $9,031 $11,754
Less: Reimbursed costs .............. (36) (147)
-------- ---------
Net revenues ........................ 8,995 11,607
-------- ---------
Costs and expenses:
Direct costs ...................... 2,795 4,615
Selling, general and administrative 4,600 5,070
Depreciation and amortization ..... 786 556
-------- ---------
Total costs and expenses ............ 8,181 10,241
-------- ---------
Income (loss) before income taxes and
minority interest ................. 814 1,366
Minority interest in limited
liability company's (income) loss . (21) 303
-------- ---------
Income (loss) before income taxes ... 793 1,669
Income tax provision (benefit) (2) .. 315 719
-------- ---------
Net income (loss) (3) ............... $ 478 $ 950
======== =========
Pro forma net income (4) ............ $ 770
=========
Pro forma net income per share (4) .. $ .15
=========
Shares used in computing pro forma
net income per share (4) .......... 4,998
=========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
September 30, 1996
----------------------------------
Pro As
Actual Forma(4) Adjusted(5)
-------- -------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents ................... $ 530 $ 80 $27,380
Working capital ............................. 2,055 1,605 28,905
Total assets ................................ 5,275 4,825 32,125
Minority interest in limited liability company 29 -- --
Total stockholders' equity .................. 2,921 2,500 29,800
</TABLE>
- ------
(1) For periods prior to June 1, 1994, the Company operated as direct or
indirect subsidiaries or as divisions of UM Holdings, Ltd. ("UM").
Effective June 1, 1994, the Company was capitalized through the transfer
of the net assets and operations of the division by UM.
(2) The Company is included in the consolidated income tax returns of UM. The
historical financial statements reflect income taxes calculated on a
separate company basis. See Note 6 of Notes to Consolidated Financial
Statements.
(3) Net income (loss) for all periods presented includes various transactions
with related parties, including administrative services and a facility
lease with UM and consulting fees paid to the Company's President, who is
a stockholder. See Note 7 of Notes to Consolidated Financial Statements.
(4) Reflects (i) the conversion of PREMIER, Inc's. minority interest in
limited liability company into Common Stock of the Company upon the
closing of this offering and (ii) distributions of $450,000 to be paid to
UM in the fourth quarter of 1996. See Note 1 of Notes to Consolidated
Financial Statements for discussion of the calculation of pro forma net
income, pro forma net income per share and the shares used in computing
pro forma net income per share.
(5) Represents the pro forma balance sheet data as adjusted to give effect to
the sale by the Company of 2,000,000 shares of Common Stock in this
offering at an assumed initial public offering price of $15.00 per share
(after deducting the estimated underwriting discount and offering
expenses payable by the Company). See "Use of Proceeds," "Dividend
Policy," "Capitalization" and "Description of Capital Stock."
5
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, prospective
purchasers should consider carefully the risk factors set forth below in
evaluating an investment in the shares of the Common Stock of the Company
offered hereby.
DEPENDENCE ON CERTAIN INDUSTRIES AND CLIENTS
The Company's net revenues are highly dependent on research and
development expenditures by the pharmaceutical, medical device and
biotechnology industries. The Company has benefited from the growing tendency
of pharmaceutical, medical device and biotechnology companies to outsource
their product development projects to independent CROs. Any reduction in the
outsourcing of research and development expenditures in these industries
could have a material adverse effect on the Company. The Company has in the
past derived, and may in the future derive, a significant portion of its net
revenues from a relatively limited number of major projects or clients. In
1994, two clients accounted for 17.0% and 11.5% of net revenues, in 1995
three clients accounted for 15.0%, 12.1% and 10.0% of net revenues, and in
the first nine months of 1996, three clients accounted for 15.3%, 10.5% and
10.4% of net revenues. Customer concentration in the CRO industry is not
uncommon and the Company is likely to experience such concentration in the
future. The loss of any such client could have a material adverse effect on
the Company. See "Business -- Clients."
LOSS OR DELAY OF CONTRACTS
Most of the Company's contracts are terminable without cause upon 30 to 90
days notice by the client. Clients terminate or delay contracts for various
reasons including, among others, the failure of the product being tested to
satisfy safety or efficacy requirements; unexpected or undesired clinical
results of the product; the client's decision to forego a particular study;
insufficient patient enrollment or investigator recruitment; and production
problems resulting in shortages of required clinical supplies. In the nine
months ended September 30, 1996, 16 Company contracts were terminated for which
the remaining contract amounts totalled approximately $3.0 million. In addition,
the Company believes that several factors, including the potential impact of
health care reform, have caused pharmaceutical, biotechnology and medical device
companies to apply more stringent criteria to the decision to proceed with
clinical trials and may result in a greater willingness of these companies to
terminate such trials. Therefore, the Company does not believe that its backlog
as of any date is necessarily a meaningful predictor of future results. Although
the Company's contracts typically require non-refundable, up-front payments and
contain a provision for the payment of certain fees in closing a study after
early termination, the loss or delay of a large project or contract or the loss
or delay of multiple smaller contracts could have a material adverse effect on
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- Backlog."
RISKS ASSOCIATED WITH UNPROVEN BUSINESS STRATEGIES
The Company did not offer clinical trial management services until September
1995. While the Company's objective is to expand its CRO business, diagnostic
testing services continue to be the Company's largest product offering,
constituting 65.1% and 82.5% of the Company's net revenues for 1995 and the nine
months ended September 30, 1996, respectively. The Company's efforts to expand
its CRO business are at an early stage, and there can be no assurance that the
Company will be able to expand this area in a profitable manner. One of the
Company's strategies is to leverage its affiliation with PREMIER, Inc. While the
Company believes that this strategic relationship provides it with various
competitive advantages, there can be no assurance that the contemplated
beneficial effects of the relationship will materialize. The Company's prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by companies expanding into a new business area or utilizing a new
strategy, particularly companies in rapidly evolving markets, and there can be
no assurance that the Company will be successful in these efforts. See "Business
- -- The Company's Strategy."
6
<PAGE>
MANAGEMENT OF GROWTH
The Company expects to grow rapidly in the next few years, especially in
its clinical trial management and data management services. The Company
believes that sustained growth places a strain on operational, human and
financial resources. To manage its growth, the Company must continue to
improve its operating and administrative systems and to attract and retain
qualified management, professional, scientific and technical operating
personnel. Foreign operations also involve the additional risks of
assimilating differences in foreign business practices, hiring and retaining
qualified personnel and overcoming language barriers. Failure to manage
growth effectively could have a material adverse effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The Company relies on a number of key executives including Joel
Morganroth, M.D., its President and Chief Executive Officer; Christopher
Gallen, M.D., Ph.D., President, Clinical Research Services; Glenn Cousins,
President, Diagnostic Services; and David Evans, Senior Vice President and
Chief Technical Officer. The loss of the services of any of the Company's key
executives could have a material adverse effect on the Company. There can be
no assurance the Company will be able to continue to attract and retain
qualified personnel. See "Business -- Employees" and "Management."
VARIATION IN QUARTERLY OPERATING RESULTS; SEASONALITY
The Company's quarterly operating results have been and will continue to
be subject to variation, depending on factors such as the commencement,
completion or cancellation of significant contracts, the mix of contracted
services, foreign exchange rate fluctuations, the timing of start-up expenses
for new offices and services, and the costs associated with integrating
acquisitions. The Company has experienced, and expects to experience in the
future, seasonal variations in its revenues. The Company believes that
quarterly comparisons of its financial results should not be relied upon as
an indication of future performance. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Quarterly
Results."
ACQUISITION RISKS
The Company reviews acquisition candidates in the ordinary course of its
business. Acquisitions involve numerous risks, including the expenses
incurred in connection with the acquisition, difficulties in assimilating
operations and products, the diversion of management's attention from other
business concerns and the potential loss of key employees of the acquired
company. Acquisitions of foreign companies also involve the additional risks
of assimilating differences in foreign business practices, hiring and
retaining qualified personnel and overcoming language barriers. There can be
no assurance that any future acquisitions will be successfully integrated
into the Company's operations. See "Use of Proceeds" and "Business -- The
Company's Strategy."
Due to the fact that the Company has been a subsidiary of UM, it will not
be eligible to use the pooling of interests method of accounting for
acquisitions made during the two year period following this offering, which
could make potential acquisitions less attractive to the Company.
COMPETITION; INDUSTRY CONSOLIDATION
The CRO industry is highly fragmented, with several hundred CROs ranging
in size from one person consulting firms to full-service, global product
development organizations. The Company primarily competes against other CROs,
some of which possess substantially greater capital, technical and other
resources than the Company. To a lesser extent, the Company also competes
against universities and teaching hospitals. As a result of competitive
pressures and the potential for economies of scale, the industry is
consolidating. This trend is likely to produce increased competition among
the larger CROs for clients and acquisition candidates. There are few
barriers to entry for small, limited-service entities entering the CRO
industry and these entities also may compete with established CROs for
clients. The Company believes that major pharmaceutical, biotechnology and
medical device companies tend to develop preferred provider relationships
with full-service CROs, effectively excluding smaller CROs from the bidding
process. The Company may find reduced access to certain potential
7
<PAGE>
clients due to these arrangements. In addition, the CRO industry has
attracted the attention of the investment community, which could lead to
increased competition by increasing the availability of financial resources
for CROs. Increased competition may lead to price and other forms of
competition that could adversely affect the Company. See "Business --
Competition."
DEPENDENCE ON PROPRIETARY TECHNOLOGY; ABILITY TO RESPOND TO TECHNOLOGICAL
CHANGE
The Company relies principally upon trade secret and contract law to
protect its proprietary technology, and there can be no assurance that such
measures will prove adequate. The Company's future success depends in part
upon its ability to enhance its current technology and to develop and
introduce new technology that keeps pace with technological developments and
the sophisticated needs of its clients. There can be no assurance that the
Company will successfully develop and introduce such enhancements or new
technologies. In addition, there can be no assurance that products or
technologies developed by others will not render the Company's technology
non-competitive or obsolete.
POTENTIAL LIABILITY
The Company could be held liable for errors or omissions in connection
with any of the services it performs. Clinical research services involve the
testing of new drugs and devices on human volunteers pursuant to a study
protocol that has been approved by an impartial review board with medical and
non-medical members. Such testing exposes the Company to the risk of
liability for personal injury or death to patients resulting from their
participation in the study, including, among other things, possible
unforeseen adverse side effects or improper use of a new drug or device. Many
of these patients are already seriously ill and are at risk of further
illness or death. In addition, the Company could be liable for the general
risks associated with its Phase I clinical research unit, where healthy and
at times unhealthy volunteers are housed and treated. Potential liabilities
include, but are not limited to, unforeseen adverse side effects resulting
from the use of new drugs or devices and the professional malpractice of
medical care providers. The Company could be materially adversely affected if
it were required to pay damages or incur defense costs in connection with a
claim that is beyond the scope of an indemnity provision or beyond the scope
or level of insurance coverage maintained by it or the client, or where the
indemnifying party does not fulfill its indemnification obligations. In
addition, there can be no assurance that such insurance will continue to be
available on terms acceptable to the Company. See "Business -- Potential
Liability and Insurance."
DEPENDENCE ON GOVERNMENT REGULATION
Human pharmaceutical products, biological products, and medical devices
are subject to rigorous regulations by the federal government, principally
the FDA, and foreign governments if products are tested or marketed abroad.
In the United States, the Federal Food, Drug, and Cosmetic Act ("FFDCA")
governs clinical trials and approval procedures, as well as the development,
manufacturing, safety, labeling, storage, record keeping and marketing of
pharmaceutical products and medical devices. Biological products are subject
to similar regulation under both the FFDCA and the Public Health Service Act.
Because the Company offers services relating to the conduct of clinical
trials and the preparation of marketing applications, the Company is
obligated to comply with applicable regulatory requirements governing these
activities, both in the United States and in foreign countries. Requirements
governing these activities vary from country to country.
A relaxation in the scope of regulatory requirements, such as the
introduction of simplified marketing applications for pharmaceuticals,
biologics, or medical devices, could decrease the business opportunities
available to the Company. In addition, the Company's failure to comply with
applicable regulations relating to the conduct of clinical trials or the
preparation of marketing applications could lead to a variety of sanctions.
For example, regulatory violations in the United States could result,
depending on the nature of the violation and the type of product involved, in
the issuance of a Warning Letter; termination of a clinical study; refusal of
the FDA to approve clinical trial or marketing applications or withdrawal of
such applications; injunction; seizure of investigational products; civil
penalties; criminal prosecutions; or debarment of the Company from assisting
in the submission of abbreviated drug applications for generic drugs. Such
sanctions could have a material adverse effect on the Company.
8
<PAGE>
The Company's laboratory services are subject to regulation under the
Clinical Laboratory Improvement Amendments of 1988. Violations of these
requirements can lead to a variety of sanctions, including enjoining the
Company from providing laboratory services, which could have a material
adverse effect on the Company. See "Business -- Industry Trends" and
"Business -- Government Regulation."
UNCERTAINTY IN HEALTH CARE INDUSTRY AND POTENTIAL HEALTH CARE REFORM
The federal and numerous state governments have undertaken efforts to
control growing health care costs through legislation, regulation and
voluntary agreements with medical care providers and pharmaceutical,
biotechnology and medical device companies. In recent years, several
comprehensive health care reform proposals were introduced in the U.S.
Congress. The intent of the proposals was, generally, to expand health care
coverage for the uninsured and to reduce the growth of total health care
expenditures. While none of the comprehensive proposals was adopted, health
care reform may again be addressed by the U.S. Congress. Implementation of
comprehensive or incremental government health care reform, as well as
industry-wide health care cost containment pressures, may adversely affect
research and development expenditures by pharmaceutical, biotechnology and
medical device companies, which could decrease the business opportunities
available to the Company. The Company is unable to predict the likelihood of
such legislation being enacted into law or the effects such legislation would
have on the Company. See "Business -- Industry Overview."
EXCHANGE RATE FLUCTUATIONS
The Company expects net revenues derived from operations outside the
United States to grow in future years. For 1993, 1994, 1995 and the nine
months ended September 30, 1996, the Company's non-U.S. net revenues
represented 13.5%, 17.0%, 9.8% and 15.8%, respectively, of total net
revenues. Since the revenues and expenses of the Company's foreign operations
generally are denominated in foreign currencies, exchange rate fluctuations
between such foreign currencies and the United States dollar will subject the
Company to currency translation risk with respect to the reported results of
its foreign operations, as well as to risks sometimes associated with
international operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market will
develop or be sustained after the offering. The initial public offering price
will be determined through negotiations between the Company and the
Underwriters and may not be indicative of future market prices. See
"Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The market price of the
Company's Common Stock could be subject to wide fluctuations in response to
variations in operating results from quarter to quarter, changes in earnings
estimates by analysts, market conditions in the industry and general economic
conditions. Furthermore, the stock market has experienced, and may further
experience in the future, significant price and volume fluctuations unrelated
to the operating performance of particular companies. These market
fluctuations may have a material adverse effect on the market price of the
Company's Common Stock.
THE EFFECT OF CERTAIN CHARTER PROVISIONS; PREFERRED STOCK ISSUANCE
The Company's Certificate of Incorporation requires an affirmative
super-majority (80%) stockholder vote before the Company can enter into
certain defined business combinations, except for combinations that meet
certain specified conditions. The Certificate of Incorporation also provides
for staggered three year terms for members of the Board of Directors. The
Company has 500,000 authorized shares of Preferred Stock, none of which will
be outstanding upon completion of the offering. Pursuant to the Certificate
of Incorporation, the Board of Directors has the authority to issue Preferred
Stock in one or more series, and to fix the rights, preferences, privileges
and restrictions, including dividend, conversion, voting, redemption
(including sinking fund provisions) and other rights, liquidation preferences
and the number of shares constituting any series and the
9
<PAGE>
designation of such series, without any further vote or action by the
stockholders of the Company. These charter provisions could have the effect
of discouraging potential take-over attempts and may make attempts by
stockholders to change the management of the Company more difficult. See
"Description of Capital Stock."
DILUTION TO NEW INVESTORS
Purchasers of Common Stock in this offering will experience immediate and
substantial dilution in the net tangible book value per share of the Common
Stock. See "Dilution."
RISK OF HAZARDOUS MATERIAL CONTAMINATION
The Company's clinical activities have involved, and may continue to
involve, the controlled use of hazardous materials. Although the Company
believes that its safety procedures for handling the disposal of such
materials comply with the standards prescribed by state and federal laws and
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident,
the Company could be held liable for damages which, to the extent not covered
by existing insurance or indemnification, could have a material adverse
effect on the Company.
CONCENTRATION OF OWNERSHIP IN CURRENT STOCKHOLDERS, OFFICERS, AND DIRECTORS
Following this offering, the Company's current stockholders, executive
officers, and directors will beneficially own approximately 62.2% of the
outstanding shares of Common Stock. As a result, such persons will have the
ability to control the election of the Company's directors and the outcome of
corporate actions requiring stockholder approval. This concentration of
ownership could have the effect of discouraging potential take-over attempts
and may make more difficult attempts by stockholders to change the management
of the Company.
ABSENCE OF DIVIDENDS
The Company has no present plans to pay cash dividends to its stockholders
and, for the foreseeable future, intends to retain all of its earnings for
use in its business. The declaration of any future dividends by the Company
is within the discretion of its Board of Directors and will be dependent on
the earnings, financial condition and capital requirements of the Company, as
well as any other factors deemed relevant by its Board of Directors. See
"Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, of the 15,000,000 authorized shares of
Common Stock, 7,272,591 shares will be issued and outstanding or reserved for
issuance pursuant to the exercise of outstanding stock options. Upon
completion of this offering, the Company will have 6,732,150 shares of Common
Stock outstanding. The 2,750,000 shares offered hereby will be freely
tradeable without restriction under the Securities Act of 1933, as amended
(the "Securities Act"), except for any such shares held by "affiliates" of
the Company within the meaning of the Securities Act, which will be subject
to the resale limitations of Rule 144 promulgated under the Securities Act
("Rule 144"). The Company believes that the remaining outstanding shares, and
the 540,441 shares issuable upon exercise of outstanding options, may be sold
pursuant to Rule 144 or Rule 701 under the Securities Act in compliance with
the limitations thereof beginning 90 days after the offering. In accordance
with the terms of the lock-up agreements entered into with the Company, the
Company's directors, executive officers, and stockholders have agreed not to
sell the shares owned by each of them without the prior written consent of
Montgomery Securities for a period of 180 days (365 days, in the case of Dr.
Morganroth) following the first offer of shares of Common Stock pursuant to
this Prospectus. See "Shares Eligible for Future Sale."
COMPANY HISTORY
The Company is a Delaware corporation. It and its predecessors have
operated since 1977 as direct or indirect subsidiaries or as divisions of UM
Holdings, Ltd. ("UM"), a holding company that owns several companies in
different industries. The Company's original predecessor, Cardio Data
Systems, began providing Holter monitoring analysis services to
pharmaceutical companies developing new drugs. Over time, additional
diagnostic testing services were added, and this business became separately
operated as CDS Research. In 1984, UM
10
<PAGE>
acquired Research Data Corporation ("RDC"), a provider of specialized data
processing services designed to aid pharmaceutical companies submitting new
drugs for regulatory approval. RDC pioneered the computer assisted new drug
application ("CANDA"), filing the first CANDA in 1985.
The CDS Research and RDC divisions were operationally combined in 1993 to
form Research Data Worldwide. In the same year, the Company opened its Phase
I clinical research unit. The Company was incorporated in Delaware in 1993
and became operational when UM contributed the Research Data Worldwide
division to it in June 1994.
To take advantage of the potential synergies and cross-selling opportunities
with its centralized diagnostic testing services, the Company added clinical
trial management capabilities in September 1995 by forming a limited liability
company with PREMIER, Inc., which is owned 65% by the Company and 35% by
PREMIER, Inc. PREMIER, Inc. is the nation's largest voluntary healthcare
alliance, with 1,800 affiliated hospitals and institutions located in all 50
states representing over 300,000 hospital beds. Upon the closing of this
offering, PREMIER, Inc.'s minority interest in the limited liability company
will convert into 330,150 shares of the Company's Common Stock, representing
approximately 4.9% of the outstanding Common Stock. Shortly after forming the
limited liability company, the Company changed its name to Premier Research
Worldwide, Ltd.
The Company's principal executive offices are located at 124 South 15th
Street, Philadelphia, Pennsylvania 19102. Its telephone number is
215-972-0420.
USE OF PROCEEDS
The net proceeds to the Company from the sale of 2,000,000 shares of
Common Stock offered by the Company pursuant to this offering are estimated
to be $27.3 million ($30.2 million if the Underwriters over-allotment option
is exercised in full) at an assumed initial public offering price of $15.00
per share and after deducting the estimated underwriting discount and
estimated offering expenses payable by the Company. The Company will not
receive any of the proceeds from the sale of Common Stock by the Selling
Stockholder.
The Company intends to use the net proceeds of this offering for capital
expenditures (including expansion of facilities, acquisition of equipment and
development and improvement of information technology systems), geographic
expansion, possible future acquisitions, working capital and other general
corporate purposes. The Company has no commitments or agreements with respect
to any acquisition. Pending such uses, the Company intends to invest the net
proceeds from this offering in short-term, investment-grade, interest bearing
securities.
DIVIDEND POLICY
Until 1996, UM maintained a central cash management function for all of
its subsidiaries, including the Company. Settlement of cash disbursement and
collection transactions by UM on behalf of the Company have been recorded
through equity in the historical financial statements. See Consolidated
Financial Statements, including Notes thereto. The Company made net
distributions to UM for the nine months ended September 30, 1996 of $687,000
and is committed to make additional distributions of $450,000 to UM in the
fourth quarter of 1996. After the closing of this offering, the Company
intends to retain any earnings for future growth, does not anticipate paying
any cash dividends on its Common Stock in the foreseeable future and will not
make any further distributions to UM.
11
<PAGE>
CAPITALIZATION
The following table sets forth as of September 30, 1996 (i) the actual
capitalization of the Company; (ii) the pro forma capitalization after giving
effect to (a) the conversion of PREMIER, Inc.'s minority interest in the
limited liability company into Common Stock of the Company upon the closing
of this offering and (b) distributions of $450,000 to be paid to UM in the
fourth quarter of 1996; and (iii) the pro forma capitalization as adjusted to
give effect to the sale of 2,000,000 shares of Common Stock offered by the
Company (at an assumed initial public offering price of $15.00 per share and
after deducting the estimated underwriting discount and estimated offering
expenses payable by the Company).
<TABLE>
<CAPTION>
September 30, 1996
---------------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- ----------- -------------
(in thousands)
<S> <C> <C> <C>
Minority interest in limited liability company $ 29 $ -- $ --
-------- ----------- -------------
Stockholders' equity:
Preferred Stock, $10 par value, 500,000
shares authorized, none issued and
outstanding ........................... -- -- --
Common Stock, $.01 par value, 15,000,000
shares authorized, 4,402,000 shares
issued and outstanding (actual);
4,732,150 shares issued and outstanding
(pro forma); 6,732,150 shares issued
and outstanding (pro forma as adjusted)
(1) ................................... 44 47 67
Additional paid-in capital .............. 2,273 2,299 29,579
Retained earnings ....................... 604 154 154
-------- ----------- -------------
Total stockholders' equity ......... 2,921 2,500 29,800
-------- ----------- -------------
Total capitalization ............... $2,950 $2,500 $29,800
======== =========== =============
</TABLE>
- ------
(1) Excludes (i) 521,637 shares reserved for issuance upon the exercise of
outstanding options at a weighted average exercise price of $2.26 per
share (ii) 18,804 shares reserved for issuance upon the exercise of
outstanding options at an assumed initial public offering price of
$15.00, and (iii) 490,000 shares reserved for future grant under the
Company's 1996 Stock Option Plan. See "Management -- Stock Option Plans"
and Note 8 of Notes to Consolidated Financial Statements.
12
<PAGE>
DILUTION
At September 30, 1996, the Company's pro forma net tangible book value was
approximately $2.4 million, or $.51 per common share after giving effect to
(i) the conversion of PREMIER, Inc.'s minority interest in the limited
liability company into 330,150 shares of Common Stock of the Company upon the
closing of this offering and (ii) distributions of $450,000 to be paid to UM
in the fourth quarter of 1996. Pro forma net tangible book value per share is
equal to the Company's total tangible assets less total liabilities divided
by the total number of shares of Common Stock outstanding on a pro forma
basis. After giving effect to the sale of the 2,000,000 shares of Common
Stock offered by the Company hereby (at an assumed initial public offering
price of $15.00 per share and after deducting the estimated underwriting
discount and offering expenses payable by the Company) and the application of
the estimated net proceeds therefrom, the Company's pro forma as adjusted net
tangible book value at September 30, 1996 would have been approximately $29.7
million, or $4.41 share. This represents an immediate increase in pro forma
net tangible book value of $3.90 per share to the existing stockholders and
an immediate dilution in pro forma net tangible book value of $10.59 per
share to new investors. The following table illustrates this per share
dilution:
<TABLE>
<CAPTION>
<S> <C> <C>
Initial public offering price .................................. $15.00
Pro forma net tangible book value before the offering ..... $ .51
Increase attributable to new investors .................... 3.90
-------
Pro forma as adjusted net tangible book value after the offering 4.41
--------
Dilution in pro forma net tangible book value to new
investors(1) ................................................. $10.59
========
</TABLE>
The following table summarizes on a pro forma as adjusted basis as of
September 30,1996, the differences between the existing stockholders and new
investors purchasing shares in this offering (at an assumed initial public
offering price of $15.00 per share) with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price per share paid to the Company:
<TABLE>
<CAPTION>
Shares Total
Purchased Consideration
------------------------ -------------------------- Average Price
Number Percent Amount Percent Per Share
----------- --------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Existing
stockholders(2)(3) ...... 4,732,150 70.3% $ 2,908,000 8.8% $ .61
New investors(3) ......... 2,000,000 29.7 30,000,000 91.2 15.00
----------- --------- ------------- ---------
Total .......... 6,732,150 100.0% $32,908,000 100.0%
=========== ========= ============= =========
</TABLE>
- ------
(1) If all options to purchase Common Stock outstanding as of September 30,
1996 with exercise prices less than the assumed initial public offering
price of $15.00 per share were to be exercised, the pro forma as adjusted
net tangible book value after this offering would be $4.26 per share and
the dilution per share in pro forma net tangible book value to new
investors in this offering would be $10.74 per share.
(2) Includes 330,150 shares of Common Stock issuable upon conversion of the
minority interest in limited liability company into shares of Common
Stock of the Company upon the closing of this offering.
(3) Sales by the Selling Stockholder of 750,000 shares in this offering will
reduce the number of shares held by existing stockholders to 3,982,150,
or approximately 59.2%, and will increase the number of shares held by
new investors to 2,750,000, or approximately 40.8%, of the total number
of shares of Common Stock to be outstanding after the offering.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected statement of operations data for the years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1996, and the
selected balance sheet data as of December 31, 1994 and 1995 and September 30,
1996, have been derived from consolidated financial statements of the Company
audited by Arthur Andersen LLP, independent public accountants, included
elsewhere in this Prospectus. The selected balance sheet data as of December 31,
1993 have been derived from the Company's audited financial statements not
included herein. The selected statement of operations data for the years ended
December 31, 1991 and 1992 and for the nine months ended September 30, 1995 and
the selected balance sheet data as of December 31, 1991 and 1992 have been
derived from the Company's unaudited internal financial statements not included
herein and reflect all adjustments that management considers necessary for a
fair and consistent presentation of the financial position and results of
operations for those periods. The results of operations for the nine months
ended September 30, 1996 are not necessarily indicative of results to be
expected for the entire year. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Quarterly Results." The
following selected financial data are qualified by reference to, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and the Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1991(1) 1992(1) 1993(1) 1994(1) 1995
-------- -------- --------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues ............................. $6,544 $8,083 $10,245 $12,910 $12,218
Less: Reimbursed costs ............... -- -- -- -- (154)
-------- -------- --------- --------- ---------
Net revenues ......................... 6,544 8,083 10,245 12,910 12,064
-------- -------- --------- --------- ---------
Costs and expenses:
Direct costs ....................... 1,256 1,971 2,428 3,473 4,124
Selling, general and administrative 2,928 4,017 7,278 7,245 6,375
Depreciation and amortization ...... 925 688 785 1,197 1,013
-------- -------- --------- --------- ---------
Total costs and expenses ............. 5,109 6,676 10,491 11,915 11,512
-------- -------- --------- --------- ---------
Income (loss) before income taxes and
minority interest (2) .............. 1,435 1,407 (246) 995 552
Minority interest in limited liability
company's (income) loss ............ -- -- -- -- 48
-------- -------- --------- --------- ---------
Income (loss) before income taxes .... 1,435 1,407 (246) 995 600
Income tax provision (benefit) (3) ... 579 562 (69) 415 259
-------- -------- --------- --------- ---------
Net income (loss) (2) ................ $ 856 $ 845 $ (177) $ 580 $ 341
======== ======== ========= ========= =========
Pro forma net income (4) ............. $ 313
=========
Pro forma net income per share (4) ... $ .07
=========
Shares used in computing pro forma net
income per share (4) ............... 4,757
=========
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------------
1995 1996
-------- ---------
<S> <C> <C>
Statement of Operations Data:
Revenues ............................. $9,031 $11,754
Less: Reimbursed costs ............... (36) (147)
-------- ---------
Net revenues ......................... 8,995 11,607
-------- ---------
Costs and expenses:
Direct costs ....................... 2,795 4,615
Selling, general and administrative 4,600 5,070
Depreciation and amortization ...... 786 556
-------- ---------
Total costs and expenses ............. 8,181 10,241
-------- ---------
Income (loss) before income taxes and
minority interest (2) .............. 814 1,366
Minority interest in limited liability
company's (income) loss ............ (21) 303
-------- ---------
Income (loss) before income taxes .... 793 1,669
Income tax provision (benefit) (3) ... 315 719
-------- ---------
Net income (loss) (2) ................ $ 478 $ 950
======== =========
Pro forma net income (4) ............. $ 770
=========
Pro forma net income per share (4) ... $ .15
=========
Shares used in computing pro forma net
income per share (4) ............... 4,998
=========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
As of
December 31,
------------------------------------------------
1991(1) 1992(1) 1993(1) 1994(1) 1995
------- ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents ......... $ 155 $ 241 285 $ 447 $ 33
Working capital
(deficit) ........... 805 525 (260) 87 1,729
Total assets ........... 2,920 3,570 5,126 5,155 4,400
Minority interest in
limited liability
company ............. -- -- -- -- 332
Total stockholders'
equity .............. 1,850 1,856 2,248 2,175 2,658
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
As of
September 30, 1996
------------------------------------
Actual Pro forma(4)
-------- ------------
<S> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents ......... $ 530 $ 80
Working capital
(deficit) ........... 2,055 1,605
Total assets ........... 5,275 4,825
Minority interest in
limited liability
company ............. 29 --
Total stockholders'
equity .............. 2,921 2,500
</TABLE>
Footnotes appear on next page
14
<PAGE>
- ------
(1) For periods prior to June 1, 1994, the Company operated as direct or
indirect subsidiaries or as divisions of UM. Effective June 1, 1994, the
Company was capitalized through the transfer of the net assets and
operations of the divisions by UM.
(2) The Company is included in the consolidated income tax returns of UM. The
historical financial statements reflect income taxes calculated on a
separate company basis. See Note 6 of Notes to Consolidated Financial
Statements.
(3) Net income (loss) for all periods presented includes various transactions
with related parties, including administrative services and a facility
lease from UM and consulting fees paid to the Company's President, who is
a stockholder. See Note 7 of Notes to Consolidated Financial Statements.
(4) Reflects (i) the conversion of PREMIER, Inc.'s minority interest in
limited liability company into Common Stock of the Company upon the
closing of this offering and (ii) distributions of $450,000 to be paid to
UM in the fourth quarter of 1996. See Note 1 of Notes to Consolidated
Financial Statements for discussion of the calculation of pro forma net
income, pro forma net income per share and the shares used in computing
pro forma net income per share.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and related Notes contained elsewhere
in this Prospectus.
OVERVIEW
The Company is a CRO providing a broad range of integrated product
development services on a global basis to its clients in the pharmaceutical,
biotechnology and medical device industries. The Company's services include
centralized diagnostic testing, clinical trial management, clinical data
management, biostatistical analysis, Phase I clinical research, health care
economics and outcomes research and regulatory affairs services.
The Company's diagnostic service contracts are on a fee-for-service basis
and have terms from one month to two years. A portion of the Company's fee
typically is paid upon contract execution as a non-refundable up-front
payment, with the remaining amounts billed monthly. Clinical research service
contracts generally are fixed priced, with certain variable components, and
range in duration from a few months to two years. A portion of the Company's
fee typically is paid upon contract execution as a non-refundable up-front
payment, with the balance billed in accordance with contract terms. The
Company's contracts generally may be terminated with or without cause on 30
to 90 days notice. Clients terminate or delay contracts for a variety of
reasons, including, among others, the failure of products being tested to
satisfy safety or efficacy requirements; unexpected or undesired clinical
results of the product; the client's decision to forego a particular study;
insufficient patient enrollment or investigator recruitment; and production
problems resulting in shortages of required clinical supplies. In the event
of termination, the Company typically is entitled to all sums owed for work
performed through the notice of termination, all costs associated with
termination of the study, and the unamortized portion of any non-refundable
up-front payments.
Revenues from diagnostic service contracts generally are recognized on a
per procedure basis as the work is performed. Revenues from clinical research
service contracts generally are recognized on a percentage of completion
basis as work is performed. For the nine months ended September 30, 1996 and
1995, the diagnostic services revenues represented 82.4% and 65.1%,
respectively, of total net revenues. The Company regularly subcontracts with
third-party investigators in connection with clinical trials and with other
third-party providers for specialized services. These and other reimbursable
costs are paid by the Company and reimbursed by clients and, in accordance
with industry practice, are included in revenues. Since reimbursed costs may
vary significantly from contract to contract and are not meaningful for
analyzing trends in revenues, they are included in gross revenues but
excluded from net revenues. Consistent with industry practice, the Company
considers net revenues its primary measure of growth. The Company has had,
and expects to continue to have, certain clients from which at least 10% of
the Company's overall revenue is generated. The Company believes that such
concentration of business is not uncommon in the CRO industry.
The Company has experienced significant growth through internal expansion,
reflecting an expansion of the Company's client base, additional services
offered by the Company and an increase in the number and size of projects
under management. Net revenues grew from $9.0 million for the nine months
ended September 30, 1995 to $11.6 million for the nine months ended September
30, 1996.
The Company's backlog consists of anticipated net revenues from work under
letters of intent and contracts that have been signed but not yet completed.
At October 31, 1996, backlog was approximately $14.7 million. The Company
believes that its backlog as of any date is not necessarily a meaningful
predictor of future results and no assurance can be given that the Company
will be able to fully realize all of its backlog as net revenues. See
"Business -- Backlog."
The Company conducts operations on a global basis, with offices in the
United States and the United Kingdom. For 1993, 1994, 1995 and the nine
months ended September 30, 1996, the Company's non-U.S. net revenues
represented 13.5%, 17.0%, 9.8% and 15.8%, respectively, of total net
revenues.
16
<PAGE>
Contracts between the Company's international division and its clients
generally are denominated in Pounds Sterling. Because substantially all of
the international division's expenses are paid and payments are received in
Pounds Sterling, its earnings are not materially affected by fluctuations in
the exchange rates. However, the Company's financial statements are
denominated in U.S. dollars and, accordingly, changes in the exchange rate
between foreign currencies and the dollar do affect the Company's financial
results. Cumulative adjustments from translating the international division's
financial statements have been immaterial and, therefore, have been charged
to income as incurred.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain financial
data as a percentage of net revenues. The trends illustrated in the following
table may not be indicative of future results.
<TABLE>
<CAPTION>
Percentage of Net Revenues
-------------------------------------------------------
Nine Months
Year Ended Ended
December 31, September 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenues ................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Direct costs ................. 23.7 26.9 34.2 31.1 39.8
Selling, general and
administrative ............ 71.0 56.1 52.8 51.1 43.7
Depreciation and amortization 7.7 9.3 8.4 8.7 4.8
-------- -------- -------- -------- --------
Income (loss) before income
taxes and minority interest .. (2.4)% 7.7% 4.6% 9.1% 11.7%
======== ======== ======== ======== ========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Percentage Increase (Decrease)
--------------------------------------
Fiscal Fiscal Nine
1993 1994 Months
to to 1995 to
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Net revenues ................... 26.5% (6.2)% 28.9%
Costs and expenses:
Direct costs ................. 45.8 17.1 64.3
Selling, general and
administrative ............ -- (11.1) 10.9
Depreciation and amortization 50.0 (16.7) (25.0)
-------- -------- --------
Income (loss) before income
taxes and minority interest .. * (44.5) 67.8
======== ======== ========
</TABLE>
- ------
* Not meaningful
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Net revenues increased $2.6 million, or 28.9% to $11.6 million for the
nine months ended September 30, 1996, compared to the nine months ended
September 30, 1995. The increase was directly attributable to a significant
increase in the volume of diagnostic services. Diagnostic services revenues
increased $4.0 million or 71.9% for the nine months ended September 30, 1996,
compared to the same period in the prior year, and include an increase of
$0.9 million in the net revenues of the Company's U.K. subsidiary. Offsetting
the increase in diagnostic services revenues was a $1.0 million decrease in
CANDA revenues and a $0.5 million decrease in Phase I clinical trials
revenues. The decrease in CANDA revenues was due to the decrease in the level
of new contract signings caused by the Company's larger pharmaceutical
clients' ability to perform such services in-house. The Company believes that
the decrease in Phase I revenues primarily was caused by a delay in the
commencement of domestic Phase I trials in 1996 as a result of certain
consolidations occuring in the pharmaceutical industry.
Direct costs increased $1.8 million, or 64.3%, to $4.6 million for the
nine months ended September 30, 1996, compared to the nine months ended
September 30, 1995. As a percentage of net revenues, direct costs increased
to 39.8% in 1996, compared to 31.1% in 1995. The increase primarily was
attributable to increased consulting fees paid to the Company's President in
connection with medical interpretations for diagnostic tests, in addition to
general increases in connection with the increase in diagnostic services. The
consulting fees for medical interpretations increased from $0.6 million in
1995 to $1.5 million in 1996. The Company and the President have entered into
a new consulting agreement that discontinues such variable fees effective
January 1, 1997. See "Certain Relationships" and Notes 7 and 9 of Notes to
Consolidated Financial Statements.
Selling, general and administrative expenses increased $0.5 million, or
10.9% to $5.1 million for the nine months ended September 30, 1996, compared
to the nine months ended September 30, 1995. As a percentage of net revenues,
selling, general and administrative expenses decreased from 51.1% in 1995 to
43.7% in 1996. The
17
<PAGE>
dollar increase resulted from additional costs, primarily payroll, required
to build the clinical trials management business. The reduction as a
percentage of net revenues was due to the relatively fixed nature of the
expenses, the Company's focus on monitoring support costs and efficiencies
gained through increased volume.
Depreciation and amortization decreased $0.2 million, or 25.0%, to $0.6
million for the nine months ended September 30, 1996, compared to the nine
months ended September 30, 1995. As a percentage of net revenues,
depreciation and amortization decreased from 8.7% in 1995 to 4.8% in 1996.
The decrease primarily was the result of the Company's continuing transition
from more expensive mainframe computers to less expensive personal and
server-based computers.
The Company's effective income tax rate for the nine months ended
September 30, 1996 was 43.1%, compared to 39.7% for the nine months ended
September 30, 1995. The rate increase primarily was a result of a one-time
state tax benefit in 1995 in connection with a change in tax law that
reinstated the net operating loss carryforward provisions of that state,
enabling the Company to utilize a suspended carryforward from 1993.
YEAR ENDED DECEMBER 31, 1995 AND 1994
Net revenues decreased $0.8 million, or 6.2%, to $12.1 million for the year
ended December 31, 1995, compared to the year ended December 31, 1994. The
decrease primarily was attributable to a decrease in the Company's CANDA
revenues, partially offset by an increase in the Company's Phase I clinical
testing revenues. CANDA revenues decreased $1.5 million from 1994 due to a
decrease in the level of new contract signings caused by the Company's larger
pharmaceutical clients' ability to perform such services in-house. Diagnostic
services revenues were relatively flat in 1995 compared to 1994, with domestic
revenues increasing $0.9 million, and international revenues decreasing $1.1
million. The increase in domestic diagnostic services revenues was due to an
increase in both the volume and the pricing of diagnostic services. The decrease
in international diagnostic services revenues primarily was the result of two
major project cancellations due to unexpected clinical results. Diagnostic
services revenues in 1995 include $1.2 million of the remaining unamortized
non-refundable up-front payments on certain canceled studies, including $0.2
million at the Company's U.K. subsidiary.
Direct costs increased $0.6 million, or 17.1%, to $4.1 million for the
year ended December 31, 1995, compared to the year ended December 31, 1994.
As a percentage of net revenues, direct costs increased to 34.2% in 1995 from
26.9% in 1994. The increase was primarily attributable to additional costs
related to the volume increase at the Phase I clinical research unit, in
addition to increased consulting fees paid to the Company's President in
connection with medical interpretations for diagnostic tests. Such consulting
fees increased from $0.5 million in 1994 to $0.8 million in 1995. See
"Certain Relationships" and Notes 7 and 9 of Notes to Consolidated Financial
Statements.
Selling, general and administrative expenses decreased $0.8 million, or
11.1%, to $6.4 million for the year ended December 31, 1995, compared to the
year ended December 31, 1994. As a percentage of net revenues, selling,
general and administrative expenses decreased to 52.8% in 1995 from 56.1% in
1994. The decrease resulted primarily from the decrease in management and
administrative expenses related to CANDA services as the Company reacted to
the reduction in its CANDA business.
Depreciation and amortization decreased $.2 million, or 16.7%, to $1.0
million for the year ended December 31, 1995, compared to the year ended
December 31, 1994. As a percentage of net revenues, depreciation and
amortization decreased to 8.4% in 1995 from 9.3% in 1994. The decrease
primarily was the result of the Company's transition from more expensive
mainframe computers to less expensive personal and server-based computers.
The Company's effective income tax rate for the year ended December 31,
1995 was 43.2%, compared to 41.7% for the year ended December 31, 1994. The
rate increase in 1995 primarily was the result of the U.K. subsidiary's loss,
partially offset by a one-time state tax benefit in connection with a change
in tax law that reinstated the net operating loss carryforward provisions of
that state, allowing the Company to utilize a suspended carryforward from
1993.
18
<PAGE>
YEAR ENDED DECEMBER 31, 1994 AND 1993
Net revenues increased $2.7 million, or 26.5%, to $12.9 million for the
year ended December 31, 1994, compared to the year ended December 31, 1993.
The increase primarily was attributable to the increased volume of both
domestic and international diagnostic services, in addition to 1994 being the
first full year of operation of the Phase I clinical research unit.
Direct costs increased $1.1 million, or 45.8%, to $3.5 million for the year
ended December 31, 1994, compared to the year ended December 31, 1993. As a
percentage of net revenues, direct costs increased to 26.9% in 1994 from 23.7%
in 1993. The increase reflects the increased volume at the Phase I clinical
research unit and the increased volume of diagnostic testing services, in
addition to increased consulting fees paid to the Company's President in
connection with medical interpretations for diagnostic tests. Such consulting
fees increased less than $0.1 million in 1993 to $0.5 million in 1994. See
"Certain Relationships" and Notes 7 and 9 of Notes to Consolidated Financial
Statements.
Selling, general and administrative expenses remained relatively flat at $7.2
million for the year ended December 31, 1994, compared to the year ended
December 31, 1993. However, as a percentage of net revenues, selling, general
and administrative expenses decreased to 56.1% in 1994 from 71.0% in 1993, as
the Company gained efficiencies through increased volume. General and
administrative payroll increased $0.7 million as the Company continued to build
infrastructure to support its growth. This increase was offset by a $0.6 million
decrease in marketing and advertising expenses related to the Company's 1993
launch of a clinical data management product and the opening of its new
corporate headquarters and Phase I clinical research unit.
Depreciation and amortization increased $0.4 million, or 50.0%, to $1.2
million for the year ended December 31, 1994, compared to the year ended
December 31, 1993. As a percentage of net revenues, depreciation and
amortization increased to 9.3% in 1994 from 7.7% in 1993. The increase
primarily was the result of additional property and equipment purchased
during 1993 and early 1994 to support the Company's new corporate
headquarters and the general increase in business. In addition, the Company
opened its clinical research unit and clinical laboratory in 1994.
The Company's effective income tax rate for the year ended December 31,
1994 was 41.7%, compared to 28.0% for the year ended December 31, 1993. The
rate increase in 1994 was primarily the result of the Company not recording a
state tax benefit on its domestic operating loss in 1993 as state tax law did
not provide for loss carryforwards or carrybacks.
QUARTERLY RESULTS
The Company's quarterly operating results have been, and are expected to
continue to be, subject to fluctuations, depending on factors such as the
commencement, completion or cancellation of large contracts, the mix of
contract services, the progress of ongoing contracts, the timing of start-up
expenses for new offices and the introduction of new products and services.
Because a large percentage of the Company's operating costs are relatively
fixed in the short term, variations in the timing and progress of large
contracts could have a material adverse effect on quarterly results. The
Company believes that comparisons of its quarterly financial results are not
necessarily meaningful and should not be relied upon as an indication of
future performance. See "Risk Factors -- Variation in Quarterly Operating
Results; Seasonality."
19
<PAGE>
The following table presents unaudited quarterly results for the Company
for each of the eleven most recent fiscal quarters in the period ended
September 30, 1996. In the opinion of the Company, this information includes
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the financial information set forth for those periods. This
quarterly financial data should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily
indicative of the results of any future period.
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31,
1994 1994 1994 1994
---------- ---------- ----------- ----------
(in thousands)
<S> <C> <C> <C> <C>
Statement of
Operations Data:
Net revenues ....... $3,052 $3,590 $3,397 $2,871
---------- ---------- ----------- ----------
Costs and expenses:
Direct costs ..... 729 938 954 852
Selling, general
and
administrative 1,875 1,799 1,826 1,745
Depreciation and
amortization .. 281 313 299 304
---------- ---------- ----------- ----------
Total costs and
expenses ......... 2,885 3,050 3,079 2,901
---------- ---------- ----------- ----------
Income (loss) before
income taxes and
minority interest 167 540 318 (30)
Minority interest in
limited liability
company's (income)
loss ............. -- -- -- --
---------- ---------- ----------- ----------
Income (loss) before
income taxes ..... 167 540 318 (30)
Income tax provision
(benefit) ........ 70 225 132 (12)
---------- ---------- ----------- ----------
Net income (loss) .. $ 97 $ 315 $ 186 $ (18)
========== ========== =========== ==========
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30,
1995 1995 1995 1995 1996 1996 1996
---------- ---------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of
Operations Data:
Net revenues ....... $3,243 $2,558 $3,194 $3,069 $2,890 $4,271 $4,446
---------- ---------- ----------- ---------- ---------- ---------- -----------
Costs and expenses:
Direct costs ..... 832 872 1,091 1,329 1,170 1,702 1,743
Selling, general
and
administrative 1,693 1,411 1,496 1,775 1,548 1,655 1,867
Depreciation and
amortization .. 292 266 228 227 203 188 165
---------- ---------- ----------- ---------- ---------- ---------- -----------
Total costs and
expenses ......... 2,817 2,549 2,815 3,331 2,921 3,545 3,775
---------- ---------- ----------- ---------- ---------- ---------- -----------
Income (loss) before
income taxes and
minority interest 426 9 379 (262) (31) 726 671
Minority interest in
limited liability
company's (income)
loss ............. -- -- (21) 69 101 107 95
---------- ---------- ----------- ---------- ---------- ---------- -----------
Income (loss) before
income taxes ..... 426 9 358 (193) 70 833 766
Income tax provision
(benefit) ........ 169 4 142 (56) 30 359 330
---------- ---------- ----------- ---------- ---------- ---------- -----------
Net income (loss) .. $ 257 $ 5 $ 216 $ (137) $ 40 $ 474 $ 436
========== ========== =========== ========== ========== ========== ===========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The CRO industry generally is not capital intensive. The Company's
principal cash needs relate to funding receivables as client payments
generally lag 45 to 75 days after the invoice date. The Company historically
has funded the increase in receivables through cash generated from
operations.
For the nine months ended September 30, 1996, the Company's operations
generated $1.3 million in cash, primarily related to the Company's net
income. The increase in accounts receivable of $0.9 million for this period
was generally offset by an increase in accounts payable and accrued expenses
and other working capital changes. At September 30, 1996, the Company had
cash and cash equivalents of $0.5 million and working capital of $2.1
million. For the year ended December 31, 1995, the Company's operations used
$0.8 million of cash, primarily attributable to a $1.3 million decrease in
deferred revenues, as 1995 contract signings did not include significant
up-front payments, partially offset by the Company's net income for the
period and other changes in working capital accounts.
20
<PAGE>
The Company has a $1.0 million Revolving Credit Facility to be used for
working capital purposes at the Company's discretion, which is collateralized by
substantially all of the assets of the Company. Borrowings under the line are
limited to 60% of eligible accounts receivable, as defined. Interest on any
outstanding portion of the line is at the bank's prime lending rate plus 0.5%
(8.75% at September 30, 1996). The line expires June 30, 1997, and is renewable
annually thereafter. The Company had no outstanding borrowings under the line as
of September 30, 1996. The line contains certain financial and operational
covenants, including minimum levels of tangible net worth and working capital
and limitations on sales of capital stock, acquisitions of other entities, loans
to related parties, dividend payments, sale leaseback transactions, types of
investments and lease payments. In November 1996, the Company received a
commitment from its bank to increase the line to $5.0 million and to change the
covenants to permit this offering. This commitment is subject to typical
conditions.
The Company has no long-term debt or material long-term obligations other
than its real property leases. See "Business -- Facilities" and Note 9 of
Notes to Consolidated Financial Statements. The Company currently is
budgeting approximately $3.0 million for capital expenditures in 1997.
The Company expects existing cash and cash equivalents, cash flow from
operations, the net proceeds from this offering and borrowings under its line
of credit will be sufficient to meet its foreseeable cash needs for at least
the next two years. Although the Company presently is not a party to any
acquisition agreements or similar arrangements, there may be acquisitions or
other growth opportunities that require additional external financing, and
the Company may from time to time seek to obtain additional funds from public
or private issuances of equity or debt securities. There can be no assurance
that such financings will be available on terms acceptable to the Company.
The Company historically has made distributions to UM, its principal
stockholder, and has committed to pay distributions of $450,000 to UM in the
fourth quarter of 1996. Subsequent to this offering, the Company does not
anticipate paying any cash dividends in the foreseeable future and will not
make further distributions to UM. The Company currently intends to retain
future earnings to fund the growth of its business. See "Dividend Policy."
21
<PAGE>
BUSINESS
GENERAL
Premier Research Worldwide, Ltd. (the "Company") is a clinical research
organization ("CRO") providing a broad range of integrated product
development services to its clients in the pharmaceutical, biotechnology and
medical device industries. The Company complements the research and
development departments of its clients by offering high quality clinical
research services on an as-needed basis, thereby providing a variable cost
alternative to certain fixed costs typically associated with internal product
development. Over the last three years, the Company has built a base of over
100 clients, including 23 of the 25 largest pharmaceutical companies in the
world. In the first nine months of 1996, the Company performed services under
96 contracts for 62 clients. The Company's services include centralized
diagnostic testing, clinical trial management, clinical data management,
biostatistical analysis, Phase I clinical research, health care economics and
outcomes research and regulatory affairs services.
Throughout its history, the Company has been an innovator in the use of
new technologies that speed product development and regulatory review. For
example, the Company created and filed the first computer-assisted new drug
application ("CANDA") with the United States Food & Drug Administration
("FDA"). The Company has designed its technology to simplify and make more
efficient the collection, transfer, analysis and preparation of clinical
trial data. The Company believes that its proprietary technology links all
facets of clinical development, produces cost advantages, facilitates
superior levels of service, improves the quality of clinical research and
enhances the Company's global capabilities.
All of the Company's services are designed to help clients reduce their
product development time in a cost-effective manner. In 1977 the Company's
predecessor, Cardio Data Systems, began providing diagnostic testing services
used to evaluate the safety and efficacy of new drugs. Today, the Company
provides these services, which include electrocardiograms ("ECGs"), Holter
monitoring, pulmonary function testing, blood and urine sampling, and other
tests, on a centralized basis. To take advantage of the potential synergies
and cross-selling opportunities with its centralized diagnostic testing
services, the Company added clinical trial management capabilities in
September 1995 by forming a limited liability company with PREMIER, Inc.,
which is owned 65% by the Company. Upon the closing of this offering,
PREMIER, Inc.'s minority interest in this limited liability company will be
converted into 330,150 shares of Common Stock of the Company. Although a
substantial majority of the Company's net revenues is still derived from
centralized diagnostic testing services, the Company today has the capacity
to provide the full range of CRO services on a global basis.
INDUSTRY BACKGROUND
CROs provide product development services to the pharmaceutical,
biotechnology and medical device industries, and derive substantially all of
their revenues from the research and development expenditures of these
industries. The CRO industry provides a comprehensive range of product
development services, including study design, clinical trial management, data
collection, biostatistical analysis, diagnostic testing and regulatory
services. All these clinical trials services are subject to applicable
government regulations in jurisdictions where the services are provided.
The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to a few large,
full-service CROs with global capabilities. Although there are few barriers
to entry for small, limited-service providers, the Company believes that
there are significant barriers to becoming a full-service CRO with global
capabilities. Some of these barriers include the high fixed personnel costs
required to develop broad therapeutic capabilities, the need for
sophisticated management information systems, expertise and technology to
manage complex clinical trials, the ability to access investigators and
specific patient populations in sufficient numbers and the infrastructure
necessary to serve the global needs of clients.
As a result of competitive pressures and economies of scale, the CRO
industry is consolidating. Mergers and acquisitions have resulted in the
emergence of a few large, full-service CROs with the capital, technical and
financial resources to conduct all phases of clinical trials on behalf of
pharmaceutical, biotechnology and medical device companies. The Company
believes that industry trends favor those CROs able to provide a full range
of services.
22
<PAGE>
Diagnostic testing services form a part of most new drug studies. While
most CROs sub-contract these services, the Company directly provides a full
array of centralized diagnostic testing services. The Company believes that
the ability to provide a broad range of centralized diagnostic testing
services will become an important factor in competing as a full-service CRO.
INDUSTRY TRENDS
The global pharmaceutical and biotechnology industries spent an estimated
$35 billion in 1995 on research and development, of which the Company
estimates $20 billion was spent on the type of services offered by the
Company. Of this amount, approximately $2.5 billion was outsourced to CROs.
The Company believes that the following trends will lead to increased
outsourcing of drug and device development activities by pharmaceutical,
biotechnology and medical device companies:
CLIENT DEMAND FOR FASTER PRODUCT DEVELOPMENT
Pharmaceutical, biotechnology and medical device companies face increased
pressure to bring innovative, patent-protected products to market in the
shortest possible time, while following good clinical practices and adhering
to applicable government regulations. Reducing product development time
maximizes the client's potential period of marketing exclusivity and, in
turn, the potential economic returns for new products. The Company believes
that CROs able to improve the speed and quality of product development,
through appropriate clinical, technological and organizational expertise, are
able to provide more effective product development services than most
pharmaceutical, biotechnology or medical device companies could perform
internally. The Company believes that the practice of some pharmaceutical,
biotechnology or medical device companies to contract with full-service CROs,
rather than separately contracting specific phases of product development to
several different CROs, also may result in faster overall development times.
In addition, the Company believes that its clients increasingly recognize
that the use of technology to produce clinical databases designed to
facilitate regulatory review reduces product development and regulatory
review time.
COST CONTAINMENT PRESSURES
Cost containment pressures on pharmaceutical and medical device companies
arising from market acceptance of generic drugs, managed care pressures to
reduce prices, the development of large purchasing alliances and the use of
formulary restrictions has led to increased scrutiny of product development
expenses. This cost containment pressure has prompted many pharmaceutical and
medical device companies to reduce staffing levels, to centralize research
and development and to increase outsourcing to CROs. In addition, the Company
believes that the increased need to differentiate products and to generate
support for product pricing will aid the growth of pharmacoeconomic and
outcomes research, both for products under development and products already
on the market.
The pharmaceutical and medical device industries are consolidating in
response to the need for cost reductions. Once consolidated, many
pharmaceutical and medical device companies outsource to CROs in an effort to
reduce the high fixed personnel cost associated with internal drug
development. At the same time, the Company believes that pharmaceutical and
medical device companies will continue to develop new products that represent
potential sources of new business for the Company and other CROs.
INCREASINGLY COMPLEX AND STRINGENT REGULATIONS
Increasingly complex and stringent regulatory requirements have added to
the volume of data required for regulatory filings. The pharmaceutical and
biotechnology industries are increasingly outsourcing to CROs to manage the
added work loads created by these regulatory requirements. More stringent
regulatory requirements are being applied to medical devices as well. The
Company believes that this trend will increase the volume of data required
for device regulatory filings and escalate the demand for data collection and
analysis services during the device development process, creating additional
opportunities for CROs.
DEVELOPMENT OF DRUGS FOR COMPLEX DISEASES
The development of an increasing number of drugs targeted at complex
chronic diseases, such as Alzheimer's disease, and drugs that address
specific patient populations, such as stroke patients, has increased
23
<PAGE>
the need for specialized clinical trial management and patient recruitment
services. The Company believes that this increased complexity will result in
greater outsourcing by pharmaceutical, biotechnology and medical device
companies to CROs with particular expertise in certain therapeutic areas and
with the ability to access these specific populations.
BIOTECHNOLOGY INDUSTRY GROWTH
In the last decade, the United States biotechnology industry has grown
rapidly and is developing an increasing number of the new products submitted
for regulatory approval. From 1989 to 1995, the number of biotechnology
products in clinical trials rose from 80 to over 450, an annual compounded
growth rate of approximately 35%. Many biotechnology companies do not have
the necessary staff, expertise or financial resources to conduct clinical
trials on their own, and may not believe that it is in their strategic
interest to create such capabilities. The Company believes that biotechnology
companies provide growth opportunities for CROs. In addition, the
biotechnology industry is conducting more clinical trials outside the United
States, benefiting CROs with international capabilities.
GLOBALIZATION OF CLINICAL RESEARCH AND DEVELOPMENT
Pharmaceutical, biotechnology and medical device companies are
increasingly attempting to expand the market for new products by pursuing
regulatory approvals in multiple countries simultaneously, rather than
sequentially as they have in the past. Expanding the market for a product and
accelerating regulatory review times are particularly important to these
companies because of limited patent lives and the high development costs of
new products. To respond to these pressures and to gain access to the global
marketplace, pharmaceutical, biotechnology and medical device companies are
increasingly outsourcing to CROs that have full-service, international
capabilities and that are able to coordinate concurrent regulatory filings.
NEED FOR SOPHISTICATED DATA MANAGEMENT
During a clinical trial, clients often receive data from multiple sources
in a variety of incompatible formats. To make cost effective, real-time
product development decisions using this data, it is necessary to have
sophisticated data management systems that can more easily analyze the data.
As a result, both clients and government regulators seek real-time,
interactive access to clinical data.
In addition to increasing the volume of data required for filings,
regulatory agencies are also requesting data in electronic form, permitting
more direct independent analysis. For example, the FDA has issued guidelines
encouraging the use of computer-assisted filings in an effort to expedite the
review process. Additionally, the need for pharmacoeconomic and outcomes
research increases the requirements for data. The Company believes that
pharmaceutical, biotechnology and medical device companies may outsource to
CROs with sophisticated data management capabilities to reduce costs and to
access their technological expertise.
THE COMPANY'S STRATEGY
The Company's objective is to accelerate its clients' product development
timelines. The Company's strategies for achieving this objective include:
USE INNOVATIVE TECHNOLOGY TO ACCELERATE AND IMPROVE PRODUCT DEVELOPMENT
The Company believes that its proprietary technology links all facets of
clinical development, produces cost advantages, facilitates superior levels
of service, improves the quality of clinical research and enhances the
Company's global capabilities. The Company has specifically designed its
technology for use by medical personnel rather than information technology
specialists. The Company's technology enables it to create and continually
update its clinical databases as trials progress and allows for interactive
review of data by its clients and governmental regulators. See "Technology."
PROVIDE COMPREHENSIVE PRODUCT DEVELOPMENT SERVICES
The Company believes that CROs able to offer a full range of product
development services will have a competitive advantage because a single
provider increases the speed and accuracy of clinical data collection through
compatible systems and uniform data formats. The Company provides a full
array of clinical research
24
<PAGE>
services, including, centralized diagnostic testing services, clinical trial
management, clinical data management, biostatistical analysis, Phase I
clinical research, health care economics and outcomes research and regulatory
affairs services. The Company believes that offering a full range of
centralized diagnostic services, in addition to its other clinical research
services, provides an additional competitive advantage.
EXPAND CAPACITY FOR GLOBAL PRODUCT DEVELOPMENT SERVICES
The Company believes that the ability to provide global product
development services enhances its ability to compete for large multi-national
business. The Company has an international presence in diagnostic services
and has supported trials in 32 countries out of its Philadelphia, PA and
Peterborough, U.K. offices. Using this experience and infrastructure, the
Company is expanding its clinical trial management and clinical data
management services to areas outside of the United States.
DEVELOP ITS STRATEGIC RELATIONSHIP WITH PREMIER, INC.
The Company intends to leverage its strategic relationship with PREMIER,
Inc., the largest voluntary alliance of hospitals in the United States. In
1996, PREMIER, Inc. expects to negotiate, on behalf of the alliance, group
purchases of approximately $10 billion of medical devices, supplies and
pharmaceuticals. PREMIER, Inc. actively aids the Company in marketing its
services to the numerous pharmaceutical, biotechnology and medical device
companies that sell products and services to the alliance. In addition, the
Company believes that its access to PREMIER, Inc.'s patient and physician
databases provides a competitive advantage for patient and investigator
recruitment. PREMIER, Inc. is developing a large trial management
organization, for which the Company will be the exclusive CRO. The Company
and PREMIER, Inc. also have begun working together to develop an adverse
event reporting system and a drug use information system, and the Company
plans to expand this activity to include such services to PREMIER, Inc.
members and other health systems. See "Relationship with PREMIER, Inc."
PURSUE STRATEGIC ACQUISITIONS
The Company plans to pursue strategic acquisitions of related businesses
and selected CROs. Acquisition candidates must provide opportunities for
innovation and growth and include businesses that provide complementary
services, expand the Company's geographic presence, provide new therapeutic
expertise, or have complementary client bases.
COMPANY SERVICES
The Company's historic business has been the provision of centralized
diagnostic testing services, which continues to account for a substantial
majority of the Company's net revenues. The Company added clinical trial
management capabilities in September 1995 when it formed a limited liability
company with PREMIER, Inc., owned 65% by the Company. Upon the closing of
this offering, PREMIER, Inc.'s interest in this limited liability company
will convert into 330,150 shares of the Company's Common Stock. Today, the
Company provides a full range of clinical research services. The Company's
services include centralized diagnostic testing services, clinical trial
management, clinical data management, biostatistical services, Phase I
clinical research, health care economics and outcomes research and regulatory
affairs services, both in the United States and internationally.
CENTRALIZED DIAGNOSTIC TESTING SERVICES
Diagnostic tests are employed in clinical trials to measure the effect of
the product on certain body organs and systems, to determine the product's
safety and/or efficacy. Diagnostic testing services provided by the Company
include a variety of diagnostic tests, such as ECGs, Holter monitoring and
clinical laboratory services. These services, which the Company provides on a
centralized basis, are part of most new drug studies. In most cases, the ECG
and transtelephonic monitoring strips, Holter monitoring tapes, imaging and
pulmonary function computer disks and blood and urine samples are delivered
to the Company, which the Company then analyzes or interprets. The Company
provides a broad array of centralized diagnostic testing services, including
the following:
25
<PAGE>
12-lead Electrocardiography. The ECG provides an electronic map of the
heart's rhythm and structure, and typically is performed in most clinical
trials. ECG strips are measured by the Company's analysts utilizing a
digitizing system, and are then interpreted by a Board-certified
cardiologist.
Holter Monitoring. Holter monitoring is a 24 hour continuous ECG recording
of the heart's rhythm on a cassette tape. The Company has provided Holter
monitoring services since 1977.
Transtelephonic Monitoring (TTM). TTM measures the electrical activity of
the heart, typically for 5 to 30 seconds. This data is transmitted over
telephone lines by patients carrying a self-activated transmitting device.
This test typically is utilized in trials seeking to identify symptomatic
heart rhythm events.
Pulmonary Function Testing (PFT). PFT measures the lungs' capacity and
function by having the patient breathe into a spirometer.
Diagnostic Imaging. This service is used in all clinical imaging
modalities, including standard radiography (e.g., x-rays), contrast-enhanced
radiography (e.g., angiography, studies of the gastrointestinal tract),
computed techniques (including CT scanning and MRI), nuclear medicine
techniques and ultrasonography to determine or confirm the condition of a
patient.
Clinical Laboratory Services. The Company performs centralized reference
testing of blood and urine samples for multi-center drug trials and in
support of the Company's Phase I clinical research unit.
CLINICAL TRIAL MANAGEMENT SERVICES
The Company offers complete services for the design, performance and
management of clinical trial programs. The results of clinical trials form
the basis on which regulatory approval is granted for pharmaceutical and
biotechnology products and medical devices. The Company's multi-disciplinary
clinical research group and extensive network of consultants examine a
product's pre-clinical and clinical data to design protocols that will
evaluate the product's safety and efficacy. The Company can then manage every
aspect of clinical trials, including protocol and database design, site and
investigator recruitment, regulatory initiation, patient enrollment, study
monitoring and data collection, medical services and report writing.
The Company's clinical trial management services include the following:
Study Protocol Design. The protocol defines the medical issues the study
seeks to examine and the statistical tests that will be conducted to
determine whether the product is safe and effective or, in some
pharmacoeconomic trials, whether it is cost-effective. Detailed in the
protocol are: (i) the number and type of clinical, laboratory and outcomes
measures that are to be tracked and analyzed, (ii) the number of patients
required to produce a statistically valid result, (iii) the period of time
over which the patients must be tracked and (iv) the dosage and frequency of
drug administration or the program of use of the relevant device.
Site and Investigator Recruitment. The drug or device being tested is
administered to patients by physicians (investigators), at hospitals, clinics
or other locations (sites). Potential investigators are identified by a
number of means. In some cases, the sponsor has pre-selected investigators
with whom it wishes to work. The CRO generally solicits the investigator's
participation in the study. Each trial's success depends on the successful
identification and recruitment of investigators with an adequate base of
patients who meet the requirements of the study protocol. The Company has a
database of several thousand investigators, both within and outside the
PREMIER, Inc. alliance of hospitals. Access to this data allows the Company
to readily identify the sites and investigators able to provide the requisite
patient population.
Patient Enrollment. Investigators find and enroll patients suitable for
each study according to the protocol. The speed with which trials can be
completed is significantly affected by the rate at which patients are
enrolled. Inability to recruit a sufficient number of patients in a timely
manner is a recurring problem and one of the most frequent causes of clinical
trial delays, as well as a major source of cost overruns for the sponsor. The
Company believes that its affiliation with PREMIER, Inc. and the resultant
access to PREMIER, Inc.'s databases should enhance the Company's ability to
quickly and cost-effectively recruit investigators and patients for clinical
trials. The Company believes that its access to PREMIER, Inc.'s patient
databases provides a competitive advantage because it permits the Company to
identify more precisely exclusion and inclusion criteria, thereby maximizing
patient recruitment without jeopardizing patient safety.
26
<PAGE>
Regulatory Services. Each site is required to document compliance with
regulations governing the conduct of clinical trials, which must be completed
before a trial can be initiated. The PremierResearcho CTIMS (clinical trial
information management system) facilitates this process by providing
real-time tracking of the status of all relevant documents to the Company and
to the client.
Study Monitoring and Data Collection. As patients are examined and tests
are conducted in accordance with the study protocol, data are recorded on
customized case report forms ("CRFs") and laboratory reports. Traditionally,
these data are assessed at the study site by specially trained clinical
research associates, also known as CRAs or monitors. The CRAs compare the
data to the medical records at the site to reduce the possibility of fraud or
error. The CRA requires site personnel to correct errors to facilitate
efficient data entry. CRAs visit sites regularly to ensure that the CRFs are
completed correctly and that all data specified in the protocol are
collected. CRFs are reviewed for consistency and accuracy before their data
are entered into an electronic database. In most CROs, these data are
manually entered by personnel who are not trained to evaluate the content of
the data.
The Company also offers its clients the PremierResearcho Fax system, which
can accelerate the completion and collection of accurate CRFs. The
PremierResearcho Fax system permits a CRF to be filled out by the
investigating site and faxed to the Company within days of a patient's visit.
The data from the fax are automatically downloaded into the Company's
database by means of optical character recognition and the results are
carefully checked both by computer and by trained clinical research
personnel. Any errors are compiled and automatically faxed back to the site
for correction. This process allows a large portion of data errors to be
identified and corrected within a week of a given patient's visit, as opposed
to the traditional correction process that typically requires several weeks
to several months. The Company believes that correcting a large portion of
the errors as the trial progresses decreases the time and expense of clinical
data collections and is a significant competitive advantage.
Medical Services and Report Writing. During the course of a clinical
trial, the Company may provide medical research services, including medical
monitoring of the clinical trials and interpretation of clinical trial
results. In addition, the statistical analysis of the data collected during a
trial, together with other clinical data, are included in a final report
generated for inclusion in a regulatory document. The Company's
PremierResearcho CARD (computer-assisted research and development) technology
allows for immediate correction of data and identification of safety and
efficacy issues that may change the course of the clinical development plan
or accelerate its timeline. The Company believes that this results in
improved medical services.
CLINICAL DATA MANAGEMENT AND BIOSTATISTICAL ANALYSIS
The Company has a history of technological innovation in the provision of
services in drug trials, including creating the first computer-assisted new
drug application ("CANDA") and creating over sixty CANDAs. The Company
believes that its technological expertise provides a competitive advantage in
the provision of clinical data management and biostatistical analysis
services.
Clinical Data Management. The Company's data management professionals
assist in the design of protocols and CRFs, as well as the development of
training manuals for investigational staff to ensure that data are collected
in a systematic format. Once the study protocol has been finalized, CRFs for
recording the desired information must be developed. Different CRFs may be
used at different assessment periods during the course of a trial reflecting
the variety of data collected, and there may be as many as 100 or more CRFs
for each patient in a given study. The Company's technically trained staff
format CRFs compatible with the optical character recognition capabilities of
the Company's PremierResearcho Fax system. CRFs, when utilized with the
PremierResearcho Fax system, increase the accuracy and reduce the time and
cost of data processing during the trial. Databases are designed according to
the analytical specifications of the project and the particular needs of the
client. The Company provides clients with data listings, data review and
coding, data entry, database verification and editing and problem data
resolution. In addition, the Company offers its clients the ability to
compile the clinical data for an electronic regulatory submission, such as a
CANDA.
Biostatistical Analysis. The Company's biostatistics professionals provide
biostatistical consulting, database design, data analysis and statistical
reporting. These professionals develop and review protocols, design
appropriate analysis plans and design report formats to address the
objectives of the study protocol and the cli-
27
<PAGE>
ent's individual objectives. The Company's programming staff and
biostatisticians work together to perform appropriate analyses and produce
tables, graphs, listings and other applicable displays of trial results. In
addition, biostatisticians can assist clients in government regulatory
proceedings and in legal proceedings.
PHASE I CLINICAL RESEARCH
The Company maintains a 28-bed, monitored clinical research unit in which
it conducts Phase I clinical research studies. This unit focuses on complex
Phase I trials that require diagnostic testing such as ECG, Holter monitoring
and similar services.
HEALTH CARE ECONOMICS AND OUTCOMES RESEARCH
In response to the increased need for pharmacoeconomic and outcomes data
following product approval, the Company plans to offer a variety of health
information services using its expertise in data collection, acquisition,
monitoring, and auditing. The Company intends to design and conduct
pharmacoeconomic, technology assessment, and clinical outcomes studies for
pharmaceutical clients as well as for PREMIER, Inc. and its affiliated
hospitals and institutions. PREMIER, Inc. and the Company are developing an
adverse event reporting system and a drug use information system. The Company
plans to expand this activity to include such services to PREMIER, Inc.
members and other health systems.
REGULATORY AFFAIRS SERVICES
The Company provides comprehensive regulatory product registration
services for pharmaceutical, biotechnology and medical device products in
North America, including regulatory strategy formulation, document
preparation and intermediation with the FDA and other regulatory agencies.
The Company reviews published literature, assesses the scientific background
of a product and the competitive and regulatory environment, identifies
deficiencies and defines the steps necessary to obtain registration in the
most expeditious manner. Through this service, the Company helps its clients
determine the feasibility of developing a particular product or product line.
TECHNOLOGY
The Company's technology is designed to accelerate product development and
to improve the quality of clinical research by providing superior data
handling that facilitates analysis. Its technology is developed for clinical
research personnel, rather than information technology specialists, enabling
medical reviewers to make timely and accurate decisions during the product
development process. The Company's software is available on multiple
platforms such as Microsoft Windows, Macintosh, and DOS, which facilitates
integration with the wide variety of systems used by its clients.
The Company believes that its technology is attractive to its clients'
clinical groups, since it includes "user-friendly" tools specifically
designed for clinical research personnel. The Company believes that this
provides a competitive advantage, since this group is influential in CRO
selection.
The Company has a history of technological innovation in supporting
clinical trials, including:
o First electronic transfer of centralized diagnostic data, eliminating
manual key punching (1979).
o First multi-site remote data entry system used by the FDA, partially
replacing site monitoring (1984).
o First computer-assisted new drug application, shortening the regulatory
review process (1985). The Company has since created over 60 full data
review CANDAs, which it believes constitutes more CANDAs of this kind
than those created by all the other major CROs combined.
o First NDA Day, a one day intensive session between the FDA and the
product's sponsor using the interactive features and real-time data
query capabilities of the CANDA (1988).
o First interactive CANDA, providing for the interactive review of
clinical data by the FDA, further accelerating the regulatory review
process (1993).
28
<PAGE>
The Company's technology includes:
PremierResearcho Navigator. Navigator is the Company's proprietary, highly
interactive software system designed specifically for the review, analysis
and submission of clinical data in the new drug or device application
process. The Company's role in the first CANDA submission, the first
interactive CANDA and the first NDA Day, which are described above, are
examples of uses of the technology that has evolved into the Navigator.
Navigator is designed to allow medical and regulatory personnel to
interactively review and analyze research data. It is a "user-friendly"
software that permits medical personnel to: subset data; better analyze and
understand clinical trial results, including adverse events and
identification of outliers; graphically display clinical research data; and
respond more quickly to regulatory review questions. The Company believes
that use of its Navigator system speeds both the product development and
regulatory review process, which allows the client to prioritize, change or
potentially terminate development of the product.
The Company markets the Navigator system for single clinical studies or
single laboratory datasets under the name PremierResearcho CARD
(computer-assisted research and development). Immediate review of clinical
information to detect errors in trial conduct is possible with
PremierResearcho CARD, allowing for rapid correction of data and
identification of safety and efficacy issues that may change the course of
the clinical development plan or accelerate its timeline.
The Company markets the Navigator system for electronic regulatory
submissions for pharmaceutical clients under the name PremierResearcho CANDA.
PremierResearcho CANDA allows for faster and more effective medical review
and analysis of the submission by the product's sponsor and by regulatory
authorities than conventional tools. Navigator also may be used for the
regulatory submission of biologic and medical device clinical data.
PremierResearcho Enterprise. Enterprise is a proprietary information
management system that permits efficient and timely delivery of diagnostic
and clinical trial data to the user. Enterprise integrates an entire set of
data from an individual patient in a clinical trial. This information is then
available for on-line review by project management, diagnostic services and
clinical research personnel. Enterprise also provides for flexible encoding
and transfer of the clinical information to the client, based on standardized
data specifications or the client's own specifications. The data can be
provided to the client in a variety of data and media formats, as well as
bundled with Navigator, to allow for immediate interactive review. The
Company believes that Enterprise facilitates and speeds product development
by making it easier for the client to collect, store, retrieve and utilize
the massive amounts of data traditionally collected in clinical trials.
PremierResearcho Fax. This system receives CRFs, electronically enters the
information into databases, electronically queries the site to correct data
errors and inconsistencies, and compiles the resultant database for rapid
export. The Company believes that the PremierResearcho Fax system can
accelerate the collection and correction of the CRF, which is filled out by
investigators at a site and faxed to the Company within days of the patient
visit. The data from the fax is automatically downloaded into the Company's
database by means of optical character recognition and the results are
carefully checked by both the computer and trained clinical research
personnel. Any errors are compiled and automatically faxed back to the site
for correction. This process allows a large portion of data errors to be
resolved within a week of a given patient's visit, as opposed to the
traditional correction process that typically requires several weeks to
several months. The Company believes that correcting a large portion of
errors as the trial progresses decreases the time and expense of clinical
data collection.
The Company is in the early stages of developing a remote pen-based data
entry system that permits two-way interaction between the Company and the
site (PremierResearcho Pad), and an interactive voice response system for
automated telephone data entry (PremierResearcho Voice), which will augment
PremierResearcho Fax.
PremierResearcho CTIMS. The Company's proprietary project management
software, PremierResearcho CTIMS (clinical trial information management
system), manages the clinical trial process. CTIMS automates many laborious
tasks of trial management using software modules for various applications.
These modules allow for regulatory and other document tracking; investigator,
site and patient recruitment and tracking; CRA monitoring; and contract
management.
29
<PAGE>
RELATIONSHIP WITH PREMIER, INC.
In September 1995, the Company formed a limited liability company with
PREMIER, Inc., which is owned 65% by the Company, for the provision of
clinical research services. Upon the closing of this offering, PREMIER,
Inc.'s interest in the limited liability company will convert into 330,150
shares of the Company's Common Stock.
PREMIER, Inc. is a voluntary healthcare alliance of 1,800 affiliated
hospitals and institutions which is the result of the merger of the Premier
Health Alliance, Inc., American Healthcare Systems, Inc. and SunHealth
Alliance, Inc. It is the largest voluntary healthcare alliance in the United
States, representing over 300,000 hospital beds located in all 50 states.
PREMIER, Inc. negotiated, on behalf of the alliance, group purchases of
approximately $6 billion of medical devices, supplies and pharmaceuticals in
1995, and expects to negotiate group purchases of approximately $10 billion
of such products in 1996.
The agreement between PREMIER, Inc. and the Company gives the Company
access to information about PREMIER, Inc.'s pharmaceutical contacts as well
as access to PREMIER, Inc.'s databases of patients and physicians for use in
connection with the Company's clinical research studies. The Company, in
turn, has agreed that PREMIER, Inc.'s affiliated hospitals will be utilized
as investigator sites for these studies; however, the Company is not
restricted from using investigator sites outside the PREMIER, Inc. alliance.
In addition to these contractual provisions, the Company seeks to leverage
its strategic relationship with PREMIER, Inc. in the following ways:
o PREMIER, Inc. has agreed to introduce the Company to pharmaceutical and
device companies that sell or propose to sell products to the alliance,
and to include a requirement in all of its drug and device purchase
agreements that such companies will consider utilizing the Company's
services in their clinical trials. For this purpose, the Company has
assigned one salesperson to work exclusively at PREMIER, Inc.'s
principal purchasing office and to participate in group purchasing
meetings.
o PREMIER, Inc., with the assistance of the Company, is developing a large
trial management organization ("TMO"), for which the Company will be the
exclusive CRO. The TMO will standardize and coordinate investigators,
clinical sites and patient recruitment and form a central institutional
review board ("IRB"). The Company believes that its involvement with
this TMO will facilitate the development of close working relationships
with a large nationwide network of investigators, producing improvements
in the quality, speed and cost of the clinical development process.
o The Company is the only CRO with access to PREMIER, Inc.'s databases.
This access permits the Company to independently estimate the available
patient population in a given area and to assess whether an individual
investigator has direct access to a suitable patient population. Knowing
whether a given investigator can supply a sufficient number of patients
meeting the inclusion and exclusion criteria of a particular protocol is
an important competitive advantage, since patient enrollment is a
critical factor in a successful trial. Additionally, the Company will
use its access to this database to generate pharmacoeconomic and
outcomes data for its clients.
o The Company and PREMIER, Inc. are collaborating on the development of an
adverse events reporting system and drug use information system. It is
expected that these systems will be used by PREMIER, Inc.'s affiliated
hospitals and subsequently may be marketed to other hospitals.
The Company believes that PREMIER, Inc. benefits from its relationship
with the Company in a variety of ways. The Company's commitment to utilize
PREMIER, Inc.'s affiliated hospitals in its studies may constitute an
incentive for hospitals to join the PREMIER, Inc. alliance, due to both the
fees received by the hospital and the prestige of being involved in clinical
research. The statistical and data management services being developed by the
Company also are expected to provide helpful information and expertise to
PREMIER, Inc. in making its purchasing decisions.
SALES AND MARKETING
The Company's marketing strategy is to focus on prospective clients whose
product development projects are complex. The Company's sales staff maintains
direct contacts and relationships with clients and prospective
30
<PAGE>
clients. Two senior salespeople with substantial experience in the marketing
of large trials have recently joined the Company. The Company believes that a
large percentage of its clients have been referred by others in the industry,
and its salespeople seek to foster such referrals.
The Company believes that its technology is attractive to the clinical
staff of its clients because of its "user-friendly" tools specifically
designed for clinical research personnel. The Company believes that this
provides it with a competitive marketing advantage, since such personnel are
influential in CRO selection.
While the Company seeks new clients, it also attempts to increase repeat
business with existing clients by meeting high quality and timely performance
standards and through proactive project management. Approximately 78% of net
revenues in the first nine months of 1996 were derived from clients for which
the Company previously has performed services. When the Company increases the
amount of business with an existing client, both benefit from the
efficiencies of using proven systems already in place for study conduct and
data delivery.
The Company intends to use its affiliation with PREMIER, Inc. to gain
access to pharmaceutical, biotechnology and medical device companies that
sell or propose to sell products to PREMIER, Inc. For this purpose, the
Company has assigned one salesperson to work exclusively at PREMIER, Inc.'s
principal purchasing office and to participate in group purchasing meetings
to directly market the Company's services.
The Company uses direct mailings of brochures and marketing materials to
existing and prospective clients and advertises in trade journals and similar
publications. The Company also attends and exhibits at selected trade shows
in the United States and Europe.
CLIENTS
Over the last three years, the Company has provided services to 23 of the
top 25 pharmaceutical companies in the world as ranked by 1995 research and
development expenditures. During the first nine months of 1996,
pharmaceutical companies accounted for approximately 90% of the Company's net
revenues. In the future, as the Company expands its clinical research
services, it expects that biotechnology and medical device companies will
account for a more significant percentage of its net revenues. At September
30, 1996, the Company was providing services under 96 contracts to 62
clients, including some of the largest United States, European and Japanese
pharmaceutical companies. In 1994, two clients represented approximately
17.0% and 11.5% of the Company's net revenues and in 1995 three clients
accounted for approximately 15.0%, 12.1% and 10.0% of the Company's net
revenues. During the first nine months of 1996, three clients accounted for
approximately 15.3%, 10.5% and 10.4% of the Company's net revenues. The loss
of any significant client could have a material adverse effect on the
Company's net revenues. See "Risk Factors -- Dependence on Certain Industries
and Clients" and "Risk Factors -- Loss or Delay of Contracts."
BACKLOG
Backlog consists of anticipated net revenues from work under letters of
intent and contracts that have been signed but not yet completed. Once work
under a contract or letter of intent commences, revenues are generally
recognized over the life of the contract, which usually lasts for anywhere
from one month to two years. Backlog excludes anticipated net revenues from
projects for which the Company has commenced work but for which a definitive
contract or letter agreement has not been executed. Backlog at October 31,
1996 was approximately $14.7 million.
The Company believes that its backlog as of any date is not necessarily a
meaningful predictor of future results. Clinical studies under contracts
included in backlog are subject to termination or delay. Clients terminate or
delay contracts for a variety of reasons including, among others, the failure
of products being tested to satisfy safety requirements, unexpected or
undesirable clinical results of the product, the client's decision to forego
a particular study, insufficient patient enrollment or investigator
recruitment or production problems resulting in shortages of the drug. Most
of the Company's contracts are terminable without cause upon 30 to 90 days
notice by the client. The Company typically is entitled to keep any advance
payment and receive certain fees for winding down a study that is terminated
or delayed and, in some cases, a termination fee. See "Risk Factors --
Dependence on Certain Industries and Clients" and "Risk Factors -- Loss or
Delay of Contracts."
31
<PAGE>
COMPETITION
The decision of whether to outsource can place the Company in competition
with a client's in-house development group. However, once the decision is
made to outsource, the Company primarily competes against other full service
CROs and, to a lesser extent, universities and teaching hospitals. Some of
these competitors have substantially greater capital, technical and other
resources than the Company. Large CROs with which the Company competes
include ClinTrials Research, Inc., Covance, Inc., IBAH, Inc., Pharmaceutical
Product Development, Inc., PAREXEL International Corporation and Quintiles
Transnational Corporation. CROs generally compete on the basis of experience,
medical and scientific expertise in specific therapeutic areas, the quality
of clinical research, the ability to organize and manage large-scale trials
on a global basis, the ability to manage large and complex medical databases,
the ability to provide statistical and regulatory services, the ability to
recruit investigators and patients, the ability to integrate information
technology with systems to improve the efficiency of clinical research, an
international presence, financial viability and price. The Company believes
that it competes favorably in all of these areas.
The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to a few large,
full-service CROs with global operations. The trend toward CRO industry
consolidation has resulted in heightened competition among the CROs for
clients and acquisition candidates. In addition, consolidation within the
pharmaceutical industry, as well as a trend by pharmaceutical companies to
outsource to fewer CROs, has heightened competition among CROs for contracts
from that industry. The Company believes major pharmaceutical, biotechnology
and medical device companies tend to develop preferred provider relationships
with full-service CROs, effectively excluding smaller CROs from the bidding
process. The Company may find reduced access to certain potential clients due
to these arrangements.
GOVERNMENT REGULATION
Human pharmaceutical products, biological products and medical devices are
subject to rigorous regulations by the federal government, principally the
FDA, and foreign governments if products are tested or marketed abroad. In
the United States, the FFDCA governs clinical trials and approval procedures
as well as the development, manufacturing, safety, labeling, storage, record
keeping and marketing of pharmaceutical products and medical devices.
Biological products are subject to similar regulation under both the FFDCA
and the Public Health Service Act. Because the Company offers services
relating to the conduct of clinical trials and the preparation of the
marketing applications, the Company is obligated to comply with applicable
regulatory requirements governing these activities, both in the United States
and in foreign countries. Requirements governing these activities vary from
country to country.
In the United States, the Company is subject to inspection by the FDA to
evaluate compliance with applicable requirements governing the conduct of
clinical trials. If the FDA discovers that the Company has violated
applicable requirements relating to the conduct of clinical trials or the
preparation of marketing applications, discussed in more detail below, the
FDA may take enforcement action such as issuance of a Warning Letter;
termination of a clinical study; refusal to approve clinical trial or
marketing applications or withdrawal of such applications; injunction;
seizure of investigational products; civil penalties; or recommending
criminal prosecutions. Pursuant to the FDA's fraud policy, the FDA generally
will refuse to approve a pending clinical trial or marketing application, or
withdraw such application, if it discovers conduct such as submission of
fraudulent applications, making untrue statements of material facts, or
giving or promising bribes or illegal gratuities. The Company also is subject
to both mandatory and permissive debarment by FDA, which would prohibit the
Company from assisting in the submission of abbreviated new drug applications
for generic drugs. Conviction of criminal conduct relating to the development
or approval of an abbreviated drug application is a prerequisite to such
debarment. Such sanctions could have a material adverse effect on the
Company.
The following is a summary of the specific requirements relating to the
clinical testing and approval of drugs, biologics and devices follows.
Drug Development and Approval in the United States -- An Overview
Drug products marketed in the United States usually require approval by
the FDA before marketing. The steps required before a new prescription drug
may be marketed in the United States include (i) preclinical labo-
32
<PAGE>
ratory and animal tests; (ii) the submission to the FDA of an Investigational
New Drug application ("IND"), which must be evaluated and found acceptable by
the FDA before human clinical trials may commence; (iii) adequate and
well-controlled human clinical trials to establish the safety and
effectiveness of the drug; (iv) the submission of a New Drug Application
("NDA") to the FDA; and (v) FDA approval of the NDA. The Company's services
relate to steps (ii) through (iv) of this process.
Clinical trials to evaluate the safety and effectiveness of drugs are
generally conducted in three sequential phases that may overlap. In Phase I
(typically lasting from 6 months to one year), the drug is introduced into a
small number of human subjects, usually healthy volunteers, to determine
safety (adverse effects), dosage tolerance, metabolism, distribution,
excretion and clinical pharmacology. Phase II (typically lasting from one to
two years) involves clinical trials in a limited patient population to
determine the effectiveness of the pharmaceutical for specific targeted
indications, to determine dosage tolerance and optimal dosage and to identify
possible adverse side effects and safety risks. After a compound has been
shown in Phase II trials to have an acceptable safety profile and probable
effectiveness, Phase III trials (typically lasting from 2 to 3 years) are
undertaken in an expanded patient population at multiple clinical sites to
further evaluate clinical effectiveness and safety within an expanded patient
population.
Prior to commencing each phase of a clinical trial, a drug sponsor must
submit an IND application to the FDA. The IND application must contain, among
other things, protocols for each study; a description of the composition,
manufacture, and control of the drug substance and the drug product;
information about preclinical pharmacological and toxicological studies of
the drug; and a summary of previous human experience with the investigational
drug. Unless the FDA objects, the IND will become effective 30 days following
its receipt by the FDA. If the FDA has concerns about the proposed clinical
trial, it may delay the trial and require modifications to the trial protocol
prior to permitting the trial to begin. In addition, all clinical trials of
new drugs must obtain approval of the IRB(s) at each institution at which the
trial is conducted. The IRB reviews the study to verify the method of
experimentation, safety, and ensure that subjects give their informed consent
to participate in the clinical trial.
When results from a Phase II or Phase III study show promise in the
treatment of a serious or immediately life-threatening disease in patients
for whom no comparable or satisfactory alternative drug or other therapy
exists, the FDA may allow the manufacturer to make the new drug available to
a larger number of patients through the regulated mechanism of a treatment
IND. Although less scientifically rigorous than a controlled clinical trial,
the treatment IND facilitates availability of promising drugs to ill patients
prior to general marketing and also allows sponsors to obtain additional data
on the drug's safety and effectiveness. In general, treatment use of an
investigational drug is conditioned upon compliance with safeguards of the
IND process such as informed consent, IRB approval, and other requirements.
Once a clinical trial with proper IRB and IND approval is commenced, the
conduct of the clinical trial is governed by extensive FDA regulations.
Clinical trial sponsors (i.e., the persons who initiate the trials but do not
actually conduct the investigations) are responsible for the selection of
qualified investigators, providing investigators with protocols and other
necessary information, monitoring the investigation, reporting changes in
study protocol to the FDA, reporting to the FDA and investigators safety
reports of serious and unexpected adverse experiences associated with use of
the drug, and maintaining records concerning the study. To the extent that
the Company performs these functions on behalf of a drug sponsor, the Company
must comply with these requirements.
Upon completion of clinical trials that demonstrate the safety and
efficacy of a new drug, a drug sponsor must submit an NDA and obtain FDA
approval of an NDA prior to marketing the drug. The NDA must include
information pertaining to the composition, manufacture, and specification of
the drug substance; a description of the preclinical studies; a description
of the human pharmacokinetic data and human bioavailability data;
descriptions of clinical investigations; a statistical evaluation of the
clinical data; and proposed labeling. Submission of an NDA does not assure
the FDA approval for marketing. The application review process generally
takes at least two to three years to complete, and the FDA may require
additional data or other studies during the course of its review.
Notwithstanding the submission of such data, the FDA ultimately may decide
that the application does not satisfy its regulatory criteria for approval.
Finally, the FDA may require additional clinical testing following NDA
approval to confirm safety and efficacy (Phase IV clinical tests). No
assurance exists that clinical studies conducted will provide sufficient
information to support the filing of an NDA.
33
<PAGE>
Clinical trials may be conducted outside of the United States without an
IND. The FDA will accept data from such foreign clinical trials to support
clinical investigations in the United States and/or approval of an NDA only
if the agency determines that the trials are well-designed, well-conducted,
performed by qualified investigators, and conducted in accordance with
internationally recognized ethical principles.
Less extensive approval requirements can apply to generic drugs.
Abbreviated requirements are applicable to drugs that are, for example,
either bioequivalent to brand name "pioneer" drugs, or otherwise similar to
pioneer drugs, such that all the safety and efficacy studies previously
conducted on the pioneer product need not be repeated for approval. Changes
in approved drug products, such as in the delivery system, dosage form or
strength, can also be the subject of abbreviated application requirements.
Biological Product Development and Approval in the United States -- An
Overview
Like drugs and medical devices, biological products (i.e., those derived
from living materials of humans, plant, animals or microorganisms, such as
vaccines) are subject to extensive regulation by FDA. Biological products are
regulated primarily under the Public Health Service Act, but are also subject
to regulation under the FFDCA.
While some biological products may be approved for marketing via a new
drug application ("NDA"), most manufacturers must obtain two licenses from
FDA prior to marketing a biological product: a license for the manufacturing
establishment, and a product license. In order to obtain a product license, a
manufacturer must obtain FDA approval of a product license application
("PLA"). Similar to an NDA, a PLA must contain the following information:
nonclinical and clinical data demonstrating the product's safety, purity and
potency; a description of the manufacturing methods; data regarding the
product's stability; test results for the lots represented by the submitted
samples, and samples of the product and its labeling.
The sponsor of a clinical trial involving a biological product must file
an IND with FDA, unless the product is exempt from such requirement. Once the
IND becomes effective, the conduct of the clinical trial is governed by the
same regulatory requirements governing drug clinical trials. Thus, to the
extent that the Company performs these functions on behalf of the biological
product sponsor, the Company must comply with these requirements.
Device Development and Approval in the United States -- An Overview
The FFDCA and regulations thereunder require that, unless exempted by
regulation, all products meeting the statutory definition of "device" receive
the FDA clearance of a premarket notification (510(k) submission or FDA
approval of a premarket approval ("PMA") application prior to marketing in
the United States. Generally, devices are distinguished from drugs through
the characteristic of acting or achieving their effect through means other
than pharmacologic action.
The FDA categorizes medical devices into three regulatory classifications
(Class I, II, and III) on the basis of controls deemed reasonably necessary
to ensure their safety and effectiveness. Class I devices are subject to
general controls (e.g., labeling, premarket notification, and adherence to
good manufacturing practice regulations for medical devices), and Class II
devices are subject to general controls and special controls (e.g.,
performance standards, postmarket surveillance, patient registries and FDA
guidelines). Class III devices (generally including life-sustaining,
life-supporting, or implantable devices, or new devices that have been found
not to be substantially equivalent to a legally marketed predicate device)
are those which must receive premarket approval ("PMA") prior to marketing.
Before a new device can be introduced into the market, the manufacturer
must generally obtain marketing clearance or approval through either a 510(k)
premarket notification or a PMA. A 510(k) clearance will be granted if the
submitted information establishes that the proposed device is "substantially
equivalent" to a legally marketed "predicate" device (i.e., a Class I or II
medical device, or to a Class III medical device for which the FDA has not
called for a PMA). The 510(k) must include, among other information, proposed
labeling and advertisements; data demonstrating substantial equivalence to a
claimed predicate; and any additional information regarding the device
requested by the FDA that is necessary to make a finding as to substantial
equivalence to a predicate device. The FDA can require clinical studies to
demonstrate that a device is as safe and effective as the predicate device.
The FDA recently has been requiring a more rigorous demonstration of
substantial
34
<PAGE>
equivalence than in the past. It generally takes from four to twelve months
from submission of a 510(k) to obtain 510(k) clearance, but it may take
longer. The FDA may determine that a proposed device is not substantially
equivalent to a legally marketed device, or that additional information or
data are needed before a substantial equivalence determination can be made.
If a manufacturer cannot establish that a proposed device is substantially
equivalent to a legally marketed predicate device, the manufacturer must seek
premarket approval of the proposed device from the FDA through the submission
of a PMA application. A PMA application must be supported by extensive data,
including nonclinical laboratory studies or animal testing; clinical trial
data; and a bibliography of all published reports reasonably known to the
manufacturer concerning safety or effectiveness. In addition, the PMA must
include a full description of the device and its components; the principle of
operation of the device; a full description of the methods, facilities and
controls used for manufacturing, processing, packing, storage and, where
appropriate, installation; and proposed labeling. Upon receipt of a PMA
application, the FDA makes a threshold determination as to whether the
application is sufficiently complete to permit a substantive review. If the
FDA determines that the PMA application is sufficiently complete to permit a
substantive review, the FDA will accept the application for filing.
Once the submission is accepted for filing, the FDA begins an in-depth
review of the PMA. An FDA review of a PMA application generally takes one to
two years from the date the PMA application is accepted for filing, but may
take significantly longer. The review time is often significantly extended by
the FDA asking for more information or clarification of information already
provided in the submission. During the review period, an advisory committee,
typically a panel of clinicians, will likely be convened to review and
evaluate the application and provide recommendations to the FDA as to whether
the device should be approved. The FDA is not bound by the recommendations of
the advisory panel. If the FDA's evaluation of the PMA application is
favorable, the FDA will issue either an approval letter or an approvable
letter, which usually contains a number of conditions which must be met in
order to secure final approval of the PMA. When and if those conditions have
been fulfilled to the satisfaction of the FDA, the FDA will issue a PMA
approval letter, authorizing marketing of the device for certain indications.
If the FDA's evaluation of the PMA application is not favorable, the FDA will
deny approval of the PMA application or issue a "not approvable" letter. The
FDA may also determine that additional clinical trials are necessary, in
which case PMA approval may be delayed for several years while additional
clinical trials are conducted and submitted in an amendment to the PMA.
Human clinical trials are always required to support a PMA application,
and may be required to support a 510(k) submission. If the device involved
presents a "significant risk" to the patient, the clinical trial sponsor must
obtain IRB approval for the study and must file an investigational device
exemption ("IDE") application with the FDA prior to commencing human clinical
trials. The IDE application must include reports of prior clinical and
nonclinical investigations of the device; an investigational plan; a
description of the methods, facilities, and controls used for the
manufacture, processing, packing, storage, and, where appropriate,
installation of the device; information concerning the investigators
participating in the study and the IRB's that approved the study; copies of
labeling; copies of forms to be provided to subjects to obtain informed
consent; and other relevant information requested by the FDA. As with IND
applications, the IDE will become effective 30 days following its receipt by
the FDA unless the FDA objects to the application. If the FDA has concerns
about the proposed clinical trial, it may delay the trial and require
modifications to the trial protocol prior to permitting the trial to begin.
Clinical trials involving a device that presents a "nonsignificant risk" to
the patient may begin after the sponsor has obtained approval by one or more
appropriate IRB's, but not the FDA. Such investigations are, nevertheless,
subject to informed consent requirements, monitoring by the sponsor, and
record keeping requirements.
As discussed with respect to clinical studies involving drugs, the FDA
strictly regulates the conduct of all clinical trials involving medical
devices, regardless of whether the clinical trial is conducted under an IDE.
The sponsor of a clinical study involving a device is responsible for
ensuring that proper IRB and/or FDA approval is obtained prior to commencing
the study, selecting qualified investigators and informing investigators of
all necessary information, monitoring the investigation, informing the IRB
and the FDA about significant new information pertaining to the
investigation, and maintaining accurate and current records concerning the
investigation. The sponsor must evaluate unanticipated adverse effects and
terminate the study if it presents an unreasonable risk to subjects. To the
extent that the Company performs these functions on behalf of a
investigational device sponsor, the Company must comply with these
requirements.
35
<PAGE>
The FDA will accept foreign clinical studies involving devices that are
not conducted under an IDE if the data are valid and the investigator has
conducted the studies in conformance with the "Declaration of Helsinki" or
the laws and regulations of the country in which the research is conducted,
whichever accords greater protection to human subjects. Foreign clinical data
that meets these requirements may form the sole basis for PMA approval if the
foreign data are applicable to the United States population and medical
practice, studies were performed by clinical investigators of recognized
competence, and (if necessary) the FDA validates the data through an on-site
inspection or other means.
CLIA Requirements -- An Overview
The Company's clinical laboratory services are subject to the requirements
of the Clinical Laboratory Improvement Amendments of 1988 ("CLIA"). This law
requires all laboratories to meet specified standards in the areas including
personnel qualification, administration, participation in proficiency
testing, patient test management, quality control, and quality assurance. In
addition, laboratories such as the Company's clinical laboratory must obtain
appropriate certification under CLIA. The Company has obtained such
certification for its clinical laboratory.
Under CLIA, the Company's clinical laboratory is subject to inspection by
the United States Department of Health and Human Services or a designee.
Violations of the CLIA requirements may result in sanctions including
suspension, limitation, or revocation of certification; enjoinment of
laboratory activities; civil money penalties; or criminal prosecution for
intentional violations. There can be no assurance that the regulations under,
and future administrative interpretations of, CLIA will not have an adverse
impact on the Company's services in this area.
Foreign Regulatory Requirements
The Company also is subject to foreign regulatory requirements governing
clinical trials and product approval requirements. Whether or not the FDA
approval has been obtained to conduct a clinical trial or market an
FDA-regulated product, approval by comparable regulatory authorities in
foreign countries usually must be obtained to conduct such activities in
those countries. See "Risk Factors -- Dependence on Government Regulation."
POTENTIAL LIABILITY AND INSURANCE
The Company attempts to manage its risk of liability for personal injury
or death to patients from administration of products under study through
contractual indemnification provisions with clients and through insurance
maintained by the Company and its clients. Contractual indemnification
generally does not protect the Company against certain of its own actions,
such as negligence. The terms and scope of such indemnification vary from
client to client and from trial to trial. Although most of the Company's
clients are large, well capitalized companies, the financial viability of
these indemnification provisions cannot be assured. Therefore, the Company
bears the risk that the indemnifying party may not have the financial ability
to fulfill its indemnification obligations. The Company also maintains
professional liability insurance in the amount of $1 million per claim and $3
million in the aggregate. The Company could be materially and adversely
affected if it were required to pay damages or incur defense costs in
connection with a claim that is beyond the scope of an indemnity provision or
beyond the scope or level of insurance coverage maintained by it or the
client or where the indemnifying party does not fulfill its indemnification
obligations. See "Risk Factors -- Potential Liability."
INTELLECTUAL PROPERTY
The Company's services have been enhanced by significant investment in
information technology. The Company's information services group is committed
to achieving operating efficiencies through technical advances. The Company
has developed certain computer software and technically derived procedures
that it seeks to protect through a combination of contract law, copyrights,
trademarks, and trade secrets. Although the Company does not believe that its
intellectual property rights are as important to its results of operations as
are such factors as technical expertise, knowledge, ability and experience of
the Company's professionals, the Company believes that its technical
capabilities provide significant benefits to its clients.
36
<PAGE>
EMPLOYEES
At September 30, 1996, the Company had 120 employees. At the U.S. location
in Philadelphia, PA, the Company had 101 employees (79 full-time, 22
part-time). At the U.K. location in Peterborough, the Company had 19
employees (18 full-time, 1 part-time). On September 30, 1996, 20 employees
held M.D., Ph.D. or other masters or post-graduate degrees. The Company
believes that its relations with its employees are good.
FACILITIES
The Company leases all of its facilities. The Company's principal offices
are located in Philadelphia, PA, where it leases approximately 35,000 square
feet under a lease expiring in 2003. This facility is owned by UM Holdings,
Ltd. See "Certain Relationships." The Company also maintains an office of
approximately 9,000 square feet in Peterborough, U.K. The Company believes
that the leases generally reflect market rates in their respective geographic
areas.
37
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the names, ages and titles of the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
--------------------------------- ----- -------------------------------------------
<S> <C> <C>
Joel Morganroth, M.D. 51 President and Chief Executive Officer
Glenn Cousins 39 President, Diagnostic Services
Christopher C. Gallen, M.D.,
Ph.D. 45 President, Clinical Research Services
David A. Evans 39 Sr. Vice President, Chief Technical Officer
Fred M. Powell 35 Vice President, Finance and Administration
Carol Miller 37 Sr. Vice President, Business Development
Joan Carter 53 Chairman, Director
John J. Aglialoro 53 Director
Arthur Hull Hayes, Jr., M.D. 63 Director
Arthur W. Hicks, Jr. 38 Director
Jerry D. Lee 60 Director
Connie Woodburn 41 Director
</TABLE>
Joel Morganroth, M.D., President and Chief Executive Officer. Dr.
Morganroth has served as the Chief Executive Officer of the Company since
1993 and has consulted for the Company since 1976. Dr. Morganroth was a
Professor of Medicine and Pharmacology at Hahnemann University from 1982 to
1992, and served as a Director of Cardiac Research and Development at the
Graduate Hospital of Philadelphia from 1987 until 1992. Currently, Dr.
Morganroth is an Adjunct Professor of Medicine (Pharmacology) at Jefferson
Medical College of Thomas Jefferson University and Clinical Professor of
Medicine at the University of Pennsylvania School of Medicine. Dr. Morganroth
is an internationally recognized cardiologist and clinical researcher. He has
served for ten years as a Medical Review Officer/Expert for the FDA and since
1995 has served in a similar capacity for the Health Protection Branch of
Canada.
Glenn Cousins, President, Diagnostic Services. Mr. Cousins has served in
various capacities since joining the Company in 1980. Most recently, Mr.
Cousins served as Vice President and Chief Operating Officer of the Company
from 1993 until he was appointed to his present position in 1996 as
President, Diagnostic Services.
Christopher C. Gallen, M.D., Ph.D., President, Clinical Research Services.
Dr. Gallen has served as President, Clinical Research Services of the Company
since January 1996. Prior to joining the Company, Dr. Gallen held various
management positions with Quintiles Transnational Corporation in San Diego,
California, including Senior Director of Medical and Scientific Services
(1995-1996) and Director of Medical and Scientific Services (1994-1995). Dr.
Gallen was also associated with the Scripps Research Institute in La Jolla,
California, serving as Director, Biomagnetism Laboratory from 1987 to 1994.
Dr. Gallen served as Staff Neurologist for the Scripps Clinic and Research
Foundation (1990-1995) and Consultant Psychiatrist for the San Diego County
Department of Mental Health (1985-1994).
David A. Evans, Senior Vice President and Chief Technical Officer. Mr.
Evans has served as Senior Vice President and Chief Technical Officer since
January 1994. Mr. Evans, who joined the Company in 1984, has also served as
Vice President (1989-1990) and Executive Vice President (1991-1993). Mr.
Evans led the Company's effort to provide CANDAs to the FDA and was the
principal designer of the first CANDA.
Fred M. Powell, C.P.A., Vice President, Finance and Administration. Mr.
Powell has served as Vice President, Finance and Administration of the
Company since 1995. Since joining the Company in 1993, Mr. Powell also has
served as Director of Finance and Administration (1993-1995) and Director of
Finance (1993). Prior to joining the Company, Mr. Powell was employed as an
Assistant Controller for Crown Textile Co. (1989-1993), and as a Senior
Manager of KPMG Peat Marwick LLP. While at KPMG Peat Marwick LLP, Mr. Powell
specialized in the pharmaceutical and service industries.
Carol Miller, Senior Vice President, Business Development. Ms. Miller
joined the Company as Senior Vice President, Business Development in November
1996. Prior to joining the Company, Ms. Miller was employed
38
<PAGE>
by ClinTrials Research, Inc., where she served as Senior Director, Business
Development (1996), Business Development Manager (1995-1996), Assistant
Director (1993-1995), Senior Manager (1993), Senior Clinical Project Manager
(1992-1993), and Clinical Project Manager (1992) . Ms. Miller also was
employed by Clinical Science Research International/Pharmco as Senior
Clinical Research Associate (1991) and Clinical Project Manager (1991-1992).
Joan Carter, Chairman, Director. Ms. Carter has served as Chairman of the
Company's Board of Directors since 1996, and as a member of the Board of
Directors of the Company or its predecessors since their founding. Ms. Carter
is a founder and since 1972 has been a director and executive officer of UM,
which is the indirect majority stockholder of the Company. She has served as
President of UM since 1986. Ms. Carter is also a member of the Board of
Directors of the Federal Reserve Bank of Philadelphia.
John J. Aglialoro, Director. Mr. Aglialoro has served on the Board of
Directors of the Company or its predecessors since their founding. Mr.
Aglialoro is a founder and since 1972 has been a director and executive
officer of UM. Mr. Aglialoro has held the position of Chairman of UM since
1982.
Arthur Hull Hayes, Jr., M.D., Director. Dr. Hayes has served on the
Company's Board of Directors since 1996. Since 1991, Dr. Hayes has served as
President and Chief Operating Officer of MediScience Associates, Inc., a
consulting firm. Dr. Hayes is an advisor to the Company and others in
healthcare product development and regulation, clinical pharmacology, and
medical and pharmacy practice, and is internationally recognized as a medical
researcher and clinician. Dr. Hayes served as Commissioner of the FDA from
1981 to 1983. He is also a member of the Board of Directors of Celgene, Inc.,
Myriad Genetics and NaPro Biopharmaceuticals, Inc.
Arthur W. Hicks, Jr., Director. Mr. Hicks has served on the Company's
Board of Directors since 1995. Mr. Hicks is UM's Vice President and Chief
Financial Officer, in which capacity he has served since 1988. He is a
certified public accountant, and prior to joining UM, was employed by Ernst &
Young, LLP, a public accounting firm.
Jerry D. Lee, Director. Mr. Lee has served on the Company's Board of
Directors since 1996. Mr. Lee was a partner in the accounting firm of Ernst &
Young LLP from 1969 until his retirement in 1995. He was managing partner of
its Philadelphia office from 1979 to 1989 and a member of the firm's
world-wide multi-national partner group from 1989 to 1995.
Connie Woodburn, Director. Ms. Woodburn has served on the Company's Board
of Directors since 1996. Ms. Woodburn is Executive Vice President of PREMIER,
Inc., the nation's largest voluntary healthcare alliance, where she has been
employed in a variety of management capacities since 1987.
Mr. Aglialoro and Ms. Carter are married. There are no other family
relationships among the directors or executive officers.
Members of the Board of Directors serve three year terms with staggered
expiration dates. The terms of Ms. Carter and Ms. Woodburn expire in 1997,
the terms of Mr. Aglialoro and Dr. Hayes expire in 1998, and the terms of Mr.
Hicks and Mr. Lee expire in 1999. Officers are elected by the Board of
Directors and serve at the pleasure of the Board.
EMPLOYMENT CONTRACTS
The Company has entered into employment agreements with each of the
executive officers named in the Summary Compensation Table. Under these
agreements, the employment may be terminated with or without cause at any
time. In the event that the Company terminates an officer's employment other
than "for cause", the Company is obligated to continue normal salary payments
for up to six months (one year in the case of Dr. Morganroth). Pursuant to
the agreement, each officer has agreed not to compete with the Company during
his employment and for a period of two years thereafter. In October 1996, Dr.
Morganroth entered into a new employment agreement that becomes effective
January 1, 1997, and continues, unless terminated, through December 31, 2001.
Under the terms of this agreement, Dr. Morganroth will receive an annual
salary which for 1997 will equal $201,000. A professional corporation of
which Dr. Morganroth is the sole stockholder and employee has separately
agreed to provide services to the Company, including serving as medical
director and providing medical interpretation for diagnostic tests. See
"Certain Relationships."
39
<PAGE>
BOARD COMMITTEES
The Executive Committee of the Board of Directors is composed of Ms.
Carter and Mr. Aglialoro, the Compensation and Personnel Committee is
composed of Mr. Lee and Ms. Woodburn and the Audit Committee is composed of
Mr. Hicks and Mr. Lee. The Board intends to create a Scientific Oversight
Committee composed initially of Dr. Hayes.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a fee of $1,000 for
each directors meeting attended and $500 for each committee meeting attended.
Upon completion of this offering, non-employee directors also will receive an
annual retainer of $2,000. Each director is reimbursed for out-of-pocket
expenses incurred in connection with attending meetings and other services as
a director. At the time of their initial election to the Board, Mr. Lee, Dr.
Hayes and Ms. Woodburn were each granted options to acquire 4,402 shares of
Common Stock of the Company. These options will become first exercisable on
the earlier of the seventh anniversary of the date of grant or 180 days
following the closing of this offering.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid by the Company for the year ended December 31, 1995 to the
Company's Chief Executive Officer and to each of the Company's other
executive officers whose salary and bonus exceeded $100,000 in such year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long term
Annual Compensation
Compensation(1) --------------
--------------------- Number of All Other
Name and Principal Position Year Salary Bonus Options Compensation(2)
------------------------------ ------ ---------- ------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Joel Morganroth, M.D. 1995 $171,000 -- 220,100 -- (3)
President and Chief Executive
Officer
David Evans 1995 119,500 -- 33,015 $6,138
Sr. Vice President, Chief
Technical Officer
Glenn Cousins 1995 115,000 -- 66,030 6,900
President, Diagnostic
Services
</TABLE>
- ------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser
of $50,000 or 10% of the total of annual salary and bonuses for the
officer for such year.
(2) Represents the Company's 401(k) plan contributions.
(3) Excludes consulting fees of $956,000 paid to a professional corporation
owned by Dr. Morganroth. See "Certain Relationships."
STOCK OPTION GRANTS
The following tables contain certain information concerning the grant of
stock options under the Company's 1993 Non-Qualified Stock Option Plan during
the year ended December 31, 1995, and the number and value of options held at
December 31, 1995 by each of the Company's executive officers named in the
Summary Compensation Table. These options will become exercisable on the
sooner of July 1, 2003 or the 90th day following the closing of this
offering. Prior to the offering, the Company has been privately-held and
there has been no public market for its securities. The Company believes that
the options were granted at prices in excess of the then fair market value of
the stock.
40
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Potential
Realizable
Value
at Assumed
Annual Rates of
Stock Price
Number of Percent of Total Appreciation
Securities Options for
Underlying Granted to Exercise or Option Term
Options Employees in Base Price Expiration ---------------
Name Granted Fiscal Year ($/Sh) Date(1) 5%(2) 10%(2)
--------------------- ------------ ---------------- ------------- ------------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Joel Morganroth, M.D. 220,100 46.5% $2.27 2/1/02 $0 $0
David Evans 33,015(3) 7.0% 2.27 2/1/02 0 0
Glenn Cousins 66,030(3) 14.0% 2.27 2/1/02 0 0
</TABLE>
- ------
(1) Assumes that the closing of this offering occurs on February 1, 1997.
(2) Amounts represent hypothetical gains that could be achieved for the
options if exercised at the end of the option term. These gains are based
upon assumed rates of share price appreciation set by the Securities and
Exchange Commission of five percent and ten percent of the fair value of
the Common Stock on the date of grant of the options (which was
substantially less than the exercise price), compounded annually from the
date of grant to the option expiration date. The gains shown are net of
the option exercise price, but do not include deductions for taxes or
other expenses associated with the exercise. While these assumptions
result in no potential realizable value of the option, a calculation
based on the proposed initial public offering price would result in a
significant potential realizable value. Actual gains, if any, are
dependent on the performance of the Common Stock and the date on which
the option is exercised.
(3) Excludes options for 11,005 shares and 22,010 shares granted to Mr. Evans
and Mr. Cousins, respectively, during 1995 and subsequently terminated.
<PAGE>
FISCAL 1995 YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
Name at Fiscal Year End at December 31, 1995
--------------------- ------------------- --------------------
<S> <C> <C>
Joel Morganroth, M.D. 220,100 $0
David Evans 33,015 0
Glenn Cousins 66,030 0
</TABLE>
STOCK OPTION PLANS
1993 Non-Qualified Stock Option Plan. The Company's 1993 Non-Qualified
Stock Option Plan (the "1993 Plan") authorizes the grant of options to
acquire up to 1,100,500 shares of the Company's Common Stock. The purpose of
the 1993 Plan was to provide an incentive for key individuals to advance the
success of the Company. The Plan is administered by a committee of not less
than two directors, the members of which are ineligible to participate in the
Plan. The Committee, in its discretion, determines who shall receive options
under the Plan.
The 1993 Plan provides for the grant of non-qualified options to acquire
the Company's Common Stock. The option price for each option which has been
granted under the 1993 Plan is $2.27 per share. Each option granted under the
1993 Plan will become exercisable on July 1, 2003 or on the 90th day
following the closing of the initial public offering ("IPO") of the Company's
Common Stock (the "IPO Date"), as defined, and will expire on the fifth
anniversary of the IPO Date. The offering pursuant to this Prospectus will
constitute an IPO, as defined in the 1993 Plan. In accordance with the terms
of lock-up agreements entered into with the Company, the holders of the
options have agreed not to sell shares of Common Stock owned by each of them
without the prior written consent of Montgomery Securities for a period of
180 days (365 days, in the case of Dr. Morganroth) following the first offer
of shares of Common Stock pursuant to this Prospectus. See "Underwriting."
Options covering 517,235 shares of the Common Stock are outstanding under
the 1993 Plan as of the date of this Prospectus. The Company does not
anticipate granting any additional options under the Plan prior to the
offering hereunder, and under the terms of the 1993 Plan, no further options
can be granted under the 1993 Plan after the IPO Date.
41
<PAGE>
1996 Stock Option Plan. The Company's 1996 Stock Option Plan (the "1996
Plan") authorizes the grant of options to acquire up to 500,000 shares of the
Company's Common Stock. Such options may be incentive stock options ("ISOs")
within the meaning of the Internal Revenue Code of 1986, as amended, or
options that do not qualify as ISOs ("Non-Qualified Options").
The 1996 Plan is administered by a Committee of the Board of Directors
(the "Committee") consisting of not less than two directors of the Company.
The Committee has full power and authority to interpret the provisions, and
supervise the administration, of the 1996 Plan. It determines, subject to the
provisions of the 1996 Plan, to whom options are granted, the number of
shares of Common Stock subject to each option, whether an option shall be an
ISO or a Non-Qualified Option and the period during which each option may be
exercised. In addition, the Committee determines the exercise price of each
option, subject to the limitations provided in the 1996 Plan. The exercise
price per share of any ISO granted under the Plan may not be less than 100%
of the fair market value per share of Common Stock on the date of grant (110%
of such fair market value if the grantee owns stock representing more than
10% of the combined voting power of all classes of the Company's stock). The
aggregate fair market value (determined as of the time such option is
granted) of the Common Stock for which any employee may have ISOs which
become exercisable for the first time in any calendar year may not exceed
$100,000.
ISOs may have an exercise option period of up to 10 years (five years for
optionees who own more than 10% of the total combined voting power of all
classes of stock of the Company or its parent or any subsidiary corporation).
Non-Qualified Options will have an exercise option period as specified by the
Committee at the time of grant.
The 1996 Plan provides that upon termination of employment of the optionee
for any reason other than death or disability, the right to exercise the
option (to the extent otherwise exercisable) will terminate within three
months following cessation of employment. In the event of termination of
employment due to death or disability, the same provisions apply except that
the period of time for exercise is one year.
The options granted pursuant to the 1996 Plan are not transferable except
in the event of death. Options may be granted under the 1996 Plan to
employees and directors of the Company and to others providing services or
having a relationship with the Company. No options may be granted under the
1996 Plan after November 18, 2006.
At the present time, no options have been granted under the 1996 Plan. The
Company has agreed to grant to an employee an option for 10,000 shares
pursuant to the 1996 Plan, at the offering price hereunder. The Company has
no other current plans to grant options under the 1996 Plan.
401(K) PLAN
The Company has participated in a deferred savings program for employees
pursuant to Section 401(k) of the Internal Revenue Code of 1986 sponsored by
UM, for which the Company is charged for the profit sharing plan
contributions made with respect to its employees. During 1997, the Company
intends to adopt its own 401(k) program, which will be substantially
identical to the UM program. Under the 401(k) program, full-time employees of
the Company who have completed at least one year of employment may elect to
defer receipt of a specified portion of their compensation, with the Company
providing limited matching contributions. Subject to certain limitations
relating to non-discrimination, a participant is permitted to contribute
between 2% and 10% of his or her compensation to the program. The Company
makes matching contributions, up to 6% of compensation, equal to 25% to 100%
of the employee's contribution, based upon years of service. The amount that
may be contributed by a participant in any single year may not exceed an
amount specified by law, which for 1996 was $9,500. Vesting of Company
contributions commence upon the completion of two years of service and then
increases until full vesting occurs upon completion of five years of service.
An employee's contributions are fully vested immediately.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Personnel Committee is composed of Mr. Lee and Ms.
Woodburn, neither of whom is a current or former officer or employee of the
Company.
42
<PAGE>
Prior to the formation of the Compensation and Personnel Committee,
decisions with respect to executive compensation were determined by the Board
which, at the time of such determinations, was composed of John Aglialoro and
Joan Carter. Ms. Carter is the Chairman of the Board, and Mr. Aglialoro is a
director of the Company. They also are executive officers, directors and the
principal stockholders of UM, which prior to this offering was the principal
stockholder of the Company. See "Certain Relationships".
PRINCIPAL AND SELLING STOCKHOLDERS
Of the shares of Common Stock offered hereby, 750,000 are being sold by UM
Holdings, Ltd. through its wholly-owned subsidiary UM Equity Corp.
(collectively, "UM"). The Company will not receive any of the proceeds from
the shares of Common Stock being sold by UM. Substantially all of the capital
stock of UM is owned equally by John Aglialoro and Joan Carter.
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company by UM, the Company's
directors and executive officers, and each other person known to the Company
to own beneficially more than 5% of the Common Stock, and as adjusted to
reflect UM's sale of Common Stock in this offering.
<TABLE>
<CAPTION>
Prior to Offering After Offering
------------------------------ ------------------------------
Shares Shares Shares
Beneficially Percentage Being Beneficially Percentage
Name of Beneficial Owner Owned Owned Offered(1) Owned Owned
----------------------------------------- -------------- ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
UM Holdings, Ltd. (2) ................... 3,741,700 79.1% 750,000 2,991,700 44.4%
Joel Morganroth, M.D. (3) ............... 880,400 17.8 880,400 12.7
PREMIER, Inc. (4) ....................... 334,552 7.1 334,552 5.0
Glenn Cousins (5) ....................... 66,030 1.4 66,030 1.0
Christopher C. Gallen, M.D., Ph.D.(5) ... 44,020 * 44,020 *
David A. Evans (5) ...................... 33,015 * 33,015 *
Fred M. Powell (5) ...................... 22,010 * 22,010 *
Carol Miller ............................ -- -- -- --
Joan Carter (6) ......................... 3,741,700 79.1 2,991,700 44.4
John J. Aglialoro (6) ................... 3,741,700 79.1 2,991,700 44.4
Arthur Hull Hayes, Jr., M.D. (7) ........ 4,402 * 4,402 *
Arthur W. Hicks, Jr. (5) ................ 44,020 * 44,020 *
Jerry D. Lee (7) ........................ 4,402 * 4,402 *
Connie Woodburn (7)(8) .................. 4,402 * 4,402 *
All directors and executive officers as a group
(12 persons)(9) ........................ 4,844,401 93.7 4,094,401 57.1
</TABLE>
- ------
* Less than 1.0%
<PAGE>
(1) Assumes no exercise of the over-allotment option.
(2) Represents shares owned by its wholly-owned subsidiary, UM Equity Corp.
UM's address is 56 Haddon Avenue, Haddonfield, NJ 08033.
(3) Includes (i) 495,225 shares owned by a trust for the benefit of Dr.
Morganroth's minor children, as to which Dr. Morganroth disclaims
beneficial ownership, and (ii) 220,100 shares issuable with respect to
options granted pursuant to the Company's 1993 Non-Qualified Stock Option
Plan, which become exercisable in full on the 90th day following the
closing of this offering. Dr. Morganroth's address is 124 S. 15th Street,
Philadelphia, PA 19102.
(4) Upon the closing of this offering, PREMIER, Inc.'s minority interest in
limited liability company controlled by the Company will automatically be
converted into 330,150 shares of Common Stock of the Company. The
interest in limited liability company is, and the shares of Common Stock
into which the interest will be converted will be, held by a trust for
the benefit of the owners of Premier Health Alliance Inc. at the time of
the merger which resulted in the formation of PREMIER, Inc. The trustee
for this trust is a wholly-owned subsidiary of PREMIER, Inc. Includes
options granted to Connie Woodburn, a director of the Company and an
executive officer of PREMIER, Inc., which in accordance with her
employment arrangement are held for the benefit of PREMIER, Inc. PREMIER,
Inc.'s address is 3 Westbrook Corporate Center, Westchester, Illinois
60154.
(5) Represents shares issuable with respect to options granted pursuant to
the Company's 1993 Non-Qualified Stock Option Plan, which become
exercisable in full on the 90th day following the closing of this
offering.
(6) Represents shares owned by UM, of which Mr. Aglialoro and Ms. Carter are
the principal stockholders and act as executive officers and directors.
(7) Represents shares issuable upon exercise of stock options that become
exercisable in full 180 days following the closing of this offering.
(8) Represents shares issuable under a stock option which, due to Ms.
Woodburn's employment relationship with PREMIER, Inc., are held for the
benefit of such company. Excludes shares owned by PREMIER, Inc., for
which Ms. Woodburn is an executive officer.
(9) Includes 442,401 shares issuable upon exercise of stock options.
43
<PAGE>
CERTAIN RELATIONSHIPS
The Company or its predecessors have been direct or indirect subsidiaries
or divisions of UM since 1977. Upon closing of the offering, UM will
indirectly own approximately 44.4% of the Company's Common Stock (40.1% if
the Underwriters' over-allotment option is exercised in full). John Aglialoro
and Joan Carter, who are married, are executive officers, directors and the
principal stockholders of UM; Ms. Carter is the Chairman and Mr. Aglialoro is
a director of the Company.
UM has had the following arrangements with the Company:
The Company's principal executive and operations facility is owned by UM
and leased to the Company. The current annual rent under this lease is
$349,200. The Company believes that the terms of this lease are as favorable
to the Company as would have been obtained through arms-length negotiations
with an unrelated party. See "Business -- Facilities."
UM has historically provided various administrative services to the
Company, including accounting, human resources and computer services, for
which it was charged $160,000 in 1995. In 1996, UM decentralized most of
these functions, and now provides primarily 401(k) administrative services.
For the nine months ended September 30, 1996, UM charged the Company $43,000.
The Company also has participated in UM's deferred savings program for
employees pursuant to Section 401(k) of the Internal Revenue Code. The
Company was charged $59,000 and $65,000 for 1995 and the nine months ended
September 30, 1996, respectively, for profit sharing plan contributions made
pursuant to this program on behalf of its employees. During 1997, the Company
expects to adopt its own Section 401(k) program, which will be substantively
identical to the UM program. Until April 1996, the Company participated in
UM's centralized cash management program. Pursuant to this program, the
Company's cash receipts were remitted to, and cash disbursements were funded
by, UM, with UM retaining any excess cash.
The Company performed blood and urine analysis services for a subsidiary
of UM. The Company charged market fees for these services of $115,000 and
$7,000 for 1995 and the nine months ended September 30, 1996, respectively.
The Company utilized a different UM subsidiary for subcontracted diagnostic
services, for which it incurred market fees of $94,000 and $122,000 for 1995
and the nine months ended September 30, 1996, respectively. The Company does
not anticipate using these subcontracted services in the future. The Company
sold fixed assets to UM at their carrying values of $66,000 and $29,000 for
1995 and the nine months ended September 30, 1996, respectively.
The Company is, and until the closing of the offering hereunder will
continue to be, included in the consolidated income tax filings of UM. The
Company, UM and other subsidiaries of UM have entered into a tax sharing
agreement pursuant to which the Company will pay to UM amounts equal to the
income taxes which the Company would otherwise have paid had it filed
separate income tax returns.
Certain of the Company's diagnostic testing and clinical research
contracts require that specified medical professional services be provided by
Dr. Morganroth, the Company's President and Chief Executive Officer. The
Company has retained Joel Morganroth, M.D., PC, a professional corporation
owned by Dr. Morganroth, to provide these and other services, which include
serving as Medical Director to the Company, acting as principal investigator
for various studies, and providing medical interpretation for diagnostic
tests from time to time as required. These arrangements resulted in payments
to the professional corporation during 1995 and the nine month period ended
September 30, 1996 of $956,000 and $1,621,000, respectively. Effective
January 1, 1997, the professional corporation will receive a fixed annual fee
of $144,000.
In January 1996, UM sold 660,300 shares of the Company's outstanding
Common Stock to Dr. Morganroth and, in connection therewith, loaned Dr.
Morganroth $750,000. This collateralized loan, which bears interest at 5.5%
per annum, is payable on December 31, 1997.
During 1995, the Company and PREMIER, Inc. formed a limited liability
company, owned 65% by the Company and 35% by PREMIER, Inc. Upon the closing
of this offering, PREMIER, Inc.'s interest in the limited liability company
will convert into 330,150 shares of the Company's Common Stock. Connie
Woodburn, a director of the Company, serves as Executive Vice President of
PREMIER, Inc.
44
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's authorized capital stock consists of 15,000,000 shares of
Common Stock, $.01 par value, and 500,000 shares of Preferred Stock, $10 par
value.
COMMON STOCK
As of November 15, 1996, there were 4,732,150 shares of Common Stock
outstanding. The holders of shares of Common Stock are entitled to one vote
per share held on all matters submitted to a vote of stockholders of the
Company and do not have cumulative voting rights. Accordingly, holders of a
majority of the shares of the Common Stock entitled to vote in any election
of directors may elect all of the directors standing for election, and after
the offering the current stockholders and directors and officers of the
Company will be able to elect all of the directors. In addition, holders of
the Common Stock are entitled to receive ratably such dividends, if any, as
may be declared from time to time by the board of directors out of funds
legally available therefor. In the event of the dissolution, liquidation or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of all liabilities of the
Company. Dividend and liquidation rights attributable to the Common Stock
would be subject to any preferential rights associated with any outstanding
Preferred Stock. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. All outstanding shares of Common Stock are,
and the shares of Common Stock offered by the Company in this offering will
be, when issued, fully paid and nonassessable.
PREFERRED STOCK
Presently, there are no shares of Preferred Stock outstanding. The Board
of Directors has the authority to issue Preferred Stock in one or more
series, and to fix the rights, preferences, privileges and restrictions,
including dividend, conversion, voting, redemption (including sinking fund
provisions), and other rights, liquidation preferences and the number of
shares constituting any series and the designations of such series, without
any further vote or action by the shareholders of the Company. The rights and
preferences of the Preferred Stock may be senior to the rights and
preferences of the Common Stock. Because the terms of the Preferred Stock may
be fixed by the Board of Directors of the Company without stockholder action,
the Preferred Stock could be issued quickly with terms calculated to defeat a
proposed takeover of the Company, or to make the removal of the management of
the Company more difficult. Under certain circumstances, this could have the
effect of decreasing the market price of the Common Stock.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. In general, Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date
of the transaction in which the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years did own, 15% or
more of the corporation's voting stock.
The Certificate of Incorporation of the Company requires an affirmative
super-majority (80%) stockholder vote before the Company can enter into
certain defined business combinations, except for combinations that meet
several specified conditions. These provisions, as well as the provisions of
the Certificate of Incorporation described above relating to the staggered
terms of the Board of Directors and the ability of the Board of Directors to
issue shares of Preferred Stock, could discourage potential take-over
attempts and may make more difficult attempts by stockholders to change the
management of the Company.
The Company's Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain
circumstances involving wrongful acts, such
45
<PAGE>
as the breach of a director's duty of loyalty or acts or omissions which
involve intentional misconduct or a knowing violation of law. The General
Corporation Law of Delaware also authorizes the Company to indemnify its
directors and officers. The Company believes that these provisions will
assist the Company in attracting and retaining qualified individuals to serve
as directors.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is__________.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 6,732,150 shares
of Common Stock outstanding. Of the shares outstanding upon completion of
this offering, the 2,750,000 shares sold in this offering will be freely
tradeable without restriction or registration under the Act, except for
shares purchased by "affiliates" of the Company as that term is defined in
Rule 144 under the Act.
The remaining 3,982,150 shares of Common Stock outstanding, and the
540,441 shares issuable upon exercise of outstanding stock options, will be
"restricted securities" (the "Restricted Shares") within the meaning of Rule
144 under the Act, and may not be sold in the absence of registration under
the Act unless an exemption from registration is available, including an
exemption contained in Rule 144 or Rule 701 under the Act.
In general, Rule 144, as currently in effect, provides that any person (or
persons whose shares are aggregated) who has beneficially owned shares for at
least two years, including persons who may be deemed "affiliates" of the
Company (as defined under the Act), is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of
(i) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale is filed with
the Securities and Exchange Commission (the "Commission"), or (ii) 1% of the
shares of Common Stock then outstanding. In addition, sales under Rule 144
are subject to certain other restrictions regarding the manner of sale,
required notice and availability of current public information concerning the
Company. A person who is not deemed an "affiliate" of the Company, has not
been an affiliate for at least three months prior to the sale and who has
beneficially owned shares for at least three years after the later of the
date the shares were acquired from the Company or the date they were
purchased from an affiliate of the Company, is entitled to sell such shares
under Rule 144(k) immediately without regard to the volume limitations and
current public information requirements described above. Affiliates,
including members of the Board of Directors and executive officers, continue
to be subject to such limitations.
Shares issuable on the exercise of outstanding options may be eligible for
sale in the public market pursuant to Rule 701 under the Act. In general,
Rule 701 permits resale of shares issued pursuant to certain compensatory
benefit plans and contracts commencing ninety days after the issuer becomes
subject to the reporting requirements of the Exchange Act, in reliance upon
Rule 144, but without compliance with certain restrictions of Rule 144,
including the holding period requirements.
The Company, the Selling Stockholder (which prior to this offering is the
principal stockholder of the Company), all optionees (who will have the right to
acquire a total of 540,441 shares of Common Stock pursuant to stock options
exercisable 90 or 180 days following the closing of the offering hereunder), and
each other stockholder, executive officer and director of the Company have
agreed with the Representatives of the Underwriters that, subject to certain
exceptions, they will not offer, sell, contract to sell, grant any option to
purchase, or otherwise dispose of any shares of Common Stock, or any securities
convertible or exercisable or exchangeable for shares of Common Stock,
beneficially owned by them for a period of 180 days (365 days, in the case of
Dr. Morganroth) following the first offer of shares of Common Stock pursuant to
this Prospectus without the prior written consent of the Underwriters'
Representatives.
Prior to this offering, there has been no market for the Common Stock of
the Company and no prediction can be made as to the effect, if any, that
market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock of the Company in the public market could
adversely effect prevailing market prices.
46
<PAGE>
UNDERWRITING
The Underwriters named below, represented by Montgomery Securities, Furman
Selz LLC and Genesis Merchant Group Securities (the "Representatives"), have
severally agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase from the Company and the Selling
Stockholder the number of shares of Common Stock indicated below opposite
their respective names at the initial public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent, and that the Underwriters are
committed to purchase all of the shares if they purchase any of the shares.
<TABLE>
<CAPTION>
Number of
Underwriters Shares
- ------------ -----------
<S> <C>
Montgomery Securities .......................................
Furman Selz LLC .............................................
Genesis Merchant Group Securities ............................
---------
Total ..................................................... 2,750,000
=========
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on
the cover page of this Prospectus. The Underwriters may allow to selected
dealers a concession of not more than $ per share; and the Underwriters may
allow, and such dealers may reallow, a concession of not more than $ per
share to certain other dealers. After the offering, the offering price and
other selling terms may be changed by the Representatives. The Common Stock
is offered subject to receipt and acceptance by the Underwriters, and to
certain other conditions, including the right to reject orders in whole or in
part.
The Company and the Selling Stockholder have granted an option to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to a maximum of 412,500 additional shares of
Common Stock to cover over-allotments, if any, at the same price per share as
the initial shares to be purchased by the Underwriters. To the extent that
the Underwriters exercise this option, the Underwriters will be committed,
subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with the offering.
The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.
The Company and its directors, executive officers, and stockholders have
agreed that for a period of 180 days (365 days, in the case of Dr. Morganroth)
following the first offer of shares of Common Stock pursuant this Prospectus,
they will not, directly or indirectly, offer, sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into or exchangeable for, or any rights
to purchase or acquire, Common Stock without the prior written consent of
Montgomery Securities. Montgomery Securities may, in its sole discretion and at
any time without prior notice, release all or any portion of the shares of
Common Stock subject to the lock-up agreements.
The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts
over which they exercise discretionary authority in excess of 5% of the
offering.
Prior to the offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price will be
determined by negotiations between the Company and the Representatives. Among
the factors to be considered in such negotiations are the history of, and the
prospects for, the Company and the industry in which it competes, an
assessment of the Company's management, the Company's past and present
operations, its past and present earnings and the trend of such earnings, the
prospects for future earnings of the Company, the present state of the
Company's development, the general condition of the securities markets at the
time of the offering and the market price of and demand for publicly-traded
common stocks of comparable companies in recent periods.
47
<PAGE>
The Company is applying for listing of the Common Stock on the Nasdaq
National Market under the symbol "PRWW."
LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for the
Company and the Selling Stockholder by Archer & Greiner, A Professional
Corporation, Haddonfield, New Jersey. Certain legal matters will be passed
upon for the Underwriters by Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania.
EXPERTS
The audited Consolidated Financial Statements of the Company included in
this Prospectus and elsewhere in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement on Form S-1 under
the Securities Act of 1933, as amended, for the registration of the
Securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules filed therewith, as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus concerning the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to such contract or other document filed with the
Commission as an exhibit to the Registration Statement, or otherwise, each
such statement being qualified in all respects, by such reference to such
exhibit. For further information with respect to the Company and the
Securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and financial statements and notes filed as a
part thereof.
The Company intends to distribute to its shareholders annual reports
containing audited financial statements and will make available copies of
quarterly reports for the first three quarters of each fiscal year containing
unaudited interim financial information.
48
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Report of Independent Public Accountants ......................... F-2
Consolidated Balance Sheets ...................................... F-3
Consolidated Statements of Operations ............................ F-4
Consolidated Statements of Stockholders' Equity .................. F-5
Consolidated Statements of Cash Flows ............................ F-6
Notes to Consolidated Financial Statements ....................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Premier Research Worldwide, Ltd.:
We have audited the accompanying consolidated balance sheets of Premier
Research Worldwide, Ltd. (an indirect subsidiary of UM Holdings, Ltd., see
Note 1) and subsidiaries as of December 31, 1994 and 1995 and September 30,
1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three year period ended
December 31, 1995, and for the nine months ended September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Premier Research Worldwide,
Ltd. and subsidiaries, as of December 31, 1994 and 1995 and September 30,
1996, and the results of their operations and their cash flows for each of
the years in the three year period ended December 31, 1995, and for the nine
months ended September 30, 1996, in conformity with generally accepted
accounting principles.
Philadelphia, Pa.,
November 20, 1996 (except for the
stock split discussed in Note 11,
as to which the date is November 26, 1996) ARTHUR ANDERSEN LLP
F-2
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
------------------------------ September 30,
1994 1995 1996
------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 447,000 $ 33,000 $ 530,000
Accounts receivable, net ........................ 2,326,000 2,586,000 3,450,000
Prepaid expenses and other ...................... 146,000 414,000 295,000
Deferred income taxes ........................... 148,000 106,000 105,000
------------- ------------- ---------------
Total current assets ......................... 3,067,000 3,139,000 4,380,000
Property and equipment, net ....................... 1,893,000 1,049,000 675,000
Goodwill, net ..................................... 190,000 142,000 106,000
Deferred income taxes ............................. 5,000 70,000 114,000
------------- ------------- ---------------
$5,155,000 $4,400,000 $5,275,000
============= ============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 294,000 $ 475,000 $ 605,000
Accrued expenses ................................ 892,000 526,000 640,000
Accrued income taxes ............................ 170,000 46,000 315,000
Payable to UM Holdings, Ltd. for income taxes ... -- -- 447,000
Deferred revenues ............................... 1,624,000 363,000 318,000
------------- ------------- ---------------
Total current liabilities .................... 2,980,000 1,410,000 2,325,000
------------- ------------- ---------------
Minority interest in limited liability company .... -- 332,000 29,000
------------- ------------- ---------------
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock- $10 par value, 500,000 shares
authorized, none issued and outstanding ...... -- -- --
Common stock-$.01 par value, 15,000,000 shares
authorized, 4,402,000 shares issued and
outstanding .................................. 44,000 44,000 44,000
Additional paid-in capital ...................... 2,131,000 2,273,000 2,273,000
Retained earnings ............................... -- 341,000 604,000
------------- ------------- ---------------
Total stockholders' equity ................... 2,175,000 2,658,000 2,921,000
------------- ------------- ---------------
$5,155,000 $4,400,000 $5,275,000
============= ============= ===============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
------------------------------------------------- -------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- ------------- --------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues ...................... $10,245,000 $12,910,000 $12,218,000 $9,031,000 $11,754,000
Less-Reimbursed costs ......... -- -- (154,000) (36,000) (147,000)
-------------- -------------- -------------- ------------- --------------
Net revenues .................. 10,245,000 12,910,000 12,064,000 8,995,000 11,607,000
-------------- -------------- -------------- ------------- --------------
Costs and expenses:
Direct costs ................ 2,428,000 3,473,000 4,124,000 2,795,000 4,615,000
Selling, general and
administrative ........... 7,278,000 7,245,000 6,375,000 4,600,000 5,070,000
Depreciation and amortization 785,000 1,197,000 1,013,000 786,000 556,000
-------------- -------------- -------------- ------------- --------------
Total costs and expenses ...... 10,491,000 11,915,000 11,512,000 8,181,000 10,241,000
-------------- -------------- -------------- ------------- --------------
Income (loss) before income
taxes and minority interest . (246,000) 995,000 552,000 814,000 1,366,000
Minority interest in limited
liability company's (income)
loss ........................ -- -- 48,000 (21,000) 303,000
-------------- -------------- -------------- ------------- --------------
Income (loss) before income
taxes ....................... (246,000) 995,000 600,000 793,000 1,669,000
Income tax provision (benefit) (69,000) 415,000 259,000 315,000 719,000
-------------- -------------- -------------- ------------- --------------
Net income (loss) ............. $ (177,000) $ 580,000 $ 341,000 $ 478,000 $ 950,000
============== ============== ============== ============= ==============
Pro forma net income per share
(Note 1) (unaudited):
Pro forma net income before
income taxes ............. $ 552,000 $ 1,366,000
Pro forma income tax
provision ................ 239,000 596,000
-------------- --------------
Pro forma net income ........ $ 313,000 $ 770,000
============== ==============
Pro forma net income per
share .................... $ .07 $ .15
============== ==============
Shares used in computing pro
forma net income per share 4,757,000 4,998,000
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained Division
Stock Capital Earnings Equity Total
--------- ------------ ----------- ------------- -------------
$ $ $
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 ...... -- -- -- $ 1,856,000 $1,856,000
Net loss .................... -- -- -- (177,000) (177,000)
Deemed distribution for net
operating loss utilization -- -- -- (217,000) (217,000)
Net contributions from UM
Holdings, Ltd. ........... -- -- -- 786,000 786,000
--------- ------------ ----------- ------------- -------------
Balance, December 31, 1993 .... -- -- -- 2,248,000 2,248,000
Net income ................... -- -- 300,000 280,000 580,000
Contribution of division
equity by UM Holdings,
Ltd. ..................... 44,000 2,484,000 -- (2,528,000) --
Net distributions to UM
Holdings, Ltd. ........... -- (353,000) (300,000) -- (653,000)
--------- ------------ ----------- ------------- -------------
Balance, December 31, 1994 .... 44,000 2,131,000 -- -- 2,175,000
Net income .................. -- -- 341,000 -- 341,000
Net contributions from UM
Holdings, Ltd. ........... -- 142,000 -- -- 142,000
--------- ------------ ----------- ------------- -------------
Balance, December 31, 1995 .... 44,000 2,273,000 341,000 -- 2,658,000
Net income .................. -- -- 950,000 -- 950,000
Net distributions to UM
Holdings, Ltd. ........... -- -- (687,000) -- (687,000)
--------- ------------ ----------- ------------- -------------
Balance, September 30, 1996 ... $44,000 $ 2,273,000 $ 604,000 $ -- $2,921,000
========= ============ =========== ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
-------------------------------------------- --------------------------
1993 1994 1995 1995 1996
------------- ----------- ------------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income (loss) .................................. $ (177,000) $ 580,000 $ 341,000 $ 478,000 $ 950,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities-
Depreciation and amortization ................. 785,000 1,197,000 1,013,000 786,000 556,000
Provision for losses on accounts receivable ... 109,000 79,000 57,000 -- --
Minority stockholder contribution of services . -- -- 30,000 -- --
Minority interest in limited liability company's
(loss) income .............................. -- -- (48,000) 21,000 (303,000)
Deferred income taxes ......................... 67,000 (95,000) (23,000) (8,000) (43,000)
Loss (gain) on sales of property and equipment . -- 55,000 (37,000) (6,000) (2,000)
Changes in assets and liabilities-
Accounts receivable ........................ (488,000) (285,000) (317,000) (236,000) (864,000)
Prepaid expenses and other ................. 8,000 1,000 (268,000) (137,000) 119,000
Accounts payable ........................... 337,000 (251,000) 181,000 118,000 130,000
Accrued expenses ........................... 217,000 171,000 (366,000) (292,000) 114,000
Accrued income taxes ....................... 77,000 89,000 (124,000) (125,000) 269,000
Payable to UM Holdings, Ltd. for income taxes -- -- -- -- 447,000
Deferred revenues .......................... 524,000 101,000 (1,261,000) (890,000) (45,000)
------------- ----------- ------------- ----------- -----------
Net cash provided by (used in) operating
activities ............................ 1,459,000 1,642,000 (822,000) (291,000) 1,328,000
------------- ----------- ------------- ----------- -----------
Investing activities:
Purchases of property and equipment ................ (1,984,000) (828,000) (205,000) (98,000) (178,000)
Proceeds from sales of property and equipment ...... -- 1,000 171,000 109,000 34,000
------------- ----------- ------------- ----------- -----------
Net cash provided by (used in) investing
activities ............................ (1,984,000) (827,000) (34,000) 11,000 (144,000)
------------- ----------- ------------- ----------- -----------
Financing activities:
Net contributions from (distributions to)
UM Holdings, Ltd. ............................... 569,000 (653,000) 142,000 76,000 (687,000)
Minority interest contribution ..................... -- -- 300,000 300,000 --
------------- ----------- ------------- ----------- -----------
Net cash provided by (used in) financing
activities ............................ 569,000 (653,000) 442,000 376,000 (687,000)
-------------- ----------- ------------- ----------- -----------
Net increase (decrease) in cash and cash equivalents . 44,000 162,000 (414,000) 96,000 497,000
Cash and cash equivalents, beginning of period ....... 241,000 285,000 447,000 447,000 33,000
------------- ----------- ------------- ----------- -----------
Cash and cash equivalents, end of period ............. $ 285,000 $ 447,000 $ 33,000 $ 543,000 $ 530,000
============= =========== ============= =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1995 IS UNAUDITED)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Premier Research Worldwide, Ltd. (the "Company"), a Delaware corporation,
is a clinical research organization providing services to the worldwide
pharmaceutical, biotechnology and medical device industries. The Company's
services include centralized diagnostic testing, clinical trials management,
clinical data management, biostatistical analysis, Phase I clinical research,
health care economics and outcomes research and regulatory affairs services.
The Company has an operating subsidiary in the United Kingdom (U.K.), is a
65% majority owner of a limited liability company in the United States,
Premier Research LLC (see Note 5) and is an indirect subsidiary of UM
Holdings, Ltd. ("UM").
For periods prior to June 1, 1994, the Company's business operated as
direct or indirect subsidiaries or as divisions of UM. Effective June 1,
1994, the net assets and operations of the division were transferred to the
Company by UM. The transfer was recorded as a capital contribution of the
carrying value of the division's net assets.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company, its subsidiaries and Premier Research LLC. All significant
intercompany accounts and transactions have been eliminated.
INTERIM FINANCIAL DATA
Interim financial information for the nine months ended September 30,
1995, is unaudited. In the opinion of the Company, this financial information
includes all adjustments, consisting of normal recurring adjustments,
necessary to fairly present the financial information set forth.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities and contingency
disclosures at the date of the financial statements and the reported
operations during the reporting period. Actual results could differ from
those estimates.
REVENUES
Revenues are recorded when services are rendered. Revenues under certain
clinical research service contracts are recognized under the
percentage-of-completion method and include a proportion of the revenues
expected to be realized on the contract in the ratio of costs incurred to
estimated total costs. Such contracts are generally completed within 12 to 18
months. The Company often receives non-refundable deposits from its customers
that are recorded as deferred revenues in the accompanying balance sheets.
For the year ended December 31, 1995 and for the nine months ended September
30, 1995, the Company recognized revenues of $1,313,000 and $938,000,
respectively, for such deposits related to customer project cancellations.
The Company also recognizes rental revenue on equipment in connection with
its diagnostic services.
CASH AND CASH EQUIVALENTS
Until 1996, UM maintained a centralized cash management function for its
subsidiaries, including the Company. Settlement of all cash disbursement and
collection transactions by UM on behalf of the Company are recorded through
equity. In 1996, UM decentralized its cash management function for its
subsidiaries and, therefore, the Company now maintains its own bank accounts.
The Company has always maintained a bank account in the U.K.
F-7
<PAGE>
Cash and cash equivalents include highly liquid investments purchased with
an original maturity of three months or less.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets
ranging from three to five years. Leasehold improvements are amortized over
the lease term. Repair and maintenance costs are expensed as incurred.
Improvements and betterments are capitalized. Gains or losses on the
disposition of property and equipment are charged to operations. Depreciation
expense was $777,000, $1,149,000, $965,000, $750,000 and $520,000 for the
years ended December 31, 1993, 1994 and 1995 and for the nine months ended
September 30, 1995 and 1996, respectively.
GOODWILL
Goodwill is amortized using the straight-line method over five years and
is net of accumulated amortization of $125,000, $173,000, and $209,000 as of
December 31, 1994 and 1995 and September 30, 1996, respectively. The related
amortization expense was $8,000, $48,000, $48,000, $36,000 and $36,000 for
the years ended December 31, 1993, 1994 and 1995 and for the nine months
ended September 30, 1995 and 1996, respectively.
The Company continually evaluates whether later events and circumstances
have occurred that indicate the remaining estimated useful life may warrant
revision or that the remaining goodwill balance may not be recoverable. If
factors indicate that goodwill should be evaluated for possible impairment,
the Company would use an estimate of the related undiscounted operating
income over the remaining life in measuring whether goodwill is recoverable.
ACCRUED EXPENSES
Included in accrued expenses at December 31, 1994 and 1995 and at
September 30, 1996 is accrued payroll of $267,000, $98,000 and $217,000,
respectively.
ADVERTISING COSTS
The Company expenses advertising costs as incurred. Advertising expense
for the years ended December 31, 1993, 1994 and 1995 and for the nine months
ended September 30, 1995 and 1996 was $657,000, $65,000, $118,000, $45,000
and $81,000, respectively.
INCOME TAXES
Income taxes are calculated using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Accordingly, deferred tax assets and liabilities are recognized
currently for the future tax consequences attributable to differences between
the financial statement carrying amounts of assets and liabilities and their
respective tax bases. The Company is included in the consolidated federal tax
return of UM and files separate state, local and foreign income tax returns.
The accompanying financial statements reflect income tax expense calculated
on a separate-company basis.
SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid approximately $71,000, $95,000, and $65,000 for income
taxes in the years ended December 31, 1994 and 1995 and in the nine months
ended September 30, 1996, respectively (see Note 6).
The minority owner of Premier Research LLC (see Note 5) contributed
$50,000 of fixed assets in 1995.
F-8
<PAGE>
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of trade accounts receivable
from companies operating in the pharmaceutical industry. For the years ended
December 31, 1993, 1994 and 1995 and for the nine months ended September 30,
1996, two, two, three, and three clients accounted for 29%, 29%, 37% and 36%
of the Company's net revenues, respectively. No other single client accounted
for greater than 10% of net revenues during these periods. Receivables from
these clients were $544,000, $889,000 and $1,724,000 at December 31, 1994 and
1995 and at September 30, 1996. Due to the contract nature of the Company's
business and the relative size of such contracts in comparison to the
Company, it is not unusual for a significant customer in one year to be
insignificant in the next year. The loss of any such client could have a
material adverse effect on the Company's operations. In addition, the Company
maintains reserves for potential credit losses and such losses, in the
aggregate, have not historically exceeded management expectations.
TRANSLATION OF FOREIGN FINANCIAL STATEMENTS
Assets and liabilities of the Company's U.K. subsidiary are translated at
the exchange rate as of the end of each reporting period. The income
statement is translated at the average exchange rate for the period.
Cumulative adjustments from translating the U.K. financial statements are
immaterial and, therefore, have been charged to income as incurred.
PRO FORMA NET INCOME PER SHARE
The Company's historical stockholders' equity and net income does not
reflect the conversion of the minority interest in Premier Research LLC (see
Note 5), into Common Stock of the Company upon the closing of the Company's
proposed initial public offering (see Note 11). Accordingly, historical net
income per share is not considered meaningful and has not been presented.
Pro forma net income includes the minority interest in the limited
liability company's income or loss. The shares used in computing pro forma
net income per share include the effect of the minority interest conversion
as if the conversion occurred on January 1, 1995. In addition, pursuant to
SEC Staff Accounting Bulletin No. 83, all options granted during the twelve
months preceding the initial filing of the Company's anticipated public
offering have been included in the shares used in computing pro forma net
income per share, using the treasury stock method (at an assumed initial
public offering price of $15.00 per share), for all periods presented. The
shares used in computing pro forma net income per share also include the
dilutive effect of common stock equivalents outstanding during the periods,
consisting of common stock options, using the treasury stock method.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No.
121). SFAS No. 121 established accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill. The Company
adopted SFAS No. 121 effective January 1, 1996. The adoption did not have an
effect on the Company's financial condition or results of operations.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS No. 123). SFAS No. 123 established financial accounting
and reporting standards for stock-based employee compensation plans. This
statement also applies to transactions in which an entity issues its equity
instruments to acquire goods or services from non-employees. The Company is
required to adopt SFAS No. 123 for its December 31, 1996 financial
statements. The Company has elected to adopt the disclosure requirement of
this statement.
F-9
<PAGE>
2. ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>
December 31, September 30,
------------------------------ ---------------
1994 1995 1996
------------- ------------- ---------------
<S> <C> <C> <C>
Billed .................... $2,084,000 $1,851,000 $3,419,000
Unbilled .................. 357,000 875,000 171,000
Allowance for doubtful
accounts ................ (115,000) (140,000) (140,000)
------------- ------------- ---------------
$2,326,000 $2,586,000 $3,450,000
============= ============= ===============
</TABLE>
3. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
December 31, September 30,
------------------------------ ---------------
1994 1995 1996
------------- ------------- ---------------
<S> <C> <C> <C>
Computer and other
equipment ............... $ 5,617,000 $ 5,517,000 $ 5,627,000
Furniture and fixtures .... 586,000 583,000 587,000
Leasehold improvements .... 126,000 129,000 129,000
------------- ------------- ---------------
6,329,000 6,229,000 6,343,000
Less -- Accumulated
depreciation ............ (4,436,000) (5,180,000) (5,668,000)
------------- ------------- ---------------
$ 1,893,000 $ 1,049,000 $ 675,000
============= ============= ===============
</TABLE>
4. LINE OF CREDIT:
The Company has a line of credit with a bank, through June 1997, that
provides for borrowings up to $1 million at an interest rate of prime plus
.5%. Borrowings are limited to 60% of eligible accounts receivable, as
defined, and are secured by substantially all of the Company's assets. The
line of credit agreement includes certain covenants, the most restrictive of
which limit future indebtedness, dividends and equity issuances. To date, the
Company has not borrowed any amounts under its line of credit.
5. PREMIER RESEARCH LLC:
In September 1995, the Company and PREMIER, Inc. entered into the
Agreement and Plan of Organization of a limited liability company, Premier
Research LLC (Premier LLC). Under the terms of the agreement, PREMIER, Inc.
contributed $300,000 in cash, $50,000 in property, $30,000 in services and
the business operations of its Contract Research Organization Division for a
35% interest in Premier LLC. The Company contributed $100 in cash, agreed to
manage Premier LLC and agreed to fund Premier LLC's working capital needs for
three years in exchange for a 65% interest in Premier LLC. Under the terms of
the agreement, if the Company completes a public stock offering, as defined
(see Note 11), PREMIER, Inc.'s ownership interest in Premier LLC will
automatically convert into the number of shares of Common Stock equal to 7.5%
of the outstanding Common Stock of the Company prior to the offering.
6. INCOME TAXES:
The Company is included in the consolidated federal income tax return of
UM. UM and the Company have entered into a tax-sharing agreement pursuant to
which the Company will pay to UM amounts equal to the taxes that the Company
would have paid had it filed a separate federal income tax return. The
agreement does not provide for UM to pay the Company for tax losses.
Therefore, any benefit related to tax losses has been recorded as a deemed
distribution to UM in the accompanying financial statements. In addition,
taxes payable to UM under the tax-sharing agreement for years prior to 1996
have been forgiven by UM and, accordingly, have been recorded as
contributions from UM.
F-10
<PAGE>
The income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current provision (benefit):
Federal ...... $ (218,000) $250,000 $ 359,000 $356,000 $447,000
State and
local ..... -- 97,000 46,000 46,000 213,000
Foreign ...... 82,000 163,000 (123,000) (79,000) 102,000
------------- ----------- ----------- ----------- -----------
(136,000) 510,000 282,000 323,000 762,000
------------- ----------- ----------- ----------- -----------
Deferred provision (benefit):
Federal ...... (2,000) (68,000) (21,000) (9,000) (33,000)
State and
local ..... (1,000) (27,000) (2,000) 1,000 (10,000)
Foreign ...... 70,000 -- -- -- --
------------- ----------- ----------- ----------- -----------
67,000 (95,000) (23,000) (8,000) (43,000)
------------- ----------- ----------- ----------- -----------
$ (69,000) $415,000 $ 259,000 $315,000 $719,000
============= =========== =========== =========== ===========
</TABLE>
Foreign income (loss) before income taxes was $460,000, $494,000,
$(372,000), $(239,000) and $309,000 for the years ended December 31, 1993,
1994 and 1995 and for the nine months ended September 30, 1995 and 1996,
respectively.
The reconciliation between income taxes at the statutory federal rate and
the amount recorded in the accompanying financial statements is as follows:
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Tax at statutory federal rate ........ $ (84,000) $338,000 $204,000 $270,000 $567,000
State and local taxes, net of federal -- 46,000 29,000 31,000 134,000
Amortization of goodwill ............. 3,000 16,000 16,000 12,000 12,000
Other ................................ 12,000 15,000 10,000 2,000 6,000
------------ ----------- ----------- ----------- -----------
$ (69,000) $415,000 $259,000 $315,000 $719,000
============ =========== =========== =========== ===========
</TABLE>
<PAGE>
The components of the Company's deferred tax asset are as follows:
<TABLE>
<CAPTION>
December 31, September 30,
-------------------------- ---------------
1994 1995 1996
----------- ----------- ---------------
<S> <C> <C> <C>
Allowance for doubtful accounts $ 48,000 $ 57,000 $ 57,000
Depreciation ................... 5,000 70,000 114,000
Reserves and accruals .......... 100,000 49,000 48,000
----------- ----------- ---------------
$153,000 $176,000 $219,000
=========== =========== ===============
</TABLE>
7. RELATED PARTY TRANSACTIONS:
TRANSACTIONS WITH UM
UM provided various administrative services to the Company including
accounting, human resources and certain computer services prior to 1996. UM
has historically charged the Company for these services through corporate
allocations based primarily on actual costs incurred. These expenses were
$150,000, $165,000, $160,000 and $120,000, for the years ended December 31,
1993, 1994 and 1995, and the nine months ended September 30, 1995,
respectively. In 1996, UM decentralized most of these functions, and now
provides primar- ily 401(k) administrative services. For the nine months
ended September 30, 1996, UM's charges were $43,000.
F-11
<PAGE>
The Company is included in UM's consolidated income tax filings (see Note
6), leases its primary operating facility from UM (see Note 9) and
participates in UM's 401(k) profit sharing plan. The Company was charged
$506,000, $709,000 $488,000, $366,000, and $294,000 for rent under the
facility lease and $48,000, $53,000, $59,000, $46,000, and $65,000 for profit
sharing plan contributions for the years ended December 31, 1993, 1994 and
1995 and the nine months ended September 30, 1995 and 1996, respectively. The
Company believes that all amounts charged by UM were reasonable.
Included in net revenues for the year ended December 31, 1995 and for the
nine months ended September 30, 1995 and 1996 is $115,000, $60,000 and
$7,000, respectively, charged to a UM subsidiary, for laboratory testing
services. Included in direct costs for the years ended December 31, 1993,
1994 and 1995 and for the nine months ended September 30, 1995 and 1996 is
$59,000, $312,000, $94,000, $68,000 and $122,000, respectively, charged by a
UM subsidiary for certain subcontracted diagnostic testing services. In the
years ended December 31, 1994 and 1995 and during the nine months ended
September 30, 1996, the Company sold fixed assets to UM and certain of its
subsidiaries at their carrying values of $8,000, $66,000 and $29,000,
respectively.
Transactions with the Company's President
The Company's President, who is a stockholder, is a cardiologist who
provides medical services to the Company as an independent contractor in
addition to his role as President of the Company (see Note 9). Fees incurred
under this consulting arrangement approximated $185,000, $680,000, $956,000,
$731,000, and $1,621,000 for the year ended December 31, 1993, 1994 and 1995,
and for the nine months ended September 30, 1995 and 1996, respectively, of
which $144,000 per year represents fees for his role as the Company's Medical
Director, as defined. Accordingly, the Medical Director fees are included in
selling, general and administrative expenses and the incremental fees, which
primarily relate to medical interpretations for diagnostic tests, are
included in direct costs in the accompanying statements of operations.
The Company and the Company's President have entered into new employment
and consulting agreements effective January 1, 1997 (see Note 9).
In January 1996, the President and UM entered into an agreement whereby
the President purchased 660,300 shares of the Company's Common Stock from UM
for $750,000. The President also has an outstanding option to purchase
220,100 shares of Common Stock (see Note 8).
8. STOCK OPTION PLANS:
In August 1993, the Company established a nonqualified stock option plan
covering certain key employees. The options cover the purchase of Common
Stock of the Company at exercise prices initially set above current fair
value as determined by the Board of Directors. Options granted under the plan
are exercisable on July 1, 2003 or earlier if there is a sale of the Company
or a public offering of the Company's Common Stock, as defined.
Information with respect to outstanding options under the plan is as
follows:
<TABLE>
<CAPTION>
Outstanding Option Price
Shares Per Share
------------- --------------
<S> <C> <C>
Balance, August 15, 1993 ... -- $ --
Granted .................. 440,200 4.54
Canceled ................. -- --
------------- --------------
Balance, December 31, 1993 . 440,200 4.54
Granted .................. -- --
Canceled ................. -- --
------------- --------------
Balance, December 31, 1994 . 440,200 4.54
Granted .................. 506,230 2.27
Canceled ................. (473,215) 4.54
------------- --------------
Balance, December 31, 1995 . 473,215 2.27
Granted .................. 44,020 2.27
Canceled ................. -- --
------------- --------------
Balance, September 30, 1996 517,235 $ 2.27
============= ==============
</TABLE>
F-12
<PAGE>
As of September 30, 1996, no options were exercisable and there were
583,265 additional options available for future grants under the plan. The
Company does not anticipate granting any additional options under the plan
prior to the Company's initial public offering (see Note 11) and under terms
of the plan, no further options can be granted under the plan after the
closing of the initial public offering.
In 1996, the Company adopted a new stock option plan (the "1996 Plan")
that authorizes the grant of both incentive and non-qualified options to
acquire up to 500,000 shares of the Company's Common Stock. The Company's
Board of Directors determines the exercise price of the options under the
1996 Plan. The exercise price of incentive stock options may not be below
fair value on the grant date. Incentive stock options under the 1996 Plan
expire 10 years from the grant date and are exercisable in accordance with
vesting provisions set by the Board. No options are outstanding under the
1996 Plan, however, the Company has agreed to grant an employee an option for
10,000 shares at an assumed initial public offering price of $15.00 per share
(see Note 11).
In January 1996 the Company granted a director an option for 4,402 shares
of Common Stock at an exercise price of $1.14 per share. In addition, in 1996
the Company granted two other directors options for 8,804 shares of Common
Stock at the initial public offering price (see Note 11).
9. COMMITMENTS AND CONTINGENCIES:
LEASES
The Company leases office space and equipment under operating leases,
including its primary operating facility, which it leases from UM under a
lease agreement executed in June 1996 that runs through September 2003 (see
Note 7). In 1995, the Company entered into an agreement to sublet office
space that was previously vacated. Accordingly, the Company reduced its
reserve for the vacated lease payments by approximately $175,000 by recording
a reduction to rent expense in 1995. The reserve for the vacated lease
payments was approximately $246,000, $90,000 and $43,000 at December 31, 1994
and 1995 and September 30, 1996, respectively, and is included in accrued
expenses in the accompanying balance sheets. Future minimum lease payments as
of September 30, 1996, without consideration of sublease income, are as
follows:
<TABLE>
<CAPTION>
Related Party Other Total
--------------- ------------- ------------
<S> <C> <C> <C>
1997 ............... $ 349,000 $ 272,000 $ 621,000
1998 ............... 349,000 152,000 501,000
1999 ............... 349,000 140,000 489,000
2000 ............... 349,000 129,000 478,000
2001 ............... 349,000 129,000 478,000
2002 and thereafter 601,000 971,000 1,572,000
--------------- ------------- ------------
$2,346,000 $1,793,000 $4,139,000
=============== ============= ============
</TABLE>
Future minimum payments due the Company under the sublease agreement total
$63,000 in 1997.
AGREEMENTS WITH THE COMPANY'S PRESIDENT
The Company has entered into new employment and consulting agreements with
its President (see Note 7). The employment agreement was executed in November
1996, and becomes effective January 1, 1997, and continues through December
31, 2001. Either the Company or the President may terminate the agreement at
any time, with or without cause. However, if the Company terminates the
agreement without cause, the Company must continue to pay the President's
salary for a one year period subsequent to the termination.
The consulting agreement was executed in October 1996, and relates to the
President's capacity as a medical doctor and cardiologist and, among other
things, requires the President to serve as Medical Director and/or principal
investigator for the Company in addition to providing medical interpretations
of diagnostic tests from time to time, as required. Compensation under the
consulting agreement is $144,000 per year. The consulting agreement commences
on January 1, 1997 for a one year period and will continue thereafter from
year to year unless terminated, as defined. The new consulting agreement
replaced a prior agreement whereby the President received additional
compensation for medical interpretations of diagnostic tests (see Note 7).
F-13
<PAGE>
CONTINGENCIES
The Company believes it has adequate insurance coverage against possible
liabilities that may be incurred in connection with the conduct of its
business primarily as it relates to the testing of new drugs or medical
devices. While the Company believes it operates safely and prudently, in
addition to managing liability risks through contractual indemnification, the
Company could be materially and adversely affected if it were required to pay
damages or incur defense costs in connection with a claim that is beyond the
scope of an indemnity provision or insurance coverage, or if an indemnity is
not upheld or if the claim exceeds the insurance policy limits.
10. GEOGRAPHIC INFORMATION:
The Company's operations involve a single industry segment providing
clinical research and development services. Financial information by
geographic area is as follows:
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months
---------------------------------------------- Ended
1993 1994 1995 Sept. 30,1996
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net revenues:
North America ........ $ 8,862,000 $10,712,000 $10,881,000 $ 9,769,000
Europe ............... 1,383,000 2,198,000 1,183,000 1,838,000
------------- ------------- ------------- ---------------
$10,245,000 $12,910,000 $12,064,000 $11,607,000
============= ============= ============= ===============
Operating income (loss):
North America ........ $ (706,000) $ 501,000 $ 924,000 $ 1,057,000
Europe ............... 460,000 494,000 (372,000) 309,000
------------- ------------- ------------- ---------------
$ (246,000) $ 995,000 $ 552,000 $ 1,366,000
============= ============= ============= ===============
Identifiable assets:
North America ........ $ 4,205,000 $ 4,095,000 $ 4,006,000 $ 4,070,000
Europe ............... 921,000 1,060,000 394,000 1,205,000
------------- ------------- ------------- ---------------
$ 5,126,000 $ 5,155,000 $ 4,400,000 $ 5,275,000
============= ============= ============= ===============
</TABLE>
11. RECAPITALIZATION:
The Company is contemplating an initial public offering of 2,750,000
shares of its Common Stock, of which 750,000 will be sold by UM (see Note 7).
In connection therewith, on October 24, 1996, the Company's Board of
Directors approved an increase in the number of authorized shares of Common
Stock to 15,000,000 shares and authorized 500,000 shares of Preferred Stock.
In addition, on November 26, 1996, the Company effected a 2,201-for-one split
of its Common Stock. The increase in authorized shares and the stock split
have been retroactively reflected in the accompanying consolidated financial
statements.
F-14
<PAGE>
==============================================================================
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company or by any of the Underwriters. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the shares of Common Stock to which it relates or an
offer to, or a solicitation of, any person in any jurisdiction in which such
an offer of solicitation would be unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof or that the information contained herein is correct as
of any time subsequent to the date hereof.
------
TABLE OF CONTENTS
------
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Prospectus Summary .............................................. 3
Risk Factors .................................................... 6
Company History ................................................. 10
Use of Proceeds ................................................. 11
Dividend Policy ................................................. 11
Capitalization .................................................. 12
Dilution ........................................................ 13
Selected Consolidated Financial Data ............................ 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ..................................................... 16
Business ........................................................ 22
Management ...................................................... 38
Principal and Selling Stockholders .............................. 43
Certain Relationships ........................................... 44
Description of Capital Stock .................................... 45
Shares Eligible for Future Sale ................................. 46
Underwriting .................................................... 47
Legal Matters ................................................... 48
Experts ......................................................... 48
Additional Information .......................................... 48
Index to Financial Statements ................................... F-1
</TABLE>
Until ------, 1997 (25 days after the date of this Prospectus) all dealers
effecting transactions in the Common Stock, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in
addition to the obligations of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
==============================================================================
<PAGE>
==============================================================================
2,750,000 SHARES
LOGO
PREMIER RESEARCH
WORLDWIDE
COMMON STOCK
------
PROSPECTUS
------
MONTGOMERY SECURITIES
FURMAN SELZ
GENESIS MERCHANT GROUP
SECURITIES
, 1997
==============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following is an estimate of the expenses to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts, commissions, and other
compensation:
SEC registration fee............................... $ 15,331.80
---------
NASD filing fee.................................... $ 5,560.00
---------
Printing and engraving............................. $ *
---------
Transfer agent's fees and expenses................. $ *
---------
Attorneys' fees and expenses....................... $ *
---------
Blue sky fees...................................... $ *
---------
Accountants' fees and expenses..................... $ *
---------
Miscellaneous...................................... $ *
---------
TOTAL................. $ *
---------
- --------------
*To be supplied by Amendment.
The above expenses will be paid by the Company, except that
registration and filing fees will be paid by the Company and the Selling
Stockholder pro rata according to the number of shares of Common Stock sold by
each.
Item 14. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Company
must indemnify each of its directors and officers against his expenses (that is,
reasonable costs, disbursements and counsel fees) in connection with any
proceeding involving such person by reason of his having been an officer,
director, employee or agent of the Company, or who is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the
extent he is successful on the merits. Moreover, under such statutory provision
the Company has the corporate power to indemnify its officers and directors
against expenses and (in the case of proceedings other than those by or in the
right of the Company) liabilities incurred in such a proceeding, provided (i)
the officer or director has acted in good faith and in a manner reasonably
believed to be in, or not opposed to, the best interests of the Company and (ii)
with respect to any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful. In the case of a proceeding by or in the right of the
Company, however, such indemnification is not permitted if the individual is
adjudged to be liable to the Company, unless a court determines that he is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
II-1
<PAGE>
The determination of whether indemnification is proper under the
circumstances, unless made by a court, is determined by a majority of the
disinterested members of the Board of Directors or committee thereof, by
independent legal counsel if a quorum of the disinterested members of the Board
of Directors or committee thereof is not available or if the disinterested
members of the Board of Directors or a committee thereof so direct, or by the
stockholders.
The Company's Bylaws require the Company to indemnify each director and
officer if Section 145 of the Delaware General Corporation Law permits the
Company to do so.
The Company intends to obtain a directors' and officers' liability
insurance policy, which will afford officers and directors insurance coverage
for losses arising from claims based on breaches of duty, negligence, error and
other wrongful acts.
Item 15. Recent Sales of Unregistered Securities.
In November, 1996, the Company issued 4,400,000 shares of its Common
Stock to its stockholders, as a stock split effectuated by means of a stock
dividend. The issuance of such shares was exempt from the registration
requirements of the Act because there was no "sale" of such securities.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits.
Number Description
------ -----------
1.1 Form of Agreement Among Underwriters, together with forms of
Underwriting Agreement and Selected Dealer Agreement.*
3.1 Restated Certificate of Incorporation.
3.2 By-Laws.
5.1 Opinion of Archer & Greiner, A Professional Corporation.*
10.1 Employment Agreement with Joel Morganroth, M.D.
10.2 Management Consulting Agreement with Joel Morganroth,
M.D., P.C.
10.3 Stock option agreement - Jerry Lee
10.4 Stock option agreement - Arthur Hayes
10.5 Stock option agreement - Connie Woodburn
10.6 Amended and Restated 1993 Stock Option Plan.
10.7 1996 Stock Option Plan.
II-2
<PAGE>
10.8 Lease of Philadelphia Facilities, with amendment thereto.
10.9 Agreement and Plan of Organization entered into with Premier
Health Alliance, Inc.
10.10 Tax Sharing Agreement with UM Holdings, Ltd
10.11 Teaming Agreement with Pharmaco LSR International
10.12 Revolving Credit Agreement with First Union National Bank
10.13 Promissory Note to First Union National Bank
21.1 Subsidiaries
23.1 Consent of Archer & Greiner, A Professional Corporation - See
Exhibit 5.1
23.2 Consent of Arthur Andersen, LLP
24.1 Power of Attorney of Directors and Officers - See Signature
Page.
- ----------
* To be supplied by Amendment.
(b) Financial Statement Schedule.
Number Description
------ -----------
II Valuation and Qualifying Accounts.
Item 17. Undertakings.
The Company hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company 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.
The Company hereby undertakes that, for determining any liability under
the Securities Act, it will treat the information omitted from the form of
Prospectus filed as a part of this Registration Statement in reliance upon Rule
430(A) and contained in a form of Prospectus filed by the Company under Rule
424(b)(1), or (4) or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it effective.
II-3
<PAGE>
The Company hereby undertakes that, for determining any liability under
the Securities Act, it will treat each post-effective Amendment that contains a
form of Prospectus as a new Registration Statement for the securities offered in
the Registration Statement, and the offering of the securities at that time as
the initial bona fide offering of those securities.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania, on November 27, 1996.
PREMIER RESEARCH WORLDWIDE, LTD.
By: /s/ Joel Morganroth, M.D.
-----------------------------------
JOEL MORGANROTH, M.D., President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby appoints Joel Morganroth, Fred M.
Powell, Arthur W. Hicks, Jr., and James H. Carll, and each of them, any one of
whom may act without the joinder of the others, as his attorney-in-fact to sign
in his behalf individually and in the capacity stated below and to file all
amendments and post-effective amendments to this Registration Statement, and any
and all instruments or documents filed as part of or in connection with this
Registration Statement or the amendments thereto, and any of such
attorneys-in-fact may make such changes and additions to this Registration
Statement as such attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President and
/s/ Joel Morganroth, M.D. Chief Executive Officer November 27, 1996
- ------------------------------ (Principal executive officer)
Joel Morganroth, M.D.
/s/ Fred M. Powell Vice President, Finance/ November 27, 1996
- ------------------------------ Administration
Fred M. Powell (Principal financial
and accounting officer)
/s/ Joan Carter Chairman, Director November 27, 1996
- ------------------------------
Joan Carter
/s/ John Aglialoro Director November 27, 1996
- ------------------------------
John Aglialoro
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Arthur Hull Hayes, Jr., M.D. Director November 27, 1996
- ------------------------------
Arthur Hull Hayes, Jr., M.D.
/s/ Arthur W. Hicks, Jr. Director November 27, 1996
- ------------------------------
Arthur W. Hicks, Jr.
/s/ Jerry D. Lee Director November 27, 1996
- ------------------------------
Jerry D. Lee
/s/ Connie Woodburn Director November 27, 1996
- ------------------------------
Connie Woodburn
</TABLE>
II-6
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Premier Research Worldwide, Ltd.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Premier Research Worldwide, Ltd. included
in this registration statement and have issued our report thereon dated November
20, 1996, except for the stock split discussed in Note 11, as to which the date
is November 26, 1996. Our audit was made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The schedule of valuation
and qualifying accounts is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Philadelphia, Pa.,
November 20, 1996
S-1
<PAGE>
Premier Research Worldwide, Ltd.
Schedule II - Valuation and Qualifying Accounts
Allowance For Doubtful Accounts
<TABLE>
<CAPTION>
BALANCE CHARGED BALANCE
BEGINNING TO COSTS & END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
----------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Nine Months Ended
September 30, 1996 $140,000 $ -- $ -- $140,000
Year Ended
December 31, 1995 115,000 57,000 (32,000) 140,000
Year Ended
December 31, 1994 156,000 79,000 (120,000) 115,000
Year Ended
December 31, 1993 112,000 109,000 (65,000) 156,000
</TABLE>
S-2
<PAGE>
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PREMIER RESEARCH WORLDWIDE, LTD.
Premier Research Worldwide, Ltd., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
FIRST: that (i) the name of the corporation is PREMIER RESEARCH
WORLDWIDE, LTD., formerly known as Research Data Worldwide, Ltd. which was
formerly known as Research Data Corporation, which is the name under which the
corporation was originally incorporated, and (ii) the date of filing its
original Certificate of Incorporation with the Secretary of State was August 19,
1993.
SECOND: that this Restated Certificate of Incorporation was duly
adopted by the Corporation's stockholders in accordance with the provisions of
Section 245 of the General Corporation Law of Delaware.
THIRD: that the text of the Certificate of Incorporation is hereby
amended to read in its entirety as follows:
ARTICLE I
The name of the Corporation is PREMIER RESEARCH WORLDWIDE, LTD.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such registered office is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The aggregate number of shares which the corporation shall have
authority to issue is 15,500,000, by classes and par value of shares as follows:
<PAGE>
Par Value
Class No. of Shares Per Share
----- ------------- ---------
Common 15,000,000 $ 0.01
Preferred 500,000 $ 10.00
The relative rights, preferences and limitations of the shares of each class are
as follows:
Preferred. The Board of Directors is authorized to adopt by resolution
at any time, or from time to time, amendments to the Certificate of
Incorporation in respect of any unissued and/or treasury shares of preferred
stock, and thereby to fix or change the division of shares of the preferred
stock into classes and/or into series within any class or classes, and the
determination of the relative rights, preferences and limitations of the shares
of any class or series. The authority of the Board with respect to each class or
series of preferred stock shall include, but not be limited to, determination of
the following:
(a) The number of shares constituting that class or series and the
distinctive designation of that class or series;
(b) The dividend rate on the shares of that class or series, whether
dividends shall be cumulative, and, if so, from which date or dates;
(c) Whether that class or series shall have voting rights, in addition
to any voting rights provided by law, and, if so, the terms of such voting
rights;
(d) Whether that class or series shall have conversion privileges and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(e) Whether or not the shares of that class or series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions;
(f) The rights of the shares of that class or series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(g) Any other relative rights, preferences and limitations of that
class or series as may be permitted or required by law.
-2-
<PAGE>
Common. Each share of common stock shall be entitled to one vote on all
matters submitted to a vote of stockholders. The common stockholders shall be
entitled to such dividends as may be declared by the Board of Directors from
time to time, provided that required dividends, if any, on the preferred stock
have been paid or provided for. In the event of the liquidation, dissolution, or
winding up, whether voluntary or involuntary, of the Corporation, the assets and
funds of the Corporation available for distribution to stockholders, and
remaining after the payment to holders of preferred stock of the amounts to
which they are entitled, shall be divided and paid to the holders of the common
stock according to their respective shares.
ARTICLE V
(a) The number of directors which shall constitute the whole Board of
Directors shall be not less than two nor more than fifteen. The exact number of
directors within such maximum and minimum shall be determined by resolution duly
adopted by the Board of Directors by a majority vote of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors constituting the
whole Board permits. At the meeting of stockholders, or by written consent in
lieu of such meeting, at or by which this Restated Certificate of Incorporation
is adopted, directors of the first class shall be elected to hold office for a
term expiring at the next ensuing annual meeting, directors of the second class
shall be elected to hold office for a term expiring at the second ensuing annual
meeting, and directors of the third class shall be elected to hold office for a
term expiring at the third ensuing annual meeting. At each annual meeting of
stockholders following such initial classification and election, directors in
numbers equal to the number of the class whose terms expire at the time of such
meeting shall be elected to hold office until the second succeeding annual
meeting of stockholders. Each director shall hold office until his successor is
elected and qualified, or until his earlier resignation or removal.
(c) Newly created directorships resulting from any increase in the
authorized number of directors and any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the whole Board,
and directors so chosen shall hold office for a term expiring at the annual
meeting of stockholders at which the term of the class to which they have been
elected expires.
(d) Any directors elected pursuant to any special voting rights of one
or more series of preferred stock shall be excluded from, and for no purpose be
counted in, the scope and operation of the foregoing provisions of this Article
V.
(e) Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be
-3-
<PAGE>
specified by law, this certificate of incorporation or the by-laws of the
Corporation), the affirmative vote of the holders of seventy percent (70) or
more of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as one
class) shall be required to amend, alter, change or repeal this Article V.
ARTICLE VI
1.(A) In addition to any affirmative vote required by law or
this Certificate of Incorporation, and except as otherwise expressly provided in
paragraph 2 of this Article VI:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Stockholder (as
hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions), to or with
any Interested Stockholder or any Affiliate of any Interested Stockholder, of
any assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $1,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value of $l,000,000
or more; or
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder; shall require the affirmative vote of the holders of at
least eighty percent (80%) of the then outstanding shares of each class of the
capital stock of the Corporation (the "Voting Stock"). Such affirmative
-4-
<PAGE>
vote shall be required notwithstanding the fact that no vote may be required, or
that a lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise. Notwithstanding any other provision
of this certificate of incorporation to the contrary, for purposes of this
Article VI, each share of the Voting Stock shall have one vote.
(B) The term "Business Combination" as used in this Article VI shall
mean any transaction which is referred to in any one or more of clauses (i)
through (v) of sub-paragraph (A) of this paragraph l.
2. The provisions of paragraph 1 of this Article VI shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law and any other
provision of this certificate of incorporation, if all of the conditions
specified in either of the following sub-paragraphs (A) and (B) are met:
(A) The Business Combination shall have been approved by a majority of
the Continuing Directors (as hereinafter defined); provided, however, that such
approval shall only be effective if obtained at a meeting at which a Continuing
Director Quorum (as hereinafter defined) is present.
(B) All of the following conditions shall have been met:
(i) The aggregate amount of (x) cash and (y) Fair Market Value
as of the date of the consummation of the Business Combination of consideration
other than cash, to be received per share by holders of each class of the
Corporation's capital stock in such Business Combination shall be at least equal
to the highest amount determined under sub-clauses (a), (b) and (c) below:
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any share of such class acquired by
it (l) within the two-year period immediately prior to the first public
announcement of the proposal of the Business Combination (the "Announcement
Date") or (2) in the transaction in which it became an Interested Stockholder,
whichever is higher;
(b) the Fair Market Value per Share of such class on
the Announcement Date or on the date on which the Interested Stockholder became
an Interested Stockholder (such latter date is referred to in this Article VI as
the "Determination Date"), whichever is higher; and
(c) (if applicable) the highest preferential amount
per share to which the holders of shares of such class would be entitled in the
event of any voluntary or
-5-
<PAGE>
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, regardless of whether the Business Combination to be consummated
constitutes such an event.
(ii) The consideration to be received by holders of a
particular class of outstanding Voting Stock shall be in cash or in the same
form as the Interested stockholder has previously paid for shares of such class
of Voting Stock. If the Interested Stockholder has paid for shares of any class
of Voting Stock with varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock previously acquired
by it. If the Interested Shareholder shall not have previously acquired shares
of a particular class, the form of consideration to be received by holders of
such class shall be cash.
(iii) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have received the
benefit, directly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
(iv) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be mailed to public
stockholders of the Corporation at least 30 days prior to the consummation of
such Business Combination (whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent provisions).
3. For the purposes of this Article VI:
(A) The term "person" shall mean any individual, firm,
corporation or other entity.
(B) The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the Corporation or
any Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who or which:
(i) is the beneficial owner (as hereinafter defined)
of more than twenty percent (20%) of the Voting Stock; or
(ii) is an Affiliate (as hereinafter defined) of the
Corporation and at any time within the two-year period immediately prior to the
date in question was the beneficial owner of twenty percent (20%) or more of the
Voting Stock; or
-6-
<PAGE>
(iii) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933;
provided, that no person which prior to October 24, 1996 came within the
definition set forth in this sub-paragraph (B), nor any present or future
Affiliate of such a person, shall be considered an Interested Stockholder.
(C) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or indirectly; or
(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 only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
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 person with which 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 shares of Voting Stock.
(D) For the purposes of determining whether a person is an
Interested Stockholder pursuant to sub-paragraph (B) of this paragraph 3, the
number of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned through application of subparagraph (C) of this paragraph 3 but
shall not include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding or upon exercise of
conversion rights, warrants or options, or otherwise.
(E) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule l2b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on
October 24, 1996.
(F) The term "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in subparagraph (B) of this paragraph 3, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the Corporation.
-7-
<PAGE>
(G) The term "Continuing Director" means any member of the
Board of Directors of the Corporation who is unaffiliated with the Interested
Stockholder and was a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Stockholder and is recommended
or elected to succeed a Continuing Director by a majority of Continuing
Directors, provided that such recommendation or election shall only be effective
if made at a meeting at which a Continuing Director Quorum is present.
(H) The term "Continuing Director Quorum" means three
Continuing Directors capable of exercising the powers conferred upon them under
the provisions of the Certificate of Incorporation or By-Laws of the Corporation
or by law.
(I) The term "Fair Market Value" means: (i) in the case of
stock, the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the principal United
States securities exchange registered under the Securities Exchange Act of 1934
on which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined by the
Board in good faith; and (ii) in the case of property other than cash or stock,
the fair market value of such property on the date in question as determined in
good faith by a majority of Continuing Directors, provided that such
determination shall only be effective if made at a meeting at which a Continuing
Director Quorum is present.
(J) In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received" as used in
sub-paragraphs (B)(i) and (ii) of paragraph 2 of this Article VI shall include
the shares of Common Stock and/or the shares of any other class of Voting Stock
retained by the holders of such shares.
4. The Board of Directors shall have discretion to interpret the
meaning of the provisions of this Article VI, and their applicability with
respect to various factual situations, and the determinations of the Board in
such regard shall be conclusive and binding.
5. Nothing contained in this Article VI shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
6. Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this certificate of
incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of eighty percent (80%) or more of the outstanding shares of each class
of Voting Stock shall be required to amend or repeal, or adopt any provisions
inconsistent with, this Article VI.
-8-
<PAGE>
ARTICLE VII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (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) 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, or (iv) for any transaction from which the
director derived an improper personal benefit. Any repeal or modification of
this Article VII shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
The liability of a director of the Corporation shall be further eliminated or
limited to the fullest extent allowable under Delaware Law, as it may in the
future be amended.
ARTICLE VIII
In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors shall have power to adopt,
amend and repeal from time to time by-laws of the Corporation.
IN WITNESS WHEREOF, said PREMIER RESEARCH WORLDWIDE, LTD. has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Joan Carter, its Chairman of the Board, and attested by James H.
Carll, its Assistant Secretary, this 18th day of November, 1996.
PREMIER RESEARCH WORLDWIDE, LTD.
By:____________________________________
Joan Carter, Chairman of the Board
[Corporate Seal]
Attest:
By: __________________________
James H. Carll,
Assistant Secretary
-9-
<PAGE>
Exhibit 3.2
BY-LAWS OF PREMIER RESEARCH WORLDWIDE, LTD.
As of November 18, 1996
ARTICLE I
OFFICES
Section 1. The registered office shall be located at 1209 Orange
Street, Wilmington, Delaware, unless otherwise established by a vote of a
majority of the board of directors in office and a statement of change is filed
in the manner provided by statute.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETING OF SHAREHOLDERS
Section 1. The annual meeting of shareholders for the election of
directors shall be held at the registered office of the corporation or at such
other place within or without the State of Delaware as shall be stated in the
notice of meeting or in a duly executed waiver of notice thereof.
2
<PAGE>
Section 2. Annual meetings of shareholders shall be held at such time,
at such place and on such business day as shall be fixed from time to time by
the board of directors and stated in the notice of meeting, at which annual
meeting the shareholders shall elect by a plurality vote such persons to the
board of directors whose terms expire at the time of such meeting and transact
such other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the time,
place, and purpose or purposes of the meeting shall be given not less than ten
nor more than sixty days before the date of the meeting, either personally or by
mail, to each shareholder of record entitled to vote at such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose may be held
at such time and place within or without the State of Delaware as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the Chairman of the Board, the board of
directors, or the holders of not less than a majority of all the shares entitled
to vote at the meeting.
3
<PAGE>
Section 3. Written notice of a special meeting stating the time and
place of the meeting and the purpose or purposes for which the meeting is called
shall be given not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman of
the Board, the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
but no later than 30 days from the original meeting date, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally called. If the adjournment is for more than 30 days,
or if after adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
4
<PAGE>
Section 2. If a quorum is present, the affirmative vote of a majority
of the shares of stock represented at the meeting shall be the act of the
shareholders unless the vote of a greater number of shares of stock is required
by law or the certificate of incorporation.
Section 3. Each outstanding share of stock, having voting power, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, unless otherwise provided in the certificate of incorporation. A
shareholder may vote either in person or by proxy executed in writing by the
shareholder or by his agent.
In all elections for directors every shareholder entitled to vote,
shall have the right to vote, in person or by proxy, the number of shares of
stock owned by him, for as many persons as there are directors to be elected and
for whose election he has a right to vote.
Section 4. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of shareholders of the Corporation, or any action which may be taken at any
annual or special meeting of such shareholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of corporate action without
a meeting by less than unanimous written consent shall be given to those
shareholders who have not consented in writing.
5
<PAGE>
ARTICLE V
DIRECTORS
Section 1. (a) The number of directors which shall constitute the whole
board of directors shall be not less than two nor more than fifteen. The exact
number of directors within such maximum and minimum shall be determined by
resolution duly adopted by the board of directors by a majority vote of the
whole Board. No decrease in the number of directors shall shorten the term of
any incumbent director.
(b) The board of directors shall be divided into
three classes, as nearly equal in number as the then total number of directors
constituting the whole board permits. At the meeting of shareholders, or by
written consent in lieu of such meeting, at or by which the Corporation amends
and restates its certificate of incorporation to provide for three separate
classes of directors, or at the next following meeting, directors of the first
class shall be elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be elected to hold office
for a term expiring at the second succeeding annual meeting, and directors of
the third class shall be elected to hold office for a term expiring at the third
succeeding annual meeting. At each annual meeting of shareholders following such
initial classification and election, directors in numbers equal to the number of
the class whose terms expire at the time of such meeting shall be elected to
hold office until the third succeeding annual meeting of shareholders. Each
director shall hold office until his successor is elected and qualified, or
until his earlier resignation or removal.
(c) Directors need not be residents of the State of
Delaware nor shareholders of the Corporation.
(d) Any directors elected pursuant to any special
voting rights of one or more series of Preferred Stock shall be excluded from,
and for no purpose be counted in, the scope and operation of the foregoing
provisions of this Section l or of Section 3 or Section 4 of this Article V.
Section 2. Any director or member of a committee may resign at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein or, if no time be specified, at the time of its receipt
by the Chairman of the Board, the president or the secretary. The acceptance of
a resignation shall not be necessary to make it effective.
6
<PAGE>
Section 3. Subject to statutory provisions, one or more or all of the
directors of the Corporation may be removed, but solely with cause and by the
affirmative vote of the holders of a majority of the outstanding capital stock
of the Corporation entitled to vote generally in the election of directors.
Section 4. Newly created directorships resulting from any increase in
the authorized number of directors and any vacancies in the board of directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the whole board,
and directors so chosen shall hold office for a term expiring at the annual
meeting of shareholders at which the term of the class to which they had been
elected expires.
Section 5. The business affairs of the Corporation shall be managed by
its board of directors which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the certificate
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 6. The directors may keep the books and records of the
Corporation, except such as are required by law to be kept within the state,
outside of the State of Delaware, at such place or places as they may from time
to time determine.
Section 7. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have the authority to establish
compensation of all directors for services to the corporation as directors,
officers or otherwise.
7
<PAGE>
Section 8. The board of directors, or a member of any committee designated
by the board of directors, shall, in the performance of each of their duties, be
fully protected in relying in good faith upon the records of the Corporation and
upon such information, opinions, reports or statements presented to the
Corporation by any of its officers or employees, or committees of the board of
directors, or by any other person as to matters the member reasonably believes
are within such other person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Corporation.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, annual, regular or
special, may be held either within or without the State of Delaware.
Section 2. The annual meeting of the board of directors shall be held
at such time and place as shall be fixed by the vote of the shareholders at its
annual meeting and no notice of such meeting shall be necessary to the board of
directors in order legally to constitute the meeting, provided a quorum shall be
present. In the event of the failure of the shareholders to fix the time or
place of such annual meeting of the board of directors, or in the event such
meeting is not held at the time and place so fixed by the shareholders, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held upon
such notice, or without notice, and at such time and at such place as shall from
time to time be determined by the board.
Section 4. Special meetings of the board of directors shall be held
whenever called by the Chairman of the Board, and special meetings shall be
called by the Chairman of the Board, the president or the secretary on the
written request of a majority of the directors. Notice of each such meeting
shall be given to each director by telephone or in writing at least 24 hours (in
the case of notice by telephone) or 48 hours (in the case of notice by telegram
or facsimile) or five days (in the case of notice by mail) before the time at
which the meeting is to be held. Each such notice shall state the time and place
of the meeting to be so held. Notice need not be given to any director who signs
a waiver of notice, whether before or after the meeting.
Section 5. Any or all directors may participate in a meeting of the
board or a committee of the board by means of conference telephone or any means
of communication by which all persons participating in the meeting are able to
hear each other.
Section 6. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
8
<PAGE>
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. A majority of the entire board, or of any committee thereof,
shall constitute a quorum for the transaction of business unless a greater or
lesser number is required by statute or by the certificate of incorporation,
except that when the entire board or a committee thereof consists of one
director, then one director shall constitute a quorum. The act of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the board of directors or of the committee, unless the act of a greater
or lesser number is required by statute or by the certificate of incorporation.
If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Unless otherwise provided by the certificate of
incorporation, any action required to be taken at a meeting of the board, or any
committee thereof, shall be deemed the action of the board of directors or of a
committee thereof, if all directors or committee members, as the case may be,
execute either before or after the action is taken, a written consent thereto,
and the consent is filed with the records of the Corporation.
9
<PAGE>
ARTICLE VII
EXECUTIVE COMMITTEE; OTHER COMMITTEES
Section 1. The board of directors may, by resolution adopted by a
majority of the entire board, alter or eliminate the committees of the board
described in Section 2 below or designate one or more other committees, each
committee to consist of one or more directors. Any such committee, to the extent
provided in such resolution or these by-laws, shall have and exercise all of the
authority of the board of directors in the management of the Corporation, except
as otherwise required by law. Such committee or committee shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors. The board of directors may, by resolution adopted by a
majority of the entire board, fill any vacancy in any such committee, appoint
one or more directors to serve as alternate members of any such committee, to
act in the absence or disability of members of any such committee with all the
powers of such absent or disabled members, abolish any such committee at its
pleasure, and remove any director from membership on such committee at any time,
with or without cause.
Each committee of the board of directors formed pursuant to this
section shall keep regular minutes of its meetings and actions taken at a
meeting of any such committee shall be reported to the board at its next meeting
following such committee meeting; except that, when the meeting of the board is
held within 2 days after the committee meeting, such report shall, if not made
at the first meeting, be made to the board at its second meeting following such
committee meeting unless otherwise required by law to be earlier reported.
Section 2. The present standing committees of the board are as follows:
Executive Committee: The Executive Committee of the board of
directors shall be composed of two members of the board, or such other number as
from time to time specified by the board of directors, as may from time to time
be chosen by the board of directors. The Executive Committee shall have and
exercise all the authority of the board of directors except that it shall not
(a) amend the certificate of incorporation (except that it may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the board of directors, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize
10
<PAGE>
the increase or decrease of the shares of any series), (b) make, alter or repeal
any by-law of the Corporation, (c) adopt an agreement of merger or
consolidation, (d) recommend to the shareholders the sale, lease or exchange of
all or substantially all of the Corporation's property or assets, (e) recommend
to the shareholders a dissolution of the Corporation or a revocation of
dissolution, (f) amend or repeal any resolution theretofore adopted by the board
of directors which by its term is amendable or repealable only by the board of
directors, or (g) unless otherwise authorized by the certificate of
incorporation, these by-laws, or upon an authorized resolution adopted by the
board of directors, declare a dividend, authorize the issuance of stock, or
adopt a certificate of merger and ownership; provided that the Executive
Committee shall have the authority to declare a split of the Common Stock of the
Corporation, including by means of a stock dividend. Unless a Nominating
Committee shall have been appointed by the board of directors, the Executive
Committee shall make recommendations to the board with respect to management
nominees to the board and review and make recommendations with respect to such
shareholder nominees to the board as may be submitted to the corporation.
Compensation and Personnel Committee. The Compensation and Personnel
Committee shall be composed of two members of the board, or such other number as
from time to time specified by the board of directors, as may from time to time
be chosen by the board of directors, none of whom shall be an employee of the
Corporation. The Compensation and Personnel Committee shall have the authority
from time to time to determine the compensation payable to the officers and key
employees of the Corporation and its subsidiaries and to recommend to the board
additions, deletions and alterations with respect to the various employee
benefit plans and other fringe benefits provided by the Corporation, except that
no member of the Committee shall take part in any decision pertaining to his
compensation or benefits in his capacity as a director of the Corporation.
Audit Committee. The Audit Committee shall be composed of two
members of the board, or such other number as from time to time specified by the
board of directors, as may from time to time be chosen by the board of
directors, none of whom shall be an employee of the Corporation. The Audit
Committee shall have the authority and responsibility to (a) hire one or more
firms of independent public accountants to audit the Corporation's books,
records and financial statements and to review the Corporation's systems of
accounting (including its system of internal controls), (b) discuss with such
independent public accountants the results of such audit and review, (c)
periodically conduct independent reviews of the Corporation's systems of
accounting (including its system of internal control), and (d) periodically make
reports to the board with respect to its findings.
11
<PAGE>
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of any statute or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or shareholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or shareholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given in accordance with section 4 of Article VI
hereof.
Section 2. Whenever any notice whatever is required to be given under
the provisions of any statute or under the provisions of the certificate of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the Corporation shall be chosen by the board
of directors and shall be a Chairman of the Board, a president, a secretary and
a treasurer. The board of directors may also choose one or more vice chairmen,
vice-presidents, assistant secretaries and assistant treasurers.
12
<PAGE>
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a Chairman of the Board, a
president, a secretary, and a treasurer, none of whom need be a member of the
board except for the Chairman of the Board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the Corporation
shall be fixed by the board of directors.
Section 5. Each officer of the Corporation shall hold office until his
successor is chosen and qualifies, except in the event of his death, resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the Corporation shall be
filled by the board of directors. Any two or more officers, other than those of
president and secretary, may be held by the same person.
13
<PAGE>
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall preside at all meetings of
the board of directors and shareholders, if present thereat, may appoint between
meetings of the board ad hoc committees to the board, which appointments shall
be subject to the approval of the board at its next meeting, may make
recommendations to the board with respect to the membership of the committees to
the board, and shall exercise such other powers and perform such other duties as
shall be assigned to him from time to time by the board.
THE VICE CHAIRMAN
Section 7. The vice chairman, or if there shall be more than one, the
vice chairmen in the order determined by the board of directors, shall, in the
absence or disability of the Chairman, perform the duties and exercise the
powers of the Chairman and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE PRESIDENT
Section 8. The president shall, unless otherwise provided by the board
of directors, be the chief executive officer of the Corporation. As chief
executive officer, he shall have general supervision over the affairs of the
Corporation, subject to the policies and directives of the board of directors
and shall supervise and direct all officers and employees of the Corporation,
but may delegate in his discretion any of his powers to any officer or such
other executives as he may designate. Unless otherwise provided by the board of
directors, the president shall also be the chief operating officer of the
Corporation and shall have general supervision over and control of the
operations and activities of the Corporation, subject to the supervision and
control of the board of directors, and shall have general supervision and
direction of all operating officers and employees of the Corporation, but may
delegate in his discretion any of his powers as chief operating officer to any
vice president or such other executives as he may designate. The president shall
have such other duties as from time to time may be assigned to him by the board
of directors. Notwithstanding the foregoing, the board of directors may appoint
a vice president of the Corporation as the Corporation's chief operating
officer, in which event such vice president shall have the power, authority and
responsibilities as prescribed herein for the chief operating officer.
14
<PAGE>
Section 9. The Chairman of the Board, vice chairman, president, or any
vice president shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the Corporation.
THE VICE-PRESIDENTS
Section 10. The vice president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors, the Chairman of the Board or the president may
from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 11. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the Corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors, the
Chairman of the Board or the president, under whose several supervision he shall
be. He shall have custody of the corporate seal of the Corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.
15
<PAGE>
Section 12. The assistant secretary, or if there shall be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the board of directors.
Section 14. He shall disburse the funds of the Corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board, the president and
the board of directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of the
financial condition of the corporation.
Section 15. If required by the board of directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 15. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
16
<PAGE>
ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Definitions: Certain terms used in this Article shall be
defined as follows or, where so indicated, shall include the following meanings
in addition to their normal and their statutory meanings:
a. "Corporate agent" means any person who is or was a
director, officer, employee or agent of the indemnifying corporation or of any
constituent corporation absorbed by the indemnifying corporation in a
consolidation or merger and any person who is or was a director, officer,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or any other enterprise, serving as such at the request of the
indemnifying corporation, or of any such constituent corporation, or the legal
representative of any such director, officer, trustee, employee or agent;
b. "Other enterprise" means any domestic or foreign
corporation, other than the indemnifying corporation, and any partnership, joint
venture, sole proprietorship, trust or other enterprise, whether or not for
profit, served by a corporate agent;
c. "Expenses" means reasonable costs, disbursements and
counsel fees actually incurred;
d. "Liabilities" means judgments, fines, penalties and amounts
paid in settlement actually and reasonably incurred;
e. "Criminal third party proceedings" shall mean any
threatened, pending or completed action or quasi-administrative proceeding or
investigation;
f. "Derivative action" shall mean any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor;
g. "Party" shall include the giving of testimony or similar
involvement, whether or not named as a party;
h. "Third party proceeding" shall mean any pending, threatened
or completed civil, criminal, administrative or arbitrative action, suit or
proceeding, and any appeal therefrom, and any inquiry or investigation which
could lead to such action, suit or proceeding, other than an action by or in the
right of the Corporation.
17
<PAGE>
Section 2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any third party proceeding by
reason of the fact that he or she was or is a corporate agent, against his or
her expenses and liabilities in connection with such third party proceeding if
he or she acted in good faith and in a manner reasonably believed by him or her
to be in, or not opposed to, the best interests of the Corporation and, with
respect to any criminal third party proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any third party
proceeding by judgment, order, settlement, consent, filing of a criminal
complaint or information, indictment, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in, or not opposed to, the best interests of the Corporation or,
with respect to any criminal third party proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 3. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any derivative action by reason of
the fact that such person was or is a corporate agent, against his or her
expenses with the defense or settlement of such action if he or she acted in
good faith and in a manner reasonably believed by him or her to be in, or not
opposed to, the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which he or she shall have been adjudged to be liable to the Corporation unless
and only to the extent that the Delaware Court of Chancery or the court in which
such derivative action is or was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, he or she is fairly and reasonably entitled to indemnity for such items
which the court shall deem proper.
Section 4. To the extent that any corporate agent has been successful
on the merits or otherwise in defense of any third party proceeding or
derivative action or in defense of any claim, issue or matter therein, the
corporate agent shall be indemnified against his or her expenses in connection
therewith.
Section 5. Indemnification under Sections 2 and 3 of this Article Ten
(unless ordered by a court, in which case the expenses of the corporate agent in
enforcing indemnification shall be added to and be included in the final
judgment against the Corporation) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
corporate agent is required or proper in the circumstances because he or she has
met the applicable standard of conduct set forth in Section 2 or 3 of this
Article Ten or has been successful on the merits or otherwise as set forth in
Section 4 of this Article X and that the amount requested has been actually and
reasonably incurred. Such determination shall be made:
a. By the board of directors, acting by a majority vote of a
quorum consisting of directors who were not parties to the third party
proceeding or derivative action, or
18
<PAGE>
b. If such a quorum is not obtainable or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or
c. By the shareholders.
Section 6. Expenses incurred in defending a third party proceeding,
criminal third party proceeding or derivative action shall be paid on behalf of
a corporate agent, by the Corporation in advance of the final disposition of
such actions upon receipt of an undertaking by or on behalf of such person to
repay such amount unless it shall ultimately be determined that he or she is
entitled to be indemnified by the Corporation as required in this Article Ten.
Section 7. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a corporate agent
against any expenses and liabilities asserted against him or her and incurred by
him or her by reason of his or her being or having been a corporate agent,
whether or not the Corporation would have the power to indemnify him or her
against such expenses and liabilities under the provisions of this Article Ten.
Section 8. Each person who shall act as a corporate agent shall be
deemed to be doing so in reliance upon the rights of indemnification provided in
this Article.
The indemnification provided by this Article shall not be
deemed exclusive of any other right to which a person seeking indemnification or
advancement of expenses may be entitled under any statute, by-law, agreement,
vote of shareholders or disinterested directors, or otherwise, regardless of
whether the event giving rise to indemnification occurred before or after the
effectiveness thereof, both as to action taken in the official capacity of such
person and as to action in another capacity while holding his or her office or
position, and shall continue as to a person who has ceased to be a corporate
agent and shall inure to the benefit of his or her heirs and personal
representatives.
19
<PAGE>
ARTICLE XI
CERTIFICATES FOR SHARES
Section 1. Every holder of stock in the Corporation shall be entitled
to have a certificate, signed by, or in the name of the Corporation by, the
Chairman of the Board, the vice chairman or the president or a vice-president,
and by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation, certifying the number of shares owned by him in
the Corporation.
When the Corporation is authorized to issue shares of more than one
class, there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the Corporation will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the Corporation is authorized
to issue any preferred or special class in series, the variations in the
relative rights and preferences between the shares of each such series so far as
the same have been fixed and determined and the authority of the board of
directors to fix and determine the relative rights and preferences of subsequent
series.
Section 2. The signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself or an
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such bonds or indemnities as it deems adequate,
to protect the Corporation from any claim that may be made against it with
respect to any such certificate alleged to have been lost or destroyed.
20
<PAGE>
TRANSFERS OR SHARES
Section 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon the books of the
Corporation.
RECORD DATES FOR DETERMINING SHAREHOLDERS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
the board of directors shall fix a date as the record date for such
determination of shareholders. Any such record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and shall not be more than sixty days nor less than ten days prior to
the date of such meeting. If no record date is fixed by the board of directors,
the record date shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held.
In the case of determining shareholders entitled to consent to corporate
action in writing without a meeting, the board of directors shall fix a date as
the record date for such determination of shareholders. Any such record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the board of directors, and shall not be more than ten days after the
date upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining shareholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required under Delaware law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered agent in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of shareholders are
recorded. If no record date has been fixed by the board of directors and prior
action by the board of directors is required under Delaware law, the record date
for determining shareholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
For the purpose of determining shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors shall fix a date as the record date for such
determination of shareholders. Any such record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and shall not be more than sixty days prior to such action. If no
record date is fixed by the board of directors, the record date for determining
shareholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
21
<PAGE>
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares entitled to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of shareholders, a complete list of the shareholders entitled to vote at a
shareholders' meeting, or adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each shareholders. Such
list shall be open to the examination of any shareholders, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any shareholder who is present.
ARTICLE XII
DIVIDENDS
Section 1. Subject to the provisions of the certificate of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in its bonds, in its own shares or other property including the
shares or bonds of other corporations subject to any provisions of law and of
the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
22
<PAGE>
CHECKS
Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall end on the last day
of December in each year unless otherwise fixed by resolution of the board of
directors.
SEAL
Section 5. The Corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XIII
AMENDMENTS
These by-laws may be altered, amended or repealed, or new by-laws may
be adopted, by the shareholders, or by the board of directors when such power is
conferred upon the board of directors by the certificate of incorporation (and
amendments thereto), at any regular meeting of the shareholders or of the board
of directors, or at any special meeting of the shareholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation (and amendments thereto), it shall not divest or
limit the power of the shareholders to adopt, amend or repeal by-laws.
23
<PAGE>
Exhibit 10.1
MANAGEMENT EMPLOYMENT AGREEMENT
The following agreement is hereby entered into between Joel Morganroth, M.D.,
(hereinafter known as "Employee") and Premier Research Worldwide (together with
its affiliated corporations hereinafter known as the "Company") and having its
principal offices at 124-34 South 15th Street, Philadelphia, PA 19102.
1. DUTIES AND RESPONSIBILITIES
Employee agrees to hold the position of Chief Executive Officer and
shall be directly responsible to the Board of Directors.
2. BEST EFFORTS
a) Employee agrees to devote best efforts to his employment with
the Company, on a full-time exclusive basis carrying out
duties as defined in the position description dated October,
1996.
b) Employee agrees not to use the facilities, personnel or
property of the Company for personal or private business
benefit.
3. ETHICAL CONDUCT
Employee will conduct himself in a professional and ethical manner at
all times and will comply with all Company policies as well as all
State and Federal regulations and laws as they may apply to the
services, products, and business of the Company.
4. TERM OF THE AGREEMENT
This Agreement will be for a period of five (5) years commencing
1 January 1997 and continuing through 31 December 2001.
5. COMPENSATION
a) Salary
Salary shall be payable in equal installments as per the
Company's payroll policy and shall be $201,000 annually for
the year 1997. Thereafter, salary will be reviewed annually by
the compensation committee and approved by the Board of
Directors.
b) Benefits
Benefits shall be the standard benefits of the Company as they
shall exist from time to time.
1
<PAGE>
c) Bonus
Employee hereby acknowledges the receipt of a stock option
grant of 100 shares issued under the Horizon 2000 program on 1
February 1995 which was in lieu of a bonus plan. Accordingly,
employee agrees that additional bonus (under existing or new
plans) will not be considered during the term of this
Agreement.
6. NON-DISCLOSURE
Employee acknowledges that employment with the Company, requires him
to have access to confidential information and material belonging to
the Company, including customer lists, contracts, proposals,
operating procedures, and trade secrets. Upon termination of
employment for any reason, Employee agrees to return to the Company
any such confidential information and material in his possession with
no copies thereof retained. Employee further agrees, whether during
employment with the Company or any time after the termination thereof
(regardless of the reason for such termination), he will not disclose
nor use in any manner, any confidential or other material relating to
the business, operations, or prospects of the Company except as
authorized in writing by the Company.
7. NON-COMPETITION
During employment with the Company and for a period of two years
thereafter (regardless of the reason for termination) Employee agrees
he will not, directly or indirectly, in any way for his own account,
as Employee, stockholder, partner, or otherwise, or for the account
of any other person, corporation, or entity:
a) Engage, within any geographic area in which the Company is the
conducting its business, in any business segment which is
competitive with the Company in which he has actively
participated as an Employee of the Company; or
b) Solicit customers who, during the period of employment, were
customers of the Company or were actively solicited as
customers of the Company; or
c) Offer employment to any Employee of the Company in any
capacity whatsoever, or attempt to induce or cooperate with
any other firm in an attempt to induce an Employee of the
Company to leave the employ of the Company; or
d) Attempt or cooperate with any other firm in an attempt to
induce any independent contractor of the Company to cease
providing services to the Company.
8. INVENTIONS
Employee agrees to promptly disclose to the Company each discovery,
improvement, or invention conceived, made, or reduced to practice
(whether during working hours or otherwise) during the term of
employment. Employee agrees to grant to the Company the entire
interest in all of such discoveries, improvements, and inventions and
2
<PAGE>
to sign all patent/copyright applications or other documents needed
to implement the provisions of this paragraph without additional
consideration. Employee further agrees that all works of authorship
subject to statutory copyright protection developed jointly or
solely, while employed shall be considered a work made for hire and
any copyright thereon shall belong to the Company. Any invention,
discovery, or improvement conceived, made, or disclosed, during the
one year period following the termination of employment with the
Company shall be deemed to have been made, conceived, or discovered
during employment with the Company.
Employee acknowledges that the only discoveries, improvements, and
other inventions made prior to the date hereof which have not been
filed in the United States Patent Office are attached as Exhibit A.
9. NO CURRENT CONFLICT
Employee hereby assures the Company that he/she is not currently
restricted by any existing employment or non-compete agreement that
would conflict with the terms of this Agreement.
10. TERMINATION AND TERMINATION BENEFITS
Employment is "at will" which means that either the Company or
Employee may terminate at any time, with or without cause or good
reason.
a) The Company may terminate other than for "cause" at any time
upon written notice to Employee. In such case, the Company
will continue to pay Employee's annual salary for a period of
one year following such termination. The Company will have no
other obligation and no other severance pay or other benefits
will be provided.
b) The Company may terminate employment for cause at any time
upon written notice setting forth the nature of such cause.
The following, as determined by the Company in its reasonable
judgment, shall constitute "cause" for termination:
(1) Employee's failure to perform duties and
responsibilities as outlined in the job description
dated October, 1996 or as amended thereafter.
(2) Any Employee misconduct which is injurious to the
business or interests of the Company.
(3) Violation of any federal, state, or local law
applicable to the business of the Company.
(4) Any material breach of this agreement.
c) Employee may terminate employment at any time, with or without
good reason, upon 90 days written notice to the Company.
d) If Employee resigns or employment is terminated by the Company
for cause, the Company shall have no further obligation to
Employee other than for annual salary earned through the date
of termination.
3
<PAGE>
11. MISCELLANEOUS
a) This Agreement and any disputes arising herefrom shall be
governed by New Jersey law.
b) In the event that any provision of this Agreement is held to
be invalid or unenforceable for any reason, including without
limitation the geographic or business scope or duration
thereof, this Agreement shall be construed as if such
provision had been more narrowly drawn so as not to be invalid
or unenforceable.
c) This Agreement supersedes all prior agreements, arrangements,
and understandings, written or oral, relating to the subject
matter.
d) The failure of either party at any time or times to require
performance of any provision hereof shall in no way affect the
right at a later time to enforce the same.
For Employee: For the Company:
_______________________________ ________________________________
Date:__________________________ Date: __________________________
4
<PAGE>
Exhibit 10.2
MANAGEMENT CONSULTANT AGREEMENT
-------------------------------
The following agreement is hereby entered into between Joel Morganroth, M.D., PC
(hereinafter known as "Consultant") and Premier Research Worldwide, (together
with its affiliated corporations hereinafter known as the "Company") and having
its principal offices at 124-34 South 15th St., Philadelphia, PA 19102.
1. SCOPE OF PROJECT
----------------
a) Consultant agrees to serve as Medical Director and/or
principal investigator and to advise the Company on matters
related to the successful operation of the Company's Clinical
Research Unit.
b) Consultant agrees to provide medical interpretation for
diagnostic tests as such reading is from time to time
required.
2. ETHICAL CONDUCT
---------------
Consultant will conduct himself in a professional and ethical manner
at all times and will comply with all Company policies as well as all
State and Federal regulations and laws as they may apply to the
services, products, and business of the Company.
3. COMPENSATION
------------
a) Fees shall be $144,000, prepaid in twelve equal installments
on the 15th of each month.
b) Consultant will be reimbursed for reasonable out of pocket
disbursements properly documented.
c) Consultant agrees to carry standard malpractice insurance with
limits of 1M, 3M.
d) Consultant agrees to maintain his medical licenses as required
to carry out the duties described herein.
e) Consultant shall be acting as an independent contractor and
not as an employee of the Company. Payment of any tax and/or
social security liabilities relative to this compensation
shall be the responsibility of Consultant.
4. NON-DISCLOSURE
--------------
Consultant acknowledges that consultancy for the Company, requires
him to have access to confidential information and material belonging
to the Company, including customer lists, contracts, proposals,
operating procedures, and trade secrets. Upon termination of the
1
<PAGE>
consulting relationship for any reason, Consultant agrees to return
to the Company any such confidential information and material in his
possession with no copies thereof retained. Consultant further
agrees, whether during the term of this agreement with the Company or
any time after the termination thereof (regardless of the reason for
such termination), he will not disclose nor use in any manner, any
confidential or other material relating to the business, operations,
or prospects of the Company except as authorized in writing by the
Company.
5. INVENTIONS
----------
a) Consultant agrees to promptly disclose to the Company each
discovery, improvement, or invention conceived, made, or
reduced to practice during the term of this agreement.
Consultant further agrees to grant to the Company the entire
interest in all of such discoveries, improvements, and
inventions and to sign all patent/copyright applications or
other documents needed to implement the provisions of this
paragraph without additional consideration. Consultant further
agrees that all works of authorship subject to statutory
copyright protection developed jointly or solely, while
engaged as a Consultant shall be considered property of the
Company and any copyright thereon shall belong to the Company.
Any invention, discovery, or improvement conceived, made, or
disclosed, during the one year period following the
termination of this agreement shall be deemed to have been
made, conceived, or discovered during the term hereof.
b) If publication of data generated from studies conducted under
the auspices of the Company is anticipated, Consultants agrees
to obtain permission from the Company for such publication.
6. NO CURRENT CONFLICT
-------------------
Consultant hereby assures the Company that he is not currently
restricted by any existing employment, consulting, or non-compete
agreement that would conflict with the terms of this Agreement.
7. TERM OF AGREEMENT
-----------------
The term of this Agreement is one year commencing from 1 January 1997
and will continue from year to year unless terminiated.
8. TERMINATION
-----------
a) The Company may terminate consulting services at any time
without the need to show cause upon 60 days written notice to
Consultant.
2
<PAGE>
b) The Company may terminate consulting services without notice
for failure to meet obligations under the Agreement. The
following, as determined by the Company in its reasonable
judgment, shall constitute failure to meet these obligations:
(1) Consultant's failure to perform services defined under
the scope of the project.
(2) Any misconduct which is injurious to the business or
interests of the Company.
(3) Violation of any federal, state, or local law applicable
to the business of the Company.
(4) Any material breach of this agreement.
c) Consultant may terminate at any time upon 60 days written
notice to the Company.
9. MISCELLANEOUS
-------------
a) This Agreement and any disputes arising herefrom shall be
governed by New Jersey law.
b) In the event that any provision of this Agreement is held to
be invalid or unenforceable for any reason, including without
limitation the geographic or business scope or duration
thereof, this Agreement shall be construed as if such
provision had been more narrowly drawn so as not to be invalid
or unenforceable.
c) This Agreement supersedes all prior agreements, arrangements,
and understandings, written or oral, relating to the subject
matter.
d) The failure of either party at any time or times to require
performance of any provision hereof shall in no way affect the
right at a later time to enforce the same.
For Consultant: For the Company:
------------------------------ --------------------------
Date: Date:
------------------------------ --------------------------
3
<PAGE>
Exhibit 10.3
November 11, 1996
Mr. Jerry Lee
Golf Club Road
Greenwich, CT 06830
Dear Mr. Lee:
This letter serves to explain the stock option which was granted to you in
January, 1996 upon your election to the Board and which is a component of the
Board of Directors compensation. Some of the goals of the plan include:
1. provide a reward to the Directors commensurate with the increase in
shareholder value;
2. avoid a taxable event to the Director at the time of grant or exercise;
3. avoid a compensation charge to the company.
The following describes key terms of the options:
1. # of shares - 2, equal to .10% of the total outstanding shares of
Premier as of the date of grant.
2. Exercise Price - $2,500 per share, as determined by a third party
valuation.
3. Ability to exercise - options are exercisable seven years following the
date of grant for a one month period. The option also becomes
exercisable 180 days following an initial public offering if it occurs
within seven years from the date of grant and will remain exercisable
for a five year period. In addition, the option becomes exercisable for
a one month period upon the sale of a majority interest in the business
if it occurs before an IPO and within seven years from the date of
grant.
4. Directors may exercise their options by payment in cash or stock of
Premier.
5. Termination of options - options terminate within one month of a Board
member's resignation or removal from office.
6. The number of option shares will be adjusted for stock splits or stock
dividends.
Other limitations to exercising the options may be imposed by the underwriters
and the Securities Exchange Commission.
Sincerely,
/s/ Joan Carter
- ------------------------------------------
Joan Carter
Chairman of the Board
JC:kab
<PAGE>
Exhibit 10.4
November 11, 1996
Mr. Arthur Hull Hayes
MediScience Associates, Inc.
Nelson Communications, Inc.
71 Elk Avenue
New Rochelle, NY 10804
Dear Mr. Hayes:
This letter serves to explain the stock option which was granted to you upon
your election to the Board and which is a component of the Board of Directors
compensation. Some of the goals of the plan include:
1. provide a reward to the Directors commensurate with the increase in
shareholder value;
2. avoid a taxable event to the Director at the time of grant or exercise;
3. avoid a compensation charge to the company.
The following describes key terms of the options:
1. # of shares - 2, equal to .10% of the total outstanding shares of
Premier as of the date of grant.
2. Exercise Price - equal to the stock price of Premier at the initial
public offering.
3. Ability to exercise - options are exercisable seven years following the
date of grant for a one month period. The option also becomes
exercisable 180 days following an initial public offering if it occurs
within seven years from the date of grant and will remain exercisable
for a five year period. In addition, the option becomes exercisable for
a one month period upon the sale of a majority interest in the business
if it occurs before an IPO and within seven years from the date of
grant.
4. Directors may exercise their options by payment in cash or stock of
Premier.
5. Termination of options - options terminate within one month of a Board
member's resignation or removal from office.
6. The number of option shares will be adjusted for stock splits or stock
dividends.
Other limitations to exercising the options may be imposed by the underwriters
and the Securities Exchange Commission.
Sincerely,
/s/ Joan Carter
- ------------------------------
Joan Carter
Chairman of the Board
JC:kab
<PAGE>
Exhibit 10.5
November 11, 1996
Ms. Connie Woodburn
Premier Alliance Group
3 Westbrook Corp. Center, 9th Floor
West Chester, IL 60154
Dear Ms Woodburn:
This letter serves to explain the stock option component of the Board of
Directors compensation. Some of the goals of the plan include:
1. provide a reward to the Directors commensurate with the increase in
shareholder value;
2. avoid a taxable event to the Director at the time of grant or exercise;
3. avoid a compensation charge to the company.
The following describes key terms of the options:
1. # of shares - 2, equal to .10% of the total outstanding shares of
Premier as of the date of grant.
2. Exercise Price - equal to the stock price of Premier at the initial
public offering.
3. Ability to exercise - options are exercisable seven years following the
date of grant for a one month period. The option also becomes
exercisable 180 days following an initial public offering if it occurs
within seven years from the date of grant and will remain exercisable
for a five year period. In addition, the option becomes exercisable for
a one month period upon the sale of a majority interest in the business
if it occurs before an IPO and within seven years from the date of
grant.
4. Directors may exercise their options by payment in cash or stock of
Premier.
5. Termination of options - options terminate within one month of a Board
member's resignation or removal from office.
6. The number of option shares will be adjusted for stock splits or stock
dividends.
Other limitations to exercising the options may be imposed by the underwriters
and the Securities Exchange Commission.
Sincerely,
/s/ Joan Carter
- ------------------------------
Joan Carter
Chairman of the Board
JC:kab
<PAGE>
Exhibit 10.6
PREMIER RESEARCH WORLDWIDE, Ltd.
AMENDED AND RESTATED
AS OF FEBRUARY 8, 1995
1993 NON-QUALIFIED
STOCK OPTION PLAN
The 1993 Non-Qualified Stock Option Plan of Premier Research Worldwide,
Ltd. is hereby amended and restated to read in its entirety as follows:
1. Purpose. The purpose of this Non-Qualified Stock Option Plan (the
"Plan") is to provide a means by which certain employees of, and others having a
relationship with, Premier Research Worldwide, Ltd., a Delaware corporation (the
"Company"), may be given an opportunity to purchase common stock of the Company
("Common Stock"). The Plan is intended to advance the interests of the Company
by encouraging stock ownership on the part of such individuals, by enabling the
Company and its affiliates to secure and retain the services of highly qualified
persons, and by providing such individuals with an additional incentive to
advance the success of the Company and its subsidiaries.
2. Definitions. The following terms, when utilized in this Plan, have
the indicated meanings:
Base Price: For options granted prior to June 30,
1995, $5,000 per share, and for options granted thereafter, the fair market
value (determined in such reasonable manner as may be specified by the
Committee) of a share of Common Stock on the date of grant (in each case subject
to adjustment as provided in paragraph 9 below), if higher than $5,000.
IPO: The first sale by the Company of shares of its
Common Stock in an underwritten, registered public offering.
IPO Date: The date of the closing of the IPO.
Option Shares: Shares of the Common Stock that may be
purchased under an option granted pursuant to this Plan.
Permanent Disability: As defined pursuant to Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, or any successor
provision thereto.
- 1 -
<PAGE>
Sale: Any sale of substantially all the assets of the
Company, other than in the ordinary course of business, or a sale or transfer of
the capital stock of the Company (other than in the IPO) resulting in the
majority of the voting capital stock of the Company being owned by other than UM
or its affiliates. Whether an event constitutes a "sale" hereunder shall be
subject to the reasonable determination of the Committee.
UM: UM Holdings, Ltd. and its subsidiaries.
3. Stock Subject to Plan. Subject to adjustment as hereinafter
provided, options to purchase up to an aggregate of 500 shares of the Company's
Common Stock may from time to time be granted by the Company pursuant to this
Plan. Shares that by reason of the expiration of an option or otherwise are no
longer subject to purchase pursuant to an option granted under the Plan may be
re-optioned under the Plan.
4. Administration.
(a) The Plan shall be administered by a Committee consisting
of not less than two directors (the "Committee") to be appointed from time to
time by the Board of Directors. Membership on the Committee shall in any event
be limited to those members of the Board who are "disinterested persons" as
defined in the regulations promulgated by the Securities Exchange Commission
pursuant to Section 16(b) of the Securities Exchange Act of 1934.
Notwithstanding the foregoing, the Board of Directors may choose to directly
administer the Plan, provided that all members of the Board are at such time
"disinterested persons." During any such period of direct administration of the
Plan by the Board of Directors, all references herein to the Committee shall
instead mean the Board of Directors.
(b) The Committee shall have full power to grant options under
the Plan, to construe or interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it and to make all other determinations
necessary or advisable for its administration. The decisions of the Committee
shall be conclusive and final.
(c) The Committee may, from time to time, determine which
participants shall be granted options under the Plan, the number of Option
Shares subject to each option, and the time or times at which options shall be
granted.
(d) The Committee shall report to the Board of Directors the
names of participants to be granted options and the number of Option Shares
subject to, and the terms and conditions of, each option.
- 2 -
<PAGE>
(e) The members of the Board of Directors and the Committee
shall not be liable for any action or determination made in good faith with
respect to the Plan or to any option.
5. Eligibility; Grant of Options. (a) Participants. The persons who
shall be eligible to participate in this Plan and receive options hereunder
shall be such employees and other individuals who provide services to or
otherwise have a relationship with the Company or UM as the Committee shall from
time to time determine to be key individuals to the success of the Company. Each
employee granted an option shall, on or before the date of the grant, enter into
an appropriate employment agreement.
(b) Grants of Options. The Committee may from time to time, up
to the day immediately preceding the IPO Date, authorize the grant of options
pursuant to this Plan to one or more persons eligible to participate in the
Plan, each of which options shall be on such terms and conditions, consistent
with this Plan (including as specified in paragraph 7 below), as may be
specified by the Committee.
6. Stock Option Agreements. Stock options granted pursuant to this Plan
shall be evidenced by agreements which shall comply with and be subject to the
terms and conditions specified in this Plan. Nothing in this Plan or an option
granted hereunder shall govern the employment rights and duties between the
optionee and the Company or UM. Neither this Plan, nor any grant or exercise
pursuant thereto, shall constitute an employment agreement among such parties.
7. Terms and Conditions. Each option granted hereunder shall be subject
to the following terms and conditions:
(a) Option Price. The option price shall equal the Base Price
as in effect on the date of grant.
(b) Date First Exercisable. Each option shall become
exercisable in full on the first to
occur of (i) the ninetieth day following the IPO Date or (ii) July 1, 2003.
(c) Term. Each option shall expire (i) if the IPO occurs prior
to July 1, 2003, on the fifth anniversary of the IPO Date, or (ii) August 15,
2003, in the event the IPO has not occurred prior to July 1, 2003, in each case
subject to early termination as otherwise provided in this Plan or the option
agreement.
- 3 -
<PAGE>
(a) Manner of Exercise. Shares of Common Stock purchased upon
exercise of options shall at the time of purchase be paid for in full. To the
extent that the right to purchase shares has accrued hereunder, options may be
exercised from time to time by written notice to the Company stating the full
number of shares with respect to which the option is being exercised and the
time of delivery thereof, in accordance with such administrative procedures as
may from time to time be specified by the Committee. Such notice of exercise
shall be accompanied by full payment for the shares by certified or official
bank check or the equivalent thereof acceptable to Company or by tendering to
the Company shares of the Common Stock having an aggregate fair market value,
determined by the Company at the date of payment, equal to the option price and
which shall have been owned by the optionee for at least six months. Upon
exercise, the Company shall deliver to the optionee (or to such other person
entitled to exercise the option) at the principal office of the Company, or such
other place as shall be mutually agreed upon, a certificate or certificates for
such shares; provided, however, that the time of delivery may be postponed by
the Company for such period as may be required for it with reasonable diligence
to comply with any requirements of law; and provided further that in the event
the Common Stock issuable upon exercise is not registered under the Securities
Act of 1933 (the "Act"), then the Company may require that the registered owner
deliver an investment representation in form acceptable to the Company and its
counsel and the Company will place a legend on the certificate for such Common
Stock restricting the transfer of same. There shall be no obligation or duty for
the Company to register under the Act at any time the Common Stock issuable upon
exercise of the options. If optionee (or other person entitled to exercise the
option) fails to accept delivery, the optionee's payment shall be returned and
the right to exercise the option with respect to such undelivered shares shall
be terminated.
(b) Non-Assignability of Option Rights. No option shall be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.
(c) Termination of Employment. For purposes of this Plan, the
term "termination of employment" refers generally to an individual ceasing to be
an employee or independent contractor of the Company or UM. Options granted
hereunder to individuals who, at the time of grant, are employees of the Company
or UM shall terminate upon a termination of employment in accordance with the
following provisions:
(i) Upon the termination of employment of an
optionee, all options granted to the optionee pursuant to this Plan shall
terminate three months after the date of termination of employment, except to
the extent the provisions of clause (ii) below are applicable.
- 4 -
<PAGE>
(ii) Solely in the event that the termination of
employment occurs prior to the first to occur of (A) August 15, 2003 or (B) the
IPO Date, due to (1) the optionee's death or Permanent Disability or (2) the
termination of employment by the Company other than for due cause, the optionee
or his estate shall have the right to exercise any option (to the extent
otherwise exercisable) within twenty-four months after the date of termination
of employment. At the end of such twenty-four month period, the option shall
terminate. For purposes of this clause (ii), a termination shall be deemed "for
due cause" if the Company or UM determines that the optionee has committed any
act of dishonesty, or has materially breached any corporate policy or any
agreement between the optionee and his employer, or has failed to adequately
perform assigned duties and responsibilities.
(d) Adjustment of Options on Recapitalization. The aggregate
number of shares of Common Stock for which options may be granted to persons
participating under the Plan, the Base Price, the IPO Price, the number of
shares covered by each outstanding option and the exercise price per share for
each such option, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock of the Company resulting from the
subdivision or consolidation of shares, or the payment of a stock dividend after
the effective date of this Plan or the date of grant, as applicable, or other
increase or decrease in such shares effected without receipt of consideration by
the Company; provided, however, that any options to purchase fractional shares
resulting from any such adjustment shall be eliminated.
(e) Adjustment of Options Upon Reorganization. Except as
otherwise provided in subparagraph (g) below, if the Company shall at any time
merge or consolidate with or into another corporation and (A) the Company is not
the surviving entity, or (B) the Company is the surviving entity and the holders
of Company Common Stock are required to exchange their shares for property
and/or securities, the holder of each option will thereafter receive, upon the
exercise thereof, the securities and/or property to which a holder of the number
of shares of Common Stock then deliverable upon the exercise of such option
would have been entitled upon such merger or consolidation, and the Company
shall take such steps in connection with such merger or consolidation as may be
necessary to assure that the provisions of this Plan shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of such option, provided,
however that under no circumstance shall any option exercise date be accelerated
in contemplation of such action. A sale of all or substantially all the assets
of the Company for a consideration (apart from the assumption of obligations)
consisting primarily of securities shall be deemed a merger or consolidation for
the foregoing purposes.
- 5 -
<PAGE>
(f) Dissolution of Company. Except as otherwise provided in
subparagraph (g) below, in the event of the proposed dissolution or liquidation
of the Company, the options granted hereunder shall terminate as of a date to be
fixed by the Committee, provided that not less than thirty (30) days' prior
written notice of the date so fixed shall be given to the optionee, and the
optionee shall have the right, during the period of thirty (30) days preceding
such termination, to exercise the option, if the option is otherwise then
exercisable.
(g) Sale Prior to IPO. Notwithstanding the provisions of
subparagraph (e) or (f) above, and in substitution thereof, in the event that a
Sale of the Company occurs prior to the earlier to occur of the IPO Date or
August 15, 2003, each outstanding option shall terminate and in its place each
optionee shall have the right to receive, not later than ninety days following
the date of the closing of such Sale, an amount equal to (i) the effective sale
price per share in the Sale, minus (ii) the exercise price of the option, all
multiplied by (iii) the number of Option Shares represented by such option. The
amount, if any, so due to an optionee shall be calculated by the Company's
independent auditors, which determination shall be conclusive, final and binding
on all parties. This amount shall be payable in cash, unless the consideration
received in the Sale includes non-cash consideration, in which case the Company
may choose to satisfy this obligation by delivering to the optionee the same
type of consideration as that received in the Sale.
(h) Rights as a Shareholder. The optionee shall have no rights
as a shareholder with respect to any shares of Common Stock of the Company held
under option until the date of issuance of the stock certificates to him for
such shares. Except as provided in subparagraph (d) above, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date of such issuance.
8. Effective Date and Termination.
(a) The effective date of the Plan is August 15, 1993.
(b) The Plan shall terminate on November 15, 2003, but the
Board of Directors may terminate the Plan at any time prior thereto. Termination
of the Plan shall not alter or impair, without the consent of the optionee, any
option theretofore granted, or any other right or obligation then existing,
under the Plan.
9. Amendments. The Board of Directors of the Company may, from time to
time, alter, amend, suspend, or discontinue the Plan, or alter or amend any and
all option agreements granted thereunder; provided, that no such action of the
Board of Directors, without the approval of the shareholders of Company and, in
the case of subparagraph (c), the holder of the option, may alter the provisions
of the Plan so as to:
- 6 -
<PAGE>
(a) Extend the term of the Plan or the maximum term of the
options granted beyond that specified by the Plan;
(b) Withdraw the administration of the Plan from the Board of
Directors and the Committee;
(c) Alter any outstanding option agreement to the detriment of
the optionee.
10. Options Not Incentive Stock Options. Options granted pursuant to
this Plan are not intended to qualify as Incentive Stock Options within the
meaning of Section 422 of the Code, and the terms of this Plan and options
granted hereunder shall be so construed.
11. Use of Proceeds. The proceeds from the sale of Common Stock
pursuant to the exercise of options will be used for the Company's general
corporate purposes.
- 7 -
<PAGE>
Exhibit 10.7
PREMIER RESEARCH WORLDWIDE, LTD.
1996 STOCK OPTION PLAN
1. Purpose
The purpose of the 1996 Stock Option Plan (referred to herein as the
"Plan") of Premier Research Worldwide, Ltd. (the "Company") is to provide a
means by which certain employees and directors of, and others providing services
to or having a relationship with, the Company and its subsidiaries (as such term
is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code")) may be given an opportunity to purchase common stock of the
Company ("Common Stock"). The Plan is intended to promote the interests of the
Company by encouraging stock ownership on the part of such individuals, by
enabling the Company and its subsidiaries to secure and retain the services of
highly qualified persons, and by providing such individuals with an additional
incentive to advance the success of the Company and its subsidiaries.
2. Administration
The Plan shall be administered by a Committee consisting of not less
than two directors (the "Committee") to be appointed from time to time by the
Board of Directors. Membership on the Committee shall in any event be limited to
those members of the Board who are "Non-Employee Directors" as defined in the
regulations promulgated by the Securities Exchange Commission pursuant to
Section 16(b) of the Securities Exchange Act of 1934. The Committee shall have
the power to select optionees, to establish the number of shares and other terms
applicable to each such option, to construe the provisions of the Plan, and to
adopt rules and regulations governing the administration of the Plan. All power
and authority granted hereunder to the Committee may, at the discretion of the
Board of Directors, be exercised by the Board. The members of the Board of
Directors or the Committee shall not be liable for any action or determination
made in good faith with respect to the Plan or to any option granted pursuant
thereto.
3. Eligibility
The persons who shall be eligible to participate in this Plan and
receive options hereunder shall be the Company's directors and such employees
and other individuals who provide services to or otherwise have a relationship
with the Company or its subsidiaries as the Committee shall from time to time
determine to be key individuals to the success of the Company.
<PAGE>
4. Allotment of Shares
A maximum of 500,000 authorized but unissued shares of the Common
Stock, $0.01 par value, of the Company will be allotted to the Plan. Shares that
by reason of the expiration of an option or otherwise are no longer subject to
purchase pursuant to an option granted under the Plan may be re-optioned under
the Plan.
5. Effective Date and Term of Plan
The effective date of the Plan is the date on which it is approved by
the affirmative vote of shareholders owning a majority of the Common Stock of
the Company. The Plan shall terminate on the tenth anniversary of its effective
date, but the Board of Directors may terminate the Plan at any time prior
thereto. Termination of the Plan shall not alter or impair, without the consent
of the optionee, any of the rights or obligations of any option theretofore
granted under the Plan.
6. Terms and Conditions
A. All Options
Stock options granted pursuant to this Plan shall be evidenced
by agreements in such form as the Committee shall from time to time approve.
Nothing in this Plan or any option granted hereunder shall govern the employment
rights and duties between the optionee and the Company or subsidiary. Neither
this Plan, nor any grant or exercise pursuant thereto, shall constitute an
employment agreement among such parties. The following shall also apply to all
options granted under the Plan:
(i) Option Price
The option price per share for each stock option
shall be determined by the Committee, consistent with the
provisions of this Plan.
(ii) Time of Exercise of Option
Except as otherwise set forth herein, the Committee
shall establish the option period and time or times within the
option period when the stock option may be exercised in whole
or in such parts as may be specified from time to time by the
Committee. No option shall be exercisable until after the
expiration of six months from the date of grant. With respect
to an optionee who is about to retire, the Committee may in
its discretion accelerate the time or times when any
particular stock option held by said optionee may be so
exercised so that such time or times are earlier than those
originally provided in said option. In all cases exercise of
a stock option shall be subject to the provisions of Section
6A(vi).
(iii) Payment and Manner of Exercise
2
<PAGE>
The entire option price shall be paid at the time the
option is exercised. To the extent that the right to purchase
shares has accrued hereunder, options may be exercised from
time to time by written notice to the Company stating the full
number of shares with respect to which the option is being
exercised and the time of delivery thereof, in accordance with
such administrative procedures as may from time to time be
specified by the Committee. Such notice of exercise shall be
accompanied by full payment for the shares by: (1) certified
or official bank check or the equivalent thereof acceptable to
Company; (2) by tendering to the Company shares of Common
Stock, or requesting the Company to accept shares to be
acquired by exercising the option, having an aggregate fair
market value, determined by the Company at the date of
payment, equal to the option price; or (3) any combination of
the foregoing. Upon exercise, the Company shall deliver to the
optionee (or other person entitled to exercise the option), at
the principal office of the Company, or such other place as
shall be mutually agreed upon, a certificate or certificates
for such shares; provided, however, that the time of delivery
may be postponed by the Company for such periods as may be
required for it with reasonable diligence to comply with any
requirements of law; and provided further that in the event
the Common Stock issuable upon exercise is not registered
under the Securities Act of 1933 (the "Act"), then the Company
may require that the registered owner deliver an investment
representation in form acceptable to the Company and its
counsel and the Company will place a legend on the certificate
for such Common Stock restricting the transfer of same. There
shall be no obligation or duty for the Company to register
under the Act at any time the Common Stock issuable upon
exercise of the options. If the optionee (or other person
entitled to exercise the option) fails to accept delivery, the
optionee's payment shall be returned and the right to exercise
the option with respect to such undelivered shares shall be
terminated.
(iv) Non-Transferability of Option
An option by its terms shall not be transferable by
the optionee otherwise than by will or by the laws of descent
and distribution.
(v) Adjustment in Event of Recapitalization of the
Company
In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, the Board of
Directors shall make such adjustment as it may deem equitably
required, in the number and kind of shares authorized by and
for the Plan, in the number and kind of shares covered by the
options granted, and in the option price.
(vi) Rights after Termination of Employment
3
<PAGE>
In the event of termination of employment due to any
cause other than death or disability, rights to exercise the
stock option shall terminate three months following cessation
of employment. In the event of termination of employment due
to disability (within the meaning of Section 22(e)(3) of the
Code) or death, such optionee or executor, administrator or
devisee of an optionee, shall have the right to exercise such
option (to the extent otherwise exercisable) at any time
within one year after cessation of employment by reason of
such disability or death.
B. Non-Qualified Stock Options
The Committee may, in its discretion, grant options under the
Plan which, in whole or in part, do not qualify as incentive stock options under
Section 422 of the Code ("Non-Qualifying Options"). The terms and conditions of
the Non-Qualifying Options shall be governed by Section 6A above.
C. Incentive Stock Options
The Committee may, in its discretion, grant options under the
Plan which qualify, in whole or in part, as incentive stock options under
Section 422 of the Code. In addition to the terms and conditions set forth in
Section 6A above, the following terms and conditions shall govern any incentive
stock option issued under the Plan:
(i) Maximum Fair Market Value of Incentive Stock Options
No optionee may have incentive stock options which
become exercisable for the first time in any calendar year
(under all incentive stock option plans of the Company and its
subsidiary corporations) with an aggregate fair market value
(determined as of the time such option is granted) in excess
of One Hundred Thousand Dollars ($100,000).
(ii) Option Price
The option price per share for each incentive stock
option shall be 100% of the fair market value of the Common
Stock on the date the option is granted; except, in the case
of the grant to an optionee who owns Common Stock of the
Company possessing more than 10% of the total combined voting
power of all classes of stock of the Company or its
subsidiaries, the option price of such option shall be at
least 110% of the fair market value of the Common Stock on the
date the option is granted. The fair market value shall be
determined as prescribed by the Code and regulations
promulgated thereunder.
(iii) Period of Option
4
<PAGE>
Each incentive option shall expire ten years from the
date it is granted or at the end of such shorter period as may
be designated by the Committee on the date of grant; except,
in the case of the grant of an incentive stock option to an
optionee who owns Common Stock of the Company possessing more
than 10% of the total combined voting power of all classes of
stock of the Company or its subsidiaries, such option shall
not be exercisable after the expiration of five years from the
date it is granted.
(iv) Eligible Participants
Incentive stock options may be issued only to
employees of the Company or its parent or subsidiary
corporation or corporations.
7. Amendment of Plan
The Board, within its discretion, shall have authority to amend the
Plan and the terms of any option issued hereunder; provided, that no such action
of the Board of Directors, without the approval of the Shareholders of the
Company and, in the case of subparagraph (d), the holder of the option, shall:
(a) materially increase the benefits accruing to optionees
under the Plan;
(b) increase the number of securities which may be issued
under the Plan;
(c) materially modify the requirements as to eligibility for
participation under the Plan; and
(d) alter or impair any right or obligation under any option
previously granted under the Plan.
5
<PAGE>
Exhibit 10.8
LEASE AGREEMENT
Lease, dated June 1, 1996 between UM HOLDINGS Ltd., a New Jersey corporation,
having its offices at 56 Haddon Avenue, Haddonfield, New Jersey 08033 (the
"Landlord") and PREMIER RESEARCH WORLDWIDE, Ltd. a Delaware corporation, having
its offices at 124-34 South 15th Street, Philadelphia, PA 19102 (the "Tenant"),
WITNESSETH:
ARTICLE ONE
(1.) Demise of Premises, Term and Rent
1.1. The Landlord does hereby lease and demise to the Tenant, and the
Tenant does hereby hire and take from the Landlord for the term hereinafter
stated, the property known as 124-34 South 15th Street, Philadelphia, PA 19102
(the "Building"), containing approximately 34,920 square feet (rentable in
accordance with BOMA), of which tenant leases the entire building ("Space")
together with all fixtures, equipment, improvements, installations and
appurtenances which at the commencement of or during the term of this Lease are
thereto attached.
1.2. The term of this Lease shall commence on June 1, 1996 and shall
end on May 31, 2003 or on such earlier date upon which the term may expire or be
terminated pursuant to any of the conditions of limitation or other provisions
of this Lease or pursuant to law.
1.3. The Space shall be used for the following, but no other, purpose,
namely: executive, general and administrative and clerical offices, all of which
shall not be prejudicial to the reputation of, nor reflect unfavorably upon, the
Landlord as to detract from it as a location for an outstanding type of business
occupancy.
1.4. The rent reserved under this Lease for the term of this Lease
shall consist of an annual fixed rent of $349,200, payable in equal monthly
installments in advance on the first day of each and every calendar month of the
term of this Lease for which fixed rent is reserved as aforesaid to be paid to
the Landlord, at its office as set forth above, or at such other place or places
as the Landlord shall designate to the Tenant, in lawful money of the United
States of America.
1.5 The tenant is obligated to pay all operating expenses of the
building directly, including, but not limited to, real estate taxes, utilities,
repairs, insurance, maintenance, janitorial and security. The landlord is
responsible for ensuring the structural integrity of the building.
<PAGE>
1.6. The Tenant shall pay the fixed rent as and when the same shall
become due and payable as provided in this Lease, without demand therefor, and
without any setoff or deduction whatsoever, and keep, observe and perform, and
permit no violation of, each and every provision contained in this Lease on the
part of the Tenant to be kept, observed and performed.
ARTICLE TWO
(2.) Occupancy
2.1. The Tenant has examined and shall accept the premises in their
existing condition and state of repair and understands that no work is to be
performed by the Landlord in connection therewith except the work the Landlord
is required to do by the terms of this Lease.
ARTICLE THREE
(3.) Use of Premises
3.1. The Tenant shall not, except with the prior consent of the
Landlord, use, or suffer or permit the use of, the Space or any part thereof for
any purpose other than the uses permitted in Article One.
3.2. The Tenant shall not use, or suffer or permit the use of, the
Space or any part thereof in any manner or for any purpose or do, bring or keep
anything, or suffer or permit anything to be done, brought or kept, therein
which (i) would violate any provisions of this Lease or is unlawful or in
contravention of the Certificate of Occupancy for the Space, or (ii) in the
reasonable judgment of the Landlord may in any way impair or interfere with any
of the Space services or the proper and economic heating, air-conditioning or
other servicing of the Space, or impair the appearance of the Space; nor shall
the Tenant use, or suffer or permit the use of, the Space or any part thereof in
any manner, or do, or suffer or permit the doing of, anything therein or in
connection with the Tenant's business or advertising which, in the reasonable
judgment of the Landlord, may be prejudicial to the business of the Landlord or
the reputation of the Landlord, the Space or reflect unfavorably on the
Landlord, the Space or confuse or mislead the public as to any connection or
relationship between the Landlord and the Tenant. The Tenant shall not place nor
allow to be placed any signs of any kind whatsoever upon, in or about the Space,
except of a design and structure and in or at such places as may be consented to
by the Landlord in writing. Any signs permitted by the Landlord shall at all
times conform with all municipal ordinances or other laws and regulations
applicable thereto.
3.3. If any governmental license or permit shall be required for the
proper and lawful conduct of any business or other activity carried on in the
Space, and, if the failure to secure such license or permit would, in any way,
affect the Landlord, the Tenant shall promptly procure and thereafter maintain
such license or permit, submit the same for inspection by the Landlord, and
comply with the terms and conditions thereof.
2
<PAGE>
ARTICLE FOUR
(4.) Fixtures
4.1. All fixtures, equipment, improvements and installations
("Fixtures") attached to, or built into, the Space at the commencement of or
during the term of this Lease, whether or not installed at the expense of the
Tenant or by the Tenant, shall be and remain part of the Space and be deemed the
property of the Landlord and shall not be removed by the Tenant except as
otherwise expressly provided in this Lease. All electric, plumbing, heating,
sprinkling, elevator, fixtures and outlets, venetian blinds, partitions,
railings, gates, doors, vaults, stairs, paneling (including display cases and
cupboards recessed in paneling), molding, shelving, radiator enclosures, floors,
and ventilating, silencing, air conditioning and cooling equipment shall be
deemed to be included in Fixtures, whether or not attached to or built into the
Space. Notwithstanding the foregoing, the Tenant upon the termination of the
Lease (i) shall close up any slab penetration in the Space, (ii) may, at the
Tenant's option, remove from the Space all Fixtures furnished and installed in
any part of the Space (whether or not attached thereto or built therein) at the
sole expense of the Tenant (with respect to which no credit or allowance shall
have been granted to the Tenant by the Landlord) provided that such removal is
accomplished without material damage to the building and (iii) shall at
Landlord's request remove from the Space any medical or other equipment
(including plumbing fixtures), not commonly found in executive, administrative
or clerical offices, sales, vault areas, lead-line rooms, conveyors, pneumatic
tubes, mechanical and electrical rooms and telephone switchrooms and the
equipment therein; provided that the Tenant shall not be required to remove
Fixtures furnished and installed in replacement of any item for which Tenant
neither paid nor received a credit or allowance. All such closing and removal
shall be performed not later than the expiration or termination of the Lease and
shall be performed subject to the provisions of this Lease, including without
limitation, Section 5.1 (e). The Tenant shall repair any damage to the Space
arising from such closing and removal described in the preceding sentence. The
cost of repairing any damage to the Space arising from such closing and removal
described in the preceding sentences shall be paid by the Tenant upon demand. If
any Fixture which as aforesaid may or is required to be removed by the Tenant is
not so removed within the time above specified therefor, then the Landlord may
at its election deem that the same has been abandoned by the Tenant to the
Landlord, but no such election shall relieve the Tenant of its obligation to pay
the cost and expense of removing the same or the cost of repairing damage
arising from such removal. Notwithstanding the foregoing, the Landlord may, by
notice to the Tenant, prohibit the closing of any slab penetration not
theretofore closed and the removal of any or all items the Tenant is required to
remove pursuant to this Section 4.1 but has not theretofore removed.
3
<PAGE>
ARTICLE FIVE
(5.) Various Covenants
5.1. The Tenant shall:
(a) take good care of the Space and keep it clean, and pay the
cost of making good any injury, damage or breakage done by the Tenant, other
than reasonable wear and tear, injury, damage or breakage which is covered by
insurance maintained by the Landlord;
(b) permit the Landlord and any party designated by the
Landlord, and their respective representatives, to enter the Space with
reasonable prior notice to the Tenant at such hours as shall not unreasonably
interfere with the Tenant's business for the purpose of inspection, and permit
them or any of their agents or contractors to enter at any time without notice
in case of emergency and otherwise at any time with reasonable notice for the
purpose of complying with any requirement or exercising any right reserved to
the Landlord under Article Seven or elsewhere by this Lease;
(c) make no alteration, change, addition, improvement, repair
or replacement (an "Alteration") in, to, or about, the Space, and do no work in
such connection, without in each case the prior consent of the Landlord, and
then only by workmen and contractors of the Landlord or by workmen and
contractors of the Tenant acceptable to the Landlord, and in a manner and upon
terms and conditions and at times, approved by the Landlord, and make no
contract for nor employ any labor in connection with the maintenance, or other
servicing of the Space without like consent, which consents and approvals, to
the extent granting same shall not impose any additional burden on Landlord,
shall not be unreasonably withheld, notwithstanding anything in this Lease to
the contrary;
(d) not violate, or permit the violation of, any condition
imposed by the standard fire insurance policy issued for office buildings in the
City of Philadelphia, Pennsylvania, and not suffer or permit anything to be
done, or keep, suffer or permit anything to be kept, in the Space, which would
increase the fire or other casualty insurance rate on the Space, or which would
result in insurance companies of good standing refusing to insure the Space in
amounts and against risks as reasonably determined by the Landlord, the Landlord
hereby acknowledging that the use permitted by Section 1.3 of this Lease does
not violate the Landlord's fire insurance policy currently in effect for the
Space;
(e) at the expiration or any earlier termination of this
Lease, terminate its occupancy of, and quit and surrender to the Landlord, the
Space broom-clean and in as good condition as it was at the commencement of such
term, except for (1) ordinary wear and tear, and (2) loss or damage by fire or
other casualty which shall not have been occasioned by the fault of the Tenant
or Tenant's invitees;
(f) indemnify, and save harmless, the Landlord, and its agents
and partners and its and their respective contractors, licensees, invitees,
servants, officers, directors, agents and employees, any mortgagee under any
underlying mortgage from and against all liability (statutory or otherwise),
claims, suits, demands, damages, judgments, costs, interest and expenses
(including reasonable counsel fees and disbursements incurred in the defense
thereof) to which any Indemnitee may be subject or suffer, whether by reason of,
or by reason of any claim for, any injury to, or death of, any person or persons
or damage to property (including any loss of use thereof) or otherwise,
occasioned wholly or in part by or resulting from any acts or omissions by the
Tenant or the Tenant's agents, employees, guests, licensees, invitees,
subtenants, assignees or successors, or for any cause or reason whatsoever
arising out of or by reason of the occupancy of the Tenant or the conduct of the
Tenant's business;
4
<PAGE>
(g) maintain, at all times during the term of this Lease and
during any other times the Tenant is granted access to the Space, a policy or
policies of commercial general liability insurance (including, without
limitation, insurance of the Tenant's contractual liability under this Lease)
with the premiums fully paid on or before the due date, issued by a reputable
insurance company licensed to do business in the Commonwealth of Pennsylvania,
having a minimum rating A- by A.M. Best & Company or such other financial rating
as the Landlord may at any time consider appropriate, and reasonably acceptable
to the Landlord. Such insurance shall afford minimum limits as the Landlord may
reasonably designate from time to time, but in no event less than $1,000,000 per
occurrence with a $5,000,000 aggregate in respect of injury or death to any
number of persons and not less than $1,000,000 for damage to or loss of use of
property in any one occurrence. Each policy shall provide that it cannot be
canceled except upon 60 days' prior written notice to the Landlord and shall
name the Indemnitees and such other designees as the Landlord may from time to
time designate as additional insureds thereunder. The Tenant shall furnish
original certificates of such insurance to the Landlord prior to the term
commencement date and thereafter not less than 3 days prior to the expiration of
each such policy and any renewals or replacements thereof.
ARTICLE SIX
(6.) Assignment, Mortgaging, Subletting, Subordination, etc.
6.1. Except as may be otherwise permitted in this Article, the Tenant
covenants, for the Tenant and its successors, assigns and legal representatives,
that neither this Lease nor the term and estate hereby granted, nor any part
hereof or thereof, will be assigned, mortgaged, pledged, encumbered or otherwise
transferred, and that neither the Space, nor any part thereof, will be
encumbered in any manner by reason of any act or omission on the part of the
Tenant, or will be used or occupied, or permitted to be used or occupied, or
utilized for desk space, for mailing privileges or as a concession, by anyone
other than the Tenant, or will be sublet, or offered or advertised for
subletting, without the Landlord's expressed written consent, which consent can
be withheld or delayed by Landlord for any reason or for no reason at all.
6.2. If the Tenant desires the Landlord's consent to the subletting of
all or a portion of the Space for any part of the term of this Lease with
respect thereto, the Tenant shall notify the Landlord of the name of the
proposed sublessee, such information as to the proposed sublessee's business,
financial responsibility and standing as the Landlord may require, and of the
terms and conditions of the proposed subletting.
6.3 Landlord shall be entitled to fifty (50) percent of the Net
Proceeds of rent monies paid to Tenant by approved sublessee. For the purpose of
this Section 6.3 Net Proceeds is defined as Gross rental per square foot less
any brokers' commission, less the base rent paid to Landlord pursuant to Section
1.4 above. Such proceeds will be paid quarterly to Landlord and are subject to
an audit by Landlord's then present accounting firm.
5
<PAGE>
6.4 This Lease and Tenant's interest herein is subject and subordinate
to all mortgages and underlying ground leases which may now or hereafter affect
the Space and to all renewals, modifications, amendments, consolidations,
replacements and extensions of any of the foregoing, provided Landlord secures
from the holder thereof an agreement, in form reasonably satisfactory to such
holder, providing that (i) so long as Tenant is not in default hereunder and
continues to observe all of the terms, covenants and conditions applicable to
Tenant, and (ii) provided Tenant shall attorn to such holder, it shall not
disturb the continued occupancy of Tenant under the terms hereof. Tenant, upon
the request of the holder of any such mortgage, shall execute and deliver to the
party requesting it an instrument in writing to the foregoing effect under which
Tenant agrees to attorn to such holder or to a purchaser of the mortgaged
premises in foreclosure. This clause shall be self-operative and no further
instrument of subordination shall be required. However, in confirmation of such
subordination, Tenant shall execute promptly any certificate consistent with the
foregoing terms that Landlord may reasonably request. The holder of any such
mortgage, now or hereafter having priority over this Lease, may subordinate same
to this Lease by notice to Tenant and without Tenant's consent and upon such
subordination, such holder shall have the same rights with respect to this Lease
as though this Lease had been executed and delivered prior to execution and
delivery of the mortgage and had been assigned by Landlord to such holder.
ARTICLE SEVEN
(7.) Changes or alterations by Landlord
7.1. The Landlord reserves the right to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Space and the
fixtures and equipment thereof, as well as in or to the street entrances, halls,
passages, elevators, and stairways and other parts of the Space, and to erect,
maintain and use pipes, ducts and conduits in and throughout the Space, as it
may reasonably deem necessary or desirable; provided, that the exercise of such
rights shall not result in an unreasonable obstruction of the means of access to
the Space or unreasonable interference with the use of the Space. Nothing in
this Section or in Article Five shall be deemed to relieve the Tenant of any
duty, obligation or liability to make any repair, replacement or improvement or
comply with any Requirement.
ARTICLE EIGHT
(8.) Damage by Fire, etc.
8.1. In case of fire or other casualty, the Tenant shall give immediate
notice to the Landlord. If the premises shall be partially damaged by fire, the
elements or other casualty, the Landlord shall repair the same as speedily as
practicable, but the Tenant's obligation to pay the rent hereunder shall not
cease. If, in the opinion of the Landlord, the premises be so extensively and
substantially damaged as to render them untenantable, then the rent shall cease
until such time as the premises shall be made tenantable by the Landlord.
However, if in the opinion of the Landlord, the premises be totally destroyed or
6
<PAGE>
so extensively and substantially damaged as to require practically a rebuilding
thereof, then the rent shall be paid up to the time of such destruction and then
and from thenceforth this lease shall come to an end. In no event, however,
shall the provisions of this clause become effective or be applicable, if the
fire or other casualty and damage shall be the result of the carelessness,
negligence or improper conduct of the Tenant or the Tenant's agents, employees,
guests, licensees, invitees, subtenants, assignees or successors. In such case,
the Tenant's liability for the payment of the rent and the performance of all
the covenants, conditions and terms hereof on the Tenant's part to be performed
shall continue and the Tenant shall be liable to the Landlord for the damage and
loss suffered by the Landlord. If the Tenant shall have been insured against any
of the risks herein covered, then the proceeds of such insurance shall be paid
over to the Landlord to the extent of the Landlord's costs and expenses to make
the repairs hereunder, and such insurance carriers shall have no recourse
against the Landlord for reimbursement.
8.2 If the land and premises leased herein, or of which the leased
premises are a part, or any portion thereof, shall be taken under eminent domain
or condemnation proceedings, or if suit or other action shall be instituted for
the taking or condemnation thereof, or if in lieu of any formal condemnation
proceedings, the Landlord shall grant an option to purchase and/or shall sell
and convey the said premises or any portion thereof, to the governmental or
other public authority, agency, body or public utility, seeking to take said
land and premises or any portion thereof, then this lease, at the option of the
Landlord, shall terminate, and the term hereof shall end as of such date as the
Landlord shall fix by notice in writing; and the Tenant shall have no claim or
right to claim or be entitled to any portion of any amount for such option, sale
or conveyance in lieu of formal condemnation proceedings; and all rights of the
Tenant to damages, if any, are hereby assigned to the Landlord. The Tenant
agrees to execute and deliver any instruments, at the expense of the Landlord,
as may be deemed necessary or required to expedite any condemnation proceedings
or to effectuate a proper transfer of title to such governmental or other public
authority, agency, body or public utility seeking to take or acquire the said
lands and premises or any portion thereof. The Tenant covenants and agrees to
vacate the said premises, remove all the Tenant's personal property therefrom
and deliver up peaceable possession thereof to the Landlord or to such other
party designated by the Landlord in the aforementioned notice. Failure by the
Tenant to comply with any provisions in this clause shall subject the Tenant to
such costs, expenses, damages and losses as the Landlord may incur by reason of
the Tenant's breach hereof.
ARTICLE NINE
(9.) Subsidiaries
9.1. Any subsidiaries of Tenant now existing or created in the future
will be party to this agreement as co-tenants. At the Landlord's request, the
Tenant will cause such subsidiaries to execute documentation provided by
Landlord to evidence this co-tenancy.
7
<PAGE>
ARTICLE TEN
(10.) Notices
10.1. Any notice, consent, approval, request, communication, bill,
demand or statement (collectively, "Notices") under this Lease by either party
to the other party shall be in writing and shall be deemed to have been duly
given when delivered personally or by overnight mail service to such other party
and a receipt has been obtained or on the third day after being mailed in a
postpaid envelope (registered or certified, return receipt requested) addressed
to such other party, which address for the Landlord shall be as above set forth
and for the Tenant shall be the Space, or if the address of such other party for
notices shall have been duly changed as hereinafter provided, if so mailed to
such other party at such changed address. Either party may at any time change
the address for Notices by a Notice stating the change and setting forth the
changed address. If the term "Tenant" as used in this Lease refers to more than
one person, any notice to any one of such persons shall be deemed to have been
duly given to the Tenant.
ARTICLE ELEVEN
(11.) Conditions of Limitation
11.1. This Lease and the term and estate hereby granted are subject
to the limitation that:
(a) if the Tenant shall default in the payment of any Rent and
any such default shall continue for five (5) days after notice;
(b) if the Tenant shall default in observing any provision of
Article Three and such default shall continue and shall not be remedied by the
Tenant within three (3) days after notice;
(c) if the Tenant shall default in observing any provision of
this Lease (other than a default of the character referred to in subsection (a)
or (b) of this Section), and if such default shall continue and shall not be
remedied by the Tenant within thirty (30) days after notice or, if such default
cannot for causes beyond the Tenant's control, with due diligence be cured
within said period of thirty (30) days, if the Tenant (i) shall not, promptly
upon the giving of such notice, give the Landlord notice of the Tenant's
intention to duly institute all steps necessary to remedy such default, (ii)
shall not duly institute and thereafter diligently prosecute to completion all
steps necessary to remedy the same, or (iii) shall not remedy the same within a
reasonable time after the date of the giving of said notice by the Landlord,
which period shall in no event exceed ninety (90) days;
(d) if any event shall occur or any contingency shall arise
whereby this Lease or the estate hereby granted or the unexpired balance of the
full term of this Lease would, by operation of law or otherwise, devolve upon or
pass to any person, firm or corporation other than the Tenant (except as
permitted under Article Six);
(e) when and to the extent permitted by law, if a petition in
bankruptcy shall be filed by or against the Tenant, or if the Tenant shall make
a general assignment for the benefit of its creditors, or the Tenant shall
8
<PAGE>
receive the benefit of any insolvency or reorganization act, or if a receiver or
trustee is appointed for any portion of the Tenant's property and such
appointment is not vacated within sixty (60) days, or if an execution or
attachment shall be issued under which the Space shall be taken or occupied by
anyone other than the Tenant; then in any of said cases the Landlord may give to
the Tenant a notice of intention to end the term of this Lease, and, if such
notice is given, this Lease and the term and estate hereby granted (whether or
not the term shall theretofore have commenced) shall terminate upon the
expiration of three (3) days from the date of the notice is deemed given with
the same effect as if the last of said three (3) days were the date originally
specified as the expiration of the full term of this Lease, but the Tenant shall
remain liable for damages as provided in this Lease or pursuant to law. If this
Lease shall have been assigned, the term "Tenant", as used in subsections (a) to
(e), inclusive, of this Section 11.1 shall be deemed to include the assignee and
the assignor or either of them under any such assignment unless the Landlord
shall, in connection with such assignment, release the assignor from any further
liability under this Lease, in which event the term "Tenant", as used in said
subsections, shall not include the assignor so released.
ARTICLE TWELVE
(12.) Re-entry by Landlord
12.1. If this Lease shall terminate under Article Eleven, or if the
Tenant shall default in the payment of any Rent on any date upon which the same
becomes due, and if such default shall continue for five (5) days after the
Landlord shall have given to the Tenant a notice specifying such default, the
Landlord or the Landlord's agents and servants may immediately or at any time
thereafter re-enter the Space, either by summary disposes proceedings or by any
suitable action or proceeding at law or by force (if permitted by law) or
otherwise, without being liable to indictment, prosecution or damages therefor,
and may repossess the same, and may remove any persons therefrom, to the end
that the Landlord may have, hold and enjoy Building again as and of its first
estate and interest therein. The words "re-enter", "re-entry", and "re-entering"
as used in this Lease are not restricted to their technical legal meanings.
12.2. If this Lease shall terminate under the provisions of Article
Eleven or if the Landlord undertakes any summary dispossess or other proceeding
or action or other measure for the enforcement of its right of re-entry (any
such termination of this Lease or undertaking by the Landlord being a "Default
Termination"), the Tenant shall thereupon pay to the Landlord the Rent up to the
time of such Default Termination, and shall likewise pay to the Landlord all
such damages which, by reason of such Default Termination, shall be payable by
the Tenant as provided in this Lease or pursuant to law. Also in the event of a
Default Termination the Landlord shall be entitled to retain all moneys, if any,
paid by the Tenant to the Landlord whether as advance rent or security for rent,
but such moneys shall be credited by the Landlord against any Rent due from the
Tenant at the time of such Default Termination or, at the Landlord's option,
against any damages payable by the Tenant as provided in this Lease or pursuant
to law.
9
<PAGE>
12.3. In the event of a breach or threatened breach on the part of the
Tenant of any of its obligations under this Lease, the Landlord shall also have
the right of injunction. The specified remedies to which the Landlord may resort
under this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which the Landlord may lawfully be
entitled at any time, and the Landlord may invoke any remedy allowed by law or
in equity as if specific remedies were not provided for in this Lease.
ARTICLE THIRTEEN
(13.) Damages
13.1 If there is a Default Termination of this Lease, the Tenant will
pay to the Landlord as damages sums equal to the aggregate of the fixed rent and
the additional rent, if any, which would have been payable by the Tenant had
this Lease not terminated by such Default Termination, payable upon the due
dates therefor specified in this Lease following such Default Termination and
until the date originally specified as the expiration of this Lease. In the
event that the Landlord shall have relet the premises and receive rents
therefor, it shall apply such rents first to the payment of such expenses,
reasonable attorney's fees and costs as may have been incurred in the
re-entering and repossessing the premises and in making such repairs and
alterations as may be necessary; and second to the payment of the rents due
hereunder.
13.2 Nothing in this Lease shall be construed as limiting or precluding
the recovery by the Landlord against the Tenant of any sums or damages to which,
in addition to the damages specified above, the Landlord may lawfully be
entitled by reason of any default under this Lease on the part of the Tenant.
ARTICLE FOURTEEN
(14.) Tenant's Removal
14.1 Any personal property which shall remain in the Space after the
expiration or termination of the term of this Lease with respect to such part
shall be deemed to have been abandoned, and either may be retained by the
Landlord as its property or may be disposed of in such manner as the Landlord
may see fit at the Tenant's cost; provided, that the Tenant will, upon request
of the Landlord, remove from the Space any such personal property by the later
of the expiration or termination of this Lease or thirty (30) days after the
Landlord's request.
ARTICLE FIFTEEN
(15.) Lease Contains All Agreements-No Waivers
15.1 This Lease contains all of the understandings relating to the
leasing of the Space and the Landlord's obligations in connection therewith and
neither the Landlord nor any agent or representative of the Landlord has made or
is making, and the Tenant in executing and delivering this Lease is not relying
upon, any warranties, representations, promises or statements whatsoever, except
to the extent expressly set forth in this Lease. All understandings and
agreements, if any, heretofore had between the parties are merged in this Lease,
which alone fully and completely expresses the agreement of the parties.
10
<PAGE>
15.2 The failure of either the Landlord or the Tenant to insist in any
instance upon the strict keeping, observance or performance of any provision of
this Lease or to exercise any election in this Lease shall not be construed as a
waiver or relinquishment for the future of such provision, but the same shall
continue and remain in full force and effect. No waiver or modification by
either the Landlord or the Tenant of any provision of this Lease shall be deemed
to have been made unless expressed in writing and signed by the Landlord or the
Tenant, as the case may be. No surrender of possession of the Space or of any
part thereof or of any remainder of the term of this Lease shall release the
Tenant from any of its obligations under this Lease unless accepted by the
Landlord in writing. The receipt and retention by the Landlord of Rent from
anyone other than the Tenant shall not be deemed a waiver of the breach by the
Tenant of any provision in this Lease, or the acceptance of such other person as
a tenant, or a release of the Tenant from its further observance of the
provisions of this Lease. The receipt and retention by the Landlord of Rent with
knowledge of the breach of any provision of this Lease shall not be deemed a
waiver of such breach.
15.3 The Tenant agrees to permit the Landlord and Landlord's agents,
employees or other representatives to show the premises to persons wishing to
rent or purchase the same, and Tenant agrees that on and after 180 days next
preceding the expiration of the term hereof, the Landlord or its agents,
employees or other representatives shall have the right to place notices on the
front of said premises or any part thereof, offering the premises for rent or
for sale.
15.4 If the Tenant shall fail or refuse to comply with and perform any
conditions and covenants of this lease, the Landlord may, in its discretion,
carry out and perform such conditions and covenants, at the cost and expense of
the Tenant, which shall be payable on demand. This remedy shall be in addition
to such other remedies as the Landlord may have hereunder by reason of the
breach by the Tenant of such covenants and conditions.
15.5 The Tenant waives all rights of recovery against the Landlord or
Landlord's agents, employees or other representatives for any loss, damages or
injury of any nature whatsoever to property or persons for which the Tenant is
insured. The Tenant shall obtain from Tenant's insurance carriers and will
deliver to the Landlord waivers of the subrogation rights under the respective
policies.
The parties due hereby agree to all of the terms and provisions of this
Agreement which shall be governed under the laws of the State of Delaware.
- ------------------------------- ---------------------------------
Premier Research Worldwide, Ltd. (Tenant) UM Holdings Ltd. (Landlord)
- ------------------------------- ---------------------------------
Date Date
11
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD
124-34 South 15th Street
Philadelphia, PA 19102
November 18, 1996
Joan Carter, President
UM HOLDINGS, LTD.
52 Haddon Avenue
Haddonfield, NJ 08033
Re: Lease dated June 1, 1996 between UM HOLDINGS, LTD. and PREMIER
RESEARCH WORLDWIDE, LTD. (the "Lease")
Dear Ms. Carter:
Premier Research Worldwide, Ltd. ("Premier") requests that Paragraph
1.3 of the Lease be amended to specifically allow its use of the property known
as 123-34 South 15th Street, Philadelphia, PA (the "Building") for the provision
of medical and clinical research purposes.
PREMIER RESEARCH WORLDWIDE, LTD
By: /s/ Fred M. Powell
---------------------------------
Authorized Signatory
UM Holdings Ltd. agrees to amend Paragraph 1.3 of the Lease to
specifically allow Premier's use of the Building as described above.
UM HOLDINGS, LTD
By: /s/ Arthur W. Hicks, Jr
---------------------------------
Authorized Signatory
<PAGE>
Exhibit 10.9
AGREEMENT
AND
PLAN OF ORGANIZATION
AGREEMENT, dated as of August 28, 1995 among RESEARCH DATA WORLDWIDE,
LTD., a Delaware corporation ("RDW"), PREMIER HEALTH ALLIANCE, INC., a Delaware
corporation ("Premier"), and CONTRACT RESEARCH WORLDWIDE, L.L.C., a newly-formed
limited liability company formed under the laws of Delaware (the a "Company").
Preliminary Statement
---------------------
RDW and Premier are each engaged in various aspects of performing
services on behalf of pharmaceutical companies in connection with new drug
applications. RDW and Premier desire to form and organize the Company, which
will act as a contract research organization and, in connection therewith, RDW
and Premier have agreed to take various steps in connection therewith,
including, in the case of Premier, the contribution of certain of the assets and
the business of Premier's contract research organization division (the
"Division").
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Plan Of Organization
--------------------
1.1 Formation. RDW has formed the Company by filing the Certificate of
Formation in the form attached hereto as Annex I. The membership interests in
the Company are to be held 65% by RDW and 35% by Premier.
1.2 Actions to be Taken at Closing. In reliance on the representations,
warranties and agreements contained herein and subject to the terms and
conditions hereof, at the Closing hereinafter referred to, the parties hereto
shall take the following steps:
(a) RDW and Premier will execute and deliver the operating
agreement for the Company in the form attached hereto as Annex II (the
"Operating Agreement"), pursuant to which the Company shall thereafter operate.
(b) Premier, as a capital contribution to the Company, shall
convey, transfer and deliver to the Company, the following assets and business
of the Division (the "Assets"):
(i) Cash in a minimum amount of $300,000.
<PAGE>
(ii) The Division's fixed assets, including its machinery,
equipment, computers and furniture, as described on Schedule 1.2(b) (ii) hereto.
(iii) The Division's CTTS software and other privately
developed proprietary software of the Division, including all current program
listings, source code, object code, computer-coded instructions, flow charts,
and all related specifications, program documentation and technical information
relating thereto, as more fully described on Schedule 1.2(b) (iii) hereto.
(iv) All software not described on Schedule 1.2(b) (iii) which
is used on the computers described on Schedule 1.2(b) (ii) to conduct the
Division's business as presently conducted.
(v) All of the Division's inventories of supplies, as of the
Closing.
(vi) The Division's contracts for research studies, as listed
on Schedule 1.2(b) (vi) hereto, including all prepayments thereunder to the
extent pertaining to unperformed portions of the contract.
(vii) Such of the Division's other leases, licenses and
agreements, listed on Schedule 1.2(b) (vii) hereto, as may be accepted by RDW in
its discretion.
(viii) All prepaid expenses of the Division, as of the Closing.
(ix) All of the Division's books, records, documents, books of
accounts, files and correspondence, except for tax returns and filings.
(x) All of the Division's business, goodwill and other
intangible assets, including without limitation its customer lists, clinical
research associates network and investigator network, and all right, title and
interest in the name "Premier Research" for use as a contract research
organization operating in the pharmaceutical and medical device fields.
The Assets specifically exclude the Division's accounts receivable. In
addition, RDW shall have the right to specifically exclude any of the assets
listed above, which specifically excluded assets shall not be included within
the term "Assets" hereunder.
(c) The Company shall accept the transfer and conveyance of the
Assets and further shall execute and deliver an Assignment and Assumption
Agreement substantially in the form of Annex III hereto (the "Assumption
Agreement"), pursuant to which the Company will assume prospective performance
from and after the Closing Date, in accordance with the terms thereof, of (i)
the contracts for research studies listed on Schedule 1.2 (b) (vi) and (ii) such
of the leases, licenses and agreements listed on Schedule 1.2 (b) (vii) as RDW
accepts (collectively, the "Assumed Agreements"). The parties acknowledge that
certain of the Assumed Agreements may require the consent of the other party
thereto for the assignment thereof hereunder. In the event that such consent is
2
<PAGE>
not obtained and the Company nevertheless chooses to accept such Assumed
Agreement, Premier shall have no liability to the Company with respect to the
failure to obtain such consent, nor shall Premier have any liability to the
Company in the event that any such Assumed Agreement is terminated, after the
Closing, due to the assignment thereof to the Company hereunder. Except as
specifically provided in the Assumption Agreement, the Company is assuming no
liability or obligation of the Division or of Premier or RDW of any nature
whatsoever (including without limitation any claim(s) against the Division or
Premier by Medco, which claim(s) shall be the responsibility of Premier).
ARTICLE II
The Closing
-----------
The closing of the transactions contemplated by paragraph 1.2 above,
including the transfer of the Assets (the "Closing"), shall be effective as
September 5, 1995. The date of the Closing is referred to in this Agreement as
the Closing Date. This Agreement may be terminated by Premier or RDW (provided
the terminating party is not in default) if the Closing has not occurred by
September 29, 1995.
ARTICLE III
Representation and Warranties of Premier
----------------------------------------
Premier hereby represents, warrants and covenants to RDW and the
Company as of the date hereof and the time of the Closing as follows:
3.1 Seller's Organization, Etc. Premier is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified as a foreign corporation in all jurisdictions
wherein the character of the property owned or leased or the nature of the
business transacted by it makes qualification as a foreign corporation
necessary, and has the corporate power to own its properties and carry on its
business.
3.2 Corporate Authority; Etc. The execution, delivery and performance
by Premier of this Agreement and the Operating Agreement, the Assumption
Agreement, and the instruments described in paragraphs 6.3 below (collectively
with this Agreement, the "Acquisition Documents") have been duly authorized by
all necessary corporate action and will not violate any provision of law or of
Premier's Certificate of Incorporation or By-Laws or other constituent document,
or result in the breach of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of
Premier pursuant to, any indenture, agreement or instrument to which Premier is
a party or by which Premier or any of its property may be bound or affected. The
3
<PAGE>
Acquisition Documents have been or at Closing will be duly executed and
delivered by Premier and constitute or will constitute the legal, valid and
binding obligations of Premier, enforceable in accordance with their respective
terms.
3.3 Financial and Other Data. Premier has delivered to Buyer copies of
the following financial statements (the "Financial Statements") of the Division:
(i) A schedule of assets and liabilities as of July 31, 1995
("Schedule"); and
(ii) Statements of income for the fiscal years ended December 31,
1992, 1993 and 1994 and for the six month period ended June 30, 1995.
Except as noted therein, the Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated. The above-referenced
Schedule presents fairly in all material respects the assets and liabilities of
the Division as of its date, and the above-referenced statements of income
present fairly in all material respects the results of operations of the
Division for the periods covered thereby. Premier has disclosed and discussed
with RDW the incorrect matching of revenues and expenses which occurred at the
1993 fiscal year end cut-off which overstated operating profit for 1993, and the
operating loss for 1994, by approximately $800,000.
3.4 Litigation, Etc. Except as set forth on Schedule 3.4, there is no
litigation, proceeding or governmental investigation pending or, to the best
knowledge of Premier, threatened against or relating to the Division, its
properties or business, or the transactions contemplated by this Agreement. The
consummation of the transactions contemplated by this Agreement will not require
the consent, approval, authorization or order of any court or governmental
authority and will not result in a violation of any Assumed Agreement. There are
no decrees, injunctions or orders of any court or governmental department or
agency regarding the Division, its properties or business of which Premier has
written notice or actual knowledge.
3.5 Compliance with Laws. To the best of Premier's knowledge: Premier
has complied in all material respects with all federal, state, county, and local
laws, statutes, ordinances, rules, regulations, and orders (collectively, the
"Laws") relating to the Division or the Assets; the operation of Division's
business at its current locations is in conformity in all material respects with
all applicable zoning ordinances and regulations; and Premier has all licenses,
franchises, permits, certificates, authorizations, consents, licenses and
approvals required by law or any governmental authority or agency for (i) the
conduct of the Division's business as presently conducted, and (ii) the
execution, delivery or performance of this Agreement or any instrument
hereunder. Premier has not received notice and has no knowledge that it is in
default or noncompliance in any material respect under any of such permits,
certificates, consents, approvals, authorizations, orders, licenses, franchises
and/or other similar authority. To the best of Premier's knowledge, the
consummation of the transactions herein contemplated including, but not limited
to, the execution, delivery, and consummation of the Acquisition Documents, do
not, and will not, constitute a violation of or default under, conflict with, or
4
<PAGE>
result in a breach of any judgment, order, award, decree, of any court,
administrative agency or governmental body or Law.
3.6 Assets. Premier has and at Closing will convey, good and marketable
title to all of the Assets, free and clear of all claims, liens, security
interests and encumbrances of any nature whatsoever. The Assets include all
assets used to conduct the Division's business as presently conducted. The
machinery, computers and equipment described in Schedule 1.2(b) (ii) will be
conveyed in "AS IS" condition without representation or warranty of any kind
except as to title.
3.7 Assumed Agreements. Except as indicated on Schedule 3.7, no consent
or other action is necessary in order to assign the Assumed Agreements to the
Company. Except as indicated on said Schedule, each of the Assumed Agreement is
in full force and effect, there is no default or event which with notice or
lapse of time or both would constitute a default under any Assumed Agreement,
all sums owing or to be owing thereunder by Premier with respect to the period
prior to the Closing have been or prior to Closing shall be paid and satisfied
in full, there have been no prepayments by the other party thereto, and, to the
best of Premier's knowledge, there is no obligation of Premier giving rise to
any right of set-off under any Assumed Agreement.
3.8 Liabilities. Other than trade payables incurred by the Division in
the ordinary course of business after the date of the Balance Sheet, the
Division has no liabilities or obligations (whether accrued, absolute,
contingent or otherwise) of any nature whatsoever which are not reflected on the
Balance Sheet.
3.9 No Adverse Change. Since June 30, 1995 there has been no material
adverse change in the business, assets, liabilities or financial condition of
the Division, nor has there been any conducting of the Division's business other
than in the ordinary course.
3.10 Schedules. The following Schedules which are attached hereto
contain accurate lists and summary descriptions of the following:
SCHEDULE 1.2(b) (ii) : All machinery, equipment, computers and
furniture used in the Division's business as presently conducted, including
serial number (if applicable) and location.
SCHEDULE 1.2(b) (iii): All privately developed software used in
the Division's business as presently conducted.
SCHEDULE 1.2(b) (vi): All of the Division's contracts for research
studies, setting forth the amount of prepayments under each such contract to the
extent pertaining to unperformed portions of the contract.
SCHEDULE 1.2(b) (vii): All of the Division's other leases,
licenses and agreements.
5
<PAGE>
SCHEDULE 3.10(i): All of Premier's employee profit-sharing,
incentive, deferred compensation, welfare, pension, retirement, group insurance
and other employee benefit plans, arrangements and practices (including all
trust agreements and the most recent determination letters of the United States
Internal Revenue Service relating to such plans), relating to the Division or
its employees, if any ("Employee Benefit Plans").
SCHEDULE 3.10(ii): The names and current annual rates of
compensation of all the employees and agents of the Division, together with a
summary (containing estimates to the extent necessary) of (i) existing bonuses,
additional compensation (whether current or deferred) and other like benefits,
if any paid to such persons in the two prior fiscal years or subsequent thereto,
and (ii) any other payments made by or on behalf of the Division to any labor
organization or representative, employee, or agent of any labor organization in
the prior fiscal year or subsequent thereto.
Accurate and complete copies of the leases, agreements, contracts,
commitments, plans, arrangements and other documents referred to in the
foregoing Schedules have been delivered by Premier to RDW.
3.11 Labor Contracts. Premier is not and has never been a party to or
bound by a labor contract or collective bargaining agreement.
3.12 Tax Matters. Premier has duly and timely filed with the
appropriate governmental agencies (federal, state and local) all tax and other
returns required to be filed by it, all of which, to the best of Premier's
knowledge, have been accurately prepared. To the best of Premier's knowledge,
all federal, state, local and foreign taxes, assessments, interest, and
penalties, and all other sums owed to any other governmental authority or
agency, whether federal, foreign, state or local (collectively, "Taxes"), due,
owing and payable, or which may be due, owing and payable, have been fully paid
or duly provided for in the Financial Statements. No claim for Taxes due is
being contested by Premier. Premier has received no notice from the Internal
Revenue Service ("IRS"), the Illinois Department of Revenue or any other taxing
authority of any deficiency or other adjustment which has not been satisfied,
and Premier has no knowledge that such a notice may be sent. In no event shall
the Company have any liability or obligation with respect to the Taxes owed or
to be owing by Premier, including Taxes related to the Division or its
operations or properties.
3.13 Employee Agreements. (i) Except as indicated in Schedule 3.13,
Premier has no employment agreements, arrangements, contracts, or
understandings, whether written or oral, with any employee, labor organization,
representative of any labor organization relating to the Division's employees.
To the best of Premier's knowledge, Premier has not violated any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, equal opportunity in employment, or employee's health,
safety, wages and hours.
(ii) There are no labor disputes existing, or to the best of
Premier's knowledge, threatened, involving strikes, slowdowns, work stoppages,
6
<PAGE>
job actions or lockouts of any employees of the Division. There are no unfair
labor practices or petitions for election pending before the National Labor
Relations Board or any other federal or state labor commission relating to the
employees of the Division. No demand for recognition heretofore made by any
labor organization is pending with respect to the Division.
3.14 Employee Benefit Plans. Premier is not and has not been a party to
any multi-employer retirement plan. No Employee Benefit Plan is in material
violation of any of the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and no prohibited transaction within the
meaning of Title I or Title II of ERISA has occurred and is continuing with
respect to any such plan. With respect to each Employee Benefit Plan: (i) the
minimum funding standards have been met for each year in which Section 302 of
ERISA or Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code"), were applicable, and no waiver of the minimum funding standards has
been requested for any such year, (ii) no events have occurred which are
required to be reported to the Pension Benefit Guaranty Corporation ("PBGC")
under Section 4043(b) of ERISA, (iii) all premiums required to be paid to the
PBGC have been paid, (iv) there is no unfunded liability, (v) such plans as are
intended to be qualified under Section 401(a) of the Code have received
favorable determination letters from the Internal Revenue Service with respect
to such qualified status and at all times have been operated in a manner
consistent therewith, and (vi) all report forms or other information required to
be filed with any government agency or to be delivered to any plan participant
or beneficiary have been filed, distributed or made available.
3.15 Intellectual Property. (i) Premier owns or has the right to use
all the trademarks, trade names, and proprietary rights utilized in the
operations of the Division, without any obligation or liability for royalties,
fees, or other compensation to any owner, licensor, or other claim to any of the
foregoing, and, to the best of Premier's knowledge, without conflict with or
infringement upon any right or claimed right of any other person.
(ii) There have been no claims made against Premier or the Division
for assertion of the invalidity, abuse, misuse or unenforceability of any of its
or any third party's patents, trademarks, trade names, copyrights or other
proprietary rights.
(iii) Premier owns and has the unrestricted right to use all of the
Division's proprietary rights free and clear of any right, lien, encumbrance,
charge, or claim of any other person or entity.
(iv) No patents, copyrights, trade secrets, or other proprietary
information are used in the Division's business as presently conducted.
3.16 Environmental Laws and Hazardous Substances; Etc. The operation
and use of the Assets conform in all material respects to all applicable laws,
ordinances, regulations, permits, licenses and certificates relating to
environmental protection or employee health and safety. Premier has not received
any request for information, notice of claim, demand or other notification that
7
<PAGE>
it is or may be potentially responsible with respect to any investigation or
clean-up of any threatened or actual release of any hazardous substance in
connection with the conduct of the Division's business. Premier has not stored,
deposited, disposed, treated, recycled or transported any hazardous substance
arising from the conduct of the Division's business or, to its knowledge,
arranged for the transportation of such substances to any location which is
listed or proposed for listing under the Resource Conservation and Recovery Act,
as amended ("CERCLA") or the United States Resource Conservation and Recovery
Act, as amended ("RCRA") or on any similar state list, or which is the subject
of federal, state or local enforcement action or other investigations which may
lead to claims against Premier, the Division or the Company for clean-up costs,
remedial work, damages to natural resources or for personal injury claims
including, but not limited to, claims under CERCLA. For the purpose of this
paragraph, a "hazardous substance" shall mean the term as defined in RCRA or
CERCLA, and the regulations pursuant thereto, and dangerous, toxic or hazardous
substances or similar terms under any other state, federal or local law, and any
other applicable environmental, land use or similar act, statute, ordinance or
regulation or as alleged or determined at common law.
3.17 Disclosure. No representation or warranty of Premier made in this
Agreement or as provided herein contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading.
ARTICLE IV
Representations and Warranties of RDW
-------------------------------------
RDW hereby represents and warrants to Premier as of the date hereof and
the time of the Closing as follows:
4.1 Organization. RDW is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly qualified
as a foreign corporation in all jurisdictions wherein the character of the
property owned or leased or the nature of the business transacted by it makes
qualification as a foreign corporation necessary, except for such failures to be
so qualified which do not, individually or in the aggregate, have a material
adverse effect upon RDW or its assets or financial condition, and has the
corporate power to own its properties and carry on its business.
(b) Corporate Authority, Etc. All requisite corporate action has
been taken to authorize the execution, delivery and performance of this
Agreement and the Operating Agreement by RDW. Such documents have been or at
Closing will be duly executed and delivered by RDW and constitute or will
constitute the legal, valid and binding obligations of RDW, enforceable in
accordance with their respective terms.
(c) Consents, Etc. The consummation of the transactions
contemplated by this Agreement will not (i) require the consent, approval,
authorization or order of any court or governmental authority, or (ii)
constitute a violation of or default under, conflict with, or result in a breach
8
<PAGE>
of (A) any judgment, order, award, decree, of any court, administrative agency
or governmental body or laws to which RDW is subject, or (B) any agreement or
instrument to which RDW is a party or by which it is bound. There are no
decrees, injunctions or orders of any court or governmental department or agency
affecting RDW's ability to consummate the transactions contemplated hereunder.
(d) Organization of the Company; Etc. The Company is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware which will be, upon the execution and delivery of
the Operating Agreement as contemplated hereby, duly organized. Upon the
execution and delivery of the Assumption Agreement by the Company as
contemplated hereby, such document will constitute the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms. The Company
is newly-formed, has not conducted business, and has no debts, liabilities or
obligations, except for non-material amounts arising in the organizational
process.
4.2 Litigation. There is no litigation, proceeding or governmental
investigation pending or, to the best knowledge of RDW, threatened against RDW
which could have a material adverse effect on RDW.
4.3 Compliance with Laws. To the best of RDW's knowledge: RDW has
complied in all material respects with all laws relating to its business, and
the consummation of the transactions herein contemplated including, but not
limited to, the execution, delivery and consummation of the Acquisition
Documents, do not, and will not, constitute a violation of or default under,
conflict with, or result in a breach of any judgment, order, award, decree, of
any court, administrative agency or governmental body or Law.
4.4 Tax Matters. RDW has duly and timely filed with the appropriate
governmental agencies (federal, state and local) all tax and other returns
required to be filed by it, all of which, to the best of RDW's knowledge, have
been accurately prepared. To the best of RDW's knowledge, all Taxes due, owing
and payable, have been fully paid or duly provided for. No claim for Taxes due
is being contested by RDW. RDW has received no notice from the IRS or any other
taxing authority of any deficiency or other adjustment which has not been
satisfied, and RDW has no knowledge that such a notice may be sent.
4.5. Disclosure. No representation or warranty of RDW made in this
Agreement or as provided herein contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein or therein not misleading.
9
<PAGE>
ARTICLE V
Conditions Precedent to Premier's Obligation
--------------------------------------------
The obligations of Premier at the Closing shall be subject to the
satisfaction of the following conditions precedent at Closing (each of which may
be waived by Premier):
5.1 Representations. All representations and warranties of RDW
contained herein shall be true and correct on the Closing Date as if made on
such date; all agreements of RDW contained herein shall have been complied with;
and Premier shall have received a certification of RDW, dated the Closing Date
and executed by RDW's President or Vice President, to each such effect.
5.2 Operating Agreement. The Operating Agreement shall have been
executed and delivered by Premier and RDW.
5.3 Assumption Agreement. The Company shall execute and deliver to
Premier the Assumption Agreement.
5.4 Opinion of Counsel. RDW shall have delivered to Premier an opinion,
dated the Closing Date, of its counsel, Archer & Greiner, to the effect that:
(i) RDW is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the corporate
power to carry on its business as it is then being conducted.
(ii) The execution, delivery and performance by RDW of this
Agreement and the Operating Agreement have been duly authorized and approved by
all requisite action and such documents have been duly executed and delivered by
RDW and each constitutes the valid and binding obligation of RDW enforceable in
accordance with its terms.
(iii) The Company is a limited liability company duly organized,
validly existing and in goodstanding under the laws of the State of Delaware,
and has the power to carry on its contemplated business.
(iv) The execution, delivery and performance by the Company of the
Assumption Agreement has been duly authorized and approved by all requisite
action and such document has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company enforceable in
accordance with its terms.
ARTICLE VI
Conditions Precedent to RDW's and the Company's Obligations
-----------------------------------------------------------
The obligations of RDW and the Company at the Closing shall be subject
to the satisfaction of the following conditions precedent at Closing (each of
which may be waived by RDW):
10
<PAGE>
6.1 Representations. All representations and warranties of Premier
contained herein shall be true and correct on the Closing Date as if made on
such date; all agreements of Premier contained herein shall have been complied
with; and RDW shall receive a certification, dated the Closing Date, of Premier,
executed by Premier's President or Vice President, to each such effect.
6.2 Operating Agreement. The Operating Agreement shall have been
executed and delivered by RDW and Premier.
6.3 Instruments of Conveyance and Transfer. The Company shall receive
from Premier such deeds, bills of sale, endorsements, assignments, and other
good and sufficient instruments of conveyance and transfer as are effective to
transfer to the Company Premier's title to the Assets as provided in this
Agreement and, simultaneously with such delivery, Premier shall take or cause to
be taken all such other steps as are requisite to put in actual possession and
operating control of the Assets.
6.4 UCC Searches. Premier shall have delivered to RDW certified copies
of Requests for Information (Form UCC-11) or equivalent reports from all
appropriate offices, listing all effective financing statements which name
Premier (under its present name, any trade names of Premier (including the
Division's name) and any previous names) as debtor, together with copies of such
financing statements, none of which shall cover any of the Assets to be
transferred hereunder.
6.5 Payment. The Company shall have received from Premier, by wire
transfer, an amount of cash equal to the sum of (a) the amount to be paid
pursuant to paragraph 1.2(b)(i), plus (b) the sum of all prepayments under the
Division's contracts for research studies to the extent pertaining to
unperformed portions of the contract.
6.6 Due Diligence Investigations. The results of the due diligence
investigations referred to in paragraph 9.7 below shall have been satisfactory
to RDW in its reasonable discretion.
6.7 Opinion of Counsel. Premier shall have delivered to RDW an opinion,
dated the Closing Date, of its counsel, Green, Stewart & Farber, P.C., to the
effect that:
(i) Premier is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the corporate
power to carry on its business as it is then being conducted.
(ii) The execution, delivery and performance by Premier of the
Acquisition Documents have been duly authorized and approved by all requisite
action, and such Acquisition Documents have been duly executed and delivered by
Premier and each constitutes the valid and binding obligation of Premier
enforceable in accordance with its terms.
11
<PAGE>
(iii) The execution, delivery and performance by Premier of each of
the Acquisition Documents will not (a) result in a breach of any provision of
the Certificate of Incorporation or by-laws of Premier, (b) conflict with or
result in a breach of any order of any court or governmental agency, or (c) to
such counsel's knowledge, without independent investigation, result in a breach
of or constitute a default under any contract, instrument or agreement to which
Premier is a party (including without limitation the Assumed Agreements) or by
which any of its properties or assets are bound.
(iv) To such counsel's knowledge, Premier is not engaged in or
involved with any pending or threatened litigation, or administrative proceeding
(a) which relates to the execution, delivery or performance of the Acquisition
Documents, or (b) which would, if adversely determined, cause any material
adverse change in the property, financial condition or business operations of
the Division.
ARTICLE VII
Mandatory Conversion of Membership Interest
-------------------------------------------
7.1 Anything in this Agreement or the Certificate of Formation or
Operating Agreement of the Company to the contrary notwithstanding, the
membership interest in the Company issued to Premier at the Closing (whether
then owned by Premier or some other party) shall automatically, and without any
further action, be converted into the right to receive shares of the common
stock of RDW, in the amount specified in paragraph 7.2 below, upon and at the
time of an IPO or a Sale of RDW, as defined in paragraph 7.3 below. Such
conversion shall be effective simultaneously with the closing of the IPO or
Sale, as applicable. Upon such conversion, the entire interest of Premier, or
its successors-in-interest, in the Company, including their respective
membership interests therein, shall terminate and be converted solely into the
right to receive the common stock of RDW, as specified herein.
7.2 Upon a mandatory conversion as described in paragraph 7.1, Premier
and/or its successors-in-interest shall receive a number of shares (rounded to
the nearest whole number) equal to the percentage, as indicated in the next
sentence, of the number of issued and outstanding shares of the common stock of
RDW immediately preceding the closing of the IPO or Sale, as applicable. The
percentage referred to in the preceding sentence shall equal 7.5%, plus
one-tenth of one percent (0.1%) per every $100,000 of contracts, or letter of
intent for contracts, obtained by the Company on or before December 31, 1995
from the businesses listed on Schedule 7.2, up to but not exceeding 10% in the
aggregate.
7.3 The following terms, when utilized herein, have the indicated
meanings:
"IPO" means the first sale by RDW of shares of its common stock in
an underwritten, registered public offering.
12
<PAGE>
"Sale" means any of the following events: (i) a sale of
substantially all the assets of RDW, other than to any corporation or limited
liability company (a "related corporation") the majority of whose voting capital
stock is owned by one or more of UM Holdings, Ltd. or its subsidiaries
(collectively, "UM"), John Aglialoro, Joan Carter, or any corporation or limited
liability company controlled by John Aglialoro and/or Joan Carter and/or the
estate of John Aglialoro or Joan Carter; or (ii) a sale or transfer of the
capital stock of the Company (other than in the IPO) resulting in a majority of
the voting capital stock of RDW being owned by other than one or more of UM,
John Aglialoro, Joan Carter, the estate of John Aglialoro or Joan Carter or a
related corporation; or (iii) a merger or consolidation involving RDW having the
same effect as a sale or transfer of stock as described in clause (ii).
ARTICLE VIII
Covenants with Respect to the Operations of the Company, Etc.
-------------------------------------------------------------
The parties covenant and agree with each other as follows with respect
to the on-going operations and affairs of the Company:
8.1 Financial Statements. Etc. RDW covenants that (i) it will provide
to Premier (x) within 120 days after the end of each fiscal year, annual
financial statements for the Company and (y) within 30 days after each month,
monthly financial statements for the Company; and (ii) it will invite Premier to
attend all management meetings of the Company, which will be held not less
frequently than quarterly.
8.2 Investigator Sites. RDW agrees that the Company will provide to
Premier advance notice with respect to its studies, which notice shall set forth
a deadline for response consistent with the requirements for such study and the
material terms of such study. In the event that a Premier affiliated hospital is
qualified and meets the needs of such study, can work within the budget for such
study, and can respond within the time frame for such study, such Premier
affiliated hospital shall be utilized as the investigation site in connection
therewith.
8.3 Access to Certain Information. The Company will be provided access
to existing information concerning Premier's pharmaceutical contacts and
information from Premier's databases with respect to Premier's affiliated
hospitals' patients and physicians for use in connection with its studies. The
Company will enter into any customary form of confidentiality agreement in
connection therewith as may be reasonably specified by Premier.
8.4 Working Capital Requirements. RDW agrees to fund the working
capital requirements of the Company during the three year period following the
Closing, as reasonably determined by RDW. Such funding may be by means of
capital contributions to the Company, by loans which will be upon commercially
reasonable terms, or a combination of both, in the discretion of RDW. This
funding by RDW shall not affect the number of limited liability units of the
Company held by Premier and RDW.
13
<PAGE>
8.5 Sublease of Space. From and after the Closing until January 1,
1996, the Company shall have the right to utilize, without payment of rent or
other charge, the Division's existing space located at Three Westbrook Corporate
Center, Westchester, IL and the equipment and systems located thereat. The
Company will utilize such space, systems and equipment in such a manner so as
not to cause undue confusion or burden upon the other activities of Premier
presently conducted at this facility. The Company shall utilize the same care in
the use of such space, systems and equipment as it utilizes with respect to its
own space, systems and equipment. The Company shall be responsible for any harm
or damage done during such period solely to the extent that the same is (i)
caused as a result of its negligence or willful misconduct and (ii) is not
covered by insurance. Included within such sublease, at no cost to the Company,
shall be utilities, repair and maintenance, depreciation and insurance. Company
will be responsible for direct costs of telephone, postage and office supplies;
however, the Company shall not be responsible for any general allocation for
such items. If the Company does not utilize or vacates such space, the Company
shall have the right to leave at the space any or all of the fixed assets
described in Schedule 1.2(b) (ii) at no cost to the Company.
8.6 Cash Management System. The Company shall be permitted to
participate in the cash management program of RDW's parent, without charge. All
cash placed through this system, until returned to the Company, will constitute
a receivable to the Company, unless designated a cash flow distribution, in
which case Premier shall receive a pro rata (based upon its relative interest in
the Company) cash flow distribution.
8.7 UM Corporate Allocation Fee. Notwithstanding any contrary provision
contained herein or in the Operating Agreement, RDW's parent, UM Holdings, Ltd.,
shall have the right to receive a management fee, which shall be equal to 10% of
the Company's earnings before interest, taxes, depreciation and amortization, as
indicated on its annual financial statements.
8.8 Certain Services. Premier agrees to provide services to the Company
in the area of publicity and communications consulting, preparation of data base
reports, and set-up services for the computer networks and telecommunications
networks at the Company's offices. These services, together with ongoing access
to Premier's staff and resources, will be available to the Company on a no-cost
basis, as mutually agreed from time to time by the parties.
ARTICLE IX
Further Agreements
------------------
The parties further agree as follows:
9.1 Further Assurances. Premier, the Company and RDW each agree that it
will, upon request of the other at any time after the Closing Date and without
further consideration, execute and deliver such other documents and instruments
14
<PAGE>
and take such other action as may reasonably be requested to carry out more
effectively the purpose and intent of this Agreement. Premier agrees that it
will provide any consents requested by the Company and/or RDW for the Company
and/or RDW to use, or register as a trademark/service mark, the name "Premier
Research" in the pharmaceutical and medical device fields.
9.2 Waiver of Bulk Sales Law. The parties hereto hereby waive
compliance with the Bulk Sales Law of any state in connection with the sale and
purchase hereunder.
9.3 Conduct of Division's Business. Pending the Closing, Premier shall
not permit:
(i) any conduct of the Division's business other than in the
ordinary course;
(ii) any increase in the compensation payable or to become payable
to any of the Division's employees or agents or any bonus, incentive
compensation, service award or other like benefit, granted, made or accrued,
contingently or otherwise, to or to the credit of any thereof, or any employee
welfare, pension, retirement, profit-sharing or similar payment or arrangement
or union or collective bargaining agreement made or agreed to by Premier
pertaining to the Division's employees;
(iii) any borrowing or lending of money by Premier relating to the
Assets or the Division;
(iv) any capital expenditure, or incurring of liability therefor,
by the Division, other than in the ordinary course; or
(v) any material failure on the part of the Division to use its
best efforts to preserve its business organization intact, to keep available the
services of its present officers and employees, and to preserve for the Company
the business and the goodwill of its suppliers, customers, referring sources and
others having business relations with it.
9.4 Transition. Premier agrees to take any reasonable action requested
by RDW in order to promote the smooth transition of the Division's business to
the Company, including without limitation the transfer to the Company of the
Division's business and operating procedures, and know-how used in the
Division's business as presently conducted.
9.5 Books and Records. Premier acknowledges that included within the
Assets are all the books, records and files (including records stored in
computers) relating to the Division and its business, other than tax returns and
filings and portions of records that do not relate to the Division and its
business. All thereof shall be delivered to the Company at Closing. At
reasonable times and upon reasonable notice (i) the Company will make available
for inspection by Premier all books and records of the Division transferred to
it hereunder and (ii) Premier shall make available for inspection by RDW or the
Company all other books and records of Premier relating to the business to be
transferred hereunder and reasonably required by RDW or the Company.
15
<PAGE>
9.6 Employees. The Company shall have the right, but not the
obligation, to offer to employ any and all of the Division's employees. Premier
acknowledges that, while no definitive decision has been made at the date of
this Agreement, RDW reserves the right to move the Company's operations from
Chicago.
9.7 Investigations by RDW. RDW may prior to the Closing Date, through
its employees, agents and representatives, make or cause to be made such
investigations during normal and reasonable business hours as it deems necessary
or advisable of the properties, assets, businesses, books and records of the
Division. In such regard, Premier shall permit RDW and its employees, agents and
representatives to have full access to the premises of the Division and all
books and records of the Division, and Premier shall furnish to RDW such
financial, operating and technical data and other information as RDW shall from
time to time reasonably request.
9.8 Investigations by Premier. Premier may, prior to the Closing Date,
through its employees, agents and representatives, make or cause to be made such
investigations during normal and reasonable business hours as it deems necessary
or advisable of the properties, assets, businesses, books and records of RDW, to
the extent relevant to this transaction.
9.9 Right of Offset. The right of Premier to receive payments or
distributions as a member of the Company or otherwise under this Agreement or
the Operating Agreement is subject to any and all defenses of RDW or the Company
based upon, or arising out of, breach of any representation, warranty, covenant
or indemnity obligation for which Premier shall be liable to RDW or the Company,
and RDW or the Company or both may, after giving Premier written notice and a
ten (10) day opportunity to cure, elect to offset against the payment (or, to
the extent necessary, payments) next due hereunder or thereunder amounts for
which Premier is so liable. Acceptance by Premier of any payments so reduced by
offset shall not be deemed an accord, compromise or waiver of rights, including
a waiver of right to dispute the offset, and failure by RDW or the Company to
utilize the offset mechanism shall not be deemed a relinquishment, forgiveness,
waiver, bar or defense in respect of any claim or right (including the
continuing right to offset) of RDW and the Company. In the event of any suit or
other legal proceeding arising out of a contest to an offset under this Section,
the prevailing party shall be entitled to recover from the other party upon a
final judgment on the merits (i) reasonable attorneys' fees, expenses, and costs
incurred in such suit or other legal proceeding and (ii) if Premier is the
prevailing party, interest on the offset as determined by the Court.
ARTICLE X
Indemnification
---------------
10.1 Premier agrees to indemnify, defend and hold harmless RDW and the
Company from and against any loss, costs, damages, or expense (including
reasonable attorneys' fees) arising from or relating to:
16
<PAGE>
(i) Any and all liabilities or obligations of Premier, including
without limitation, liabilities, obligations and claims arising from any matter
related to the Division occurring before the Closing Date (including claims
relating to acts or omissions of the Division or its employees or agent prior to
the Closing, whether such claims are made prior to or after the Closing Date and
including without limitation any claim(s) by Medco), unless such liability or
obligation is specifically assumed by the Company pursuant to the terms of the
Assumption Agreement;
(ii) Any and all damage or deficiency resulting from any
misrepresentation, omission, breach of warranty or non-fulfillment of any
covenant or agreement on the part of Premier under this Agreement or any
certificate, schedule, exhibit, bill of sale, assignment, agreement not to
compete, lease or other agreement furnished or to be furnished by Premier under
this Agreement or any document executed in connection herewith; and
(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expense, including reasonable attorneys' fees,
incident to any of the foregoing.
10.2 RDW agrees to indemnify, defend and hold harmless Premier and the
Company from and against any loss, cost, damage or expense (including reasonable
attorney's fees) arising from or relating to any misrepresentation, omission,
breach of warranty or non-fulfillment of any covenant or agreement made by RDW
herein or any document delivered hereunder. RDW also agrees to indemnify, defend
and hold harmless Premier from and against any loss, cost, damage or expense
(including reasonable attorneys' fees) arising from or relating to any liability
or obligation expressly assumed by the Company under the Assumption Agreement.
10.3 The Company agrees to indemnify, defend and hold harmless Premier
from and against any loss, cost, damage or expense (including reasonable
attorneys' fees) arising from or relating to any liability or obligation
expressly assumed by the Company under the Assumption Agreement.
10.4 Any claim for indemnity under this Article X shall be made by
written notice to the indemnifying party specifying in reasonable detail the
basis of the claim. The indemnified party agrees to give prompt written notice
to the indemnifying party of any claim by a third party against the indemnified
party which might give rise to a claim against the indemnifying party under this
Article X, stating the nature and basis of such claim and, if ascertainable, the
amount thereof. In connection with any such third party claim, the indemnifying
party may, at its election and expense, assume the defense of such third party
claim, provided that the indemnifying party shall have acknowledged in writing
its obligation to indemnify in respect of such third party claim. If the
indemnifying party shall not have elected to so assume the defense of such third
party claim, it shall have the right to participate in the defense of such third
party claim and no such third party claim shall be settled without the consent
of the indemnifying party, provided that the indemnifying party shall have
acknowledged in writing its obligation to indemnify in respect of such third
party claim.
17
<PAGE>
ARTICLE XI
Miscellaneous
-------------
11.1 Expenses. RDW, Premier and the Company each agrees to pay its own
costs and expenses in connection with the transactions contemplated by this
Agreement, including without limitation legal and accounting expenses. Premier
will be responsible for any sales, transfer or similar taxes which may arise due
to the transfer of the Assets as contemplated hereby. Premier has an obligation
under a separate agreement to pay a broker in connection with this transaction.
Premier will pay such broker and will indemnify, defend and hold RDW and the
Company harmless for any loss, cost, damage, or expense (including reasonable
attorneys' fees) arising from any claim by such broker. RDW and Premier each
represents and warrants to the other that it has not dealt with any third party
in such manner as to cause the other party or the Company to be liable in any
respect of any broker's or finder's commissions.
11.2 Survival. Notwithstanding any presumption to the contrary, all
representations, covenants, warranties and agreements contained in this
Agreement shall survive the Closing.
11.3 Law; Benefit. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Pennsylvania. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
11.4 Notices. Any notice, request, demand, consent, approval, or other
communication required or permitted under this Agreement will be written and
will be deemed to have been given (i) when personally delivered or sent by
telecopy, or (ii) on the next day after delivery to a nationally-recognized
express delivery service with instructions for overnight delivery; or (iii) on
the third day after it is deposited in any depository regularly maintained by
the United States postal service, postage prepaid, certified or registered mail,
return receipt requested, addressed to the following address or to such other
address as the party to be notified shall have specified to the other party in
accordance with this paragraph:
If to RDW or the Company:
Research Data Worldwide
124 S. 15th Street
Philadelphia, PA 19102
Attn: President
Facsimile No.: 215-972-0414
With required copies to:
UM Holdings, Ltd.
56 Haddon Avenue
Haddonfield, NJ 08033
Attn: Arthur Hicks, Vice President
Chief Financial Officer
Facsimile No: (609) 354-2216
18
<PAGE>
Archer & Greiner,
A Professional Corporation
One Centennial Square
Haddonfield, New Jersey 08033
Attn: James H. Carll, Esquire
Facsimile No: (609) 795-0574
If to Premier:
Premier Health Alliance, Inc.
Three Westbrook Corporate Center
Ninth Floor
Westchester, IL 60154
Attn: Connie Woodburn
Facsimile No: (708) 409-3499
With a required copy to:
Green, Stewart & Farber, P.C.
Three Westbrook Corporate Center
Ninth Floor
Westchester, IL 60154
Attn: Keith R. Anderson, Esq.
Facsimile No: (708) 409-4105.
11.5 Entire Agreement; Etc. This Agreement sets forth the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings of the parties with respect
thereto. This Agreement may be amended or supplemented solely by a writing
executed by the parties hereto.
11.6 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement.
11.7 Headings. The headings preceding the text of this Agreement are
inserted solely for convenience of reference and shall not constitute a part of
this Agreement nor affect its meaning, construction or effect.
11.8 The Company to be Bound: Upon the organization of the Company, the
Company shall automatically become bound by the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
RESEARCH DATA WORLDWIDE, LTD.
By: ________________________________
PREMIER HEALTH ALLIANCE, INC.
By: ________________________________
CONTRACT RESEARCH WORLDWIDE, L.L.C.
By: Research Data Worldwide, Ltd.,
Manager
By: ______________________________
Joel Morganroth, President
20
<PAGE>
Exhibit 10.10
TAX ALLOCATION AGREEMENT
BETWEEN
UM HOLDINGS Ltd. AND SUBSIDIARIES
TAX ALLOCATION AGREEMENT dated as of December 1, 1994 (this "Agreement"), by and
between UM Holdings Ltd., a New Jersey corporation ("Holdings"), and its
subsidiaries, including, but not limited to Trotter Inc.; Life Extension
Institute, Inc.; Cardio Data Services, Inc.; Research Data Worldwide, Ltd.; UM
Equity Corp; and UM Investments ("Subsidiaries").
WHEREAS, Holdings owns 100% of the voting common stock of Trotter Inc., the only
class of authorized and outstanding stock; 100% of the voting common stock of
Life Extension Institute, Inc., the only class of authorized and outstanding
stock; 100% of the voting common stock of Cardio Data Services, Inc., the only
class of authorized and outstanding stock; 100% of the voting common stock of
Research Data Worldwide, Ltd., the only class of authorized and outstanding
stock 100% of the voting common stock of UM Equity Corp., the only class of
authorized and outstanding stock; 100% of the voting common stock of UM
Investments, the only class of authorized and outstanding stock; and
WHEREAS, Holdings and Subsidiaries desire to file a consolidated federal income
tax return pursuant to section 1501 of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, Holdings and Subsidiaries have filed consolidated federal income tax
returns with its direct and indirect subsidiaries, each of which desires to
become a party to this Agreement (for purposes of this Agreement, references to
"Subsidiaries" shall include each of the Subsidiaries); and
WHEREAS, Holdings and Subsidiaries desire to provide a method for the equitable
apportionment between themselves of the tax consequences of filing consolidated
federal income tax returns and to create a binding obligation on the part of
Subsidiaries to pay to on account of such liability, the amounts specified
herein;
NOW, THEREFORE, intending to be legally bound, Holdings and Subsidiaries hereby
mutually covenant and agree as follows:
1. Holdings will file a consolidated federal income tax return for the
affiliated group consisting of itself and Subsidiaries (the "Group") for
the taxable year ending December 31, 1994, and for any subsequent taxable
year for which the Group is required or permitted to file such a return
pursuant to the provisions of the Code and Treasury Regulations
thereunder.
2. Subsidiaries hereby irrevocably designates Holdings as its agent for the
purpose of taking all actions necessary or incidental to the filing of
consolidated federal income tax returns and dealing with all related tax
matters. Subsidiaries agrees to file such consents, elections and other
documents and to take such other actions as may be necessary or
appropriate to carry out the purpose of this agreement as Holdings may
request.
<PAGE>
3. a. For each taxable year of the Group, Holdings shall pay to the
United States Treasury the entire amount of the consolidated
federal income tax liability of the Group, at such times as may be
required or permitted by the Code and Treasury Regulations.
b. Each subsidiary shall be responsible for and pay to Holdings those
amounts which equal the estimated tax payments and final tax
payments which such Subsidiary would have made to the United
States Treasury had its federal income tax liability been computed
on a separate return basis, determined on the basis of the best
information available. Subsidiaries shall pay such amounts to
Holdings on the due dates or up to thirty business days subsequent
to the dates for the estimated and final tax payments to the
United States Treasury, which Subsidiaries would have made had it
been filing on a separate return basis, determined without regard
to Holdings' obligation to make payments of tax pursuant to
paragraph 4.a. hereof.
c. In the event that a Subsidiary incurs a loss for federal income
tax purposes which has the effect of reducing the Group's
consolidated federal income tax liability for any taxable year,
Holdings shall not be obligated to pay to such Subsidiary the
amount of such reduction.
d. In the event of any adjustment to the consolidated tax returns as
filed (due to, for instance, the filing of an amended return,
claim for refund, or an audit by the Internal Revenue Service),
the liability of Subsidiaries under paragraph 3. b. hereof shall
be redetermined to give effect to each such adjustment as if it
had been made a part of the original computation of Subsidiaries'
tax liability.
e. In applying this paragraph 4, the parties may, for administrative
convenience and consistent with the purposes of this Agreement,
consider Subsidiaries' federal income tax liability on a return
basis to be consolidated federal income tax liability of the
Subsidiaries.
4. Nothing in this Agreement shall be construed to prohibit Holdings from
electing to discontinue filing consolidated federal income tax returns
for the Group for any taxable year or prohibit Holdings from making or
forbearing from making any election available to it under the Code.
5. No modification, amendment or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by the
party against which enforcement of such modification amendment or waiver
is sought.
6. All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered.
<PAGE>
7. This Agreement shall be binding upon and inure to the benefit of any
successor, by merger, acquisition of assets or otherwise, to any of the
parties hereto, to the same extent as if such successor had been an
original party to this Agreement.
8. If at any time either Holdings or Subsidiaries acquires or creates one or
more subsidiary corporations that are eligible to be includible
corporations of the Group pursuant to the Code and Treasury Regulations
thereunder, such subsidiary corporations shall be subject to this
Agreement and all references thereafter to Holdings or Subsidiaries, as
the case may be, shall be interpreted to include such subsidiary
corporations.
9. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
10. This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the _____ day of
__________, 1994.
_________________________________________________
Title: President, UM Holdings, Ltd.
----------------------------------------
_________________________________________________
Title: President, UM Equity Corp.
----------------------------------------
_________________________________________________
Title: President, UM Investment Corp.
----------------------------------------
_________________________________________________
Title: President, Trotter Inc.
----------------------------------------
_________________________________________________
Title: President, Life Extension Inc.
----------------------------------------
_________________________________________________
Title: President, Cardio Data Services, Inc.
----------------------------------------
_________________________________________________
Title: President, Research Data Worldwide, Ltd.
----------------------------------------
<PAGE>
Exhibit 10.11
TEAMING AGREEMENT
THIS AGREEMENT effective as of January 1, 1995, by and between RESEARCH
DATA WORLDWIDE, LTD., a Delaware corporation, having its headquarters at 124
South 15th Street, Philadelphia, Pennsylvania 19102-3010 (hereinafter called
"RDW"), and PHARMACO LSR INTERNATIONAL INC., a Texas corporation having its
headquarters at 4009 Banister Lane, Two Park Place, Austin, Texas 78704
(hereinafter called "Pharmaco").
BACKGROUND
WHEREAS, RDW is the sole and complete owner of all right, title and
interest in and to certain proprietary computer software commonly known as
Navigator, as further described in the License Agreement attached as Exhibit A
hereto (the "Software"), which is used to create clinical research data review
systems; and
WHEREAS, Pharmaco and certain of its affiliates operate as a contract
research organization ("CRO") with both domestic and international operations
and a worldwide customer base (collectively Pharmaco, Pharmaco LSR Limited and
Pharmaco LSR Ltd., and any of such entities wholly-owned subsidiaries existing
now or in the future are referred to hereinafter as the "Pharmaco Group"); and
WHEREAS, RDW and Pharmaco, because of their diverse capabilities, have
determined that they would benefit from a teaming arrangement between their
respective organizations so as to enable each party to enjoy the benefits of the
other party's capabilities in their respective areas of expertise; and
WHEREAS, as part of said teaming arrangement, Pharmaco would like to
obtain a license to utilize the Software and RDW is agreeable to providing
Pharmaco with such a license, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the promises, covenants, and
conditions hereinafter set forth, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1.0 Relationship.
1.1 RDW and Pharmaco will cooperate to market their joint
services in the pharmaceutical industry and other
appropriate industries. Pharmaco will endeavor to
cause the Pharmaco Group to refer contract
opportunities to RDW to perform services within RDW's
capabilities and geographic scope. RDW will likewise
endeavor to refer contract opportunities to the
Pharmaco Group to perform services within the
capabilities and geographic scope of the Pharmaco
Group. Unless otherwise expressly
<PAGE>
required by the terms of this Agreement, neither
party shall have any obligation to refer contract
opportunities to the other party hereunder if the
referring party has the ability internally to perform
or provide the services required by such contract
opportunity.
1.2 The parties will designate in writing one or more
individuals (reasonably acceptable to the other
party) within their own organizations as their
representative(s) responsible to direct performance
of the parties' necessary functions hereunder.
1.3 Except as expressly set forth herein, nothing
contained in this Agreement shall be construed as
limiting or restricting the rights of RDW or Pharmaco
or the Pharmaco Group to quote, offer to sell or sell
to any third party any product or service.
1.4 Nothing in this Agreement shall be deemed to
constitute, create, give effect to, or otherwise
recognize a joint venture, partnership, or other
formal business entity of any kind. Neither party is,
or shall represent itself as, an employee, agent, or
legal representative of the other party for any
purpose whatsoever. Neither party is granted any
right or authority to assume or to create any
obligation or responsibility, expressed or implied,
on behalf of, or in the name of, the other party or
to bind the other party in any manner whatsoever.
2.0 License Grant.
2.1 RDW agrees to grant to Pharmaco an exclusive license,
subject to the terms and provisions of the License
Agreement (as such term is defined hereinafter), to
use the Software in the Licensed Territory solely in
connection with the Pharmaco Group's activities as a
CRO. Pharmaco's rights in connection with the
Software, including use of the Software, sublicensing
of the Software, modification of the Software and
reproduction of the Software, are further described
below or in the License Agreement. RDW acknowledges
that any entities within the Pharmaco Group shall
have the same use and other rights and obligations as
Pharmaco with respect to the Software, as if they
were parties to this Agreement and the License
Agreement; provided that, except for the license fee
to be paid by Pharmaco, as contemplated in Section
3.1 below, no royalties or other fees shall be
charged to or payable by any member of the Pharmaco
Group in connection with such member of the Pharmaco
Group's use of the Software pursuant hereto. For
purposes of this Agreement, the term "Licensed
Territory" shall mean the United States, Europe,
Australia and all countries located in the Pacific
rim (including but not limited to Taiwan, South Korea
and Japan.
2.2 Nothing contained in this Agreement shall be
construed as prohibiting RDW, or any affiliate of RDW
from utilizing the Software in any manner
<PAGE>
or for any purpose whatsoever in the conduct of its
own business operations, or to prohibit the licensing
of the Software to any non-CRO entity, including but
not limited to pharmaceutical and biotech companies,
governments, universities, and other data-generating
sources, whether or not such party may be affiliated
with a CRO; provided that under the license for such
Software any such non-CRO entity shall be prohibited
(i) from using the Software in connection with
activities performed by a competitive, for profit,
independent, third party CRO for such non-CRO entity
or (ii) otherwise sublicensing the Software to any
competitive, for profit, independent, third party
CRO. RDW has not and shall not directly or indirectly
license the Software to any competitive, for profit,
independent, third party CRO organization other than
Pharmaco or otherwise permit the use of the Software
by any other competitive, for profit, independent,
third party CRO organization and, upon RDW becoming
aware of any use of the Software in violation of the
foregoing prohibition, RDW shall promptly take all
appropriate and necessary actions to stop or enjoin
the continuing use of the Software in such manner.
2.3 This Agreement and the grant of the license to
Pharmaco with respect to the Software hereunder shall
be subject to the execution and delivery by Pharmaco
of the license agreement attached hereto as Exhibit A
with the various modifications reflected thereon (the
"License Agreement"). Except as expressly modified
herein, the grant of the license to Pharmaco with
respect to the Software hereunder shall be governed
by the terms and provisions of the License Agreement
which shall be deemed to be a part of this Agreement
to the same extent as if set forth at length herein.
To the extent of any inconsistencies between this
Agreement and the License Agreement, this Agreement
shall control.
2.4 Pharmaco shall also have the right, during the term
of this Agreement, at no additional charge, to permit
customers of the Pharmaco Group located in the
Licensed Territory to access the Software for use
solely in connection with research services being
provided by a member of the Pharmaco Group to such
customers. Any such access to the Software by any
customer of the Pharmaco Group shall terminate
immediately upon the termination of the provision of
research services by the Pharmaco Group to such
customer.
2.5 Pharmaco shall also have the right, during the term
of this Agreement, to grant sublicenses to use the
Software to (or cause RDW to directly license the
Software to) any other person in the Licensed
Territory but only if such
- 3 -
<PAGE>
person's principal operations ares located outside of
the United States and the license is limited to use
of the Software outside of the United States. The
grant of each such sublicense by Pharmaco hereunder
shall be subject to the licensee's execution and
delivery of a license agreement, in RDW's then
current form, and the acceptance of such license
agreement by RDW at its offices in Philadelphia,
Pennsylvania, which acceptance shall not be
unreasonably withheld. In connection with such
arrangement, RDW shall be entitled to charge its
standard license fee to each sublicensee. All license
or sublicense fees payable pursuant to any such
sublicense agreement shall be paid directly to RDW.
2.6 Pharmaco shall maintain accurate records of all
sublicenses granted by it hereunder. RDW shall have
the right to audit the books of Pharmaco or any other
member of the Pharmaco Group with respect to the
grant of sublicenses hereunder, upon reasonable
notice to Pharmaco. Pharmaco shall cooperate in each
such audit.
3.0 License Fees/Certain Clinical Laboratory Business.
3.1 Unless this Agreement is otherwise terminated, an
annual license fee shall be payable by Pharmaco in
connection with the Software in the amount of
$150,000 for Year 1 (the "Year 1 Fee"), $250,000 for
Year 2 (the "Year 2 Fee"), $350,000 for Year 3 of
this Agreement (the "Year 3 Fee"), and $100,000 per
year for each year thereafter that this Agreement, or
the license granted to Pharmaco hereunder is renewed
in accordance with the terms hereof (collectively
such fees are referred to as the "Annual Fees"). Such
Annual Fees may be paid in cash or satisfied through
the placement of certain Clinical Laboratory Business
with RDW (or any of its affiliates) as further
described below. As used herein, "Year 1" is the
initial twelve-month period hereunder beginning on
January 1, 1995, "Year 2" is the second twelve-month
period hereunder and "Year 3" is the third
twelve-month period hereunder.
3.2 During the term of this Agreement, Pharmaco and the
other members of the Pharmaco Group shall endeavor
collectively to place certain minimum amounts of
Clinical Laboratory Business with RDW as follows:
Annual Clinical
Year Laboratory Business
---- -------------------
Year 1 $1.5 million
Year 2 $3.0 million
Year 3 $4.0 million
Each year
thereafter $2.0 million
- 4 -
<PAGE>
For purposes of this Agreement, the term "Clinical
Laboratory Business" shall mean the provision of
clinical bioanalytical laboratory services used to
determine blood and urine test results either placed
by a member of the Pharmaco Group or a sponsor
(hereinafter referred to as a "Sponsor") in
connection with a study being managed by Pharmaco
LSR. RDW represents that all such services shall be
performed in accordance with Good Laboratory
Practices and shall be accorded priority status for
scheduling purposes. Clinical Laboratory Business
shall be deemed to be placed when Pharmaco, a member
of the Pharmaco Group or a Sponsor has entered into a
binding agreement with RDW for such services pursuant
to which such services will such be completed within
six months from the date of the agreement or when the
actual services (or portion thereof) are actually
performed, whichever is earlier.
3.3 RDW shall bill Pharmaco and the Pharmaco Group for
all Clinical Laboratory Business performed by RDW
pursuant to this Agreement at the rates set forth on
Exhibit B attached hereto. The prices set forth on
Exhibit B shall remain fixed for the initial twelve
month period of this Agreement but thereafter are
subject to adjustment from time to time by RDW.
During the term of this Agreement, RDW agrees that
the maximum permitted increase in any rate set forth
on Exhibit B hereto shall be five percent (5%) per
calendar year. The Pharmaco Group shall be considered
a preferred customer of RDW and at all times the
rates charged to the Pharmaco Group shall be at least
as favorable as the average rate charged to other
similar customers of RDW and at least as favorable as
the rates generally available in the market for
clients placing work of a similar volume and dollar
magnitude. Pharmaco reserves the right to request and
receive appropriate documentation from RDW from time
to time supporting that its rates conform to the
foregoing standard and to audit RDW's books in this
respect as it deems appropriate, subject to any
applicable confidentiality restrictions imposed by
law or contracts with third parties.
3.4 RDW shall submit invoices to Pharmaco on a monthly
basis for all Clinical Laboratory Business completed
by RDW pursuant to this Agreement during the
immediately preceding calendar month. Each such
invoice shall be due and payable in full within
thirty (30) days of the date of the invoice. All
amounts not paid within forty-five (45) days after
the invoice date shall bear interest, computed
monthly, at a rate equal to
- 5 -
<PAGE>
the lesser of (a) one percent (l%) per month, and (b)
the highest rate of interest permitted by applicable
law.
3.5 The parties have agreed that each of the Annual Fees
shall be paid in three equal installments, in
arrears, as of the end of the fourth month, the end
of the eighth month and the end of the twelfth month
of the particular year to which such fee relates
(referred to as a "Payment Period"). For instance,
the Annual Fee for Year 1 is payable $50,000 on April
30, 1995, $50,000 payable on August 31, 1995, and
$50,000 payable on December 31, 1995. All amounts not
paid within forty-five (45) days after the end of a
Payment Period shall bear interest, computed monthly,
at a rate equal to the lesser of (a) one percent (1%)
per month, and (b) the highest rate of interest
permitted by applicable
law. Annual Fees may be paid either in cash or
through receiving a credit for Clinical Laboratory
Business placed with RDW as further described in
Section 3.6 below.
3.6 The parties have agreed that Pharmaco will receive a
credit against the amount it would otherwise owe as
an Annual Fee based on a varying percentage of all
Clinical Laboratory Business placed by the Pharmaco
Group with RDW within any particular Year as follows:
Credit
Year Percentage
---- ----------
Year 1 10.00%
Year 2 8.333%
Year 3 8.75%
Each year
thereafter 5.00%
An invoice shall be prepared by RDW at the end of
each Payment Period of this Agreement reflecting (a)
the aggregate Clinical Laboratory Business placed by
the Pharmaco Group for such period as determined in
accordance with Section 3.2 hereof, (b) the amount of
credit earned with respect to such business for such
period, (c) the amount of any credit carry-forward as
determined in accordance with Section 3.7 hereof, (d)
the amount of the current credit and then
carry-forward credits if any, applied against the
installment of the Annual Fee due and owing for such
Payment Period, and (e) the balance of the
installment of such Annual Fee for such Payment
Period, if any, due and owing.
- 6 -
<PAGE>
3.7 To the extent that the credit received by Pharmaco
pursuant to Section 3.6 as calculated for a
particular Payment Period exceeds the installment
amount of the Annual Fee for such period, the balance
or unused portion of such credit will be applied to
the next installment amount(s) of the Annual Fee.
3.8 In the event that within a particular Year the amount
of Clinical Laboratory Business placed with RDW
hereunder has resulted in a credit in excess of the
amount that can be used to pay the Annual Fee owed
for such period, then with respect to any "excess"
credit, Pharmaco shall be deemed to have applied such
credit to any future Annual Fees on a
dollar-for-dollar basis.
3.9 It is the intent of the parties that the Pharmaco
Group will also attempt to refer Clinical Laboratory
Business to RDW's European laboratory facility, once
such facility has become operational.
4.0 Diagnostic Services.
4.1 During the term of this Agreement, Pharmaco agrees
that RDW shall be the exclusive world-wide provider
of all centralized ECG, transtelephonic ECG and
Holter monitoring services (collectively, the
"Diagnostic Services") contracted for by the Pharmaco
Group. This exclusivity requirement shall not be
applicable where the trial sponsor has preselected
another provider for the Diagnostic Services or where
RDW is unable to comply with the protocol or any
other of the trial sponsor's requirements applicable
to the Diagnostic Services, as reasonably determined
by Pharmaco in consultation with RDW. All such
Diagnostic Services shall be performed in accordance
with Good Laboratory Practices.
4.2 RDW shall bill Pharmaco for all Diagnostic Services
performed by RDW pursuant to this Agreement at the
rates set forth on Exhibit C attached hereto. The
prices set forth on Exhibit C are fixed for 1995 and
thereafter are subject to adjustment from time to
time by RDW. During the term of this Agreement, RDW
agrees that the maximum permitted increase in any
rate set forth on Exhibit C hereto shall be five
percent (5%) per calendar year. Such rates shall be
at least as favorable as the average rates charged to
other similar customers of RDW and at least as
favorable as the rates generally available in the
market for clients placing work of a similar volume
and dollar magnitude.
- 7 -
<PAGE>
4.3 RDW shall submit invoices to Pharmaco on a monthly
basis for all Diagnostic Services completed by RDW
pursuant to this Agreement during the immediately
preceding calendar month. Each such invoice shall be
due and payable in full within thirty (30) days of
the date of the invoice. All amounts not paid within
forty-five (45) days after the invoice date shall
bear interest, computed monthly, at a rate equal to
the lesser of (a) one percent (1%) per month, and (b)
the highest rate of interest permitted by applicable
law.
5.0 Further Agreements.
5.1 RDW agrees to make available to Pharmaco, at such
times and places as shall be mutually agreed upon by
RDW and Pharmaco, certain members of RDW's staff for
consultation purposes with respect to the Software.
RDW shall bill Pharmaco for the use of such personnel
at RDW's then current hourly rates plus all
reasonable out-of-pocket expenses incurred. For
purposes hereof, out-of-pocket expenses shall be
considered "reasonable" only if incurred in
accordance with Pharmaco's standard policies, copies
of which have been provided to RDW.
5.2 RDW also agrees to make available to Pharmaco, at
such times and places as shall be mutually agreed
upon by RDW and Pharmaco, RDW's Senior Scientific
Officer, David Evans (or his successor), for
consultation purposes with respect to the Software.
RDW shall bill Pharmaco for the use of Mr. Evans at a
rate equal to his then current hourly billing rate as
a member of RDW's senior research and development
staff. Notwithstanding anything to the contrary
contained herein, the parties agree that nothing
contained herein shall be construed as to require Mr.
Evans to devote more than twenty-five percent (25%)
of his normal working hours to consultation services
on behalf of Pharmaco. RDW agrees that any work
product produced by Mr. Evans exclusively for
Pharmaco pursuant to this Section 5.2, and paid for
by Pharmaco in accordance with the terms hereof,
shall be considered a work made for hire and shall be
the exclusive property of Pharmaco. To the extent any
work product produced by Mr. Evans exclusively for
Pharmaco pursuant to this Section 5.2 and paid for in
full by Pharmaco in accordance with the terms hereof
is not considered to be a work made for hire, RDW
hereby assigns all right, title and interest therein
to Pharmaco and agrees to take all steps necessary at
Pharmaco's expense) to perfect Pharmaco's ownership
interest therein, including obligating David Evans
(or his successor) to take all steps as may be
appropriate or necessary in connection therewith.
- 8 -
<PAGE>
5.3 Upon request, RDW shall provide training to
Pharmaco's designated employees in the use of the
Software. Pharmaco shall pay a training fee to RDW in
an amount equal to RDW's then current charges for
such services and shall also reimburse RDW for all
reasonable out-of-pocket expenses incurred in
connection with such training.
6.0 Notices. Any notice required or permitted hereunder shall be
deemed given when sent by telecopy or personally
delivered to the addresses listed below, or three
days after mailing if deposited in the United States
mail with postage prepaid thereon as registered or
certified mail with return receipt requested,
addressed as follows:
If to RDW: Research Data Worldwide
124 South 15th Street
Philadelphia, PA 19102-3010
Attention: Dr. Joel Morganroth
Fax No.: (215) 972-0414
With a copy to: James H. Carll, Esquire
Archer & Greiner
A Professional Corporation
One Centennial Square
Haddonfield, NJ 08033
Fax No.: (609) 795-0574
If to Pharmaco: Pharmaco LSR International Inc.
4009 Banister Lane
Austin, Texas 78704
Attention: John Bryer
- 9 -
<PAGE>
With a copy to: Craig E. Chason, Esquire
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
or to such other address as the party to be notified shall
have specified pursuant to this Section 6.0
7.0 TERMINATION
7.1 This Agreement shall commence on the date first set
forth above. This Agreement shall continue, unless
sooner terminated in accordance with the terms
hereof, until the third (3rd) anniversary of the date
hereof. Thereafter, this Agreement shall be
automatically renewed on an annual basis unless
either party elects not to renew, in which event
written notice of such election must be given to the
other party at least ninety (90) days prior to the
end of the then current term. The Annual Fee for any
renewal period shall be $100,000 payable in arrears,
in three separate installments of $33,333 as of the
end of each four month period of the renewal period.
During any renewal period Pharmaco will receive a
credit against the amount it would otherwise owe as
an Annual Fee equal to 5% of the amount of Clinical
Laboratory Business placed with RDW as defined in
Section 3.2 hereof. No other fees pursuant to Section
3 or otherwise shall be due or owing with respect to
any renewal period (other than any applicable
sublicense fees from sublicensee payable pursuant to
Section 2.4 hereof). Unless otherwise agreed to in
writing by the parties hereto, all of the terms and
conditions of this Agreement shall remain in full
force and effect during any renewal term. The initial
term and any renewal terms shall together constitute
the "Term" of this Agreement.
7.2 RDW may terminate this Agreement and the rights
granted hereunder by delivery of written notice of
termination to Pharmaco during the continuance of any
of the following events:
(a) Pharmaco shall fail to make any payment
required of it hereunder and such failure
shall continue for forty-five (45) days
after written notification thereof is given
to Pharmaco by RDW;
(b) Pharmaco shall fail to fulfill one or
more of its obligations hereunder (other
than as specified in subparagraph (a) above)
and
- 10 -
<PAGE>
such failure shall continue for forty-five
(45) days after written notification thereof
is given to Pharmaco by RDW;
(c) A receiver shall be appointed with
respect to Pharmaco, or any of its assets,
or any attachment, garnishment, levy or lien
(other than in the ordinary course of
business) shall be made, issued or filed
against any material portion of Pharmaco's
assets and such action shall not be
discharged or stayed within thirty (30)
days;
(d) Pharmaco shall be a party to any merger
or consolidation in which it is not the
surviving entity, or shall sell, transfer,
convey or lease all or any substantial part
of its assets, or otherwise cease its
ongoing business operations; or
(e) Pharmaco shall (i) apply for, consent
to, or permit the appointment of a trustee
or liquidator of Pharmaco, or of all or a
substantial part of its assets, (ii) be
unable, or admit in writing its inability,
to pay debts as they mature, (iii) make a
general assignment for the benefit of
creditors, (iv) be adjudicated a bankrupt or
insolvent, or (v) file a voluntary petition
in bankruptcy or a petition or an answer
seeking reorganization or an arrangement
with creditors or to take advantage of any
insolvency law, or an answer admitting the
material allegations of a petition filed
against it in any such proceeding.
7.3 Pharmaco may terminate this Agreement by delivery of
written notice of termination to RDW during the
continuance of any of the following events:
(a) RDW shall fail to fulfill one or more of
its obligations hereunder and such failure
shall continue for forty-five (45) days
after written notification thereof is given
to RDW by Pharmaco;
(b) A receiver shall be appointed with
respect to RDW, or any of its assets, or any
attachment, garnishment, levy or lien (other
than in the ordinary course of business)
shall be made, issued or filed against any
material portion of RDW's assets and such
action shall not be discharged or stayed
within thirty (30) days;
(c) RDW shall be a party to any merger or
consolidation in which it is not the
surviving entity or shall sell, transfer or
otherwise convey all or a substantial part
of its assets to an
- 11 -
<PAGE>
unrelated third party or otherwise cease its
ongoing business operations; or
(d) RDW shall (i) apply for, consent to, or
permit the appointment of a trustee or
liquidator of RDW, or of all or a
substantial part of its assets, (ii) be
unable, or admit in writing its inability,
to pay debts as they mature, (iii) make a
general assignment for the benefit of
creditors, (iv) be adjudicated a bankrupt or
insolvent, or (v) file a voluntary petition
in bankruptcy or a petition or an answer
seeking reorganization or an arrangement
with creditors or to take advantage of any
insolvency law, or an answer admitting the
material allegations of a petition filed
against it in any such proceeding.
7.4 Upon RDW's termination of this Agreement pursuant
Section 7.2 or Pharmaco's termination of this
Agreement pursuant to Section 7.1, Pharmaco shall pay
to RDW all amounts owed hereunder for services
rendered by RDW to Pharmaco prior tot he date of
termination, cease all use of the Software and
deliver to RDW all documents and materials received
pursuant to this Agreement relating to the Software.
7.5 Upon Pharmaco's termination of this Agreement
pursuant to Section 7.3 or RDW's termination of this
Agreement pursuant to Section 7.1, Pharmaco may
continue to use the Software on an exclusive basis as
provided herein and in the License provided that the
applicable royalty continues to be paid in full by
Pharmaco pursuant to Section 3 hereof.
7.6 The provisions of Section 5.2 of the License
Agreement shall survive any termination or expiration
of this Agreement.
8.0 Miscellaneous.
8.1 Waiver by either party of strict performance of any
provision hereof shall not be deemed a waiver of the
same provision in the future, or of any other
provision. Such waivers shall be written and
submitted as notices given in accordance with the
notice provisions hereof.
8.2 The terms and provisions hereof shall be binding upon
and inure to the benefit of the successors and
assigns of the parties hereto. Notwithstanding
anything to the contrary contained herein, neither
party may assign, delegate, or otherwise transfer
this Agreement, or any of its duties,
responsibilities, obligations, or liabilities
hereunder, without the other
- 12 -
<PAGE>
party's prior written consent, and any such purported
assignment, delegation or transfer shall be null and
void.
8.3 This Agreement sets forth the entire and final
understanding of the parties with respect to the
subject matter hereof, and it may not be changed
except by a written document signed by a corporate
officer of the parties hereto. Any and all previous
negotiations and representations not included herein
or referred to herein are hereby abrogated.
8.4 All Exhibits attached hereto are incorporated into
and made a part of this Agreement.
8.5 Pharmaco shall in no event be liable for any damages,
other than direct damages, arising out of, or in
connection with Pharmaco or the Pharmaco Group's
obligations under this Agreement. RDW shall in no
event be liable for any damages, other than direct
damages, arising out of, or in connection with RDW's
obligations under this Agreement.
8.6 All information of any kind or nature provided by
Pharmaco to RDW in connection with this Agreement
shall be considered confidential and proprietary,
shall not be copied and shall be returned to Pharmaco
upon request. All information of any kind or nature
provided by RDW to Pharmaco in connection with this
Agreement shall be considered confidential and
proprietary, shall not be copied and shall be
returned to RDW upon request.
8.7 If any provision of this Agreement or its application
to any person or circumstance shall be invalid,
illegal, or unenforceable to any extent, the parties
shall replace the invalid, illegal or unenforceable
provision with a provision that most nearly
approximates the original intentions of the parties
and is enforceable under applicable law, and the
remainder of this Agreement and its application shall
not be affected.
8.8 This Agreement may be executed in one or more
counterparts, each of which shall be deemed an
original, but all of which shall constitute one and
the same instrument.
8.9 This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and
any disputes hereunder shall be resolved by binding
arbitration pursuant to the rules and regulations of
the American Arbitration Association ("AAA") by
arbitrators that have experience in the computer
software industry with the venue for any AAA
hearings being Wilmington, Delaware.
- 13 -
<PAGE>
IN WITNESS WHEREOF, the parties have caused these presents to be
executed the day and year first hereinabove written.
RESEARCH DATA WORLDWIDE, LTD.
By:______________________________
Name:____________________________
Title:___________________________
PHARMACO LSR INTERNATIONAL, INC.
By:________________________________
Name:______________________________
Title:_____________________________
- 14 -
<PAGE>
See Schedule of Additional Terms attached Revolving Credit Agreement
hereto and made a part hereof. (Pennsylvania)
THIS REVOLVING CREDIT AGREEMENT (together with all schedules and exhibits hereto
and any amendments and modifications hereto in effect from time to time, the
"Agreement") is made this 13th day of June, 1996, by and between First Union
National Bank, (the "Bank") and Premier Research Worldwide, Ltd. (the
"Borrower").
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged and intending to be legally bound hereby, the
Bank and the Borrower agree as follows:
A. Credit Accommodations. Subject to the terms and conditions hereinafter set
forth, the Bank agrees to extend to the Borrower the following credit
accommodation:
1. Revolver. A revolving credit facility (the "Revolver"), expiring on June
30, 1997 (the "Expiration Date"), under which the Bank, subject to the
following terms and conditions, will make advances to the Borrower from
time to time and the Borrower may borrow, repay, and reborrow such amounts
up to the Maximum Principal Amount. Amounts outstanding under the Revolver
shall be evidenced by a Revolving Credit Note in the form provided to the
Borrower by the Bank (together with any attachments thereto and amendments
or modifications thereto in effect from time to time, the "Note").
2. Maximum Principal Amount. The maximum aggregate principal amount of
advances to be outstanding at any time hereunder is One Million and 00/100
Dollars ($1,000,000.00) (the "Maximum Principal Amount").
3. Rate of Interest. Interest on the outstanding principal balance hereunder
shall accrue at the Bank's Prime Rate (as defined below) plus one-half of
one percent (0.500%), provided however, that following an Event of
Default, interest on the outstanding principal balance hereunder shall
accrue at the Default Rate (as defined in the Note).
4. Payment Terms.
a. Interest on the outstanding principal balance hereunder is due and
payable by the Borrower to the Bank each month commencing July 1, 1996
and on the first day of each such consecutive period thereafter; and
b. All unpaid principal and accrued, unpaid interest is due and payable in
full by the Borrower to the Bank on the Expiration Date.
<PAGE>
5. Reduction of Revolver to $300,000.00. The Borrower shall reduce the amount
of the outstanding principal under the Revolver to $300,000.00 for one
period of thirty consecutive days during each year after the date hereof
while the Revolver is in effect.
6. Notice of the Borrowing. The Borrower shall give the Bank either (i)
written notice of the amount and date of each advance requested under the
Revolver one Business Days (as defined below) prior to the date of such
proposed advance, in the form of the "Notice of Borrowing Under Revolving
Credit" attached to the Note as Exhibit A, or (ii) if the Bank permits, in
its sole and absolute discretion, an oral request of the amount and date
of each proposed advance, provided such oral request is confirmed promptly
after the oral request by such written Notice of Borrowing Under Revolving
Credit. An oral request for an advance may be made by (i) any officer of
the Borrower listed on any borrowing resolution supplied by the Borrower
to the Bank; and/or (ii) any employee of the Borrower who has been
authorized, by oral or written notice to the Bank, to act on behalf of the
Borrower and/or who has been stated in any oral or written confirmation by
the Bank to the Borrower to be an employee believed by the Bank to be
authorized by the Borrower (the "Authorized Representative"). Any advance
made by the Bank based on a request by anyone purporting to be an
Authorized Representative shall be binding on the Borrower.
Notwithstanding the foregoing, the Bank's records of any advance made
pursuant to this Agreement shall, in the absence of manifest error, be
deemed correct and acceptable and binding upon the Borrower. Each advance
shall be in an amount equal to One Thousand and no/100 Dollars ($1,000.00)
or any whole multiple thereof, provided, however, that the outstanding
principal balance under the Revolver shall not exceed, at any time, the
Maximum Principal Amount.
7. Reduction of Commitment. The Borrower shall have the right, upon not less
than n/a Business Day(s) prior written notice to the Bank, to terminate
all or part of the unused portion of the commitment under the Revolver.
Any partial reduction of such unused commitment shall be in an amount
equal to n/a Dollars ($n/a) or any whole multiple thereof.
8. Debiting of Account. The Borrower agrees to maintain an account (the
"Account") at the Bank continuously until the Liabilities due hereunder
are paid in full. All advances made by crediting the Account or any other
account of the Borrower at the Bank shall be conclusively presumed to have
been properly authorized by the Borrower. The Bank may, and the Borrower
authorizes the Bank to, debit the Account or any other account of the
Borrower at the Bank for the amount of any payment as and when such
payment becomes due hereunder. If there are insufficient funds in the
Account at the time the Account is debited, and the debiting creates an
overdraft, the Bank may charge the Borrower, in addition to any overdraft
fee, an administrative fee in an amount established from time to time by
the Bank. The foregoing rights of the Bank to debit the Borrower's
accounts shall be in addition to, and not in limitation of, any rights of
set-off which the Bank may have hereunder or under any Loan Document, nor
shall the rights hereunder limit the Bank's recourse to any particular
source of funds or monies.
9. Definitions. The following terms used throughout this Agreement shall have
the meanings assigned below:
1 of 11
<PAGE>
1. Affiliate. The term "Affiliate" means First Union Corporation and any of
its direct or indirect affiliates and subsidiaries.
2. Business Day. The term "Business Day" means any day other than a Saturday,
Sunday, or a day on which the Bank is authorized or obligated by law or
executive order to be closed.
3. Collateral. The term "Collateral" means any and all property of any
Obligor (as defined below) now or hereafter in the possession, custody or
control of the Bank or any Affiliate including, but not limited to, any
balance or share of any deposit, trust or agency account and all
collateral described in any and all Loan Documents (as defined below), the
additional collateral described in Section I of this Agreement, any
additional collateral more fully described in the Schedule (as defined
below) and any other property of any Obligor now or hereafter subject to a
security agreement, mortgage, pledge agreement, assignment, hypothecation
or other document granting the Bank or any Affiliate a security interest
or other lien or encumbrance.
4. Consolidated. The term "Consolidated" shall mean an accounting
presentation which includes any consolidated subsidiaries of the Borrower.
5. GAAP. The term "GAAP" means generally accepted accounting principles in
effect from time to time in the United States.
6. Liabilities. The term "Liabilities" means any and all obligations and
indebtedness of every kind and description of the Borrower owing to the
Bank or to any Affiliate, whether or not under the Loan Documents, and
whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, contractual or tortious, arising by
operation of law, by overdraft, or otherwise, or now or hereafter
existing, including, without limitation, principal, interest, fees, late
fees, expenses, attorneys' fees and costs, and/or allocated fees and costs
of the Bank's in-house counsel, that have been or may hereafter be
contracted or incurred.
7. Loan Documents. The term "Loan Documents" means this Agreement and any and
all credit accommodations, notes, loan agreements, and any other
agreements and documents, now or hereafter existing, creating, evidencing,
guarantying, securing or relating to any or all of the Liabilities,
together with all amendments, modifications, renewals, or extensions
thereof.
8. Obligor. The term "Obligor" means the Borrower, and each and every maker,
endorser, guarantor or surety of or for the Liabilities.
9. Prime Rate. The term "Prime Rate" means the rate of interest established
by the Bank as its reference rate in making loans, and is not tied to any
external rate of interest or index. The rate of interest charged hereunder
shall change automatically and immediately as of the date of any change in
the Prime Rate, without notice to the Borrower.
10. Schedule. The term "Schedule" means the Schedule of Additional Terms which
is attached hereto.
<PAGE>
D. Fees. The Borrower shall pay the following nonrefundable fees to the Bank
with respect to the Revolver:
1. Facility Fee. A one-time facility fee ("Facility Fee") equal to n/a
percent (n/a %) of the Maximum Principal Amount of Five Thousand and
no/100 Dollars ($5,000.00) which is payable on or before the date of this
Agreement. Notwithstanding anything to the contrary in this Agreement, the
Bank may, in its sole discretion, charge the Borrower an additional
Facility Fee in the event that the Revolver is every modified, renewed or
extended;
2. Unused Commitment Fee. An unused commitment fee ("Commitment Fee") of n/a
percent (n/a%) on the average undrawn amount of the Revolver will be
payable by the Borrower to the Bank quarterly in arrears on or prior to
the fifth Business Day following the Borrower's receipt of a statement
therefor; and
3. Computation. Interest and the unused Commitment Fee, if any, shall be
calculated on the basis of a 360 day year for the actual number of days
elapsed.
E. Representations and Warranties. The Borrower represents and warrants with
respect to itself and, to the extent applicable, each of its consolidated
subsidiaries, and agrees that each such representation and warranty shall be
deemed to be restated at the time of each borrowing hereunder, that:
1. Organization; Authority. If not an individual, the Borrower is a
corporation, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization or formation, is duly
qualified as a foreign corporation, limited partnership, or limited
liability company, and is in good standing under the laws of each
jurisdiction in which it is required to be qualified because of the
business it conducts or the property it owns, and has the necessary power
and authority to enter into and perform its obligations under the Loan
Documents and all other documents required by the Bank in connection
therewith. If an individual, the Borrower is an adult and is legally
competent. The execution and performance of the Loan Documents have been
duly authorized by all necessary proceedings on the part of the Borrower,
and, upon their execution and delivery, they will be valid, binding, and
enforceable in accordance with their terms; the Borrower's execution and
performance of the Loan Documents will not violate any orders, laws or
regulations applicable to the Borrower, any organizational documents of
the Borrower, or any instruments, indentures or agreements (including any
provisions pertaining to subordinated debt) to which the Borrower is a
party or by which the Borrower or any of its properties are bound; and all
consents, approvals, licenses, franchises, patents, trademarks and other
general intangibles required in connection with this Agreement, the other
Loan Documents, or the operation of the Borrower's business have been
obtained and are in full force and effect. The Borrower's subsidiaries and
affiliates, if any, are duly organized, validly existing, and in good
standing under the laws of the jurisdictions of their organization;
2. Use of Proceeds; No Purchases of Margin Stock. The proceeds of the
Revolver will be used only in connection with the Borrower's business, for
the following purposes: to finance accounts receivable.
2 of 11
<PAGE>
None of the proceeds of the Revolver will be used to purchase or carry any
"margin security" or extend credit for such purpose within the meaning of
Regulations G or U of the Board of Governors of the Federal Reserve
System;
3. Financial Statements. All financial statements, statements as to ownership
of the Borrower and its assets, and other statements and information
delivered to the Bank were prepared in accordance with GAAP, consistently
applied, are true and correct, and disclose all presently outstanding
indebtedness or obligations of the Borrower, including contingent
obligations, obligations under leases of property from others, and all
liens and encumbrances, including tax liens, against its properties and
assets; and there have been no adverse changes in the Borrower's financial
condition or business since the date of such statements;
4. Suits. There are no actions, suits, proceedings, or claims pending or
threatened against the Borrower or any of its property; and the Borrower's
business is in compliance with all applicable orders, laws and
regulations;
5. Defaults. The Borrower is not in default under any agreement to which the
Borrower is a party or by which the Borrower or any of its property is
bound, or under any indenture or instrument evidencing any indebtedness of
the Borrower, and neither the Borrower's execution of nor performance
under the Loan Documents will create a default or any lien or encumbrance
under any such agreement, indenture or instrument other than a lien or
encumbrance in favor of the Bank;
6. ERISA. No employee benefit plan established or maintained by the Borrower
which is subject to the Employee Retirement Income Security Act, 29 U.S.C.
ss. 1001 et seq. ("ERISA") has an accumulated funding deficiency (as such
term is defined in ERISA). No material liability to the Pension Benefit
Guaranty Corporation (or any successor thereto under ERISA) has been
incurred by the Borrower with respect to any such plan and no Reportable
Event under ERISA has occurred. The Borrower has no actual or anticipated
liability under Section 4971 of the Internal Revenue Code ("Code")
(relating to tax on failure to meet the minimum funding standard of
Section 412 of the Code) with respect to any employee benefit plan to
which it contributes but which is not maintained or established by it;
7. Tax Returns and Taxes. The Borrower has filed all federal, state and local
tax returns required to be filed and has paid all taxes, assessments and
governmental charges and levies thereon, including interest and penalties,
except where the same are being contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside, and no
liens for taxes have been filed and no claims are being assessed by a
governmental authority with respect to any taxes. The charges, accruals
and reserves on the books of the Borrower with respect to taxes or other
governmental charges are adequate;
8. Compliance with Laws. The Borrower has complied with all requirements of
foreign, federal, state and local law in connection with the acquisition,
ownership and operation of the Borrower's business and property including,
without limitation, any and all applicable requirements of environmental
protection laws;
<PAGE>
9. Environmental Compliance. To the best of the Borrower's knowledge, after
due inquiry and investigation, the Borrower and all previous owners and/or
operators of the real and/or personal property of the Borrower have not
engaged in any conduct resulting in the discharging of hazardous
substances or wastes into the atmosphere or waters, or onto lands. The
Borrower has not received a summons, citation, directive, letter, or other
communication, written or oral, from any jurisdiction, political
subdivision, agency, or instrumentality thereof, concerning any
intentional or unintentional act or omission on the Borrower's part
resulting in the discharging of hazardous substances or wastes into the
atmosphere or waters, or onto lands; and
10. Affirmation of Additional Representations and Warranties. The Borrower
hereby makes and affirms, for itself and if applicable, for its
consolidated subsidiaries, any additional representations and warranties
set forth in the Schedule.
F. Conditions.
1. Documents Required for Initial Advance. The obligation of the Bank to make
the initial advance under the Revolver is subject to the payment of fees
due to the Bank under Section D.1. and L.3. of this Agreement and to the
Bank's receipt of the following documents, duly executed and delivered by
the Obligor thereunder, and in form and substance satisfactory to the
Bank:
a. The Note(s) and this Agreement;
b. If the Borrower is a corporation, certified resolutions of the Board of
Directors of the Borrower authorizing the Borrower to borrow under the
Revolver and to execute, deliver and perform its obligations under the
Loan Documents. If the Borrower is a partnership or limited liability
company, the Borrower shall deliver to the Bank a certified document
executed by all general partners and limited partners of the Borrower
or members of the Borrower, as the case may be, authorizing the
Borrower to borrow under the Revolver and authorizing the Borrower's
execution, delivery and performance of the Loan Documents. Such
resolution or document shall contain such other provisions as shall be
required by the Bank;
c. The following security, subordination, and/or guaranty documents, and
related instruments necessary to perfect any interest in the Collateral
described therein: Ucc-1 filings on all assets, general security
agreement, landlord subordination & waiver, Guaranty of Premier
Research, L.L.C, & Premier Research Worldwide Limited, subordination
agreements from UM Holdings, Ltd, and UM Equity Corp; and
d. Such other documents as the Bank may reasonably require, including,
without limitation, proof of insurance, appraisals of real and/or
personal property, environmental analysis, other agreements,
instruments, or indentures to which an Obligor is a party, including,
without limitation, financing statements, proofs, opinions of the
Borrower's counsel and/or other professionals, guaranties and other
written assurances.
2. Requirements for Any Advance. The obligation of the Bank to make any
advance under the Revolver is subject to the payment of the fees due to
the Bank under Sections D.1., D.2. and L.3. of this Agreement and is
conditioned upon the following:
a. The representations and warranties contained in Section E hereof are
true and correct on and as of the date of each such advance, and the
Authorized Representatives previously notified and/or confirmed are the
same and have the same authority to bind the Borrower;
3 of 11
<PAGE>
b. No Event of Default described in Section J hereof, and no event which,
with the giving of notice, or the passage of time, or both, would
become an Event of Default, has occurred and is continuing; and
c. All of the Loan Documents remain in full force and effect.
G. Affirmative Covenants. The Borrower covenants and agrees that so long as
there are any outstanding Liabilities hereunder or otherwise or the Bank
shall have any obligation hereunder, the Borrower and each of its
consolidated subsidiaries (except that if this box [x] is checked, these
covenants shall not apply to such consolidated subsidiaries) shall:
1. Financial Statements. Furnish to the Bank the following financial
information: (i) not later than ninety (90) days after the end of each
fiscal year, consolidated and consolidating [ ] audited [ ] reviewed
[ ] compiled year-end financial statements for the Borrower (if the boxes
herein are left blank, then the type of financial statement shall be
determined by the Bank at its sole discretion), and if applicable, for
each of its consolidated subsidiaries, including, but not limited to,
statements of financial condition, income and cash flows, a reconciliation
of net worth, notes to financial statements (all of the above prepared in
accordance with GAAP, consistently applied, by an independent certified
public accountant acceptable to the Bank, and certified as true, correct,
and complete by the Borrower's chief financial officer) and any other
information that may assist the Bank in assessing the Borrower's financial
condition; (ii) not later than forty-five (45) days after the end of each
interim fiscal quarter, the Borrower's consolidated and consolidating
financial statements, including, but not limited to, statements of
financial condition, income and cash flows, and a reconciliation of net
worth (all of the above prepared in a format acceptable to the Bank,
certified as true, correct, and complete by the Borrower's chief financial
officer); (iii) the following statements and schedules relating to the
Borrower's business, [ ] monthly [ ] quarterly or at such other times as
may be requested by the Bank:
[ ] accounts receivable agings [ ] accounts payable agings
[ ] inventory schedules [ ] other ;
------------------------
and/or (iv) such information respecting the operations, financial or
otherwise, of the Borrower or any of its subsidiaries, as the Bank may
from time to time reasonably request;
2. Compliance Certificate. Furnish to the Bank, together with each set of
financial statements described in Paragraphs, G.1. (i) and (ii) above, a
compliance certificate signed, in the form attached hereto as Exhibit "A,"
signed by the Borrower's chief financial officer, certifying that: (i) all
representations and warranties set forth in this Agreement and in any
other Loan Document are true and correct as of the date thereof; (ii) none
of the covenants in this Agreement or in any other Loan Document has been
breached; (iii) no event has occurred which, alone, or with the giving of
notice or the passage of time, or both, would constitute an Event of
Default under this Agreement or under the other Loan Documents; and (iv)
no material adverse change has occurred in the Borrower's financial
condition;
3. Notice of Certain Events. Promptly give written notice to the Bank of (i)
the details of any Reportable Events (as defined in ERISA) which have
occurred (ii) the occurrence of any event which alone or with notice, the
passage of time, or both, would constitute an Event of Default; (iii) the
commencement of any proceeding or litigation which, if adversely
determined, would adversely affect its financial condition or ability to
conduct business; and (iv) the formation of any subsidiary of the Borrower
after the date of this Agreement, which notice shall be accompanied by the
resolution of the Board of Directors of such subsidiary authorizing such
subsidiary to execute a guaranty of the Liabilities, satisfactory in form
and substance to the Bank, together with such guaranty duly executed by
such subsidiary;
<PAGE>
4. Preservation of Property; Insurance. Keep and maintain, and require its
subsidiaries to keep and maintain, all of its and their properties and
assets in good order and repair; maintain extended coverage, general
liability, hazard, business interruption, property and other insurance in
amounts deemed satisfactory to the Bank and as is customary for businesses
similar to the Borrower's business and deliver to the Bank certificates of
all such insurance in effect; and cause all such policies covering any
Collateral and covering business interruption to contain loss payee
endorsements in favor of the Bank and to be subject to cancellation or
reduction in coverage only upon thirty (30) days prior written notice
thereof to the Bank at its address set forth in this Agreement.
5. Taxes. Pay and discharge, and require its subsidiaries to pay and
discharge, when due, all taxes, assessments or other governmental charges
imposed on them or any of their respective properties, unless the same are
currently being contested in good faith by appropriate proceedings and
adequate reserves are maintained therefor;
6. Operation of Properties. Operate its properties, and cause those of its
subsidiaries to be operated in compliance with all applicable orders,
rules and regulations promulgated by the jurisdictions and agencies
thereof where such properties are located, and duly file or cause to be
filed such reports and/or information returns as may be required or
appropriate under applicable orders, regulations or law;
7. Access to Properties, Books and Records. Permit the Bank's representatives
and/or agents full and complete access to any or all of the Borrower's and
its subsidiaries' properties and financial records, to make extracts from
and/or audit such records and to examine and discuss the Borrower's
properties, business, finances and affairs with the Borrower's officers
and outside accountants;
8. Environmental Liens. In the event that there shall be filed a lien against
any property of the Borrower by any jurisdiction, political subdivision,
agency, or instrumentality thereof, arising from an intentional or
unintentional act or omission of the Borrower, resulting in the
discharging of hazardous substance or wastes into the atmosphere or
waters, or onto lands, then, within thirty (30) days from the date that
the Borrower is given notice that the lien has been placed against such
property, or within such shorter period of time in the event that such
jurisdiction, political subdivision, agency or instrumentality thereof
has commenced steps to cause such property to be sold pursuant to the
lien, the Borrower shall either (i) pay the claim and remove the lien from
the applicable property or (ii) furnish to such jurisdiction, political
subdivision, agency; or instrumentality thereof that imposed the lien one
of the following: (a) a bond satisfactory to such jurisdiction, political
subdivision, agency, or instrumentality thereof in the amount of the claim
out of which the lien arises, (b) a cash deposit in the amount of the
claim out of which the lien arises; or (c) other security reasonably
satisfactory to such jurisdiction, political subdivision, agency or
instrumentality thereof in an amount sufficient to discharge the claim out
of which the lien arises;
4 of 11
<PAGE>
9. Removal of Hazardous Substances. Should the Borrower cause or permit any
intentional or unintentional act or omission resulting in the discharging
of hazardous substances or wastes into the atmosphere or waters, or onto
lands, resulting in damage to the natural resources without having
obtained a permit issued by the appropriate governmental authorities, the
Borrower shall promptly clean up same in accordance with all applicable
federal, state, and local orders, statutes, laws, ordinances, rules, and
regulations; and
10. Additional Affirmative Covenants. The Borrower further affirmatively
covenants and agrees that it shall perform any other affirmative covenants
set forth in the Schedule and in the Loan Documents to which the Borrower
is a party.
H. Negative Covenants. So long as any Liabilities are outstanding, or the Bank
has any commitment to make advances hereunder, the Borrower and its
consolidated subsidiaries (except that if this box [ ] is checked, these
covenants shall not apply to such consolidated subsidiaries) shall not,
without the prior written consent of the Bank (in this section only, if a
blank in any of the following paragraphs is completed with the letters NA or
N/A, that paragraph in this section only is not applicable):
1. Incur Indebtedness; Creation of Lien. Incur, create, or assume any
indebtedness including, without limitation, obligations under capitalized
leases, except indebtedness owing to the Bank, indebtedness existing on
the date hereof and previously reported in writing to and permitted by the
Bank, indebtedness incurred for normal consumer purposes, and trade
indebtedness arising in the ordinary course of the Borrower's business;
make any loans or advances to others including, without limitation,
officers, directors, shareholders, principals, partners, members,
managers, or affiliates of the Borrower or any Obligor; or create, permit,
or suffer the creation of any liens, security interests or other
encumbrances on any of its property, real or personal, except liens,
security interests or encumbrances in favor of the Bank or existing on the
date hereof and previously reported in writing to and permitted by the
Bank;
2. Sales of Assets; Liquidation; Merger; Acquisitions. Convey, lease, sell,
transfer or assign any assets except in the ordinary course of the
Borrower's business for value received; liquidate or discontinue its
normal operations with intent to liquidate; enter into any merger or
consolidation; or acquire all or substantially all of the assets, stock or
other equity interests of another entity;
3. Payment of Dividends; Redemption of Stock. Pay any dividends, make any
withdrawal from its capital, make any other distributions and/or
repurchase, redeem, or otherwise acquire or set aside reserves to acquire,
any of its outstanding stock, partnership, member, or other equity
interests, except for such actions by any subsidiaries in favor of the
Borrower;
4. Accounts. Sell, assign, transfer or dispose of any of its accounts or
notes receivable, with or without recourse, except to the Bank;
5. Guaranty Obligations. Become a guarantor, surety, obligor or otherwise
become directly, indirectly or contingently liable for the debts or
obligations of others, except for the benefit of the Bank or its
Affiliates, and except as an endorser of checks or drafts negotiated in
the ordinary course of the Borrower's business;
<PAGE>
6. Lease Obligations. Incur, create, or assume any commitment to make any new
Lease Payments if the aggregate amount payable thereunder in any one
fiscal year would exceed $300,000.00; "Lease Payments" shall mean any
direct or indirect payment or payments, whether as rent or otherwise,
including fees or service or finance charges, under any lease, rental or
other agreement for the use of the property of any person and/or entity
other than the Borrower whether or not such agreement contains an option
to purchase;
7. Sale-Leaseback Transactions. Enter into any sale-leaseback transaction or
any transaction howsoever termed which would have the same or
substantially the same result or effect as a sale-leaseback;
8. Prepayment of Other Indebtedness. Prepay any amounts not required to be
prepaid, except to the Bank or any Affiliate, or cause or permit to be
accelerated any amounts on any outstanding indebtedness now existing or
hereafter arising;
9. Compensation. Permit salaries, withdrawals, bonuses or other compensation
to officers, directors, shareholders, principals, partners, members,
managers, or affiliates of the Borrower to exceed the aggregate amount of
$ n/a per year;
10. Expenses for Fixed Assets. Expend for fixed assets during any one fiscal
year of the Borrower an aggregate amount exceeding $ n/a ;
11. Sales or Issuance of Equity Interest. If the Borrower is a corporation,
sell, issue, or agree to sell or issue, any equity interest (voting,
non-voting, preferred or common) of the Borrower, or purchase any such
equity interest;
12. Investments. Purchase or make any investment in the stock, securities or
evidences of indebtedness of or loan to any other person or entity
(including, without limitation, entities owned or controlled by any
officers, directors, shareholders, principals, partners, members,
managers, or affiliates of the Borrower) except (i) the United States
Government or its agencies, or (ii) certificates of deposit of United
States domestic banks having a ratio of qualifying total capital to
weighted risk assets of not less than eight (8%) percent, at least four
(4%) percent of which is Tier I capital, and total capital and surplus in
excess of $50,000,000. "Qualifying total capital" and "Tier I capital"
shall be defined from time to time pursuant to regulations published by
the Office of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation;
13. Hazardous Substances. Cause or permit to exist a discharging of hazardous
substances or wastes into the atmosphere or waters, or onto lands, unless
the discharging is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state, or local governmental
authorities;
14. Consolidated Working Capital. Permit Consolidated Working Capital of the
Borrower and its consolidated subsidiaries (if any) at any time to be less
than $ n/a until and including n/a, and $ n/a at all times thereafter;
"Working Capital" is defined, at any date, as the excess of Current Assets
over Current Liabilities; "Current Assets" and "Current Liabilities" shall
mean all assets and liabilities which, in accordance with GAAP, should be
classified as current assets and current liabilities, respectively;
5 of 11
<PAGE>
15. Consolidated Debt Service Coverage Ratio. Permit the ratio of net income
minus dividends plus interest expense plus income tax expense plus
depreciation and amortization of the Borrower and its consolidated
subsidiaries for any period of four consecutive fiscal quarters ("current
period") to interest expense of the Borrower and its consolidated
subsidiaries for such current period plus the current portion of long term
debt and capital leases of the Borrower and its consolidated subsidiaries
(as reflected on the Borrower's consolidated financial statement as of the
end of the most recent fiscal quarter immediately preceding such current
period) to be less than n/a ;
16. Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth at
any time to be less than $ 1,750,000.00; "Tangible Net Worth" is defined,
at any date, as (i) the aggregate amount at which all assets of the
Borrower would be shown on a balance sheet at such date after deducting
capitalized research and development costs, capitalized interest, debt
discount and expense, goodwill, patents, trademarks, copyrights,
franchises, licenses, amounts owing from officers, directors,
shareholders, principals, partners, members, managers, or affiliates of
the Borrower and any investments in any entities owned or controlled by
any of the foregoing, and such other assets as are properly classified as
"intangible assets" less (ii) the aggregate amount of indebtedness,
liabilities (including tax and other proper accruals) and reserves of the
Borrower and its consolidated subsidiaries (excluding Approved
Subordinated Debt); "Approved Subordinated Debt" means any indebtedness
for borrowed money that is permitted by this Agreement and this is owing
on the date hereof or is subordinated to the Liabilities on terms approved
in writing by the Bank;
17. Debt to Equity Ratio Requirements. Permit the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth at any time to exceed n/a
until and including n/a , and n/a thereafter; "Total Liabilities" is
defined, at any date, as all liabilities of the Borrower which would
properly appear on the liabilities side of a balance sheet, other than
capital stock, capital surplus, retained earnings, minority interests,
deferred credit, Approved Subordinate Debt and contingency reserves under
GAAP; and
18. Additional Negative Covenants. The Borrower and its subsidiaries shall not
undertake any activities prohibited by any other negative covenants set
forth on the Schedule.
I. Additional Collateral. As additional collateral security for the payment of
the Borrower's indebtedness and obligations to the Bank hereunder, under the
other Loan Documents, and/or otherwise, the Borrower hereby grants to the
Bank a continuing security interest in and lien of the first priority upon
and hereby assigns to the Bank all funds, balances, deposits, accounts,
certificates of deposit, securities and/or other property of any kind of the
Borrower and in which the Borrower has an interest, and the proceeds of the
foregoing, now or hereafter in the possession, custody, or control of the
Bank or any Affiliate.
J. Events of Default. Each of the following shall constitute an event of default
("Event of Default") hereunder:
<PAGE>
1. Breach. A breach by any Obligor of any term, provision, obligation,
covenant, representation, or warranty arising under (i) this Agreement or
any other Loan Document, including, without limitation, failure to make
any payment when due hereunder or under any other Loan Document; (ii) any
present or future agreement or instrument with or in favor of the Bank
and/or any Affiliate, including the failure to make any payment when due;
or (iii) any present or future agreement or instrument for borrowed money
or other financial accommodations in any other person or entity;
2. Bankruptcy; Insolvency. (i) Any Obligor commences any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under the
United States Bankruptcy Code or under any similar foreign, federal,
state, or local statute, or any dissolution or liquidation proceeding, or
makes a general assignment for the benefit of creditors, or takes any
action for the purpose of effecting any of the foregoing; (ii) any
bankruptcy, reorganization, debt arrangement, or other case or proceeding
under the United Stated Bankruptcy Code or under any similar foreign,
federal, state, or local statute, or any dissolution or liquidation
proceeding, is involuntarily commenced against or in respect of any
Obligor or an order for relief is entered in any such proceeding; (iii)
the appointment, or the filing, of a petition seeking the appointment, of
a custodian, receiver, trustee, or liquidator for any Obligor or any of
its property, or the taking of possession of any part of the property of
any Obligor at the instance of any governmental authority; or (iv) any
Obligor becomes insolvent (however defined), is generally not paying its
debts as they become due, or has suspended transaction of its usual
business;
3. Death; Reorganization. The death, dissolution, merger, consolidation, or
reorganization of any Obligor;
4. Material Misstatement. Any statement, representation or warranty made in
or pursuant to this Agreement or any other Loan Document or to induce the
Bank to enter into this Agreement shall prove to be untrue or misleading
in any material respect;
5. Material Adverse Change. The occurrence of a material adverse change in
the financial condition of any Obligor or the occurrence of any event
which, in the sole opinion of the Bank, impairs the financial
responsibility of any Obligor, including, without limitation, a change in
management or ownership of any Obligor;
<PAGE>
6. Insecure. The Bank deems itself insecure;
7. Debt, Liens, Loans, Lease Payments. Any Obligor: (i) incurs or assumes
additional debt other than debt incurred for normal consumer purposes,
debt to the Bank and/or an Affiliate and/or trade debt in the ordinary
course of Obligor's business; (ii) makes any loans or advances to
officers, directors, shareholders, principals, partners, members,
managers, or affiliates of the Borrower or any Obligor; (iii) creates,
permits or grants any lien or security interest in or transfers any of its
property on which the Bank and/or an Affiliate has a lien and/or security
interest; or (iv) incurs, creates or assumes any commitment, either
directly or indirectly, for rent, service fees or charges or finance
charges under any lease, rental, sale-leaseback, or other agreement for
use of the property of any person and/or entity other than the Borrower;
8. Entry of Judgment. The filing, entry, or issuance of any judgment,
execution, garnishment, attachment, distraint, or lien against any Obligor
or its property; or the entry of any order enjoining or restraining any
Obligor and/or restraining or seizing any property of any Obligor;
9. Transfer of Assets. Any Obligor transfers or sells all or substantially
all of its assets, without the prior written consent of the Bank; or
10. Loan Documents. The validity or enforceability of any of the Loan
Documents is contested by an Obligor or any representative thereof.
6 of 11
<PAGE>
K. Remedies.
1. Acceleration of Liabilities; Rights of Bank. Upon and following the
occurrence of an Event of Default described in Section J hereof (other
than the Events of Default described in Paragraph J.2.), at the Bank's
sole option, the Bank's commitment, if any, to make any further advances
or loans to the Borrower hereunder shall terminate, and all Liabilities
shall immediately become due and payable in full, all without protest,
presentment, demand or further notice of any kind to the Borrower or any
other Obligor, all of which are expressly waived. Upon and occurrence of
any Event of Default described in Paragraph J.2., immediately and
automatically, the Bank's commitment, if any, to make any further advances
or loans to the Borrower hereunder, shall terminate and all Liabilities
shall immediately become due and payable in full, all without protest,
presentment, demand or further notice of any kind to the Borrower or any
other Obligor, all of which are expressly waived. Upon and following an
Event of Default, the Bank may, at its option, exercise any and all rights
and remedies it has under this Agreement, the other Loan Documents and
under applicable law, including, without limitation, the right to charge
and collect interest on the principal portion of the Liabilities at the
Default Rate, which rate shall, at the Bank's option, apply upon and after
an Event of Default arising from failure to pay any amount when due under
any of the Loan Documents, maturity, whether by acceleration or otherwise,
and the entry of judgment with respect to any or all of the Liabilities.
Upon and following an Event of Default hereunder, the Bank may proceed to
protect and enforce the Bank's rights under any Loan Document and/or under
applicable law by action at law, in equity, or other appropriate
proceedings, including, without limitation, an action for specific
performance to enforce or aid in the enforcement of any provision
contained herein or in any other Loan Document.
2. Right of Set-off. If any of the Liabilities shall be due and payable or
any one or more Events of Default shall have occurred, whether or not the
Bank shall have made demand under any Loan Document and regardless of the
adequacy of any Collateral for the Liabilities or other means of obtaining
repayment of the Liabilities, the Bank shall have the right, without
notice to the Borrower or any other Obligor, and is specifically
authorized hereby to set-off against and apply to the then unpaid balance
of the Liabilities any items or funds of the Borrower and/or any Obligor
held by the Bank or any Affiliate, any and all deposits (whether general
or special, time or demand, matured or unmatured) or any other property of
the Borrower and/or any Obligor, including, without limitation, securities
and/or certificates of deposit, now or hereafter maintained by the
Borrower and/or any Obligor for its or their own account with the Bank or
any Affiliate, and any other indebtedness at any time held or owing by
the Bank or any Affiliate to or for the credit or the account of the
Borrower and/or any Obligor, even if effecting such set-off results in a
loss or reduction of interest or the imposition of a penalty applicable to
the early withdrawal of time deposits. For such purpose, the Bank shall
have, and the Borrower hereby grants to the Bank, a first lien on and
security interest in such deposits, property, funds, and accounts, and the
proceeds thereof. The Borrower further authorizes any Affiliate, upon and
following the occurrence of an Event of Default, at the request of the
Bank, and without notice to the Borrower, to turn over to the Bank any
property of the Borrower, including, without limitation, funds and
securities, held by the Affiliate for the Borrower's account and to debit,
for the benefit of the Bank, any deposit account maintained by the
Borrower with such Affiliate (even if such deposit account is not then due
or there results a loss or reduction of interest or the imposition of a
penalty in accordance with law applicable to the early withdrawal of time
deposits), in the amount requested by the Bank up to the amount of the
Liabilities, and to pay or transfer such amount or property to the Bank
for application to the Liabilities.
<PAGE>
3. Confession of Judgment.
a. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR ANY
ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING THIS
WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, THE
BORROWER, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT)
SEPARATE COUNSEL FOR THE BORROWER AND WITH KNOWLEDGE OF THE LEGAL
EFFECT HEREOF, HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE BORROWER HAS OR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA, THE
COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. IT IS SPECIFICALLY
ACKNOWLEDGED BY THE BORROWER THAT THE BANK HAS RELIED ON THIS WARRANT
OF ATTORNEY IN RECEIVING THIS AGREEMENT AND AS AN INDUCEMENT TO GRANT
FINANCIAL ACCOMMODATION CONTAINED HEREIN.
b. Upon and following the occurrence of an Event of Default, the Borrower
hereby jointly and severally authorizes and empowers any attorney of
any court of record or the prothonotary or clerk of any county in
Commonwealth of Pennsylvania, or in any jurisdiction where permitted by
law or the clerk of any United States District Court, to appear for the
Borrower or any of them in any and all actions which may be brought
hereunder and enter and confess judgement against the Borrower or any
of them in favor of the Bank for such sums as are due or may become due
hereunder or under any other Loan Document, together with costs of suit
and actual collection costs including, without limitation, reasonable
attorneys' fees equal to five percent (5%) of the Liabilities then due
and owing but in no event less than $5,000, with or without
declaration, without prior notice, without stay of execution and with
release of all procedural errors and the right to issue executions
forthwith. To the extent permitted by law, the Borrower waives the
right of inquisition on any real estate levied on, voluntarily condemns
the same, authorizes the prothonotary or clerk to enter upon the writ
of execution this voluntary condemnation and agrees that such real
estate may be sold on a writ of execution; and also waives any relief
from any appraisement, stay or exemption law of any state now in force
or hereafter enacted. If a copy of this Agreement verified by affidavit
of any officer of the Bank shall have been filed in such action, it
shall not be necessary to file the original thereof as a warrant of
attorney, any practice or usage to the contrary notwithstanding. The
authority herein granted to confess judgement shall not be exhausted by
any single exercise thereof, but shall continue and may be exercised
from time to time as often as the Bank shall find it necessary and
desirable and at all time until full payment of all amounts due
hereunder and under the other Loan Documents. The Bank may confess one
or more judgments in the same or different jurisdictions for all or any
part of the obligations arising hereunder or under any other Loan
Document, without regard to whether judgment has theretofore been
confessed on more than one occasion for the same obligations. In the
event that any judgment confessed against the Borrower is stricken or
opened upon application by or on behalf of the Borrower or any Obligor
for any reason, the Bank is hereby authorized and empowered to again
appear for and confess judgment against the Borrower for any part or
all of the obligations due and owing under this Note, as herein
provided.
4. Remedies Cumulative; No Waiver. The rights, powers and remedies of the
Bank provided in this Agreement and any of the Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law
or equity. No failure or delay on the part of the Bank in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall
any single or partial exercise preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy.
7 of 11
<PAGE>
5. Continuing Enforcement of the Loan Documents. If, after receipt of any
payment of all or any part of the Liabilities, the Bank is compelled or
agrees, for settlement purposes, to surrender such payment to any person
or entity for any reason, then this Agreement and the other Loan Documents
shall continue in full force and effect or be reinstated, as the case may
be. The provisions of this Paragraph shall survive the termination of this
Agreement and the other Loan Documents and shall be and remain effective
notwithstanding the payment of the Liabilities, the cancellation of the
Agreement, the release of any security interest, lien or encumbrance
securing the Liabilities or any other action which the Bank may have taken
in reliance upon its receipt of such payment.
L. Miscellaneous.
1. Waiver of Demand. The Borrower (i) waives demand, presentment, protest,
notice of protest, and notice of dishonor of this Agreement; (ii) consents
to any and all extensions of time, renewals, waivers, or modifications
that may be granted by the Bank with respect to the payment or other
provisions of this Agreement; and (iii) agrees that makers, endorsers,
guarantors, and sureties for the indebtedness evidenced hereby may be
added or released without notice to the Borrower and without affecting the
Borrower's liability hereunder. The liability of the Borrower hereunder
shall be absolute and unconditional.
2. Notices. Notices and communications under this Agreement shall be in
writing and shall be given by (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid) or (iv) telecopy to the addresses and telecopier numbers listed
in this Agreement (provided that if no telecopier numbers appear on this
Agreement, to the telecopier numbers that the parties notify one another
of from time to time). Notice given by telecopy shall be deemed to have
been given and received when sent. Notice by overnight courier shall be
deemed to have been given and received on the date scheduled for delivery.
Notice by mail shall be deemed to have been given and received three (3)
calendar days after the date first deposited in the United States Mail.
Notice by hand-delivery shall be deemed to have been given and received
upon delivery. A party may change its address and/or telecopier number by
giving written notice to the other party as specified herein.
3. Costs and Expenses. Whether or not the transactions contemplated by the
Loan Documents are fully consummated, the Borrower shall promptly pay (or
reimburse, as the Bank may elect) all costs and expenses which the Bank
has incurred or may hereafter incur in connection with the negotiation,
preparation, reproduction, interpretation, perfection, protection of
collateral and enforcement of this Agreement and the other Loan Documents,
the collection of all amounts due under this Agreement and the other Loan
Documents, and all amendments, modifications, consents or waivers, if any,
to the Loan Documents. The Borrower's reimbursement obligations under this
Paragraph shall survive any termination of this Agreement or any other
Loan Document.
4. Payment Due on a Day Other than a Business Day. If any payment due or
action to be taken under this Agreement or any other Loan Document falls
due or is required to be taken on a day that is not a Business Day, such
payment or action shall be made or taken on the next succeeding Business
Day when the Bank is open for business and such extended time shall be
included in the computation of interest.
5. Governing Law. This Agreement and the Note shall be construed in
accordance with and governed by the substantive laws of the Commonwealth
of Pennsylvania without reference to conflict of laws principles.
<PAGE>
6. Integration; Amendment. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject
matter hereof and thereof and supersede all oral negotiations and prior
writings with respect to the subject matter hereof and thereof. No
amendment of this Agreement, and no waiver of any one or more of the
provisions hereof shall be effective unless set forth in writing and
signed by the parties hereto.
7. Successors and Assigns. This Agreement (i) shall be binding upon the
Borrower and the Bank and, where applicable, their respective heirs,
executors, administrators, successors and assigns, and (ii) shall inure to
the benefit of the Borrower and the Bank and, where applicable, their
respective heirs, executors, administrators, successors and permitted
assigns; provided, however, that the Borrower may not assign its rights or
obligations hereunder or any interest herein without the prior written
consent of the Bank, and any such assignment or attempted assignment by
the Borrower shall be void and of no effect with respect to the Bank. The
Bank may from time to time sell or assign, in whole or in part, or grant
participations in the Loan and/or the Agreement and/or the obligations
evidenced thereby. The Borrower authorizes the Bank to provide information
concerning the Borrower to any prospective purchaser, assignee or
participant.
8. Severability and Consistency. The illegality, unenforceability or
inconsistency of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the
legality, enforceability or consistency of the remaining provisions of
this Agreement or any instrument or agreement required hereunder. The Loan
Documents are intended to be consistent. However, in the event of any
inconsistencies among any of the Loan Documents, such inconsistency shall
not affect the validity or enforceability of any Loan Document. The
Borrower agrees that in the event of any inconsistency or ambiguity in any
of the Loan Documents, the Loan Documents shall not be construed against
any one party but shall be interpreted consistent with the Bank's policies
and procedures.
9. Consent to Jurisdiction and Service of Process. The Borrower irrevocably
appoints each and every owner, partner, member, manager, and/or officer of
the Borrower as its attorneys upon whom may be served, by regular or
certified mail at the address set forth in this Agreement, any notice,
process or pleading in any action or proceeding against it arising out of
or in connection with this Agreement or any of the other Loan Documents.
The Borrower hereby consents and agrees that (i) any action or proceeding
against it may be commenced and maintained in any court within the
Commonwealth of Pennsylvania or in the United State District Court for any
District of Pennsylvania by service of process on any such owner, partner,
member, manager, and/or officer and (ii) the courts of the Commonwealth of
Pennsylvania and the United States District Court for any District
Pennsylvania shall have jurisdiction with respect to the subject matter
hereof and the person of the Borrower and all collateral for the
Liabilities. The Borrower agrees that any action brought by the Borrower
shall be commenced and maintained only in a court in the Federal Judicial
District or county in which the bank has its principal place of business
in Pennsylvania.
10. Joint and Several Liability. In the event that the Borrower consists of
more than one person or entity, the Liabilities of each such person or
entity shall be joint and several and the word "Borrower" means each of
them, any of them and/or all of them.
8 of 11
<PAGE>
11. Judicial Proceedings; Waivers.
THE BORROWER AND THE BANK ACKNOWLEDGE AND AGREE THAT (i) ANY SUIT, ACTION
OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE
BANK OR THE BORROWER OR ANY SUCCESSOR OR ASSIGN OF THE BANK OR THE
BORROWER, ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE
TRIED ONLY BY A COURT AND NOT BY A JURY AND EACH PARTY WAIVES THE RIGHT TO
TRIAL BY JURY; (ii) EACH WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER,
IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; AND (iii) THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT
OF THIS AGREEMENT AND THE BANK WOULD NOT EXTEND CREDIT TO THE BORROWER IF
THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Borrower and the Bank, intending to be Legally bound
hereby, have executed this Agreement, as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Premier Research Worldwide, Ltd. Address: 124 South 15th Street
- -------------------------------------------------------------------- Philadelphia, PA 19102
Corporation, Partnership or Limited Liability Company Name
By: /s/ Arthur W. Hicks, Jr. Address: 124 South 15th Street
------------------------------------------------------------------ Philadelphia, PA 19102
Name & Title: Arthur W. Hicks, Jr., Treasurer
FIRST UNION NATIONAL BANK
By: /s/ Kevin Rowley
--------------------------------------
Name & Title: Kevin Rowley, VP
123 South Broad Street
Philadelphia, PA 19109
</TABLE>
9 of 11
<PAGE>
Schedule of
Additional Terms to Revolving Credit Agreement
dated ,
----------------------------------
by and between the Bank and the Borrower
10 of 11
<PAGE>
Exhibit A
to Revolving Credit Agreement
dated ,
----------------------------------
by and between the Bank and the Borrower
COMPLIANCE CERTIFICATE OF BORROWER
FOR THE FISCAL YEAR ENDING OR
-----------------------------------------------
FOR THE FISCAL QUARTER ENDING
---------------------------------------------
This Compliance Certificate, signed by _______________________________________
(if the Borrower is an individual) the Borrower, or (if the Borrower is not an
individual) the Chief Financial Officer of the Borrower, is delivered to the
Bank pursuant to Section G.2. of the Revolving Credit Agreement (the
"Agreement").
The undersigned certifies that he/she is authorized to execute this Compliance
Certificate on behalf of the Borrower and hereby certifies on behalf of the
Borrower as follows:
i) all representations and warranties set forth in the Agreement and in any
other Loan Document (as defined in the Agreement), remain true and
correct;
ii) none of the covenants in the Agreement or in any of the other Loan
Documents has been breached; and
iii) no event has occurred which, alone, or with the giving of notice or the
passage of time, or both, would constitute an event of default (as
defined in the Agreement) under the Agreement or under any of the Loan
Documents. No material adverse change has occurred in the Borrower's
financial condition.
The foregoing representations concerning the Borrower's financial condition are
made to the Bank with the understanding that the Bank will rely on these
representations.
- -------------------------------------------------
Borrower Name
By:
----------------------------------------------
Name/Title
By:
----------------------------------------------
Name/Title
Address:
-----------------------------------------
-----------------------------------------
<PAGE>
SCHEDULE OF ADDITIONAL TERMS TO REVOLVING CREDIT AGREEMENT
AND REVOLVING CREDIT NOTE, DATED JUNE 13, 1996,
BY AND BETWEEN THE BANK AND THE BORROWER
----------------------------------------
A. Paragraph A.2. of the Agreement and Paragraph A.6. of the Note are hereby
each deleted in their entirety and the following provision is substituted in
each of their places:
Maximum Principal Amount. The maximum aggregate principal amount of advances
to be outstanding at any time hereunder (the "Maximum Principal Amount") is
the lesser of: (i) One Million Dollars ($1,000,000); or (ii) 60% of
Borrower's Eligible Accounts. The Borrower shall not request the Bank to make
any advances under the Note which, when added to the principal balance
outstanding under the Note, would cause the principal balance outstanding
under the Note to exceed the Maximum Principal Amount. In the event that the
principal balance outstanding under the Note exceeds at any time the Maximum
Principal Amount, the Borrower shall immediately, and without demand from the
Bank, pay to the Bank the amount in excess of the Maximum Principal Amount
(the "Excess") and the Borrower agrees that until such Excess is paid to the
Bank, this Note shall evidence and be enforceable with respect to any and all
amounts outstanding hereunder including such Excess.
B. The following definition is hereby added in alphabetical order to Section C.
of the Agreement:
Eligible Account. The term "Eligible Account" means each account which meets
all of the following criteria: (a) the account arose from a bona fide
outright sale of goods by the Borrower, or for services performed by the
Borrower, under an enforceable contract, within the United States for an
individual or entity located within the United States (other than the United
States Government or any state governmental body, unless the Borrower has
complied to the Bank's satisfaction with the Federal Assignment of Claims Act
or any comparable state statute) and such goods have been shipped to the
appropriate account debtor, or the sale has otherwise been consummated, or
the services have been performed for the appropriate account debtor in
accordance with such contract; (b) the title of the Borrower to the account
is absolute and is not subject to any prior assignment or encumbrance; (c)
the amount of the account shown on the books of the Borrower and on any
invoice or statement delivered to the Bank is owing to the Borrower and no
partial payment has been made thereon by any individual or entity, other than
non-refundable customer deposits; (d) the account is not a contra account and
is not subject to any claim of reduction, counterclaim, set-off, recoupment,
or any claim for credits, allowances or adjustments by the account debtor
because of returned, inferior or damaged goods or unsatisfactory services, or
for any other reason, except for customary discounts allowed for prompt
payment; (e) not more than fifty percent (50%) of the aggregate accounts due
from the account debtor remain unpaid for more than one hundred and twenty
(120) days past the invoice date; (f) the account debtor has not returned or
refused to accept or retain any of the goods or services from the sale or
furnishing of which the account arose; (g) the age of the account, calculated
from the date of the invoice therefor, is not more than ninety (90) days; (h)
the account debtor is not an employee, stockholder, affiliate or subsidiary
of the Borrower; (i) an invoice reflecting the account has been issued by the
Borrower to the account debtor, and neither the invoice nor the account
reflected on the Borrower's books has been redated; and (j) the account is
not an account that the Bank, in its sole discretion, has determined does not
constitute an Eligible Account in whole or in part, whether because the
account debtor does not meet the Bank's credit standards or otherwise.
1
<PAGE>
C. The following representation and warranty is hereby added in numerical order
to Section E. of the Agreement:
Eligible Accounts and Borrowing Base Certificates. All accounts reported to
the Bank as Eligible Accounts in the quarterly borrowing base certificates
submitted by the Borrower or relied on by the Borrower in requesting an
advance under the Revolver meet all of the criteria set forth in the
definition of Eligible Account set forth herein, and the most recent
borrowing base certificate submitted by the Borrower to the Bank was true and
correct in all respects on the date submitted and the Borrower is not aware
of any facts or circumstances that would make such borrowing base certificate
untrue or incorrect in any respect as of the date on which it was made.
D. Paragraph G.1. of the Agreement is hereby deleted in its entirety and the
following provision is substituted in its place:
1. Financial Statements. Furnish to the Bank the following financial
information: (i) not later than one hundred and twenty (120) days after
the end of each fiscal year, consolidated and consolidating audited
year-end financial statements for the Borrower, and for each of its
consolidated subsidiaries, including, but not limited to, statements of
financial condition, income and cash flows, a reconciliation of net worth,
notes to financial statements (all of the above prepared in accordance
with GAAP, consistently applied, by an independent certified public
accountant acceptable to the Bank, and certified as true, correct, and
complete by the Borrower's chief financial officer), and any other
information that may assist the Bank in assessing the Borrower's financial
condition; (ii) not later than thirty (30) days after the end of each
interim fiscal quarter, the Borrower's consolidated and divisional
financial statements, including, but not limited to, statements of
financial condition, income and cash flows, and a reconciliation of net
worth (all of the above prepared in a format acceptable to the Bank,
certified as true, correct, and complete by the Borrower's chief financial
officer); (iii) the following statements and schedules relating to the
Borrower's business, not later than thirty (30) days identifying both
billed and unbilled amounts, (b) a borrowing base certificate presenting
eligible accounts receivable relative to outstanding advances under the
Revolver, and (c) monthly management reports, including backlog and
pipeline information, for the prior three months, as presented to the
Borrower's Board of Directors, and/or (iv) such information respecting the
operations, financial or otherwise, of the Borrower or any of its
subsidiaries, as the Bank may from time to time reasonably request;
<PAGE>
E. The following affirmative covenant is hereby added in numerical order to
Section G. of the Agreement:
Notifications. The Borrower shall promptly notify the Bank of the following:
(i) any material adverse change in the financial condition of any account
debtor; and (ii) the rejection of any goods or services, or claims made in
respect of any Eligible Account.
F. The following language is hereby added to the end of Paragraph H.1. of the
Agreement, before the semicolon:
, provided, however, that (i) indebtedness may be incurred owing to UM
Holdings, LTD or UM Equity Corp. (the "UM Subordinated Debt"), so long as
such indebtedness outstanding at any one time does not exceed $1,000,000 in
the aggregate, and all such indebtedness is subordinated to the Liabilities,
and the holders thereof have executed a subordination agreement in form and
substance satisfactory to Bank; (ii) payments of principal and interest may
be made on the UM Subordinated Debt so long as at the time of payment and
after giving effect thereto, no Event of Default shall have occurred or event
which, with the giving of notice, passage of time or both, would constitute
an Event of Default shall have occurred and be continuing; and (iii) loans
may be made to UM Holdings, LTD, so long as the amount of any such loans
outstanding at any one time does not exceed $200,000 in the aggregate and so
long as at the time each such loan is made and after giving effect thereto,
no Event of Default shall have occurred or event which, with the giving of
notice, passage of time or both would constitute an Event of Default, shall
have occurred and be continuing:
G. The following language is hereby added to the end of Paragraph H.2. of the
Agreement, before the semicolon:
in excess of $750,000 in the aggregate, so long as at the time each such
acquisition is made and after giving effect thereto, no Event of Default
shall have occurred or event which, with the giving of notice, passage of
time or both would constitute an Event of Default, shall have occurred and be
continuing;
3
<PAGE>
H. The following language is hereby added to the end of Paragraph H.3. of the
Agreement, before the semicolon:
, provided, however, that dividends of up to $1,200,000 in the aggregate in
any fiscal year may be paid to UM Holdings, LTD in amounts not to exceed
$300,000 for the year-to-date period ending March 31, $600,000 for the
year-to-date period ending June 30, $900,000 for the year-to-date period
ending September 30, and $1,200,000 for the year-to-date period ending
December 31, so long as at the time of any such payment and after giving
effect thereto, no Event of Default shall have occurred or event which, with
the giving of notice, passage of time or both would constitute an Event of
Default, shall have occurred and be continuing;
I. The following language is hereby added to the end of Paragraph H.11. of the
Agreement, before the semicolon:
, provided, however, that the Borrower may sell or use shares so long as UM
Holdings, LTD continues at all times to own at least 60% of the Borrower's
voting shares and at least 60% of all of the Borrower's other shares, whether
preferred or common;
J. The following language is hereby added to the end of Paragraph H.12. of the
Agreement, before the semicolon:
, or (iii) repurchase agreements not exceeding 29 days in duration issued by
banks with shareholders' equity of at least $100,000,000, or (iv) notes and
other instruments generally known as "commercial paper" which arise out of
current transactions, which have maturities at the time of the issuance
thereof not exceeding nine months and which have, at the time of such
purchase, investment or other acquisition, a credit rating of A1/P1 or better
of Standard & Poor's Corporation or Moody's Investors Service, Inc.;
K. Paragraph H.14. of the Agreement is hereby deleted in its entirety and the
following provision is substituted in its place:
14. Consolidated Current Ratio. Permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities at any time to be less than
1.30 : 1.00; "Current Assets" and "Current Liabilities" shall mean all
assets and liabilities which, in accordance with GAAP, should be
classified as current assets and current liabilities, respectively;
4
<PAGE>
IN WITNESS WHEREOF, the Borrower has duly executed and delivered to the
Bank this Schedule of Additional Terms, as of the day and year first above
written.
PREMIER RESEARCH WORLDWIDE, LTD., A
DELAWARE CORPORATION
By: /s/ Arthur W. Hicks, Jr.
-----------------------------
Name: Arthur W. Hicks, Jr.
Title: Treasurer
Address: 124 South 15th Street
-------------------------
Philadelphia, PA 19102
-------------------------
First Union National Bank
Address: 123 South Broad Street
--------------------------
Philadelphia, PA 19109
--------------------------
<PAGE>
See Schedule of Additional Terms attached Revolving Credit Note
hereto and made a part hereof. (Pennsylvania)
Obligator #
-----------------------
Obligation #
----------------------
Philadelphia, Pennsylvania
June 13, 1996
$1,000,000.00
FOR VALUE RECEIVED, and intending to be legally bound hereby, the Borrower,
jointly and severally and unconditionally promise(s) to pay to the order of
First Union National Bank, (the "Bank"), the principal amount of all advances
that are now or may hereafter be made hereunder and that are then outstanding,
together with accrued, unpaid interest thereof and any unpaid costs and expenses
payable hereunder, on June 30, 1997.
A. Terms of Note.
1. Interest Payments. The principal amounts outstanding under this Revolving
Credit Note (together with any attachments hereto and any amendments and
modifications hereto in effect from time to time, the "Note") shall bear
interest at the Bank's Prime Rate plus one-half of one percent (0.500%).
Accrued interest shall be due and payable by the Borrower to the Bank
monthly commencing on July 1, 1996, and on the same day of each such
consecutive period thereafter, and upon payment in full of the outstanding
principal balance hereof.
2. Computation of Interest. Interest charged hereunder shall be computed
daily on the basis of a 360 day year for the actual number of days
elapsed. All payments hereunder shall be made in lawful currency of the
United States of America and in immediately available funds. All payments
made hereunder shall be made to the Bank at its offices set forth in this
Note or at such other address as the Bank shall notify the Borrower of in
writing.
3. Incorporation by Reference. This Note is the note referred to in that
certain Revolving Credit Agreement dated June 13, 1996, between the Bank
and the Borrower (together with any exhibits thereto and amendments and
modifications thereto in effect from time to time, the "Loan Agreement")
and is subject to the terms and conditions thereof, which terms and
conditions are incorporated herein, including, without limitation, terms
pertaining to definitions, representations, warranties, covenants, events
of default and remedies. Any capitalized term used herein without
definition shall have the definition contained in the Loan Agreement.
4. Borrowing Requests; Crediting of Account. Any request for borrowing
pursuant to this Note shall be made by the Borrower in writing one (1)
Business Days prior to the date of such proposed advance in the form of a
"Notice of Borrowing under Revolving Credit" attached hereto as Exhibit
"A" or in accordance with the terms of the Loan Agreement. Notwithstanding
the foregoing, the Bank's records of any advance made pursuant to this
Note shall, in the absence of manifest error, be deemed correct and
acceptable and binding upon the Borrower. Each advance hereunder shall be
made by crediting the Account (hereinafter defined) with the amount of the
advance. All advances made by crediting the Account or any other account
of the Borrower at the Bank shall be conclusively presumed to have been
properly authorized by the Borrower.
<PAGE>
5. Bank Records of Advance. The Bank may enter in its business records the
date and the amount of each advance made pursuant to this Note and the
Loan Agreement. The Bank's records of such advance shall, in the absence
of manifest error, be conclusively binding upon the Borrower. In the event
the Bank gives notice or renders a statement by mailing or telecopying
such notice or statement to the Borrower, concerning any such advance or
the amount of principal and interest due on this Note, the Borrower agrees
that, unless the Bank receives a written notification of exceptions to
this statement within ten (10) calendar days after such statement or
notice is mailed or telecopied, the statement or notice shall be an
account stated, correct and acceptable and binding upon the Borrower.
6. Advance Requests Exceeding Maximum Principal Amount. The Borrower shall
not request the Bank to make any advances under this Note or the Loan
Agreement which, when added to the principal balance outstanding
hereunder, would cause the principal balance outstanding hereunder to
exceed One Million and 00/100 Dollars ($1,000,000.00) (the "Maximum
Principal Amount"). In the event that the principal balance outstanding
under this Note exceeds at any time the Maximum Principal Amount, the
Borrower shall immediately, and without demand from the Bank, pay to the
Bank the amount in excess of the Maximum Principal Amount (the "Excess")
and the Borrower agrees that until such Excess is paid to the Bank, this
Note shall evidence and be enforceable with respect to any and all amounts
outstanding hereunder including such Excess.
7. Debting of Account. The Borrower agrees to maintain an account (the
"Account") at the Bank continuously until the Liabilities due hereunder
are paid in full. All advances made by crediting the Account or any other
account of the Borrower at the Bank shall be conclusively presumed to have
been properly authorized by the Borrower. The Bank may, and the Borrower
authorizes the Bank to, debit the Account or any other account of the
Borrower at the Bank for the amount of any payment as and when such
payment becomes due hereunder. If there are insufficient funds in the
Account at the time the Account is debited, and the debiting creates an
overdraft, the Bank may charge the Borrower, in addition to any overdraft
fee, an administrative fee in an amount established from time to time by
the Bank. The foregoing rights of the Bank to debit the Borrower's
accounts shall be in addition to, and not in limitation of, any rights of
set-off which the Bank may have hereunder or under any Loan Document, nor
shall the rights hereunder limit the Bank's recourse to any particular
source of funds or monies.
8. Application of Payments. All payments received on this Note shall be
applied first to the Bank's fees, costs and expenses which the Borrower is
obligated to pay pursuant to the terms hereof and under any other Loan
Document, then to accrued and unpaid interest and then to principal.
9. Late Charge. If any payment hereunder is not paid in full when the same is
due, at the Bank's option exercisable at the time of any late payment, the
Bank may collect from the Borrower a fee on such unpaid amount equal to
five percent (5%) of such amount.
10. Default Rate. At the Bank's option, interest will be assessed on any
principal which remains unpaid at the maturity of this Note, whether by
acceleration or otherwise, or upon the occurrence of an Event of Default
arising from failure to pay any amount when due under any of the Loan
Documents, at a rate which is four percent (4%) higher than the rate
otherwise charged hereunder (the "Default Rate") provided that at no time
shall the Default Rate exceed the highest rate of interest allowed by law.
Such Default Rate of interest shall also be charged on the amount owed by
the Borrower to the Bank pursuant to any judgment entered in favor of the
Bank with respect to this Note or any other Loan Document.
1 of 3
<PAGE>
11. Prepayment. Prepayment of principal may be made at any time without
prepayment penalty or premium. All payments received on this Note may be
applied in such order as the Bank in its sole discretion shall determine.
Security. The Bank is hereby granted a continuing security interest in the
Collateral as security for the payment of this Note and any other Liabilities,
which security interest shall be enforceable and subject to all the provisions
of this Note. Upon and following an Event of Default hereunder, the Collateral
may be applied by the Bank at any time to the Liabilities in any order deemed
appropriate by the Bank, in its sole and absolute discretion, without notice to
the Borrower.
Confession of Judgment.
1. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR ANY ATTORNEY TO
CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING THIS WARRANT OF ATTORNEY
TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER, FOLLOWING
CONSULTATION WITH (OR DECISION NOT TO CONSULT) SEPARATE COUNSEL FOR THE
BORROWER AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY KNOWINGLY,
INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE
BORROWER HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER
THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA, THE
COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. IT IS SPECIFICALLY ACKNOWLEDGED
BY THE BORROWER THAT THE BANK HAS RELIED ON THIS WARRANT OF ATTORNEY IN
RECEIVING THIS NOTE AND AS AN INDUCEMENT TO GRANT FINANCIAL ACCOMMODATIONS TO
THE BORROWER.
2. Upon and following the occurrence of an Event of Default, the Borrower hereby
jointly and severally authorizes and empowers any attorney of any court of
record or the prothonotary or clerk of any county in the Commonwealth of
Pennsylvania, or in any jurisdiction where permitted by law or the clerk of
any United States District Court, to appear for the Borrower in any and all
actions which may be brought hereunder and enter and confess judgment against
the Borrower or any of them in favor of the Bank for such sums as are due or
may become due hereunder or under any other Loan Document, together with
costs of suit and actual collection costs including, without limitation,
reasonable attorneys' fees equal to five percent (5%) of the Liabilities then
due and owing but in no event less than $5000, with or without declaration,
without prior notice, without stay of execution and with release of all
procedural errors and the right to issue executions forthwith. To the extent
permitted by law, the Borrower waives the right of inquisition on any real
estate levied on, voluntarily condemns the same, authorizes the prothonotary
or clerk to enter upon the writ of execution this voluntary condemnation and
agrees that such real estate may be sold on a writ of execution; and also
waives any relief from any appraisement, stay or exemption law of any state
now in force or hereafter enacted. If a copy of this Note verified by
affidavit of any officer of the Bank shall have been filed in such action, it
shall not be necessary to file the original thereof as a warrant of attorney,
any practice or usage to the contrary notwithstanding. The authority herein
granted to confess judgment shall not be exhausted by any single exercise
thereof but shall continue and may be exercised from time to time as often as
the Bank shall find it necessary and desirable and at all times until full
payment of all amounts due hereunder and under the other Loan Documents. The
Bank may confess one or more judgments in the same or different jurisdictions
for all or any part of the Borrower's obligations arising hereunder or under
any other Loan Document to which the Borrower is a party, without regard to
whether judgment has theretofore been confessed on more than one occasion for
the same obligations. In the event that any judgment confessed against the
Borrower is stricken or opened upon application by or on behalf of the
Borrower or any Obligor for any reason, the Bank is hereby authorized and
empowered to again appear for and confess judgment against the Borrower for
any part or all of the obligations due and owing under this Note, as herein
provided.
IN WITNESS WHEREOF, the Borrower, intending to be legally bound hereby, has
executed and delivered to the Bank this Note, as of the day and year first above
written.
<TABLE>
<CAPTION>
<S> <C>
Premier Research Worldwide, Ltd. Address: 124 South 15th Street
- -------------------------------------------------------------- Philadelphia, PA 19102
Corporation, Partnership or Limited Liability Company Name
By: /s/ Arthur W. Hicks, Jr.
- -------------------------------------------------------------- Address: 124 South 15th Street
Name & Title: Arthur W. Hicks, Jr., Treasurer Philadelphia, PA 19102
First Union National Bank
123 South Broad Street
Philadelphia, PA 19109
</TABLE>
2 of 3
<PAGE>
EXHIBIT A
NOTICE OF BORROWING UNDER
REVOLVING CREDIT
- -------------------------------------------------------------------------------
Date of Request Date of Note Amount
$
- -------------------------------------------------------------------------------
The Borrower hereby notifies the Bank that it requires a borrowing ("Borrowing")
or confirms to the Bank the prior oral request for a Borrowing under the
Revolving Credit Agreement dated , (together with any
amendments or modifications thereto in effect from time to time, the "Loan
Agreement") established for the Borrower in the amount set forth above.
The Borrowing will be or has been deposited in the Borrower's Account
No. . In order to induce the Bank to fund such Borrowing, the
Borrower hereby affirms the following:
1. The representations and warranties of the Borrower contained in the Loan
Agreement are correct on and as of the date of this Notice of Borrowing Under
Revolving Credit and the Authorized Representatives previously notified
and/or confirmed are the same and have the same authority to bind the
Borrower.
2. No Event of Default (as defined in the Loan Agreement) has occurred and is
continuing.
3. There has been no adverse change in the Borrower's or any Obligor's
condition, financial or otherwise, since the date of the Loan Agreement.
4. All of the Loan Documents (as defined in the Loan Agreement) remain in full
force and effect, without modification.
<PAGE>
5. Use of Borrowing will be:
---------------------------------------------------
- -------------------------------------------------------------------------------
----------------------------------------------------------
Name
Address
---------------------------------------------------
---------------------------------------------------
----------------------------------------------------------
Name
Address
---------------------------------------------------
---------------------------------------------------
----------------------------------------------------------
Corporation, Partnership or Limited Liability Company Name
By:
-------------------------------------------------------
Name/Title
By:
-------------------------------------------------------
Name/Title
ACKNOWLEDGED AND ACCEPTED:
FIRST UNION NATIONAL BANK
By:
--------------------------------------
Name/Title
Address:
---------------------------------
---------------------------------
Date:
------------------------------------
3 of 3
<PAGE>
Exhibit 21.1
Subsidiaries of Registrant
--------------------------
Jurisdiction of
Name Organization
------ -----------------
Premier Research, LLC Delaware
Premier Research Worldwide, Ltd. United Kingdom
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
November 26, 1996
