<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205498
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended September 30, 1999
------------------
or
[ ] Transitional report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transitional period from to
---------------------- ----------------------
Commission file number 0-29100
---------
PREMIER RESEARCH WORLDWIDE, LTD.
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 22-3264604
- ------------------------------------------------------------- --------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
30 South 17th Street
Philadelphia, PA 19103
- ------------------------------------------------------------- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
215-972-0420
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of Common Stock, $.01 par value, outstanding as of November
12, 1999, was 6,862,250.
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets--September 30, 1999 (unaudited) and
December 31, 1998 3
Condensed consolidated statements of operations (unaudited)--Three Months
And Nine Months Ended September 30, 1999 and 1998 4
Condensed consolidated statements of cash flows (unaudited)--Nine Months
Ended September 30, 1999 and 1998 5
Notes to condensed consolidated financial statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 8-13
Item 3. Qualitative and Quantitative Disclosures about Market Risks. 13
Part II. Other Information 13
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 15
a.) Exhibits
b.) Reports on Form 8-K
Signatures 16
</TABLE>
2
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,893 $ 10,822
Short-term investments 4,604 5,668
Accounts receivable, net 10,963 10,423
Prepaid expenses and other 1,486 2,176
Deferred income taxes 159 159
-------- --------
Total current assets 30,105 29,248
Property and equipment, net 4,408 4,110
Goodwill, net 1,923 2,160
Other assets 1,023 1,023
Deferred income taxes 2,644 3,631
-------- --------
$ 40,103 $ 40,172
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,520 $ 2,519
Accrued expenses 3,273 1,156
Deferred revenues 4,583 5,556
-------- --------
Total current liabilities 9,376 9,231
-------- --------
Commitments and contingencies
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,
7,322,530 and 7,217,520 shares issued 73 72
Additional paid-in capital 37,298 37,061
Treasury stock, 499,800 and 177,800 shares at cost (2,711) (779)
Accumulated deficit (3,933) (5,413)
-------- --------
Total stockholders' equity 30,727 30,941
-------- --------
$ 40,103 $ 40,172
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 13,804 $ 9,855 $ 39,984 $ 27,443
Less-Reimbursed costs (2,363) (1,696) (8,026) (4,440)
-------- -------- -------- --------
Net revenues 11,441 8,159 31,958 23,003
-------- -------- -------- --------
Costs and expenses:
Direct costs 4,343 3,360 13,891 9,677
Selling, general and administrative 5,638 4,251 14,325 12,182
Depreciation and amortization 585 416 1,658 1,146
-------- -------- -------- --------
Total costs and expenses 10,566 8,027 29,874 23,005
-------- -------- -------- --------
Income (loss) from operations 875 132 2,084 (2)
Other income, net 97 216 383 727
-------- -------- -------- --------
Income before income taxes 972 348 2,467 725
Income tax provision 389 138 987 290
-------- -------- -------- --------
Net income $ 583 $ 210 $ 1,480 $ 435
======== ======== ======== ========
Basic and diluted net income per share $ 0.08 $ 0.03 $ 0.21 $ 0.06
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Operating activities:
Net income $ 1,480 $ 435
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,658 1,146
Provision for doubtful accounts 206 --
Deferred income taxes 987 290
Changes in assets and liabilities:
Accounts receivable (746) (3,105)
Prepaid expenses and other 690 (510)
Accounts payable (999) (673)
Accrued expenses 2,117 302
Deferred revenues (973) 1,558
-------- --------
Net cash provided by (used in) operating activities 4,420 (557)
-------- --------
Investing activities:
Purchases of property and equipment (1,719) (1,756)
America's Doctor investment -- (1,000)
Proceeds from sales of short-term investments 1,064 9,462
-------- --------
Net cash provided by (used in) investing activities (655) 6,706
-------- --------
Financing activities:
Repurchase of common stock for treasury (1,932) (540)
Net proceeds from exercise of stock options 238 552
-------- --------
Net cash provided by (used in) financing activities (1,694) 12
-------- --------
Net increase in cash and cash equivalents 2,071 6,161
Cash and cash equivalents, beginning of period 10,822 4,679
-------- --------
Cash and cash equivalents, end of period $ 12,893 $ 10,840
======== ========
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. Operating results for the periods ended September 30, 1999, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. Further information on potential factors that could
affect the Company's financial results can be found in the Company's S-1
Registration Statement and its Reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission.
Note 2. Net Income per Share
The Company follows SFAS No. 128 "Earnings per Share". This statement requires
the presentation of basic and diluted earnings per share. Basic net income per
share is computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted net income per share
is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year, adjusted for the dilutive effect of
common stock equivalents, which consist primarily of stock options, using the
treasury stock method.
The table below sets forth the reconciliation of the numerators and denominators
of the basic and diluted net income per share computations.
Three Months Ended September 30,
- --------------------------------
<TABLE>
<CAPTION>
Per
Net Share
1999 Income Shares Amount
- ---- ------ ------ ------
<S> <C> <C> <C>
Basic........................................................ $ 583,000 7,011,000 $ 0.08
Effect of dilutive shares................................... -- 74,000 --
--------- --------- -------
Diluted...................................................... $ 583,000 7,085,000 $ 0.08
========= ========= =======
1998
- ----
Basic........................................................ $ 210,000 7,106,000 $ 0.03
Effect of dilutive shares................................... -- 79,000 --
--------- --------- -------
Diluted...................................................... $ 210,000 7,185,000 $ 0.03
========= ========= =======
</TABLE>
Options to purchase 213,029 and 652,132 shares of common stock were outstanding
at September 30, 1999 and 1998, respectively but were not included in the
computation of diluted net income per share for the three months ended September
30, 1999 and 1998 because the option exercise prices were greater than the
average market price of the Company's common stock during the period.
6
<PAGE>
Nine Months Ended September 30,
- -------------------------------
<TABLE>
<CAPTION>
Per
Net Share
1999 Income Shares Amount
- ---- ------ ------ ------
<S> <C> <C> <C>
Basic........................................................ $ 1,480,000 7,057,000 $ 0.21
Effect of dilutive shares................................... -- 94,000 --
----------- --------- -------
Diluted...................................................... $ 1,480,000 7,151,000 $ 0.21
=========== ========= =======
1998
- ----
Basic........................................................ $ 435,000 7,121,000 $ 0.06
Effect of dilutive shares................................... -- 96,000 --
----------- --------- -------
Diluted...................................................... $ 435,000 7,217,000 $ 0.06
=========== ========= =======
</TABLE>
Options to purchase 239,275 and 634,951 shares of common stock were outstanding
at September 30, 1999 and 1998, respectively but were not included in the
computation of diluted net income per share for the nine months ended September
30, 1999 and 1998 because the option exercise prices were greater than the
average market price of the Company's common stock during the period.
Note 3. Comprehensive Income
The Company follows SFAS No. 130, "Reporting Comprehensive Income." The
Company's comprehensive income includes net income and unrealized gains and
losses from foreign currency translation and short-term investments. These
unrealized gains and losses were immaterial as of September 30, 1999 and 1998.
Note 4 Operating Segments
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," was issued, effective for fiscal years ending after
December 15, 1998. The Company adopted this statement for the year ended
December 31, 1998. The Company's reportable segments are strategic business
units that offer different products and services to a common client base.
The Company's products and services are provided through two business segments,
both in the United States and internationally: Clinical Operations, which
includes centralized diagnostic testing services, clinical trial management
services and clinical data management services; and Technology Operations, which
includes clinical trial and data management software, support and consulting
services. The Company's discontinued Phase I Clinical Research Unit and Clinical
Laboratory operations and income and expense not allocated to reportable
segments are reported as Other.
The Company evaluates performance based on the net revenues and operating
earnings performance of the respective business segments.
7
<PAGE>
Segment information is as follows:
<TABLE>
<CAPTION>
Three months ended September 30,1999
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
<S> <C> <C> <C> <C>
Net revenues from external customers $ 6,915,000 $ 4,439,000 $ 87,000 $11,441,000
Income (loss) from operations (772,000) 1,799,000 (152,000) 875,000
Identifiable assets 14,763,000 3,912,000 21,428,000 40,103,000
Three months ended September 30, 1998
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
Net revenues from external customers $5,146,000 $2,611,000 $402,000 $8,159,000
Income (loss) from operations (497,000) 684,000 (55,000) 132,000
Identifiable assets 10,695,000 3,494,000 24,128,000 38,317,000
Nine months ended September 30,1999
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
Net revenues from external customers $23,055,000 $8,324,000 $579,000 $31,958,000
Income (loss) from operations 300,000 2,240,000 (456,000) 2,084,000
Identifiable assets 14,763,000 3,912,000 21,428,000 40,103,000
Nine months ended September 30, 1998
-------------------------------------------------------------------
Clinical
Operations Technology Other Total
---------- ---------- ----- -----
Net revenues from external customers $13,955,000 $7,592,000 $1,456,000 $23,003,000
Income (loss) from operations (1,639,000) 1,368,000 269,000 (2,000)
Identifiable assets 10,695,000 3,494,000 24,128,000 38,317,000
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company is a clinical research organization 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
products and services are provided, both in the United States and
internationally, through two business segments: Clinical Operations, which
includes centralized diagnostic testing services, clinical trial management
services and clinical data management services; and Technology Operations, which
includes the development, marketing and support of clinical trial and data
management software, support and consulting services. The Company had operated a
Phase I Clinical Research Unit, which was closed in the first quarter of 1998.
The Company's centralized diagnostic testing services are on a
fee-for-service basis and contracts generally have terms of one month to two
years. A portion of the Company's fee frequently is paid upon contract execution
as a non-refundable up-front payment, with the remaining amounts billed monthly.
Clinical trial and data management services are generally fixed priced
contracts, with certain variable components, and range in duration from a few
months to two years. A portion of the Company's fee frequently is paid upon
contract execution as a non-refundable up-front payment, with the balance billed
in accordance with the 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 the product(s) 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
supplies. Revenues from clinical trial software and services are derived
primarily from software license fees, software maintenance and support and
consulting services.
8
<PAGE>
Revenues from centralized diagnostic testing services are recognized as
the services are performed. Revenues from clinical trial and data management
services are generally recognized on a percentage of completion basis as work is
performed. 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.
Revenues from technology software licenses are recognized upon
shipment of the software and related documentation when collectibility is deemed
probable and the license fee is deemed fixed and determinable. Revenues from
software maintenance and continuing support contracts are recognized on a
straight-line basis over the period in which the software maintenance and
continuing support is provided, generally twelve months. Revenues from
consulting and training services are recognized when the services are performed.
Results of Operations
Three months ended September 30, 1999 compared to three months ended September
30, 1998
Net revenues for the three months ended September 30, 1999, increased $3,282,000
or 40.2% to $11,441,000 compared to $8,159,000 for the three months ended
September 30, 1998.
The Company's net revenues from its Clinical Operations increased $ 1,768,000 or
34.3% to $6,915,000 for the period ended September 30, 1999 compared to
$5,146,000 for the same period in 1998. The increase in net revenues was the
result of the Company's strong performance in centralized diagnostic testing
services, which increased $1,558,000 or 78.0% to $3,555,000 in the 1999 period
from $1,996,000 in the 1998 period. In addition, the Company's clinical trial
and data management services net revenues increased $210,000 or 6.7% to
$3,360,000 for the three months ended September 30, 1999 from $3,150,000 for the
three months ended September 30, 1998. Overall, the increase in net revenues for
Clinical Operations resulted from revenues recognized from the Company's
contract backlog and new clinical contracts signed during 1999.
The Company has decided to phase out its clinical laboratory operations, which
primarily provided blood sample testing in conjunction with clinical trials.
Contractual client obligations for these services will be met through
subcontracting agreements with comparable laboratories, beginning in the third
quarter of 1999. During the three months ended September 30, 1999, net revenues
from clinical laboratory operations were $87,000 compared to $347,000 for the
three months ended September 30, 1998.
Net revenues for Technology Operations increased $1,828,000 or 70.0% to
$4,439,000 for the three months ended September 30, 1999 from $2,611,000 for the
three months ended September 30, 1998. During the third quarter of 1999, the
Company signed a five-year agreement to provide software and consulting services
to link up to four hundred investigational sites in a worldwide oncology trial.
The increase in net revenues was due primarily to the recognition of the first
portion of the revenue from this contract. Included in the net revenues of
Technology Operations for the three months ended June 30, 1999 was $575,000 in
consulting revenues relating to the Company's consulting contract with
AmericasDoctor.com, Inc.
During the third quarter of 1998, the Company recorded net revenues of $55,000
from its Phase I unit, which was closed during the first quarter of 1998.
Direct costs for the three months ended September 30, 1999 increased $983,000 or
29.3% to $4,343,000 from $3,360,000 for the three months ended September 30,
1999. The increase in direct costs is due to increased staffing and
subcontracting costs to support client contract requirements and to accommodate
projected future net revenues. Direct costs, as a percentage of net revenues,
for the three months ended September 30, 1999 were 38.0% compared with 41.2% in
1998. The decrease in direct costs as a percentage of revenues was due primarily
to the Company's ability to leverage the fixed portion of its direct costs
against an increased revenue base.
9
<PAGE>
Selling, general and administrative expenses increased $1,387,000 or 32.6% to
$5,638,000 for the three months ended September 30, 1999 from $4,251,000 for the
three months ended September 30, 1998. The increase in selling, general and
administrative expenses is due to increased personnel and personnel related
costs, performance-based incentive compensation programs established in 1999 and
direct selling expenses related to Technology license revenues recognized in the
quarter. As a percentage of net revenues, selling, general and administrative
expenses were 49.3% for the third quarter of 1999 compared to 52.1% for the
third quarter of 1998. The decline in the percentage was due primarily to the
Company's ability to leverage the fixed portion of its selling, general and
administrative expenses against an increased revenue base.
Depreciation and amortization expense increased to $585,000 in the third quarter
of 1999 from $416,000 in the comparable 1998 quarter. The increase was due to
increased depreciation expense resulting from additional capital spending to
support the growth in net revenues.
Other income, which consists primarily of interest earned on the Company's cash,
cash equivalents and short-term investments, decreased to $97,000 from $216,000
for the three months ended September 30, 1999 and 1998, respectively. The
decrease is due to lower cash and short-term investment balances in 1999 as a
result of the Company's use of cash to support working capital, capital
expenditure needs and the share repurchase program in 1999.
The Company's effective tax rate was 40.0% for the three months ended September
30, 1999 and 1998.
Nine months ended September 30, 1999 compared to nine months ended September 30,
1998
Net revenues for the nine months ended September 30, 1999, increased $8,955,000
or 38.9% to $31,958,000 compared to $23,003,000 for the nine months ended
September 30, 1998.
The Company continued to experience a strong increase in net revenues in its
Clinical Operations, which increased $9,100,000 or 65.2% to $23,055,000 for the
period ended September 30, 1999 compared to $13,955,000 for the same period in
1998. The increase in net revenues was the result of the Company's strong
performance in centralized diagnostic testing services, which increased
$4,406,000 or 78.1% to $10,045,000 in the 1999 period from $5,639,000 in the
1998 period. In addition, the Company's clinical trial and data management
services net revenues increased $4,694,000 or 56.4% to $13,010,000 for the nine
months ended September 30, 1999 from $8,316,000 for the nine months ended
September 30, 1998. Overall, the increase in net revenues for Clinical
Operations resulted from revenues recognized from the Company's contract backlog
and new clinical contracts signed during the nine months ended September 30,
1999.
The Company has decided to phase out its clinical laboratory operations, which
primarily provides blood sample testing in conjunction with clinical trials.
Contractual client obligations for these services will be met through
subcontracting agreements with comparable laboratories, beginning in the third
quarter of 1999. During the nine months ended September 30, 1999, net revenues
from clinical laboratory operations were $579,000 compared to $1,267,000 for the
nine months ended September 30, 1998.
Net revenues for Technology Operations increased $732,000 or 9.6% to $8,324,000
for the nine months ended September 30, 1999 from $7,592,000 for the nine months
ended September 30, 1998. During the third quarter of 1999, the Company signed a
significant, five-year agreement to provide software and consulting services to
link up to four hundred investigational sites in a worldwide oncology trial. The
increase in net revenues was due primarily to the recognition of the first
portion of the revenue from this contract. Included in the net revenues for
Technology Operations for the nine months ended September 30, 1999 was
$1,725,000 in consulting revenues relating to the Company's consulting contract
with AmericasDoctor.com, Inc.
During the nine months ended September 30, 1998, the Company recorded net
revenues of $189,000 from its Phase I unit, which was closed during the first
quarter of 1998.
Direct costs for the nine months ended September 30, 1999 increased $4,214,000
or 43.5% to $13,891,000 from $9,677,000 for the nine months ended September 30,
1999. The increase in direct costs is due to increased staffing and
subcontracting costs to support client contract requirements and to accommodate
projected future net revenues. Direct costs, as a percentage of net revenues,
for the nine months ended September 30, 1999 were 43.5% compared to 42.1% for
the same period in 1998. The increase in direct costs as a percentage of net
revenues is due to the increase in staff and subcontracting costs and to the
mix of revenues as Clinical Operations net revenues have a higher direct cost
ratio than Technology Operations net revenues.
10
<PAGE>
Selling, general and administrative expenses increased $2,143,000 or 17.6% to
$14,325,000 for the nine months ended September 30, 1999 from $12,182,000 for
the nine months ended September 30, 1998. The increase in selling, general and
administrative expenses is due to increased personnel related, performance-based
incentive compensation programs established in 1999, direct selling expenses
related to Technology license revenues recognized in the third quarter and other
expenses incurred in the nine months ended September 30, 1999 including $250,000
of closedown costs for the clinical laboratory. As a percentage of net revenues,
selling, general and administrative expenses were 44.8% for the nine months
ended September 30, 1999 compared to 53.0% for the nine months ended September
30, 1998. The decline in the percentage was due primarily to the Company's
ability to leverage the fixed portion of its selling, general and administrative
expenses against an increased revenue base.
Depreciation and amortization expense increased to $1,658,000 for the nine
months ended September 30, 1999 from $1,146,000 in the comparable 1998 period.
The increase was due to increased depreciation expense resulting from additional
capital spending to support the growth in net revenues.
Other income, which consists primarily of interest earned on the Company's cash,
cash equivalents and short-term investments, decreased to $383,000 from $727,000
for the nine months ended September 30, 1999 and 1998, respectively. The
decrease is due to lower cash and short-term investment balances in 1999 as a
result of the Company's use of cash to support working capital and capital
expenditure needs and the share repurchase program in 1999.
The Company's effective tax rate was 40.0% for the six months ended June 30,
1999 and 1998.
Liquidity and Capital Resources
For the nine months ended September 30, 1999, the Company generated cash from
operations of $4,420,000 compared to cash used in operations of $557,000 for the
nine months ended September 30, 1998. The year-to-year change was primarily the
result of increased income before depreciation and amortization, increased
accrued expenses and improved receivable collection partially offset by reduced
accounts payable and deferred revenues.
At September 30, 1999, the Company had $12,893,000 of cash and cash equivalents
and $4,604,000 invested in short-term marketable securities. For the nine months
ended September 30, 1999, the Company sold, upon maturity, $1,064,000 of
short-term investments and re-invested the proceeds in investments with
maturities of ninety days or less. The Company generally places its investments
in A1P1 rated commercial bonds and paper, municipal securities and certificates
of deposit with maturities of less than one year.
During the nine months ended September 30, 1999, the Company purchased
$1,719,000 of equipment compared to $1,756,000 during the nine months ended
September 30, 1998. The equipment purchases in 1999 reflect the additional
capital equipment needed to support the growth of the Company.
During the nine months ended September 30, 1999, the Company received $238,000
in cash from the exercise of 105,010 employee stock options.
The Company has renewed through June 30, 2000, its bank line of credit that
provides for borrowings up to $3,000,000 at an interest rate of prime minus 35
basis points. The line of credit agreement includes certain covenants, the most
restrictive of which limit future indebtedness and require compliance with a
liabilities-to-tangible net worth ratio. To date, the Company has not borrowed
any amounts under its line of credit.
During the nine months ended September 30, 1999, the Company used $1,932,000 to
repurchase 322,000 shares of the Company's common stock at a price of $6 per
share. The Company's share repurchase program is now complete, having
repurchased 499,800 shares of the 500,000 authorized by the Board of Directors
on July 20, 1998. In total, the Company used $2,711,000 to repurchase 499,800
shares at an average price of $5.42 per share.
The Company expects that existing cash and cash equivalents, short-term
investments, cash flows from operations and borrowings under its line of credit
will be sufficient to meet its foreseeable cash needs for at least the next
year. However, there may be acquisition and other growth opportunities that
require additional external financing and the Company may from time to time seek
to obtain additional funds from the public or private issuances of equity or
debt securities. There can be no assurance that such financings will be
available or available on terms acceptable to the Company.
11
<PAGE>
Year 2000
The Company is aware of the issues and problems associated with the Year 2000
date change. The Company has been addressing company-wide data processing and
infrastructure issues since 1995. Premier Research had undertaken a Year 2000
Compliance Plan that was completed by September 30, 1999. In addition, the
Company had all clinical systems Year 2000 compliant by July 31, 1999. The
purpose of this plan is to assure that Premier Research, as a corporate entity,
has assessed and taken appropriate actions necessary to become compliant with
any issues regarding Year 2000 requirements. The problems surrounding Year 2000
compliance are of extreme concern to the Company, since Premier Research is a
clinical research organization providing diagnostic testing and clinical
research services to the pharmaceutical industry, as well as a developer of
clinical database management software. The Company produces and delivers
information that is date sensitive, especially in deriving date and time
calculations; Premier Research currently can provide to its clients, date
formats that contain century markers or 4-digit year fields for any of its
clinical and diagnostic information.
The Company's strategy to address Year 2000 compliance is to replace potentially
non-compliant software and hardware with new compliant systems or updated Year
2000 compliant versions. The inventory and assessment phases of the Year 2000
plan have primarily been completed for its hardware and software systems. The
Company has begun its remediation phase of the plan through the replacement and
updating of systems.
As of today all of the Company's information technology infrastructure has been
assessed and have been found free from any Year 2000 issues. Those that have
shown not to be in compliance are currently being evaluated and renovated for
compliance. If a system can not be made compliant to the requirements, the
system will be replaced with one that is compliant.
The Company is also assessing its facilities worldwide that it leases or owns,
and plans to complete its deployment of applicable contingency plans by December
1, 1999.
The Company is also assessing and surveying its suppliers of third party
products and services. Based upon information received from such parties, the
Company believes that most of its suppliers are developing, assessing and
remediating any issues associated with their Year 2000 plans. The Company cannot
at this time fully assess the status of its suppliers until they have completed
their own efforts. It will review the readiness of the suppliers on an on-going
basis throughout the remainder of the year and will implement specific actions
to rectify potential problems in its supply chain.
As with any other company in its industry or any business in general, the
Company is exposed to risks associated with failures in the private and public
sector to become Year 2000 compliant. These risks include the possibility that
public infrastructure systems, such as electricity, water, natural gas or
telecommunications may fail in this country and other countries in the world
that the Company does business. In addition, there are those risks that the
internal systems of the Company's suppliers, service providers and customers
will fail. The Company also relies considerably on travel and could be adversely
affected, if air and train travel is disrupted by issues related to the Year
2000.
The Company also relies heavily on the healthcare industry. This industry and
its related clinical investigational sites may not have focused their efforts on
the Year 2000 issue to the same degree. Thus the Company has an increased risk
that its investigational sites, necessary for the conduct of clinical trials,
will be unable to provide timely answers and data that it needs to perform
services on time to its contractual clients. Also, the failure of the Company's
customers to address the Year 2000 issue could negatively impact on their
ability to use the Company's services. While contingency plans will be developed
to address these risks, the Company cannot assure that those plans will
sufficiently protect the Company from the effects of those risks. Any
disruptions from the realization of any of these risks could adversely affect
the Company's ability to perform its services.
The Company estimates that the costs associated with its Year 2000 program will
be approximately $ 0.5 million, including costs already incurred. Total Year
2000 costs of approximately $0.3 million have been incurred by the Company
through September 30, 1999. The estimates of cost, timing and impact of
addressing the Year 2000 issue are based on numerous assumptions of future
events, including the continued availability of certain resources, the ability
of the Company to meet its deadlines and the cooperation of third parties.
However, there can be no guarantee that the assumptions will be correct and that
these estimates will be achieved. Actual results could differ significantly from
those expected by the Company.
12
<PAGE>
Inflation
The Company believes the effects of inflation generally do not have a material
adverse effect on its results of operations or financial condition.
Cautionary Statement for Forward-Looking Information.
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth above may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve a number of risks and
uncertainties such as competitive factors, technology development, market demand
and the Company's ability to obtain new contracts and accurately estimate net
revenues due to variability in size, scope and duration of projects, and
internal issues of the sponsoring client. Further information on potential
factors that could affect the Company's financial results can be found in the
Company's S-1 Registration Statement and its Reports on Form 10-K and 10-Q filed
with the Securities and Exchange Commission.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The Company's primary financial market risks include fluctuations in interest
rates and currency exchange rates.
There have been no significant changes since December 31, 1998.
13
<PAGE>
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(1) Effective Date of Securities Act Registration Statement: February 3, 1997
registration No.: 333-17001
(2) Offering Date: February 4, 1997
(3) Not Applicable
(4) (i) The offering terminated after all shares registered were sold
(ii) Managing Underwriters: Montgomery Securities
Furman Selz
Genesis Merchant Group
(iii) Class of Securities Registered: Common Stock
(iv) Account of Company Account of Selling Shareholder
------------------ ------------------------------
Amount Registered 2,206,250 common stock 956,250 common stock
Aggregate price of
Amount Registered $37,506,250 $16,256,250
Amount Sold 2,206,250 956,250
Aggregate Offering
Price of Amount Sold $37,506,250 16,256,250
(v) Expenses of offering for account of the Company:
Underwriting Discount and Commission $2,625,437
Other expenses $698,813
Total Expenses $3,324,250
(A) There were no direct or indirect payments to directors,
officers, general partners of the issuer or their associates;
to persons owning ten (10) percent or more of common stock of
the Company; or affiliates of the Company.
(B) All of the above payments were direct or indirect payments to others not
described in clause (A).
(vi) Net Offering Proceeds to the Company: $34,182,000
(vii) Use of Proceeds as of September 30, 1999:
Net cash paid for business acquisition: 8,655,000
Net cash paid for minority equity investment 1,000,000
Common stock re-purchase 2,711,000
Purchase of Equipment: 6,579,000
Working Capital: (2,260,000)
Temporary Investments (consisting of short-term,
Investment-grade securities): 4,604,000
All of the above payments were to others not described in item (v)(A) above.
(viii) The use of proceeds is consistent with the Prospectus
</TABLE>
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
10.25 Registration Rights Agreement dated August 27, 1999.
Incorporated by reference to Exhibit 10.1, filed in connection
with the Company's Form 8-K dated August 27, 1999.
10.26 Put Option Agreement dated August 27, 1999. Incorporated by
reference to Exhibit 10.1, filed in connection with the
Company's Form 8-K dated August 27, 1999.
10.27 Employment Agreement with Joel Morganroth, M.D., filed
herewith. *
10.28 Management Consulting Agreement with Joel Morganroth, M.D.,
filed herewith. *
10.29 Employment Agreement with Joseph Esposito, filed herewith. *
10.30 Employment Agreement with John R. Bauer, filed herewith. *
10.31 Amendment No. 1 to Premier Research Worldwide 1996 Stock
Option Plan (Incorporated by reference to Exhibit 4.2 to the
Registration Statement on Form S-8, File No. 333-80121). *
27.0 Financial Data Schedule
* Management contract or compensatory plan or arrangement.
b.) Reports on Form 8-K
On September 9, 1999 the Registrant filed a Report on Form 8-K dated
August 27, 1999, reporting on a change in control.
15
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PREMIER RESEARCH WORLDWIDE, LTD.
(Registrant)
Date: November 15, 1999 By: /s/ Joel Morganroth
---------------------------------
Joel Morganroth, MD
Chairman and Chief
Executive Officer
Date: November 15, 1999 By: /s/ John R. Bauer
----------------------------------
John R. Bauer
Chief Financial Officer
(Principal Financial an
Accounting Officer)
16
<PAGE>
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 30 S. 17th Street, Philadelphia, PA 19103.
1. DUTIES AND RESPONSIBILITIES
Employee agrees to hold the position of Chief Executive Officer and
Chairman of the Board shall be directly responsible to the Board of
Directors.
2. BEST EFFORTS
Employee agrees to devote best his efforts to his employment with
the Company.
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 one year, commencing September
7, 1999 and will continue from year to year unless terminated.
5. Compensation
a) Salary shall be $204,000/year payable in equal
installments as per the company's payroll policy.
b) Benefits shall be the standard benefits of the Company as
they shall exist from time to time with the exception of
vacation which is four weeks/year.
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
1
<PAGE>
disclose nor use in any manner, any confidential or proprietary
material relating to the business, operations, or prospects of the
Company except as authorized in writing by the Company.
7. BUSINESS INTERFERENCE
During employment with the Company and for a period of one year
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 inappropriately or
unethically solicit clients, Premier Research Worldwide employees or
independent contractors that would interfere with the business of 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
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 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 30 days written notice to Employee. In such
case, the Company will pay severance to Employee equal to
one year's annual salary and applicable prorated bonus,
payable in one lump sum in accordance with the Company's
policy.
In addition, the Executive will continue to receive
(subject to payment of any applicable premium co-pay)
standard health, dental, disability, life and accident
2
<PAGE>
insurance benefits for the one year period following the
termination of employment.
b) Notwithstanding any contrary provision contained in this
Employment Agreement, in the event that either (a) there
is a "Change of Control" (as hereafter defined) and
neither the Company nor the Buyer offers the Executive a
position with comparable responsibilities, authority,
location or compensation, or (b) after the date of the
Change in Control but before the first anniversary
thereof, the Executive's responsibilities, authority,
location, or compensation are not acceptable to the
Executive the Executive may elect to resign and receive
severance equal to one year's annual salary and applicable
prorated bonus, hereunder, payable in one lump sum in
accordance with the Company's policy.
In addition, the Executive will continue to receive
(subject to payment of any applicable premium co-pay)
standard health, dental, disability, life and accident
insurance benefits for the one year period following the
termination of employment.
The Executive must provide written notice of such election
not less than sixty days following the date of the Change
of Control or, if the Executive's new position is changed
within the time period and in the manner described above,
within thirty days following such event.
The term "Change of Control", as utilized herein, refers
to:
(i) A change of control of a nature that would
be required to be reported in the Company's
proxy statement under the Securities
Exchange Act of 1934, as amended;
(ii) The approval by the Board of Directors of a
sale, not in the ordinary course of
business, of all or substantially all of the
Company's assets and business to an
unrelated third party and the consummation
of such transaction; or
(iii) The approval by the Board of Directors of
any merger, consolidation, or like business
combination or reorganization of the
Company, the consummation of which would
result in the occurrence of any event
described in clause (i) or (ii) above, and
the consummation of such transaction.
Except as expressly modified and amended hereby, the
Employment Agreement and its terms and provisions are
hereby ratified, confirmed and approved in all respects.
c) The Company may terminate employment for cause at any time
upon 30 days 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:
3
<PAGE>
(1) Employee's gross failure to perform duties and
responsibilities as outlined in the job
description dated October 1996 or as amended
thereafter.
(2) Any employee gross misconduct which is directly
and severely injurious to the business 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.
d) Employee may terminate employment at any time, with or
without good reason, upon 90 days written notice to the
Company.
e) 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,
benefits, and applicable prorated bonus earned through the
date of termination.
f) References herein to a "prorated bonus" refer to the
annual bonus in which the Executive then participates,
prorated for the portion of the year in which his
employment continues hereunder and based upon Company
performance during such portion of the year.
11. MISCELLANEOUS
a) This Agreement and any disputes arising herefrom shall be
governed by Pennsylavnia 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>
MANAGEMENT CONSULTANT AGREEMENT
The following agreement is hereby entered into between, Joel Morganroth, M.D.,
P.C. (hereinafter known as Consultant) and Premier Research Worldwide (together
with its affiliated corporations hereinafter known as the "Company") and having
its principal offices at 30 S. 17th Street, Philadelphia, PA 19103
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 Business 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 $156,000/year payable in twelve equal
installments by the 15th of each month
b) Consultant will be reimbursed for reasonable out of picket
disbursement properly documented.
c) Consultant agrees to maintain his medical licenses as
required to carry out the duties described herein.
d) 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 the
Consultant.
1
<PAGE>
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
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 employment.
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 employed 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,
Consultant agrees to obtain permission from the Company
for such publication
6. 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.
7. TERM OF AGREEMENT
The term of this Agreement is one year commencing from July 29, 1999
and will continue from year to year unless terminated.
2
<PAGE>
8. TERMINATION
a) The Company may terminate consulting services at any time
upon without the need to show cause upon 180 days written
notice to Consultant.
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 judgement, 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 employment 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 Pennsylavnia 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>
MANAGEMENT EMPLOYMENT AGREEMENT
-------------------------------
The following agreement is hereby entered into between, Joseph Esposito
(hereinafter known as Employee) and Premier Research Worldwide (together with
its affiliated corporations hereinafter known as the "Company") and having its
principal offices at 30 S. 17th Street, Philadelphia, PA 19103
1. DUTIES AND RESPONSIBILITIES
---------------------------
Employee agrees to hold the position of President and Chief Operating
Officer of Premier Research Worldwide, Ltd. and shall be directly
responsible to the Chief Executive Officer.
2. BEST EFFORTS
------------
Employee agrees to devote his best efforts to his employment with the
Company.
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 one year, commencing September
7, 1999 and will continue from year to year unless terminated.
5. COMPENSATION
------------
a) Salary shall be $270,000/year payable in equal installments as per the
company's payroll policy.
b) Benefits shall be the standard benefits of the Company as they shall
exist from time to time with the exception of vacation which is four
weeks/year.
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 proprietary material
relating to the business, operations, or prospects of the Company
except as authorized in writing by the Company.
1
<PAGE>
7. BUSINESS INTERFERENCE
---------------------
During employment with the Company and for a period of one year 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 inappropriately or unethically solicit clients,
Premier Research Worldwide employees or independent contractors that would
interfere with the business of 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 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 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.
2
<PAGE>
a) The Company may terminate other than for "cause" at any time upon 30 days
written notice to Employee. In such case, the Company will pay severance
to Employee equal to one year's annual salary and applicable prorated
bonus, payable in one lump sum in accordance with the Company's policy.
In addition, the Executive will continue to receive (subject to payment
of any applicable premium co-pay) standard health, dental, disability,
life and accident insurance benefits for the one year period following
the termination of employment.
b) Notwithstanding any contrary provision contained in this Employment
Agreement, in the event that either (a) there is a "Change of Control"
(as hereafter defined) and neither the Company nor the Buyer offers the
Executive a position with comparable responsibilities, authority,
location or compensation, or (b) after the date of the Change in Control
but before the first anniversary thereof, the Executive's
responsibilities, authority, location, or compensation are not acceptable
to the Executive the Executive may elect to resign and receive severance
equal to one year's annual salary and applicable prorated bonus,
hereunder, payable in one lump sum in accordance with the Company's
policy.
In addition, the Executive will continue to receive (subject to payment
of any applicable premium co-pay) standard health, dental, disability,
life and accident insurance benefits for the one year period following
the termination of employment.
The Executive must provide written notice of such election not less than
sixty days following the date of the Change of Control or, if the
Executive's new position is changed within the time period and in the
manner described above, within thirty days following such event.
The term "Change of Control", as utilized herein, refers to:
(i) A change of control of a nature that would be required to be
reported in the Company's proxy statement under the Securities
Exchange Act of 1934, as amended;
(ii) The approval by the Board of Directors of a sale, not in the
ordinary course of business, of all or substantially all of the
Company's assets and business to an unrelated third party and the
consummation of such transaction; or
(iii) The approval by the Board of Directors of any merger,
consolidation, or like business combination or reorganization of
the Company, the consummation of which would result in the
occurrence of any event described in clause (i) or (ii) above, and
the consummation of such transaction.
3
<PAGE>
Except as expressly modified and amended hereby, the Employment
Agreement and its terms and provisions are hereby ratified,
confirmed and approved in all respects.
c) The Company may terminate employment for cause at any time upon 30 days
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 to the
Company.
(2) Any employee misconduct which, in the discretion of the Company, 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.
d) Employee may terminate employment at any time, with or without good
reason, upon 30 days written notice to the Company.
e) 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, benefits, and applicable prorated bonus earned through the
date of his termination
f) References herein to a "prorated bonus" refer to the annual bonus in
which the Executive then participates, prorated for the portion of the
year in which his employment continues hereunder and based upon Company
performance during such portion of the year.
11. MISCELLANEOUS
-------------
a) This Agreement and any disputes arising herefrom shall be governed by
Pennsylvania 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.
4
<PAGE>
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:
--------------------------------- ----------------------------------
5
<PAGE>
MANAGEMENT EMPLOYMENT AGREEMENT
-------------------------------
The following agreement is hereby entered into between, John Bauer (hereinafter
known as Employee) and Premier Research Worldwide (together with its affiliated
corporations hereinafter known as the "Company") and having its principal
offices at 30 S. 17th Street, Philadelphia, PA 19103
1. DUTIES AND RESPONSIBILITIES
---------------------------
Employee agrees to hold the position of Chief Financial Officer and
shall be directly responsible to the Chief Executive Officer.
2. BEST EFFORTS
------------
Employee agrees to devote best efforts to his employment with the
Company.
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 one year, commencing September
7, 1999 and will continue from year to year unless terminated.
5. COMPENSATION
------------
a) Salary shall be $95,000/year payable in equal installments as
per the company's payroll policy.
b) Benefits shall be the standard benefits of the Company as they
shall exist from time to time.
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 proprietary material
relating to the business, operations, or prospects of the Company
except as authorized in writing by the Company.
1
<PAGE>
7. BUSINESS INTERFERENCE
---------------------
During employment with the Company and for a period of one year
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 inappropriately or
unethically solicit clients, Premier Research Worldwide employees or
independent contractors that would interfere with the business of 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
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 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 30 days written notice to Employee. In such
case, the Company will pay severance to Employee equal to
six month's salary and applicable prorated bonus, payable
in one lump sum in accordance with the Company's policy.
In addition, the Executive will continue to receive
(subject to payment of any applicable premium co-pay)
standard health, dental, disability, life and accident
insurance benefits for the one year period following the
termination of employment.
2
<PAGE>
b) Notwithstanding any contrary provision contained in this
Employment Agreement, in the event that either (a) there
is a "Change of Control" (as hereafter defined) and
neither the Company nor the Buyer offers the Executive a
position with comparable responsibilities, authority,
location or compensation, or (b) after the date of the
Change in Control but before the first anniversary
thereof, the Executive's responsibilities, authority,
location, or compensation are not acceptable to the
Executive the Executive may elect to resign and receive
severance equal to six month's salary and applicable
prorated bonus, hereunder, payable in one lump sum in
accordance with the Company's policy.
In addition, the Executive will continue to receive
(subject to payment of any applicable premium co-pay)
standard health, dental, disability, life and accident
insurance benefits for the one year period following the
termination of employment.
The Executive must provide written notice of such election
not less than sixty days following the date of the Change
of Control or, if the Executive's new position is changed
within the time period and in the manner described above,
within thirty days following such event.
The term "Change of Control", as utilized herein, refers
to:
(i) A change of control of a nature that would
be required to be reported in the Company's
proxy statement under the Securities
Exchange Act of 1934, as amended;
(ii) The approval by the Board of Directors of a
sale, not in the ordinary course of
business, of all or substantially all of the
Company's assets and business to an
unrelated third party and the consummation
of such transaction; or
(iii) The approval by the Board of Directors of
any merger, consolidation, or like business
combination or reorganization of the
Company, the consummation of which would
result in the occurrence of any event
described in clause (i) or (ii) above, and
the consummation of such transaction.
Except as expressly modified and amended hereby, the
Employment Agreement and its terms and provisions are
hereby ratified, confirmed and approved in all respects.
c) The Company may terminate employment for cause at any time
upon 30 days written notice to the Employee 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 to the Company.
(2) Any employee misconduct which, in the discretion of
the Company, is injurious to the
business or interests of the Company.
3
<PAGE>
(3) Violation of any federal, state, or local law
applicable to the business of the Company.
(4) Any material breach of this agreement.
d) Employee may terminate employment at any time, with or
without good reason, upon 30 days written notice to the
Company.
e) If employee resigns or employment is terminated by the
Company for cause, the Company shall have no further
obligation to Employee other than for six month's salary,
benefits, and applicable prorated bonus earned through the
date of termination.
f) References herein to a "prorated bonus" refer to the
annual bonus in which the Executive then participates,
prorated for the portion of the year in which his
employment continues hereunder and based upon the Company
performance during such portion of the year.
11. MISCELLANEOUS
-------------
a) This Agreement and any disputes arising herefrom shall be governed
by Pennsylvania 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:______________________
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<NAME> PREMIER RESEARCH WORLDWIDE
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