<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 1997
REGISTRATION STATEMENT NO. 333-30573
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
BORON, LEPORE & ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------
DELAWARE 7389 22-2365997
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NO.)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
-------------
17-17 ROUTE 208 NORTH
FAIR LAWN, NEW JERSEY 07410
(201) 791-7272
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
-------------
PATRICK G. LEPORE
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
BORON, LEPORE & ASSOCIATES, INC.
17-17 ROUTE 208 NORTH
FAIR LAWN, NEW JERSEY 07410
(201) 791-7272
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-------------
COPIES TO:
JOHN R. LECLAIRE, P.C. JAMES LEPORE, ESQ. JAMES M. DUBIN, ESQ.
GOODWIN, PROCTER & HOAR LEPORE, ZIMMERER, CARL L. REISNER, ESQ.
LLP LEPORE & LUIZZI PAUL, WEISS, RIFKIND,
EXCHANGE PLACE 1593 ROUTE 88 WEST WHARTON & GARRISON
BOSTON, MASSACHUSETTS BRICK, NEW JERSEY 08724 1285 AVENUE OF THE
02109-2881 (908) 840-0550 AMERICAS
(617) 570-1000 NEW YORK, NEW YORK
10019
(212) 373-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
-------------
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
1933, 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 of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_] 333-
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] 333-
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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
SECTION 8(A), MAY DETERMINE.
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<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 JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 15, 1997
PROSPECTUS
3,333,333 SHARES
BORON, LEPORE & ASSOCIATES, INC.
COMMON STOCK
-----------
All of the 3,333,333 shares of Common Stock offered hereby are being sold by
the Company. Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $ and $ per share. See "Underwriting" for
a discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol "BLPG."
-----------
THE COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
-----------
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.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $ $ $
- --------------------------------------------------------------------------------
Total(3)..................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2)Before deducting expenses payable by the Company estimated at $ .
(3) The Selling Stockholders have granted to the Underwriters a 30-day option
to purchase up to 500,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the option is exercised in full, the total
Price to Public, Underwriting Discount, Proceeds to the Company and
Proceeds to the Selling Stockholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."
-----------
The shares of Common Stock are being offered severally by the Underwriters
subject to prior sale, when, as and if accepted by the Underwriters and subject
to conditions including their right to reject orders in whole or in part. It is
expected that delivery of the shares will be made at the offices of Bear,
Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167.
-----------
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
WESSELS, ARNOLD & HENDERSON
-----------
The date of this Prospectus is , 1997
<PAGE>
ADDITIONAL INFORMATION
A Registration Statement on Form S-1, including amendments thereto, relating
to the Common Stock offered by the Company has been filed with the Securities
and Exchange Commission (the "Commission"), Washington, D.C. 20549. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules filed thereto.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as
an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules thereto. A copy of the
Registration Statement may be inspected without charge at the Commission's
principal office in Washington, D.C. and copies of all or any part thereof may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, the New York Regional Office located at
Seven World Trade Center, New York, New York 10048, and the Chicago Regional
Office located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, upon payment of certain fees prescribed by the
Commission. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's World Wide Web site is http://www.sec.gov.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements certified by its independent auditors.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"). SEE "UNDERWRITING."
----------------
An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the risk factors and
other information contained in this Prospectus, before purchasing the Common
Stock offered hereby. This Prospectus contains forward-looking statements
within the meaning of the federal securities laws. Discussions containing such
forward-looking statements may be found in the material set forth under "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as in the Prospectus generally.
Prospective investors are cautioned that any such forward looking statements
are not guarantees of future performance and involve risks and uncertainties.
Actual events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including, without
limitation, dependence on the pharmaceutical industry, customer concentration,
reliance on new services for continued growth, ability to manage growth,
multiple risks associated with potential acquisitions, variation in quarterly
operating results and volatility of the stock price, extensive regulation of
the healthcare industry, potential litigation, reliance on certain personnel,
need for additional financing, competition and effective control by principal
stockholders.
----------------
"BLP" and the Company's logo are trademarks of the Company and are used
throughout this document as such. All other trademarks and tradenames referred
to in this Prospectus are the property of their respective owners.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements of the Company and the Notes thereto
appearing elsewhere in this Prospectus. All references herein to industry
financial and statistical information are based on trade articles and industry
reports that the Company believes to be reliable, although there can be no
assurance to that effect.
THE COMPANY
Boron, LePore & Associates, Inc. ("BLP" or the "Company") provides outsourced
promotional, marketing and educational services to the pharmaceutical industry.
The Company was founded in 1981 and has become a leading provider of peer-to-
peer meetings, which typically involve gatherings of 10 to 12 physicians
meeting under the chairmanship of a Company moderator to discuss a new drug or
new indication for a familiar drug. BLP recently expanded the range of its
outsourced promotional, marketing and educational services. Newer service
offerings include coordination of other types of meetings such as symposia,
continuing education conferences and video satellite conferences; product
marketing services (which involve obtaining rights to market a pharmaceutical
product, often on a shared reward basis); and teleservices such as
teledetailing, telemarketing, sales support and fulfillment. In July 1997, the
Company opened its teleservice center in Norfolk, Virginia to support expansion
of its teleservices business.
BLP has enjoyed long-standing customer relationships with many of the world's
largest pharmaceutical companies and has served a number of these customers for
more than a decade. BLP emphasizes proactive and cooperative relationships with
the product managers and senior executives of its customers, working in concert
with them to implement marketing strategies that utilize the Company's array of
service alternatives.
The Company believes that pharmaceutical companies increasingly have sought
to outsource functions such as research and marketing in response to cost
pressures. By outsourcing marketing services, a pharmaceutical company shifts
fixed costs to variable costs and obtains the services of professionals who
specialize in reaching targeted audiences. Based on data from Scott-Levin, a
healthcare marketing information company, pharmaceutical companies spent
approximately $900 million in 1996 on promotional and marketing events,
including peer-to-peer meetings and symposia, primarily conducted by third
party suppliers.
BLP's growth strategy emphasizes: (i) offering a broad array of promotional,
marketing and educational services that are responsive to its customers' varied
outsourced marketing needs; (ii) expanding the volume and scope of services
provided to its existing customers by increasing the number of meetings and
conferences conducted for them and providing additional services such as
product marketing and teleservices; (iii) expanding BLP's customer base to
include new customers such as smaller pharmaceutical companies, foreign
pharmaceutical companies, managed care companies, drug wholesalers,
biotechnology companies and medical device manufacturers; (iv) targeting new
audiences, such as consumers, pharmacists, formulary managers and hospital
groups, with existing and new promotional, marketing and educational techniques
and technologies; and (v) pursuing strategic acquisitions as a means of
expanding its business. The Company pursues its growth strategy by emphasizing
its long-standing customer relationships and relative size in a fragmented
market to obtain and expand customer relationships. BLP uses its traditional
peer-to-peer business as a platform to expand, develop and promote other types
of services, such as product marketing and teleservices. BLP believes that its
long-standing customer relationships, staff of trained and experienced employee
moderators and customer service representatives, and new teleservice center
provide it with strategic business advantages.
The Company was incorporated under the laws of Delaware on November 22, 1996.
The Company's predecessor was incorporated under the laws of New Jersey in
1981. The Company's principal executive offices are located at 17-17 Route 208
North, Fair Lawn, New Jersey 07410, and its telephone number is (201) 791-7272.
3
<PAGE>
THE OFFERING
Common Stock offered by the Company....... 3,333,333 shares
Common Stock to be outstanding after the
offering.................................. 10,812,978 shares(1)
Use of proceeds........................... To repay existing indebtedness, to
redeem all outstanding shares of
redeemable preferred stock and for
working capital and other general
corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol.... BLPG
- --------
(1) Includes all outstanding stock grants and excludes: (i) 325,660 shares of
Common Stock issuable upon the exercise of outstanding stock options at a
weighted average exercise price of $9.35 per share at August 8, 1997; (ii)
194,687 additional shares of Common Stock available for future grants under
the Company's 1996 Stock Option and Incentive Plan, as amended (the "1996
Stock Plan"); and (iii) 225,000 additional shares of Common Stock available
for future sales under the 1997 Employee Stock Purchase Plan (the "Purchase
Plan"). See "Management--Employee Stock and Other Benefit Plans--1996 Stock
Option and Incentive Plan" and "--1997 Employee Stock Purchase Plan."
Except as otherwise noted, all information in this Prospectus has been
adjusted to reflect (i) a two-for-three reverse stock split of the Common Stock
to be effective in connection with and prior to the completion of this
offering, and (ii) the conversion of all outstanding shares of non-voting Class
A Common Stock and Convertible Participating Preferred Stock into shares of
Common Stock upon completion of this offering. Unless the context otherwise
requires, all references to "BLP" or the "Company" mean Boron, LePore &
Associates, Inc. and its predecessor.
THE TA TRANSACTION
In December 1996, the Company completed a series of transactions involving TA
Associates, Inc., a private equity firm based in Boston, Massachusetts, and
senior officers of the Company (the "TA Transaction"). In connection with the
TA Transaction, investors principally including investment funds associated
with TA Associates, Inc. (collectively, the "TA Investors") invested $12.5
million to acquire 7,000,000 shares of Convertible Participating Preferred
Stock of the Company, and the Company incurred $21.0 million of indebtedness
under a senior secured credit facility from a bank (the "Credit Facility"). The
Company in turn used the proceeds from these financing transactions principally
to redeem common stock from, and to pay bonuses to, senior officers of the
Company. Upon completion of this offering, the Convertible Participating
Preferred Stock will convert into 4,666,664 shares of Common Stock and
5,600,000 shares of Redeemable Preferred Stock, and the Redeemable Preferred
Stock will be immediately redeemed for $10.0 million plus accumulated and
unpaid dividends, $332,000 at March 31, 1997, using a portion of the net
proceeds from the sale of Common Stock offered hereby. See "Use of Proceeds"
and "Certain Transactions."
4
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------- ----------------
1994 1995 1996 1996 1997
-------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $ 20,580 $ 21,775 $ 40,219 $ 6,973 $ 13,673
Cost of sales.................. 12,378 12,788 26,004 4,496 9,737
-------- -------- -------- ------- --------
Gross profit................. 8,202 8,987 14,215 2,477 3,936
-------- -------- -------- ------- --------
Officers' compensation......... 2,003 1,336 13,351(1) 683 286
Other selling, general and ad-
ministrative expenses......... 4,533 5,005 6,644(2) 1,488 1,964
-------- -------- -------- ------- --------
Total selling, general and ad-
ministrative expenses........ 6,536 6,341 19,995 2,171 2,250
-------- -------- -------- ------- --------
Operating income (loss)...... 1,666 2,646 (5,780) 306 1,686
Interest expense, net.......... 43 86 255 55 409
Nonrecurring loss on forgive-
ness of related party loan.... -- -- 1,076 -- --
-------- -------- -------- ------- --------
Income (loss) before provi-
sion for income taxes....... 1,623 2,560 (7,111) 251 1,277
Provision for income taxes(3).. 25 51 -- -- 400
-------- -------- -------- ------- --------
Net income (loss)............ $ 1,598 $ 2,509 $ (7,111) $ 251 $ 877
======== ======== ======== ======= ========
Net income (loss) per common
share......................... $ (0.88) $ 0.11
======== ========
Pro forma weighted average com-
mon shares outstanding(4)..... 8,100 8,122
======== ========
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------
ACTUAL AS ADJUSTED(5)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 750 $15,982
Working capital......................................... 2,195 19,063
Total assets............................................ 18,493 33,435
Long-term debt, less current maturities................. 18,500 --
Redeemable equity securities............................ 12,832 --
Total stockholders' equity (deficit).................... (28,806) 19,220
</TABLE>
- --------
(1) Includes $10.0 million for special officer bonuses, including $7.5 million
as part of the TA Transaction.
(2) Includes $0.6 million for fees related to the TA Transaction.
(3) The Company elected to be taxed under Subchapter S of the Internal Revenue
Code of 1986, as amended (the "Code"), until December 4, 1996, and
accordingly the provision for income taxes for all periods ending on or
prior to such date reflects only state business tax expense, if any. If the
Company had been subject to taxation under Subchapter C of the Code for the
year ending December 31, 1996, the pro forma benefit for income taxes would
have been ($2,905,000) and the pro forma net loss per common share would
have been ($0.52). Because the Company elected to be subject to taxation
under Subchapter C of the Code for the three months ended March 31, 1997,
the provision for income taxes and the net income per common share
reflected above for such period is presented on an actual basis.
(4) Due to the effect of the TA Transaction on the Company's capital structure,
per share data for the years ended prior to December 31, 1996 are not
comparable to subsequent periods and, therefore, have not been presented.
Pro forma weighted average common shares outstanding has been computed as
provided in Note 3 to the Financial Statements of the Company included
elsewhere in this Prospectus.
(5) Gives effect to the completion of this offering at an assumed initial
public offering price of $15.00 per share and the receipt and application
of the estimated net proceeds therefrom as if such transactions had been
completed on March 31, 1997. Also reflects the anticipated write-off of
unamortized loan fees of approximately $174,000 or ($.02) per share as of
March 31, 1997, net of the related tax effect. See "The Company," "
Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Use of Proceeds" and "Capitalization."
5
<PAGE>
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus,
before purchasing the Common Stock offered hereby. This Prospectus contains
forward-looking statements within the meaning of the federal securities laws.
Discussions containing such forward-looking statements may be found in the
material set forth below and under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," as well as in
the Prospectus generally. Prospective investors are cautioned that any such
forward looking statements are not guarantees of future performance and
involve risks and uncertainties. Actual events or results may differ
materially from those discussed in the forward-looking statements as a result
of various factors, including, without limitation, the risk factors set forth
below and the matters set forth in this Prospectus generally.
DEPENDENCE ON THE PHARMACEUTICAL INDUSTRY
Substantially all of the Company's revenues to date have resulted from
promotional and marketing services provided to pharmaceutical companies. The
Company could be materially and adversely affected by adverse developments in
the pharmaceutical industry generally or any reduction in expenditures for, or
future outsourcing of, promotional and marketing activities by pharmaceutical
companies. Promotional and marketing expenditures by pharmaceutical companies
could be negatively impacted by, among other things, governmental reform or
private market initiatives intended to reduce the cost of pharmaceutical
products or by governmental, medical association or pharmaceutical industry
initiatives designed to regulate the manner in which pharmaceutical companies
promote their products.
Healthcare reform measures have been considered by Congress and other
federal and state bodies during recent years. The intent of the proposals
generally has been to reduce the growth of total healthcare expenditures and
expand healthcare coverage for the uninsured. Although comprehensive
healthcare reform has been considered, only limited proposals focusing on the
delivery of healthcare services have been enacted. Comprehensive healthcare
reform may be considered again and efforts to enact limited reform bills are
likely to continue. Implementation of government healthcare reform may
adversely affect promotional and marketing expenditures by pharmaceutical
companies, which could decrease the business opportunities available to BLP.
The Company is unable to predict the likelihood of such legislation or similar
legislation being enacted into law or the effects that any such legislation
would have on BLP.
In addition to government healthcare reform initiatives, a number of private
market initiatives to contain healthcare costs, particularly pharmaceutical
costs, have been implemented. For instance, certain large managed healthcare
providers have acted to contain such costs and have adopted the use of
formularies (lists of preferred drugs), thereby creating pressure on
pharmaceutical companies to contain costs, including promotional and marketing
expenditures. Governmental or private initiatives to further contain
pharmaceutical pricing or to regulate the sponsorship of promotional meetings
by the pharmaceutical industry could have a material adverse effect on BLP.
CUSTOMER CONCENTRATION
BLP's revenues and profitability are highly dependent on its relationships
with several large pharmaceutical companies. The Company's five largest
customers accounted for approximately 83% of its revenues in 1996,
approximately 90% of its revenues in 1995, and approximately 92% of its
revenues in 1994. In 1996, , and each accounted for 10% or
more of the Company's revenues; in 1995, , , and each
accounted for 10% or more of the Company's revenues; and in 1994, , ,
and each accounted for 10% or more of the Company's revenues (in the
cases of 1995 and 1994 after giving effect to subsequent pharmaceutical
company mergers). One customer accounted for 44% and 45% of revenues in 1996
and 1995, respectively. BLP is likely to continue to experience
6
<PAGE>
a concentration of business with its larger customers, especially given the
concentrated nature of the pharmaceutical industry. The loss or significant
reduction of business from any significant customer could have a material
adverse effect on the Company.
RELIANCE ON NEW SERVICES FOR CONTINUED GROWTH
Historically, the production of peer-to-peer meetings has generated
substantially all of BLP's revenues and profits. Although revenues from the
Company's peer-to-peer meetings business grew 62.0% from 1995 to 1996, the
Company does not anticipate that future growth of revenues from this business,
if any, will continue at such an accelerated rate. BLP believes that future
growth of its peer-to-peer meetings business may require future growth of
overall promotional spending and the addition of new customers. The growth of
the peer-to-peer meetings business may be limited as a result of BLP's high
level of business with certain customers and the fact that it generally does
not produce peer-to-peer meetings for competing products without customer
consent. Any decline in the Company's peer-to-peer meetings business or any
reduction in its growth rate could have a material adverse effect on the
Company. BLP believes that future growth of its business will depend upon its
success in diversifying its promotional, marketing and educational service
offerings. In 1996, the Company introduced other services such as the
production of symposia, product marketing services and teleservices, but such
services accounted for relatively insignificant portions of total revenues.
There can be no assurance that BLP will establish a significant or lasting
presence in the markets for these services, and the failure to achieve success
in these new markets would adversely affect the Company's future growth.
Certain of the Company's new service offerings are subject to a variety of
risks not present in its traditional peer-to-peer meetings business.
Pharmaceutical company sponsored symposia have been subject to past scrutiny
which had an adverse effect on the market for symposia services. Physician
attendance currently is subject to a number of industry and professional
association guidelines designed to prevent conflicts of interest. In the event
of changes in law, regulatory policy or applicable industry or professional
association guidelines or negative publicity concerning symposia sponsored by
the pharmaceutical industry, customers may choose to alter their guidelines in
ways that would make symposia and related consultancies less attractive to
physicians and pharmaceutical companies. In addition, restrictions on such
meetings could be imposed by governmental agencies, industry or professional
associations or the pharmaceutical companies themselves. Finally, any of the
Company's customers could be found to be in non-compliance with relevant law,
policy or guidelines in their handling of symposia. There can be no assurance
that BLP will be successful in expanding its symposia business. The Company's
product marketing services will involve obtaining rights to market a
pharmaceutical product for an agreed upon period. The Company generally will
bear most of the promotional expenses in return for the opportunity to share
incremental revenue achieved above a specified benchmark or benchmarks. There
can be no assurance that the Company will be successful in introducing product
marketing services or in selecting products to market, or that its promotional
activities will generate the agreed upon levels of sales. In addition, BLP's
new teleservice center will be subject to a variety of risks, including
competition, technological obsolescence, technical malfunction, destruction
from fire or other disasters and the likely need for ongoing capital
investments to maintain and enhance its infrastructure and computer systems.
There can be no assurance that BLP will be successful in expanding its range
of teleservice offerings.
MANAGEMENT OF GROWTH
The Company recently has experienced a period of rapid growth. This growth
has placed, and will continue to place, strains on the Company's management,
operations and systems. In order to manage its growth, BLP must continue to
improve its operating and administrative systems and to attract, hire and
train qualified management and operating personnel. The Company is in the
planning stages of implementing a new management information system and plans
to make additional investments in capital equipment to support its growth. No
assurance can be given that these systems will be successfully implemented, if
at all. Failure to implement these systems or generally to manage growth
effectively could have a material adverse effect on BLP.
7
<PAGE>
ACQUISITION RISKS
BLP has not completed any acquisitions to date. The Company's growth
strategy, however, contemplates pursuit of acquisitions in complementary and
existing business areas as a means of supporting and diversifying its service
offerings. Identifying appropriate acquisition candidates and negotiating and
consummating acquisitions can be a lengthy and costly process. There can be no
assurance that suitable acquisition candidates will be identified or that
acquisitions will be consummated on terms favorable to the Company, on a
timely basis or at all. Acquisitions involve numerous risks, including
difficulties in integrating the operations and services of an acquired
company, the expenses incurred in connection with the acquisition and
subsequent assimilation of operations and services, the diversion of
management's attention from other business concerns, the risk that acquired
businesses may be subject to unforeseen liabilities and the potential loss of
key employees of the acquired company. Acquisitions of foreign companies
involve additional risks. In the event the closing of a planned acquisition
fails to occur or is delayed, or in the event unforeseen costs or other
difficulties arise following an acquisition, BLP's quarterly financial results
may be lower than securities analysts' expectations, which likely would cause
a decline, perhaps substantial, in BLP's stock price.
VARIATION IN QUARTERLY OPERATING RESULTS; POSSIBLE VOLATILITY OF STOCK PRICE
The Company's results of operations historically have fluctuated on a
quarterly basis and can be expected to continue to be subject to quarterly
fluctuations. Quarterly results can vary as a result of a number of factors,
including timing of peer-to-peer projects and symposia, expenditure patterns
of the Company's customers, delays or costs associated with acquisitions,
commencement or completion of significant contracts, announcements by the
Company, competitors or customers, government or private market regulatory
initiatives, relative profit margins of the services provided to customers,
conditions in the healthcare industry generally, conditions in the markets for
outsourced promotional, marketing and educational services more specifically,
or other events or factors, many of which are beyond the Company's control.
BLP may not be able to foresee many of these factors and therefore may not be
able to anticipate such quarterly fluctuations. Variations in quarterly
operating results could result in reported quarterly results that are below
the expectations of securities analysts, which would likely cause a decline,
perhaps substantial, in the Company's stock price. In addition, the stock
market recently has experienced extreme price and volume fluctuations which
particularly have affected the market prices of many stocks on the Nasdaq
Stock Market, and which have often been unrelated to the operating performance
of such companies. BLP believes that quarterly comparisons of its financial
results are not necessarily meaningful and should not be relied upon as an
indication of future performance. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
REGULATION
The healthcare industry is subject to extensive regulation. Various laws,
regulations and guidelines promulgated by government, industry and
professional bodies affect, among other matters, the provision, licensing,
labeling, marketing, promotion and reimbursement of healthcare services and
products, including pharmaceutical products. Certain areas of the
telemarketing and teleservices industry also have recently become subject to
increased government regulation. It is possible that additional or changed
laws, regulations or guidelines could be adopted in the future. The failure of
BLP or its customers to comply with, or any change in, applicable regulatory
requirements or industry guidelines could, among other things, limit or
prohibit certain business activities of the Company or its customers, subject
the Company or its customers to adverse publicity, increase the costs of
regulatory compliance, or subject BLP or its customers to monetary fines or
other penalties. Such actions could have a material adverse effect on BLP. See
"Business--Government and Industry Regulation."
POTENTIAL LITIGATION EXPOSURE
In recent years, participants in the healthcare industry have become subject
to an increasing number of lawsuits alleging malpractice, product liability
and other legal theories, many of which involve large claims and significant
legal costs. As a provider of promotional, marketing and educational services
to the pharmaceutical
8
<PAGE>
industry, the Company is subject to the risk of being named as a party in such
lawsuits. As a result of its introduction of product marketing services and
teleservices, the Company believes that the relative likelihood of becoming
involved in litigation regarding the information given by its personnel has
increased, with the attendant risks of significant legal costs, substantial
damage awards and adverse publicity. Even if any such claims ultimately prove
to be without merit, defending against them can result in adverse publicity,
diversion of management's time and attention and substantial expenses, which
could have a material adverse effect on the Company.
BLP maintains insurance policies, including liability insurance, which it
believes to be adequate in amount and coverage for the current size and scope
of its operations. There can be no assurance, however, that the coverage
maintained by the Company will be sufficient to cover all future claims or
will continue to be available in adequate amounts or at a reasonable cost. The
Company expects to seek increased insurance coverage in connection with the
expansion of its service offerings and there can be no assurance that it will
be able to obtain continued or increased insurance coverage on acceptable
terms or at all. Although the Company's contracts with its customers sometimes
require the customer to indemnify the Company for the customer's negligent
conduct, the contracts do not provide for adequate indemnification against
many of the potential litigation risks facing the Company and often require
the Company to indemnify its customer for the Company's negligence. BLP,
therefore, could be held responsible for losses incurred in connection with
the performance of its services under the terms of these contracts or
otherwise and could incur substantial costs in connection with legal
proceedings associated with its services or the pharmaceutical products with
respect to which it provides services.
RELIANCE ON CERTAIN PERSONNEL
BLP's success depends to a large extent on the continued services of a
relatively limited number of members of the Company's senior management,
including Patrick G. LePore, its Chairman of the Board, Chief Executive
Officer and President. Implementation of the Company's business strategy will
require the addition of qualified management personnel. The loss of the
services of one or more members of the Company's senior management or the
failure to add qualified management personnel could have a material adverse
effect on the Company. See "Management."
NEED FOR ADDITIONAL FINANCING
Implementation of BLP's growth strategy likely will require significant
additional capital resources. Such resources may be needed for the development
of new services, for the funding of internal growth, and for acquisitions that
the Company may pursue. To finance capital requirements, the Company
anticipates that it may from time to time issue additional equity securities
and incur additional debt. The Company may not be able to obtain additional
required capital on satisfactory terms, if at all. The failure to raise the
funds necessary to finance future cash requirements could have a material
adverse effect on the Company. If BLP raises additional funds through the
issuance of equity securities, dilution to the Company's existing stockholders
may result. If the Company raises additional funds through the incurrence of
debt securities, such debt instruments may contain restrictive financial,
operating and security covenants.
COMPETITION
The business of providing promotional, marketing and educational services to
the pharmaceutical industry is competitive. The business of providing
pharmaceutical conferencing services is highly fragmented and the Company's
competitors in this area generally include smaller, regionally focused
companies that provide a limited number of promotional, marketing and
educational services, usually focused on the pharmaceutical industry. Several
of the Company's competitors in this area, however, offer services that are
somewhat wider in scope. Although BLP believes it is a leading provider of
peer-to-peer meetings, there are many larger providers of symposia and
educational conferences. As the Company seeks to expand its range of services,
it is likely to face competition from companies which already have established
a strong business presence providing similar services to other businesses. The
outsourced product marketing business is currently in its formative stage and
is expected to become increasingly competitive. A large number of companies
currently provide teleservices such as telemarketing and teledetailing to
companies in many industries including the pharmaceutical industry, and
9
<PAGE>
many of these companies have greater resources and access to capital than the
Company. Overall, BLP believes that its most significant competition is
potentially from other companies that provide outsourced promotional,
marketing and educational services and large advertising agencies which may
seek to expand their service offerings. In addition, the pharmaceutical
companies' in-house marketing departments may provide similar services to
those provided by BLP and competition could increase as a result of the
expansion of the in-house marketing capabilities by BLP's customers or in the
pharmaceutical industry generally.
MATERIAL BENEFIT TO INSIDERS
In December 1996, the Company completed the TA Transaction. In connection
with the TA Transaction, the TA Investors purchased from the Company an
aggregate of $12.5 million of Convertible Participating Preferred Stock and
the Company incurred $21.0 million of indebtedness under the Credit Facility.
The Company used the proceeds from these financing transactions principally to
redeem Common Stock from, and to pay special bonuses to, senior officers of
the Company. Upon the completion of this offering, the Convertible
Participating Preferred Stock will convert into 4,666,664 shares of Common
Stock and 5,600,000 shares of Redeemable Preferred Stock. As required by the
terms of the Redeemable Preferred Stock, the Company will immediately redeem
all of the Redeemable Preferred Stock upon its issuance for $10.0 million in
cash plus accumulated and unpaid dividends, representing approximately 23.6%
of the estimated net proceeds from this offering (assuming an initial public
offering price of $15.00 per share). See "Use of Proceeds" and "Certain
Transactions."
LOSSES; ACCUMULATED DEFICIT
In 1996, the Company incurred a net loss of $7.1 million, and at March 31,
1997, the Company had an accumulated deficit of $11.9 million and a deficit in
stockholders' equity of $28.8 million. In December 1996, as part of the TA
Transaction, the Company paid $18.9 million to redeem Common Stock, $7.5
million of special bonuses to officers, $6.2 million to satisfy obligations to
a former shareholder, and $0.6 million of fees. See "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Certain Transactions."
EFFECTIVE CONTROL BY PRINCIPAL STOCKHOLDERS
After giving effect to the sale of the shares of Common Stock offered
hereby, the TA Investors and employees, directors (excluding shares held by
the TA Investors) and consultants of the Company (including members of their
families and trusts and other entities beneficially owned by them and members
of their families) will beneficially own in the aggregate approximately 41.3%
(36.7% assuming exercise of the Underwriters' over-allotment option) and
26.0%, respectively, of the outstanding Common Stock. As a result, these
stockholders will have the ability to control, and the TA Investors will be
able to exert significant influence over, the outcome of fundamental corporate
transactions requiring stockholder approval, including, but not limited to,
mergers and sales of assets and the election of the members of BLP's Board of
Directors. See "Principal Stockholders" and "Shares Eligible for Future Sale."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market after this
offering could adversely affect the market price of the Common Stock. In
addition to the 3,333,333 shares of Common Stock offered hereby, up to
approximately 6,266,659 shares of Common Stock owned by current stockholders
of the Company will be eligible for sale in the public market pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Securities Act"),
beginning upon the later of 90 days after the date of this Prospectus or
December 4, 1997, and up to approximately 1,212,986 shares of Common Stock
owned by current stockholders of the Company will be eligible for sale in the
public market in accordance with Rule 701 under the Securities Act beginning
90 days after the date of this Prospectus. In addition, 806,321 shares subject
to sale under Rule 701 are subject to vesting provisions and will become
eligible for sale in the public market at various times as they become vested.
Holders of all of such shares, however, will agree not to sell or offer to
sell or otherwise dispose of any shares of Common Stock currently held by
them, any right to acquire any shares of Common Stock or any securities
exercisable for or convertible into any shares of Common Stock for a period of
180 days after the date of this Prospectus without the prior written consent
of Bear, Stearns & Co. Inc., other than as gifts or transfers by will
10
<PAGE>
or the laws of descent and distribution or pursuant to the Underwriters' over-
allotment option. The holders of approximately 4,666,664 shares of Common Stock
have the right on two occasions (each of which must be at least six months
apart) on any date after three months after this offering to require the
Company to register their shares under the Securities Act for resale to the
public (if such right is exercised, the holders of 7,333,325 shares will have
the right to have their shares registered); holders of approximately 7,333,325
shares have the right in primary and secondary offerings, excluding offerings
relating to employee benefit plans, Rule 145 under the Securities Act, demand
registrations, or Form S-3 registrations, to include their shares in a
registration statement filed by the Company; and holders of approximately
7,333,325 shares have the right on one or more occasions to request and have
effected a registration of shares on Form S-3 if the anticipated net aggregate
sale price of such registered shares exceeds $500,000. None of such holders are
including their shares in the registration statement filed in connection with
this offering, and all of such holders will agree not to sell or offer to sell
or otherwise dispose of any shares of Common Stock currently held by them, any
right to acquire any shares of Common Stock or any securities exercisable for
or convertible into any shares of Common Stock for a period of 180 days after
the date of this Prospectus without the prior written consent of Bear, Stearns
& Co. Inc., other than as gifts or transfers by will or the laws of descent and
distribution. Sales of substantial amounts of Common Stock (including shares
issued in connection with future acquisitions, which may be issued with
registration rights), or the availability of such shares for sale, may
adversely affect the prevailing market price for the Common Stock and could
impair the Company's ability to obtain additional capital through an offering
of its equity securities. See "Shares Eligible for Future Sale."
ABSENCE OF A PUBLIC TRADING MARKET; OFFERING PRICE
Prior to this offering, there has been no public market for the Common Stock,
and there can be no assurance that an active market will develop or be
sustained following the consummation of this offering. Consequently, the
offering price of the Common Stock will be determined by negotiation between
BLP and the representatives of the several Underwriters based on several
factors and does not necessarily reflect the market price of the Common Stock
after this offering or the price at which the Common Stock may be sold in the
public market after this offering. See "Underwriting" for a description of the
factors to be considered in determining the initial public offering price.
DIVIDEND POLICY
BLP has not declared or paid cash dividends on its Common Stock since it
became subject to taxation under Subchapter C of the Code in December 1996, and
the Company does not anticipate paying cash dividends on its Common Stock in
the foreseeable future. Under Delaware law, the Company is permitted to pay
dividends only out of its surplus, or, if there is no surplus, out of its net
profits. In addition, the payment of cash dividends generally is prohibited
under the terms of the Credit Facility and may be prohibited under agreements
governing debt which the Company may incur in the future. See "Dividend Policy"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operation."
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate") and By-laws (the "By-laws"), certain sections
of the Delaware General Corporation Law, and the ability of the Board of
Directors to issue shares of preferred stock and to establish the voting
rights, preferences and other terms thereof, may be deemed to have an anti-
takeover effect and may discourage takeover attempts not first approved by the
Board of Directors (including takeovers which stockholders may deem to be in
their best interests). Such provisions include, among other things, a
classified Board of Directors serving staggered three-year terms, the
elimination of stockholder voting by consent, the removal of directors only for
cause, the vesting of exclusive authority in the Board of Directors to
determine the size of the Board of Directors and (subject to certain limited
exceptions) to fill vacancies thereon, the vesting of exclusive authority in
the Board of Directors (except as otherwise required by law) to call special
meetings of stockholders and certain advance notice requirements for
stockholder proposals and nominations for election to the Board of Directors.
These provisions, and the ability of the Board of Directors to issue preferred
stock without further action by stockholders, could
11
<PAGE>
delay or frustrate the removal of incumbent directors or the assumption of
control by stockholders, even if such removal or assumption of control would
be beneficial to stockholders, and also could discourage or make more
difficult a merger, tender offer or proxy contest, even if such events would
be beneficial to the interests of stockholders. The Company will be subject to
Section 203 of the Delaware General Corporation Law which, in general, imposes
restrictions upon certain acquirors (including their affiliates and
associates) of 15% or more of the Company's Common Stock. See "Description of
Capital Stock--Certain Provisions of Certificate and By-laws" and "--Statutory
Business Combination Provision."
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the Common Stock in this offering will incur immediate and
substantial dilution in the net tangible book value per share of Common Stock.
At the assumed initial public offering price of $15.00 per share, investors in
this offering will incur dilution of $ per share. See "Dilution."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,333,333 shares of
Common Stock offered by the Company hereby at an assumed initial public
offering price of $15.00 per share are estimated to be $45.7 million. The
Company will use the net proceeds as follows (assuming the closing of this
offering on September 30, 1997): (i) approximately $19.6 million will be used
to repay and retire the term loan portion of the Company's outstanding
indebtedness under the Credit Facility, including accrued and unpaid interest;
(ii) approximately $10.8 million will be used to redeem all Redeemable
Preferred Stock, including accumulated and unpaid dividends; and (iii) the
balance of approximately $15.3 million will be used for working capital and
other general corporate purposes. Pending such use, the balance of the net
proceeds will be invested in short-term, investment grade, interest bearing
obligations.
The Credit Facility entered into in connection with the TA Transaction
expires on December 31, 2001. Amounts outstanding under the Credit Facility
bear interest at variable rates which are based upon either the prime rate or
LIBOR, plus in either case a margin which varies according to the ratio of
total indebtedness of the Company for the most recently completed fiscal
quarter to EBITDA for the current and three preceding fiscal quarters, each as
defined in the Credit Facility. The interest rate on such indebtedness at May
31, 1997 was 7.9% per annum. See "Capitalization" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on its Common Stock
since it became subject to taxation under Subchapter C of the Code in December
1996. The Company currently intends to retain its earnings for future growth
and, therefore, does not anticipate paying cash dividends in the foreseeable
future. Under Delaware law, the Company is permitted to pay dividends only out
of its surplus, or, if there is no surplus, out of its net profits. Payment of
future dividends, if any, will be at the discretion of the Company's Board of
Directors after taking into account various factors, including the Company's
financial condition, operating results and current and anticipated cash needs.
In addition, under the terms of the Credit Facility, the payment of cash
dividends generally is prohibited without the consent of the lenders.
12
<PAGE>
DILUTION
As of March 31, 1997, BLP had a net tangible book value of approximately
$(16.3) million or $(2.20) per share of Common Stock. As part of the TA
Transaction, the Company paid $18.9 million to redeem Common Stock, $7.5
million of special bonuses to officers, $6.2 million to satisfy obligations to
a former shareholder, and $0.6 million of fees. Net tangible book value
represents the amount of total tangible assets less total liabilities divided
by the number of shares of Common Stock outstanding, including all outstanding
stock grants and excluding all outstanding stock options. Without taking into
account any other changes in the net tangible book value after March 31, 1997,
other than to give effect to the receipt by the Company of the net proceeds
from the sale of the 3,333,333 shares of Common Stock offered by the Company
hereby at an assumed initial public offering price of $15.00 per share, the
pro forma net tangible book value of the Company as of March 31, 1997 would
have been approximately $ or $ per share. This represents an immediate
increase in net tangible book value of $ per share to existing stockholders
and an immediate dilution of $ per share to new investors. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
----
Net tangible book value per share before the offering............ $
----
Increase per share attributable to new investors.................
====
Pro forma net tangible book value per share after the offering.....
----
Dilution per share to new investors................................ $
====
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1997,
the differences between existing stockholders and the new investors 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:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Existing stockholders... % % $
New investors...........
-------- -------- --------- --------- ------ ------
Total................. % $ %
======== ======== ========= ========= ====== ======
</TABLE>
Other than as noted above, the foregoing computations assume no exercise of
any outstanding stock options after March 31, 1997 or the Underwriters' over-
allotment option. As of March 31, 1997, options to purchase 16,667 shares of
Common Stock were outstanding. To the extent these options or the
Underwriters' over-allotment option are exercised, there will be further
dilution to new investors. See "Underwriting" for information concerning the
Underwriters' over-allotment option.
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1997 (i) on an actual basis and (ii) as adjusted to give effect to the
sale by the Company of the 3,333,333 shares of Common Stock offered hereby at
an assumed initial public offering price of $15.00 per share and the
application of the estimated net proceeds therefrom as described in "Use of
Proceeds." This table should be read in conjunction with the Financial
Statements of the Company and the Notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt(1)............... $ 1,500 $ --
-------- --------
Long-term debt, net of current maturities(1).......... $ 18,500 $ --
======== ========
Convertible Participating Preferred Stock, $.01 par
value, 7,000,000 shares authorized; 7,000,000 shares
issued and outstanding; no shares authorized, issued
or outstanding as adjusted........................... $ 12,832 $ --
-------- --------
Redeemable Preferred Stock, $.01 par value, 5,600,000
shares authorized; no shares issued or outstanding;
no shares authorized, issued or outstanding as
adjusted(2).......................................... $ -- $ --
-------- --------
Stockholders' equity (deficit):
Common Stock, $.01 par value, 12,000,000 shares
authorized; 5,733,328 shares issued and 1,999,995
outstanding; 50,000,000 shares authorized,
14,483,663 shares issued and 10,750,330 shares
outstanding as adjusted(3)......................... $ 57 $ 145
Class A Common Stock, $.01 par value, 1,333,333
shares authorized; 750,333 shares issued and
outstanding; no shares authorized, issued or
outstanding as adjusted............................ 8 --
Class B Common Stock, $.01 par value, 4,666,666
shares authorized; no shares issued or outstanding;
no shares authorized, issued or outstanding as ad-
justed............................................. -- --
Additional paid-in capital.......................... 1,922 50,042
Treasury Stock, 3,733,333 shares of Common Stock, at
cost............................................... (18,850) (18,850)
Retained earnings (deficit)......................... (11,943) (12,117)(4)
-------- --------
Total stockholders' equity (deficit).............. (28,806) 19,220
-------- --------
Total capitalization.............................. $ 4,026 $ 19,220
======== ========
</TABLE>
- --------
(1) See Note 8 to the Financial Statements for information concerning long-
term debt obligations.
(2) Upon completion of this offering, the Convertible Participating Preferred
Stock will convert into 4,666,664 shares of Common Stock and 5,600,000
shares of Redeemable Preferred Stock, and all shares of Redeemable
Preferred Stock will be redeemed for $10.0 million in cash, plus
accumulated and unpaid dividends of $332,000.
(3) Excludes: (i) 35,329 shares of Common Stock issued subsequent to March 31,
1997; (ii) 325,660 shares of Common Stock currently issuable upon exercise
of outstanding stock options, including 308,994 shares issued subsequent
to March 31, 1997; (iii) 194,687 additional shares of Common Stock
available for future grants under the 1996 Stock Plan; and (iv) 225,000
additional shares of Common Stock available for future sales under the
Purchase Plan. See "Management--Employee Stock and Other Benefit Plans--
1996 Stock Option and Incentive Plan" and "--1997 Employee Stock Purchase
Plan." Assumes the conversion of the shares of the Company's Class A
Common Stock and Convertible Participating Preferred Stock into shares of
Common Stock effective upon consummation of the offering.
(4) Reflects anticipated write-off of unamortized loan fees of approximately
$290,000, net of the related tax effect.
14
<PAGE>
SELECTED FINANCIAL INFORMATION
The selected statement of operations data for the years ended December 31,
1994, 1995 and 1996 and the selected balance sheet data at December 31, 1995
and 1996 have been derived from the audited Financial Statements of the
Company included elsewhere in this Prospectus. The selected balance sheet data
at December 31, 1994 have been derived from the audited financial statements
of the Company not included in this Prospectus. The selected statement of
income data for the years ended December 31, 1992 and 1993 and the selected
balance sheet data at December 31, 1992 and 1993 have been derived from the
unaudited financial statements of the Company not included in this Prospectus.
The selected statement of income data for the three months ended March 31,
1996 and 1997 and the selected balance sheet data at March 31, 1997 have been
derived from the unaudited interim financial statements of the Company
included elsewhere in this Prospectus which include all adjustments
(consisting of normal and recurring adjustments) that management considers
necessary for a fair presentation of the data. The interim results are not
necessarily indicative of results of operations for the entire year. The
following selected financial data should be read in conjunction with the
Financial Statements and the Notes thereto of the Company and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- --------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $18,781 $19,339 $20,580 $21,775 $40,219 $6,973 $13,673
Cost of sales........... 14,059 13,820 12,378 12,788 26,004 4,496 9,737
------- ------- ------- ------- ------- ------ -------
Gross profit........... 4,722 5,519 8,202 8,987 14,215 2,477 3,936
------- ------- ------- ------- ------- ------ -------
Officers' compensation.. 1,456 1,292 2,003 1,336 13,351(1) 683 286
Other selling, general
and administrative ex-
penses................. 4,643 4,027 4,533 5,005 6,644(2) 1,488 1,964
------- ------- ------- ------- ------- ------ -------
Total selling, general
and administrative ex-
penses................ 6,099 5,319 6,536 6,341 19,995 2,171 2,250
------- ------- ------- ------- ------- ------ -------
Operating income
(loss)................ (1,377) 200 1,666 2,646 (5,780) 306 1,686
Interest expense, net... 49 49 43 86 255 55 409
Nonrecurring loss on
forgiveness of related
party loan............. -- -- -- -- 1,076 -- --
------- ------- ------- ------- ------- ------ -------
Income (loss) before
provision for income
taxes................. (1,426) 151 1,623 2,560 (7,111) 251 1,277
Provision for income
taxes(3)............... -- -- 25 51 -- -- 400
------- ------- ------- ------- ------- ------ -------
Net income (loss)...... $(1,426) $ 151 $ 1,598 $ 2,509 $(7,111) $ 251 $ 877
======= ======= ======= ======= ======= ====== =======
Net income (loss) per
common share........... $ (0.88) $ 0.11
======= =======
Pro forma weighted aver-
age common shares out-
standing(4)............ 8,100 8,122
======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1997
----------------------------------------- ------------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED(5)
------- ------- ------ ------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equiva-
lents.................. $ 12 $ 2 $ 30 $ 963 $ 7,176 $ 750 $15,982
Working capital (defi-
cit)................... (1,814) (1,707) 78 3,046 2,416 2,195 19,063
Total assets............ 1,596 1,792 5,128 10,499 23,097 18,493 33,435
Long-term debt, less
current maturities..... 23 11 308 2,061 20,000 18,500 --
Redeemable equity secu-
rities................. -- -- -- -- 12,500 12,832 --
Total stockholders' eq-
uity (deficit)......... (1,604) (1,453) 145 2,505 (29,387) (28,806) 19,220
</TABLE>
- --------
(1) Includes $10.0 million for special officer bonuses, including $7.5 million
as part of the TA Transaction.
(2) Includes $0.6 million for fees related to the TA Transaction.
(3) The Company elected to be taxed under Subchapter S of the Code until
December 4, 1996, and accordingly the provision for income taxes for all
periods ending on or prior to such date reflects only state business tax
expense, if any. If the Company had been subject to taxation under
Subchapter C of the Code for the year ending December 31, 1996, the pro
forma benefit for income taxes would have been ($2,905,000) and the pro
forma net loss per common share would have been ($0.52). Because the
Company elected to be subject to taxation under Subchapter C of the Code
for the three months ended March 31, 1997, the provision for income taxes
and the net income per common share reflected above for such period is
presented on an actual basis.
(4) Due to the effect of the TA Transaction on the Company's capital
structure, per share data for the years ended prior to December 31, 1996
are not comparable to subsequent periods and, therefore, have not been
presented. Pro forma weighted average common shares outstanding has been
computed as provided in Note 3 to the Financial Statements of the Company
included elsewhere in this Prospectus.
(5) Gives effect to the completion of this offering at an assumed initial
public offering price of $15.00 per share and the receipt and application
of the estimated net proceeds therefrom as if such transactions had been
completed on March 31, 1997. Also reflects the anticipated write-off of
unamortized loan fees of approximately $174,000 or ($.02) per share as of
March 31, 1997, net of the related tax effect. See "The Company,"
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Use of Proceeds" and "Capitalization."
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the Company's
Financial Statements and the Notes thereto included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements. Discussions
containing such forward-looking statements may be found in the material set
forth below and under "Business," as well as in this Prospectus generally.
Prospective investors are cautioned that any such forward looking statements
are not guarantees of future performance and involve risks and uncertainties.
Actual events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including, without
limitation, the risk factors set forth under "Risk Factors" and the matters
set forth in this Prospectus generally.
OVERVIEW
BLP provides outsourced promotional, marketing and educational services to
the pharmaceutical industry. Substantially all of the Company's customers are
large pharmaceutical companies seeking to communicate their messages to
physicians and other healthcare professionals on a cost-effective basis. The
Company's objective is to enhance its position as a leading provider of peer-
to-peer and other meetings and to continue to expand its array of other
outsourced promotional, marketing and educational services.
Following several years of relatively modest revenue growth, BLP's revenues
grew significantly from 1995 to 1996 and revenues in the first quarter of 1997
have increased significantly as compared to the first quarter of 1996. This
growth resulted from increased business with existing customers, the addition
of new customers, and expansion of the services offered. The Company believes
that the increase in business with existing customers and the addition of new
customers reflect increased recognition of peer-to-peer meeting programs as an
effective promotional technique and increased levels of promotional, marketing
and educational spending in the pharmaceutical industry. Principal elements of
the Company's growth strategy are further enhancing and expanding its service
offerings through acquisition or internal development, continuing to increase
business with existing customers, and obtaining new customers. As part of this
strategy, the Company recently increased its focus on both symposia and
educational conferencing services and expanded its portfolio of services to
include product marketing and teleservices. The Company opened its new
teleservice center in Norfolk, Virginia in July 1997 to support the expansion
of its teleservices capabilities.
Certain of BLP's newer services, particularly symposia, have lower gross
margins than the Company's historical business. Further, although revenues
from the Company's peer-to-peer meeting business grew from $20.6 million in
1995 to $33.4 million in 1996, the Company does not anticipate that future
growth, if any, of revenues from this business will continue at such an
accelerated rate. The Company's objective is to maintain its operating profit
margins through efficiency efforts and leveraging its operating expenses by
increasing revenues. However, if the Company's efforts to enhance the
profitability of its services are not successful or if total revenues do not
grow sufficiently to fully leverage operating expenses, the Company's
operating margins could be adversely affected.
In December 1996, the Company completed the TA Transaction. In connection
with the TA Transaction, the TA Investors invested $12.5 million to acquire
7,000,000 shares of Convertible Participating Preferred Stock of the Company.
In addition, the Company incurred $21.0 million of indebtedness under the
Credit Facility, including $20.0 million of term indebtedness. The Company
used the proceeds from these financing transactions principally to redeem
capital stock from, and to pay bonuses to, senior officers of the Company. See
"Certain Transactions." The repayment of the Credit Facility with the net
proceeds of this offering will reduce interest expense, although the Company
may incur future interest expense in connection with any future borrowings.
16
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentages of revenues represented by
certain items reflected in the Company's statements of income. The information
that follows should be read in conjunction with the Financial Statements of
the Company and Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------- ----------------
1994 1995 1996 1996 1997
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues.................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............... 60.1 58.7 64.7 64.5 71.2
-------- -------- -------- ------- -------
Gross profit.............. 39.9 41.3 35.3 35.5 28.8
-------- -------- -------- ------- -------
Officers' compensation...... 9.7 6.1 33.2(1) 9.8 2.1
Other selling, general and
administrative expenses.... 22.1 23.0 16.5(2) 21.3 14.4
-------- -------- -------- ------- -------
Total selling, general and
administrative expenses.. 31.8 29.1 49.7 31.1 16.5
-------- -------- -------- ------- -------
Operating income (loss)... 8.1 12.2 (14.4) 4.4 12.3
Interest expense, net....... 0.2 0.4 0.6 0.8 3.0
Nonrecurring loss on for-
giveness of related party
loan....................... -- -- 2.7 -- --
-------- -------- -------- ------- -------
Income (loss) before pro-
vision for income taxes.. 7.9 11.8 (17.7) 3.6 9.3
Provision for income tax-
es(3)...................... 0.1 0.3 -- -- 2.9
-------- -------- -------- ------- -------
Net income (loss)......... 7.8% 11.5% (17.7)% 3.6% 6.4%
======== ======== ======== ======= =======
</TABLE>
- --------
(1) Includes $10.0 million, or 24.9% of revenues, for special officer bonuses,
including $7.5 million as part of the TA Transaction.
(2) Includes $0.6 million, or 1.5% of revenues, for fees related to the TA
Transaction.
(3) The Company elected to be taxed under Subchapter S of the Code until
December 4, 1996, and accordingly the provision for income taxes for all
periods ending on or prior to such date reflects only state business tax
expense, if any.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1996
Revenues increased $6.7 million, or 96.1%, from $7.0 million in the three
months ended March 31, 1996 to $13.7 million in the three months ended March
31, 1997. Substantially all of this increase was due to growth of the
Company's conferencing services. This growth was comprised principally of a
$1.8 million, or 28.3%, increase in revenues from peer-to-peer meetings and
the addition of $4.4 million of revenues from symposia services, which were
introduced in late 1996. The remaining increase was attributable to an
increase in revenues from educational conferencing services.
Cost of sales increased $5.2 million, or 116.5%, from $4.5 million in the
three months ended March 31, 1996 to $9.7 million in the three months ended
March 31, 1997. Cost of sales as a percentage of revenues increased from 64.5%
in the prior year period to 71.2% in the current year period. The increase in
cost of sales as a percentage of revenues was due primarily to the
introduction of symposia services, which have a lower average gross profit
than the Company's core business due to the higher proportion of production
costs which are passed through to the customer with little or no markup.
Selling, general and administrative expenses remained relatively constant at
$2.3 million in the three months ended March 31, 1997 as compared to $2.2
million in the three months ended March 31, 1996, as the cost of personnel
additions of approximately $0.5 million in the current year period was
substantially offset by reductions in officer compensation agreed upon in
connection with the TA Transaction. Selling, general and administrative
expenses decreased as a percentage of revenues from 31.1% in the prior year
period to 16.5% in the current year period primarily as a result of increased
revenues.
Operating income increased $1.4 million, or 451.0%, from $0.3 million in the
three months ended March 31, 1996 to $1.7 million in the three months ended
March 31, 1997. Operating income as a percentage of revenues increased from
4.4% in the prior year period to 12.3% in the current year period. The
increase in
17
<PAGE>
operating income as a percentage of revenues was due to the aforementioned
decrease in selling, general and administrative expenses as a percentage of
revenues, partially offset by the aforementioned increase in cost of sales as
a percentage of revenues.
Interest expense, net increased by 641.7% from $0.1 million in the three
months ended March 31, 1996 to $0.4 million in the three months ended March
31, 1997. This increase was attributable to the Company's borrowings under its
$20.0 million term loan in December 1996 and, to a lesser extent, to
borrowings under the Company's revolving credit facility, partially offset by
the repayment of borrowings made under a previous loan agreement.
The provision for income taxes in the three months ended March 31, 1997 was
$0.4 million, reflecting estimated federal and state income tax expense,
partially offset by the utilization of benefits from net deferred tax assets
recognized on the Company's December 31, 1996 balance sheet which are related
to net operating loss carryforwards. Prior to December 4, 1996, the Company
had elected to be subject to taxation under Subchapter S of the Code and,
therefore, no federal income tax expense was recorded in the three months
ended March 31, 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenues increased $18.4 million, or 84.7%, from $21.8 million in 1995 to
$40.2 million in 1996. This increase was due primarily to growth of the
Company's promotional and other conferencing services, as well as the
expansion of its educational conferencing services and the introduction of its
teleservices and product marketing services. Revenues from promotional and
other conferencing services increased $14.2 million, or 69.2%, from 1995 to
1996. Of this increase, $12.7 million resulted from an increase in peer-to-
peer meetings and $1.5 million resulted from symposia services which the
Company introduced in late 1996. On a combined basis, revenues from
educational conferencing services, teleservices and product marketing services
increased $4.1 million, or 354.4%, from $1.2 million in 1995 to $5.3 million
in 1996.
Cost of sales increased $13.2 million, or 103.3%, from $12.8 million in 1995
to $26.0 million in 1996. Cost of sales as a percentage of revenues increased
from 58.7% in 1995 to 64.7% in 1996. The increase in cost of sales as a
percentage of revenues was due primarily to: (i) higher costs related to
recruiting for and production of peer-to-peer meetings; (ii) the expansion of
the Company's educational conferencing services, which have a lower average
gross profit than the Company's historical core business due to the Company's
use of selected third party providers for certain production efforts; (iii)
the introduction of symposia services, which have a lower average gross profit
than the Company's historical core business due to the higher proportion of
production costs which are passed through to the customer with little or no
markup; and (iv) the introduction of teleservices, which have a lower average
gross profit than the Company's historical core business due to the use of
selected third party providers and the pricing structure related to this line
of business.
Selling, general and administrative expenses increased $13.7 million, or
215.3%, from $6.3 million in 1995 to $20.0 million in 1996. This increase was
due primarily to special officer bonuses of $10.0 million, including $7.5
million as part of the TA Transaction in December 1996, and fees of $0.6
million related to the TA Transaction. The remaining expense increase was due
to increased officer compensation of $2.0 million and $1.1 million for
additional personnel, outside services and other operating expenses incurred
to support the Company's growth. Selling, general and administrative expenses
increased as a percentage of revenues from 29.1% in 1995 to 49.7% in 1996
primarily as a result of the special officer bonuses and fees, which amounted
to 26.4% revenues in 1996, partially offset by increased revenues.
Operating income (loss) decreased $8.4 million from operating income of $2.6
million in 1995 to an operating loss of $5.8 million in 1996. Operating income
(loss) as a percentage of revenues decreased from 12.2% operating income in
1995 to a 14.4% operating loss in 1996. The decrease in operating income
(loss) as a percentage of revenues was due to the aforementioned increase in
cost of sales as a percentage of revenue and
18
<PAGE>
the aforementioned increase in selling, general and administrative expenses as
a percentage of revenues. The increase in selling, general and administrative
expenses primarily reflected expenses related to the TA Transaction,
comprising 26.4% of 1996 revenues.
In December 1996, the Company incurred a nonrecurring loss of approximately
$1.1 million resulting from the write-down of a promissory note to a former
affiliate. This note was purchased by certain of the Company's officers in
connection with the TA Transaction.
Interest expense, net increased 197.5% from $0.1 million in 1995 to $0.3
million in 1996. This increase was attributable to the Company's borrowings
under the $20.0 million term loan portion of the Credit Facility in December
1996 and, to a lesser extent, to borrowings under the revolver portion of the
Company's Credit Facility, partially offset by the repayment of borrowings
made under a previous loan agreement.
There was no provision for income taxes recorded in 1996 because the Company
incurred a net operating loss during the period subsequent to becoming subject
to taxation under Subchapter C of the Code on December 4, 1996. Prior to
December 4, 1996, the Company had elected to be subject to taxation under
Subchapter S of the Code and, therefore, only state business taxes were
incurred in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues increased $1.2 million, or 5.8%, from $20.6 million in 1994 to
$21.8 million in 1995. This increase was due to the introduction of the
Company's educational conferencing services, which accounted for $1.2 million
of revenues in 1995 and no revenue in 1994.
Cost of sales increased $0.4 million, or 3.3%, from $12.4 million in 1994 to
$12.8 million in 1995 due to an increase in revenues. Cost of sales as a
percentage of revenues decreased from 60.1% in 1994 to 58.7% in 1995. The
decrease in cost of sales as a percentage of revenues was primarily due to the
realization of cost efficiencies related to technological improvements in the
Company's process for recruiting attendees for peer-to-peer meetings.
Selling, general and administrative expenses decreased $0.2 million, or
2.9%, from $6.5 million in 1994 to $6.3 million in 1995. This decrease was due
primarily to a $0.7 million reduction in officer compensation partially offset
by increases in other operating expenses. Selling, general and administrative
expenses decreased as a percentage of revenues from 31.8% in 1994 to 29.1% in
1995.
Operating income increased $1.0 million, or 58.8%, from $1.7 million in 1994
to $2.7 million in 1995. Operating income as a percentage of revenues
increased from 8.1% in 1994 to 12.2% in 1995. The increase in operating income
as a percentage of revenues was due to the aforementioned decreases in cost of
sales and selling, general and administrative expenses as a percentage of
revenues.
Interest expense, net increased by 100.0% in 1995 compared to 1994 due to an
increase in borrowings under a previous loan agreement.
The Company had elected to be subject to taxation under Subchapter S of the
Code in 1994 and 1995 for Federal income tax purposes and, therefore, only
state business taxes were incurred in these years.
QUARTERLY FINANCIAL INFORMATION
The following table sets forth unaudited quarterly operating results for
each of the Company's last nine quarters as well as certain of such data
expressed as a percentage of revenues for the periods indicated. This
information has been prepared by the Company on a basis consistent with the
Company's audited financial statements and includes all adjustments
(consisting of normal and recurring adjustments) that management considers
necessary for a fair presentation of the data. These quarterly results are not
necessarily indicative of future results of operations. This information
should be read in conjunction with the Financial Statements and Notes thereto
included elsewhere in this Prospectus.
19
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997
--------- -------- --------- -------- --------- -------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $4,509 $3,449 $3,654 $10,163 $6,973 $9,173 $9,592 $14,481 $13,673
Cost of sales........... 2,797 2,316 2,269 5,406 4,496 5,976 5,949 9,583 9,737
------ ------ ------ ------- ------ ------ ------ ------- -------
Gross profit.......... 1,712 1,133 1,385 4,757 2,477 3,197 3,643 4,898 3,936
------ ------ ------ ------- ------ ------ ------ ------- -------
Officers' compensation.. 427 324 191 394 683 715 461 11,492(1) 286
Other selling, general
and administrative ex-
penses................. 1,222 1,154 1,137 1,492 1,488 1,464 1,511 2,181(2) 1,964
------ ------ ------ ------- ------ ------ ------ ------- -------
Total selling, general
and administrative
expenses............. 1,649 1,478 1,328 1,886 2,171 2,179 1,972 13,673 2,250
------ ------ ------ ------- ------ ------ ------ ------- -------
Operating income
(loss)............... 63 (345) 57 2,871 306 1,018 1,671 (8,775) 1,686
Interest expense, net... 5 28 30 23 55 49 24 127 409
Nonrecurring loss on
forgiveness of related
party loan............. -- -- -- -- -- -- -- 1,076 --
------ ------ ------ ------- ------ ------ ------ ------- -------
Income (loss) before
provision for income
taxes................ 58 (373) 27 2,848 251 969 1,647 (9,978) 1,277
Provision for income
taxes.................. -- -- -- 51 -- -- -- -- 400
------ ------ ------ ------- ------ ------ ------ ------- -------
Net income (loss)..... $ 58 $ (373) $ 27 $ 2,797 $ 251 $ 969 $1,647 $(9,978) $ 877
====== ====== ====== ======= ====== ====== ====== ======= =======
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997
--------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 62.0 67.1 62.1 53.2 64.5 65.1 62.0 66.2 71.2
------ ------ ------ ------- ------ ------ ------ ------- -------
Gross profit.......... 38.0 32.9 37.9 46.8 35.5 34.9 38.0 33.8 28.8
------ ------ ------ ------- ------ ------ ------ ------- -------
Officers' compensation.. 9.5 9.4 5.2 3.9 9.8 7.8 4.8 79.4(1) 2.1
Other selling, general
and administrative ex-
penses................. 27.1 33.5 31.1 14.7 21.3 16.0 15.8 15.1(2) 14.4
------ ------ ------ ------- ------ ------ ------ ------- -------
Total selling, general
and administrative
expenses............. 36.6 42.9 36.3 18.6 31.1 23.8 20.6 94.4 16.5
------ ------ ------ ------- ------ ------ ------ ------- -------
Operating income
(loss)............... 1.4 (10.0) 1.6 28.2 4.4 11.1 17.4 (60.6) 12.3
Interest expense, net... 0.1 0.8 0.8 0.2 0.8 0.5 0.3 0.9 3.0
Nonrecurring loss on
forgiveness of related
party loan............. -- -- -- -- -- -- -- 7.4 --
------ ------ ------ ------- ------ ------ ------ ------- -------
Income (loss) before
provision for income
taxes................ 1.3 (10.8) 0.7 28.0 3.6 10.6 17.2 (68.9) 9.3
Provision for income
taxes.................. -- -- -- 0.5 -- -- -- -- 2.9
------ ------ ------ ------- ------ ------ ------ ------- -------
Net income (loss)..... 1.3% (10.8)% 0.7% 27.5% 3.6% 10.6% 17.2% (68.9)% 6.4%
====== ====== ====== ======= ====== ====== ====== ======= =======
</TABLE>
- -----
(1) Includes $10.0 million, or 69.1% of revenues, for special officer bonuses,
including $7.5 million as part of the TA Transaction.
(2) Includes $0.6 million, or 3.8% of revenues, for fees related to the TA
Transaction.
20
<PAGE>
BLP's results of operations historically have fluctuated on a quarterly
basis and can be expected to continue to be subject to quarterly fluctuations.
In recent years, the Company has experienced substantially higher revenues in
the fourth quarter of its fiscal year than in the preceding three quarters of
such fiscal year. The Company believes these increases were related to its
customers' budgeting processes and spending patterns. There can be no
assurances that this trend will continue. Quarterly results can vary as a
result of a number of factors, including the timing of peer-to-peer projects
and symposia, expenditure patterns of the Company's customers, delays or costs
associated with acquisitions, the commencement or completion of significant
contracts, announcements by the Company, competitors or customers, government
or private market regulatory initiatives, relative profit margins of the
services provided to customers, conditions in the healthcare industry
generally, conditions in the markets for outsourced promotional, marketing and
educational services more specifically, or other events or factors, many of
which are beyond the Company's control. See "Risk Factors--Variation in
Quarterly Operating Results; Possible Volatility of Stock Price."
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had $2.2 million in working capital, a
decrease of $0.2 million from December 31, 1996. At December 31, 1996, the
Company had $2.4 million in working capital, a decrease of $0.6 million from
December 31, 1995. The Company's primary sources of liquidity as of March 31,
1997 consisted of cash and cash equivalents, accounts receivable and borrowing
availability under the revolver portion of the Credit Facility.
The Company's accounts receivable turnover averaged 110, 93 and 67 days
outstanding for the periods ended March 31, 1997, December 31, 1996 and
December 31, 1995, respectively. The allowance for doubtful accounts was
$300,000, $300,000 and $0 at March 31, 1997, December 31, 1996 and December
31, 1995, respectively. The Company periodically reviews the financial
condition of its customers and its receivable collections history relative to
the particular billing arrangements for each account. Based on this review,
the Company believes that its receivable turnover is reasonable and its
allowance for doubtful accounts is adequate for the periods ended March 31,
1997, December 31, 1996 and December 31, 1995.
During the three months ended March 31, 1997, the Company used $5.4 million
in operating activities. This included payment of $7.5 million of officer
bonuses as part of the TA Transaction partially offset by $2.1 million of cash
provided by other operating activities. During this period, the Company used
$0.1 million in investing activities to purchase additional equipment. Also
during this period, the Company used $1.0 million in financing activities, as
it fully paid-down the revolver portion of the Credit Facility.
During 1996, the Company used $0.7 million in operating activities and $0.1
million in investing activities relating to the purchase of additional
equipment. Also during this year, the Company provided $7.1 million in
financing activities primarily related to the TA Transaction, as discussed
below, partially offset by the repayment of $2.3 million under a prior term
loan and line of credit.
In connection with the TA Transaction on December 4, 1996, the Company
entered into the Credit Facility. The Credit Facility provides for a $5.0
million revolving credit facility and a $20.0 million term loan and is secured
by the Company's assets. As of December 31, 1996 and March 31, 1997, $1.0
million and $0.0, respectively, were outstanding under the revolver portion of
the Credit Facility. Borrowings under the revolver portion of the Credit
Facility are due on December 31, 2001. The term loan is to be repaid in
incremental annual payments on a quarterly basis over five years through
December 31, 2001. The interest rates on the loans vary and are based upon
either the prime rate or LIBOR, plus in either case a margin which varies
according to the ratio of total indebtedness of the Company for the most
recently completed fiscal quarter to EBITDA for the current and three
preceding fiscal quarters, each as defined in the Credit Facility. The Credit
Facility contains various financial, operating and reporting covenants.
Additionally, as required under the terms of the Credit Facility, the Company
entered into an interest rate swap agreement in 1997 to provide interest rate
protection on 50% of the outstanding principal balance of the term loan.
21
<PAGE>
In addition to the funds provided by the debt financing described above, the
TA Investors invested $12.5 million in the Company to acquire 7,000,000 shares
of the Company's Convertible Participating Preferred Stock. The funds provided
by the debt and equity financings in the TA Transaction were used to redeem
common stock from senior officers of the Company ($18.9 million), to pay
bonuses to certain officers of the Company, all of which were accrued and paid
in the first quarter of 1997 ($7.5 million), and to satisfy obligations to a
former shareholder ($6.2 million). See "Certain Transactions."
In connection with the Company's further development of its new teleservice
center in Norfolk, Virginia, the Company anticipates capital expenditures to
increase to approximately $2.2 million in 1997.
Upon completion of this offering, as described elsewhere in this Prospectus,
the Convertible Participating Preferred Stock will convert into 4,666,664
shares of Common Stock and 5,600,000 shares of Redeemable Preferred Stock. The
Redeemable Preferred Stock will be immediately redeemed for $10.0 million plus
accumulated dividends, $332,000 at March 31, 1997, using a portion of the net
proceeds from the sale of Common Stock from this offering. In addition, the
net proceeds of the offering will be used to make a mandatory prepayment of
the entire balance of the term loan portion of the Credit Facility. Such
repayment of the term loan using the net proceeds of the offering is required
by the terms of the Credit Facility. The Company believes that the remaining
net proceeds from this offering, together with cash generated from operations,
will be sufficient to fund its anticipated working capital needs and capital
expenditures (other than financing necessary to complete future acquisitions)
for at least the next twelve months. The proceeds from this offering will
provide cash for additional growth and expansion, other than future
acquisitions, if any. To finance future acquisitions the Company may need to
issue additional securities and incur additional debt. The Company may not be
able to obtain additional required capital on satisfactory terms, if at all.
The failure to raise the funds necessary to finance future cash requirements
could materially and adversely affect the Company's ability to pursue its
strategy and its operating results in future periods. See "Use of Proceeds."
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued a new standard,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123 requires that
an entity account for employee stock compensation under a fair value based
method. However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees" ("Opinion 25"). Entities electing to remain
with the accounting under Opinion 25 are required to make pro forma
disclosures of net income and earnings per share as if the fair value based
method of accounting under SFAS 123 had been applied. The Company will
continue to account for employee stock-based compensation under Opinion 25 and
will make the pro forma disclosures required under SFAS 123.
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128") which becomes effective for the period ending December 31, 1997,
establishes new standards for computing and presenting earnings per share
("EPS"). The new standard requires the presentation of basic EPS and diluted
EPS. Basic EPS is calculated by dividing income available to common
shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common
shares outstanding adjusted to reflect potentially dilutive securities.
Previously reported EPS amounts must be restated under the new standard when
it becomes effective. The impact of adopting SFAS 128 for the year ending
December 31, 1996 and for the three months ending March 31, 1997 would not
have been material.
22
<PAGE>
BUSINESS
GENERAL
Boron, LePore & Associates, Inc. provides outsourced promotional, marketing
and educational services to the pharmaceutical industry. The Company has
become a leading provider of peer-to-peer meetings. BLP recently expanded the
range of its outsourced promotional, marketing and educational services. Newer
service offerings include coordination of other types of meetings such as
symposia, continuing education conferences and video satellite conferences;
product marketing services (which involve obtaining rights to market a
pharmaceutical product, often on a shared reward basis); and teleservices such
as teledetailing, telemarketing, sales support and fulfillment. In July 1997,
the Company opened a teleservice center in Norfolk, Virginia to suppport
expansion of its teleservices business.
The Company's predecessor, Boron, LePore & Associates, Inc., a New Jersey
corporation, was founded in 1981. In November 1996, the Company's predecessor
reincorporated in Delaware to form the Company by merging with and into BLA
Acquisition Corp., a newly-formed Delaware corporation. BLA Acquisition Corp.,
the surviving corporation, changed its name to Boron, LePore & Associates,
Inc., upon consummation of the merger.
INDUSTRY OVERVIEW
Based on data from Scott-Levin, a healthcare marketing information company,
pharmaceutical companies spent approximately $900 million in 1996 on
promotional and marketing events, including peer-to-peer meetings and
symposia, primarily conducted by third party suppliers. Pharmaceutical
companies have relied for many years on third party providers of promotional,
marketing and educational conferencing services. In recent years, changes in
the pharmaceutical industry have led to greater outsourcing of promotional,
marketing and educational functions. At the same time, pharmaceutical
companies and providers of promotional, marketing and educational services to
such companies have broadened their means of communicating with target
audiences from traditional product detailing, peer-to-peer meetings and in-
person conferences to also include teleconferences, satellite conferences and
various other forms of teleservices.
BLP believes the following factors affect promotional, marketing and
educational expenditures by pharmaceutical companies and the related use of
third party providers of promotional, marketing and educational services:
Communications with Physicians. Pharmaceutical companies have long
recognized that communicating with the physicians who prescribe drugs is
crucial to gaining market share. The Company believes that pharmaceutical
companies view peer-to-peer meetings as a highly effective means of providing
information regarding their products to physicians. The development of
sophisticated prescription tracking systems has enabled pharmaceutical
companies to measure the impact of peer-to-peer meetings on sales. These
prescription tracking systems permit pharmaceutical companies to identify
prospective peer-to-peer meeting attendees and to track the prescription
patterns of the physicians who attend. The Company believes that outsourced
promotional and marketing organizations having a demonstrated ability to reach
physicians in a cost-effective, focused manner are important to the overall
marketing efforts of pharmaceutical companies.
Consumer-Oriented Communications. BLP believes that consumers have recently
begun to play an increasingly significant role in their selection of
healthcare options and therapeutic products. Accordingly, pharmaceutical
companies have increasingly focused on communicating product information
directly to consumers. The Company believes that promotional and marketing
organizations that can effectively and efficiently communicate with consumers
directly, through services such as in-person conferences and teleservices, may
in the future play an increasingly significant role in educating consumers
about pharmaceutical products.
Product Pipelines. In 1996, the Food and Drug Administration (the "FDA")
approved for sale 131 new drugs and drug indications, including 53 new
molecular entities, representing an 89% increase in the number of
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new molecular entities approved compared to 1995. This increase is partially
attributable to the FDA's expedited review and approval procedures. The
Company believes that pharmaceutical companies have found peer-to-peer
meetings to be an effective means of communicating information in connection
with new product launches and that opportunities to provide this service exist
as a result of the present pipeline of new drugs and drug indications. In
addition, the Company believes that pharmaceutical companies are examining
their existing drug product portfolios to identify revenue and profit
enhancement opportunities for drugs at various stages in their product life
cycles. Accordingly, the Company believes there are multiple sources of
potential new business for providers of outsourced promotional, marketing and
educational services.
Cost Containment Efforts. The potential for implementation of national
healthcare reform in the early 1990s and the growing influence of managed care
and healthcare cost containment initiatives throughout the 1990s created
downward pressure on pharmaceutical prices and on the profit margins of
pharmaceutical companies. These pressures have contributed to increased
consolidation in the pharmaceutical industry which has resulted in an
increased focus on reducing operating costs to achieve economies of scale and
cost synergies. Pharmaceutical companies have employed a variety of strategies
to preserve or enhance operating margins in this environment. These include
outsourcing activities such as research and development and certain
promotional, marketing and sales activities in order to shift fixed costs to
variable costs and to promote greater operating efficiency. BLP believes that
pharmaceutical companies are increasingly receptive to outsourcing
promotional, marketing and sales activities to specialized third party service
providers, particularly those who can offer a wide array of services targeted
to specific audiences.
Consolidation of Third Party Vendor Relationships. Many pharmaceutical
companies that outsource promotional, marketing and educational services
increasingly seek relationships with firms capable of providing a range of
high quality service alternatives. Certain of these pharmaceutical companies
seek to consolidate their outsourced promotional, marketing and educational
service needs with a limited group of providers with which they have
established relationships. Consolidating providers facilitates the
implementation of an integrated marketing strategy to a variety of audiences
and provides cost and operating efficiencies to the pharmaceutical company. In
this regard, some pharmaceutical companies have established "preferred
provider" relationships with selected vendors.
GROWTH STRATEGY
BLP's objective is to enhance its position as a leading provider of peer-to-
peer and other meetings and continue to expand its array of other outsourced
promotional, marketing and educational services, focused mainly on the
pharmaceutical industry. The following are the principal elements of the
Company's strategy:
Offer a Broader Range of Promotional, Marketing and Educational
Services. BLP intends to continue to expand the types of services it offers to
meet its customers' diversified promotional, marketing and educational needs.
The Company believes pharmaceutical companies seeking to outsource marketing
functions will increasingly rely on a core group of full-service providers who
can offer an integrated array of high quality services, using varied media
targeted to reach distinct audiences. The Company believes that as a leading
provider of peer-to-peer meetings it has an established platform from which to
offer other promotional and marketing services. In 1996, BLP introduced
symposia, product marketing and telemarketing services. Of these new business
areas, symposia generated the most new revenues, accounting for revenues of
$4.4 million during the first three months of 1997, or 32.5% of total revenues
during this period.
Increase Business with Existing Customers. The Company seeks to leverage its
market reputation as a provider of peer-to-peer meetings to generate demand
for additional peer-to-peer and other meetings, as well as product marketing
services and teleservices. The demand for BLP's promotional and marketing
services has increased, in part, due to its customers' ability to monitor
prescriptions of pharmaceutical products through computerized prescription
tracking systems.
Obtain New Customers. BLP seeks to expand its customer base by targeting
large domestic pharmaceutical companies which are not currently customers. In
addition, future customer initiatives may focus
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on smaller pharmaceutical companies, foreign pharmaceutical companies and
other healthcare companies which could benefit from the Company's services.
Examples of possible customers in related healthcare industries include drug
wholesalers, biotechnology companies and medical device manufacturers. In
addition, BLP believes that its teleservices capability may be attractive to
managed care organizations seeking to communicate with and provide healthcare
information to their members.
Target New Audiences. BLP believes that consumers of pharmaceutical products
have assumed an increasingly active role in the selection of their healthcare
options and therapeutic products. Pharmaceutical companies thus seek providers
of promotional, marketing and educational services that can effectively
communicate product information directly to consumers through both traditional
and new forms of media. In addition, other new audiences such as pharmacists,
formulary managers, and hospital groups influence demand for pharmaceutical
products. BLP believes that its broad range of service capabilities, including
its new teleservice center, will enable it to reach consumers and other new
audiences effectively on behalf of pharmaceutical companies.
Pursue Strategic Acquisitions. The Company's business strategy includes
consideration of strategic acquisitions in complementary and existing business
areas. The Company believes that acquiring outsourced marketing companies may
in some cases facilitate more effective and rapid development of a broader
array of services, or expansion of existing services, than developing these
service capabilities internally. The Company's strategy following any
acquisition would be to use its competitive strengths, including its
reputation in the industry, its long-standing customer relationships and its
range of available services, to improve the financial and market performance
of both BLP and the acquired company.
SERVICES
BLP's principal lines of business presently include: (i) promotional and
other conferencing services; (ii) educational conferencing services; (iii)
product marketing services; and (iv) teleservices.
Promotional and Other Conferencing Services
The Company conducts and produces conferences in a variety of formats and
through different forms of media. All of BLP's conferences are sponsored by
the Company's pharmaceutical company customers. The conferences are designed
to communicate the sponsoring pharmaceutical company's message to the
physicians and other healthcare professionals who attend. BLP's promotional
conference service is providing peer-to-peer meetings, which involve a small
gathering of physicians who are invited to meet in person or by teleconference
to discuss a particular drug or indication under the chairmanship of a Company
trained and employed moderator. Other conference services include providing
symposia, which are attended by a larger number of attendees and involve a
more in-depth presentation than peer-to-peer meetings, and video satellite
conferencing. The Company's meetings are not limited to these formats,
however, as the Company will coordinate meetings in any format that can
effectively convey a customer's message.
Peer-to-Peer. Peer-to-peer meetings among physicians have been the historic
foundation of BLP's revenues and growth. Through peer-to-peer meetings,
pharmaceutical companies are able to convey information concerning their
products to physicians. Physicians who attend the meetings in turn have an
opportunity to exchange ideas, clinical experiences and opinions about current
therapies. Peer-to-peer meetings are particularly useful in connection with
new product launches and products that require an in-depth explanation of
their associated therapeutic benefits.
Peer-to-peer meetings typically involve 10 to 12 healthcare practitioners,
primarily physicians, who are identified by a pharmaceutical company and
generally invited using the Company's telerecruiting center. The attending
physicians discuss therapeutic benefits of a new drug or new indication for a
familiar drug under the chairmanship of a Company trained moderator. The
meetings take place throughout the United States, either at a local hotel or
restaurant over dinner (a clinical experience program or "CEP") or by
teleconference (a clinical experience teleconference or "CET"). CET meetings
are increasingly popular because physicians have a greater choice of meeting
times and can interact with peers from around the country. The physicians who
attend peer-
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to-peer meetings receive non-cash honoraria consistent with applicable
American Medical Association (the "AMA") and pharmaceutical industry
guidelines, which they may donate to charity or use for the purchase of items
such as medical equipment or textbooks.
BLP believes pharmaceutical companies select a peer-to-peer meeting provider
based on the ability of the provider to attract the invited physicians to
attend and the provider's performance record in communicating the customer's
message effectively. The Company's customers purchase prescription drug
tracking data from independent companies to measure the effectiveness of the
peer-to-peer meetings. The prescription drug tracking data generally has
demonstrated that physicians who attend the Company's meetings increase their
prescriptions of drugs reviewed at the meetings. The Company believes that its
reputation, which has been developed over 13 years of conducting peer-to-peer
meetings, facilitates recruiting physicians to attend its peer-to-peer
meetings.
The Company believes that its moderators have been an important factor in
the success of its peer-to-peer meetings. The Company historically has focused
on hiring individuals with industry experience as moderators. BLP has
developed training techniques to enable the moderators to lead effective peer-
to-peer meetings and communicate the therapeutic benefits of a drug.
Moderators are trained in such matters as how to best familiarize themselves
with the product, how to prepare the proper setting for a meeting, how to
deliver an effective presentation and how to coordinate the proper flow of
information between the moderator and the physicians and among the physicians.
In addition, BLP performs periodic quality reviews of its moderators and
solicits feedback from customers and physicians about each moderator.
BLP's contracts for the coordination and production of peer-to-peer meetings
generally are fee based, although some contain a performance component which
is monitored through the use of the independent prescription tracking systems.
The Company's contracts typically require it to provide a certain number of
meetings (usually 100 to 300) over a specified period of time (typically three
to six months) on behalf of a customer. The terms of each of the Company's
contracts vary based upon the complexity of the individual arrangement,
whether the meetings will be CEP or CET meetings, the duration of the
contract, the number of meetings and attendees covered by the contract and the
locations for the meetings. The volume of meetings coordinated and produced by
the Company has enabled it to obtain discount pricing and preferred scheduling
from Marriott Hotels, which has a dedicated sales representative in the
Company's office, and discount pricing from other vendors of services such as
airlines and overnight courier services.
In 1994, 1995 and 1996, BLP conducted 3,922, 4,312 and 7,749 peer-to-peer
meetings, respectively. These meetings generated revenues of approximately
$20.6 million in 1994, $20.6 million in 1995, and $33.4 million in 1996,
constituting 100.0%, 94.7% and 83.0%, respectively, of the Company's revenues
in each of these years. For the first three months of 1996 and 1997, the
Company conducted 1,308 and 1,968 peer-to-peer meetings, respectively, which
accounted for revenues of $6.5 million and $8.3 million, respectively, or
93.0% and 60.8% of the Company's revenues for the respective three-month
periods.
Symposia. The Company added symposia in the fourth quarter of 1996 to
complement its peer-to-peer meeting business. A Company organized symposium
generally involves attendance by approximately 50 to 300 physicians over a
weekend. The physicians hear presentations regarding a drug or treatment
protocol presented by a faculty of experts in the field for the purpose of
being trained to serve as consultants and spokespeople for the sponsoring
pharmaceutical company. The sponsoring company pays the faculty in the form of
fees or medical grants and reimburses faculty and attending physicians for
their travel expenses.
Symposia are organized and conducted on an in-person basis by BLP throughout
the United States. BLP actively works with its customers to identify speakers
and select locations for each conference. The Company utilizes its in-house
travel agent and its other relationships with vendors to assist in
coordinating symposia. The Company believes that the key considerations for
its customers in selecting a provider for symposia are cost and the ability to
effectively organize a large medical conference.
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Pharmaceutical company sponsored symposia have been subject to past scrutiny
which had an adverse effect on the market for symposia services. Physician
attendance currently is subject to a number of industry and professional
association guidelines designed to prevent conflicts of interest. In
particular, these guidelines regulate the circumstances under which travel and
lodging reimbursement and other payments to physicians are permissible. In
light of these concerns, the Company adheres to its customers' instructions in
conducting symposia. In the event of changes in law, regulatory policy or
applicable industry or professional association guidelines or negative
publicity concerning symposia sponsored by the pharmaceutical industry,
customers may choose to alter their guidelines in ways that would make
symposia and related consultancies less attractive to physicians and
pharmaceutical companies. In addition, restrictions on such meetings could be
imposed by governmental agencies, industry or professional associations or the
pharmaceutical companies themselves. Finally, any of the Company's customers
could be found to be in non-compliance with relevant law, policy or guidelines
in their handling of symposia. Any of these events could have a material
adverse effect on the demand for BLP's symposia services.
The Company's symposium contracts generally are fee based. The terms of each
of BLP's symposium contracts vary based upon the complexity of the individual
arrangement, the duration of the contract, the number of symposia covered by
the contract and their location. The Company conducted four symposia in 1996
(all of which occurred in the fourth quarter) and conducted seven symposia
through the first three months of 1997. Symposia accounted for revenues of
$1.5 million, or 3.8% of the Company's revenues in 1996. For the first three
months of 1997, symposia accounted for revenues of $4.4 million, or 32.5% of
the Company's total revenues.
Additional Conferencing Services. The Company provides a range of additional
conferencing services. The Company emphasizes flexibility and conducts
meetings in any format that can effectively communicate its customer's
message. Video satellite conferences are an example of one of the many
possible formats for meetings. Video satellite conferences are lectures
sponsored by pharmaceutical companies. The speakers typically are physicians
or other medical experts who are retained by the pharmaceutical company for a
fee to discuss a new drug or indication or other medical topic. The Company
broadcasts the conferences via satellite on television to various locations
throughout the United States. The video satellite conferences typically
utilize interactive media involving one-way video, two-way audio, and special
keypads for audience participation. By using new forms of technology and media
in connection with such video satellite conferences, and CET programs for
peer-to-peer meetings, the Company seeks to enable its clients to effectively
and efficiently communicate medical information to physicians so that
physicians can better understand and utilize pharmaceutical products.
Educational Conferencing Services
Physicians and other healthcare professionals must dedicate a minimum number
of hours to certified continuing education ("CE") to remain certified to
practice their respective professions in certain jurisdictions. BLP
coordinates CE conferences that are funded by pharmaceutical companies and
held for approximately 50 to 350 healthcare professionals, primarily
physicians, at various locations throughout the United States. Each CE
conference is designed, if applicable, to satisfy CE requirements in
accordance with relevant regulations or accreditation procedures. Not all of
the educational conferences conducted by the Company are intended to satisfy
certified CE requirements. As with the Company's promotional conferencing
services, some of the CE programs are conducted by teleconference.
The CE programs, which are conducted by a separate division of the Company,
utilize certain of the Company's core competencies in handling conferencing
logistics. Because BLP is not an accredited CE service provider, it typically
provides these programs in conjunction with an accredited CE entity, such as a
university, which is responsible for producing the program curriculum and
related educational materials. The participants usually do not pay to attend
or participate in the Company's CE programs. The CE programs are frequently
taped or otherwise recorded for further distribution to those individuals who
are unable to attend.
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Product Marketing Services
BLP introduced its product marketing service in 1996. The Company's
customers tend to focus their marketing efforts on their key products because
of budgetary and other constraints, and thus typically have a significant
number of products with relatively limited sales that are not heavily
marketed, if at all. The Company believes that the sales of certain of these
products could be increased if their therapeutic benefits were actively
communicated to physicians or other healthcare professionals. BLP believes it
can leverage its customer relationships and existing services to market some
of these products successfully by devising and implementing a variety of
promotional and marketing strategies.
The Company anticipates that product marketing engagements typically will
involve the grant by a pharmaceutical company of rights to market a particular
product for a specified period. The Company will generally bear most marketing
costs during this period and in return share incremental revenue if the
product achieves specified sales objectives. The Company contemplates that
some of these engagements, however, may be fee based to some extent.
The Company currently has the right in the United States to market
Ponstel(R) (a registered trademark of Parke-Davis), an analgesic for
dysmenorrhea manufactured by Parke-Davis, until July 1998, subject to
extension by mutual agreement for successive terms of twelve months. Under the
contract, the Company is compensated based on the increase in the sales of
Ponstel(R) above an established baseline. The Company is currently in
negotiations to provide product marketing services for several additional
pharmaceutical products for Parke-Davis and other customers.
The Company believes that pharmaceutical companies and their product
managers may be attracted to product marketing services and the related
revenue sharing structure because it enables them to obtain incremental
revenue with minimal marketing expenses. The Company's product marketing
service enables a product manager to obtain active promotion of products in
the manager's portfolio that would not otherwise be actively promoted. The
Company's involvement in product marketing need not be limited to a particular
stage of a drug's life cycle, as the Company could obtain rights to market an
underpromoted drug at any stage of a product's life cycle or supply product
support in a vacant sales territory.
Product marketing is subject to risks that do not arise in connection with
the Company's conferencing services, including the risk that the Company will
expend resources to sell a product and not achieve the level of sales required
to realize any revenue from its efforts. BLP will seek to manage this risk by
carefully selecting the products it agrees to promote based on its assessment
of multiple criteria, including, but not limited to, the potential
responsiveness of the product to promotional activities, the capabilities of
the pharmaceutical company's sales force and information obtained from
physicians. Product marketing is a new business area for the Company, and
there can be no assurance that the Company will establish a significant or
lasting presence in this market.
Teleservices
With the proliferation of multiple forms of interactive media in the 1990s,
companies in a variety of industries are increasingly using teleservices as a
means of communicating information directly to current and prospective
customers and widening the scope of their sales efforts. The Company has
expanded its teleservice capabilities, in part, because it is a cost-efficient
means, compared to in-person sales calls, to promote, market and sell
pharmaceutical or other healthcare products to the highly fragmented universe
of physicians, pharmacists and other healthcare professionals. For instance,
the Company believes that small to mid-sized pharmaceutical companies, whose
detailing forces are limited in size, may seek to expand their sales and
marketing efforts for certain products through telemarketing.
BLP believes that the use of teletechnology as a means of marketing
pharmaceutical products is in an early stage of development and that there
exists a wide range of potential future uses, particularly in relation to
consumer healthcare. The Company's strategy involves leveraging its
competitive strengths, including its established customer relationships,
existing market position, broad range of available services and experience in
communicating with physicians and other healthcare personnel, to provide an
integrated communications strategy for its customers.
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In 1996, BLP's teleservice business accounted for revenues of approximately
$1.4 million, all of which were generated out of its offices in New Jersey.
With the opening of its new teleservice center in Norfolk, Virginia in July
1997, the Company's teleservices capability increased substantially. The
Norfolk teleservice center is capable of traditional modes of teleservice plus
more advanced forms of communication, such as internet and interactive
computer capabilities, which the Company may use for CE and other purposes.
The Company chose the Norfolk location as the site for its teleservice center
based on the results of an extensive east coast site selection study which
noted, among other factors, the existence of a large pool of available
healthcare industry personnel such as nurses, and a redundantly-wired, fiber
optic cable infrastructure resulting from the significant military presence in
the area.
The Norfolk facility, when fully completed, will contain 250 terminals and
will be staffed by approximately 275 to 300 full and part-time employees. As
of August 1997, the Company has approximately 102 operational terminals at the
Norfolk facility. As the facility becomes fully operational, the Company
anticipates reducing the number of teleservice terminals currently operational
in New Jersey from 125 to approximately 75. With respect to both its New
Jersey and Norfolk teleservice facilities, the Company believes it has
adequate disaster recovery plans, including, among other protections, the
ability to regularly back-up data and to access auxiliary power when needed,
although there can be no assurance that such plans will be effective in the
case of an actual emergency.
The Norfolk facility is initially being used for telemarketing and
teledetailing, (i.e., using the telephone to speak to physicians about
pharmaceutical products). BLP contemplates broadening the activities of the
center to include other traditional marketing services targeted to the
healthcare industry, including marketing and sales support, physician
recruitment and fulfillment (i.e., the fulfillment of requests for items such
as drug samples, product information packets, product studies and other
marketing and promotional materials) from the center's adjacent warehouse of
supplies. The Company's potential teleservice businesses include: maintaining
consumer health and drug and disease information lines; handling general
health information, wellness, and triage calls; and disease state education.
BLP contemplates offering its teleservices to managed care companies as a
means of promoting proper drug use by their members. For instance, the Company
is exploring the possibility of providing information about drugs and holding
meetings about drug treatment for managed care patients who are failing to
take the medications prescribed by their physicians. The Company believes that
such a service could help reduce the costs of the managed care provider by
improving the health of its patients, while simultaneously providing
information about a pharmaceutical company's product.
The first contract for the new teleservice center's services involves
providing 40,000 outbound product detailing calls for Warner Chilcott in
support of the in-person detailing efforts of that company's field service
organization. These product detailing calls will be handled over a six month
period by former pharmaceutical sales representatives hired by the Company.
Teleservices is a new business area for the Company involving risks not
present in its traditional business, such as the risk of competition from
larger, established companies having greater resources and access to capital.
There can be no assurance that the Company will establish a significant or
lasting presence in this market.
CUSTOMERS
BLP believes that its relationships with its customers, which include many
of the largest pharmaceutical companies, are among its most important
strategic advantages. Based on BLP's 1996 revenues, the Company's principal
customers included:
.
.
.
.
.
.
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The Company has enjoyed long standing relationships with many of these
customers, a number of which relationships have lasted for more than a decade.
Prior to 1996, the Company's customers principally engaged the Company to hold
peer-to-peer meetings. In 1996, several of the relationships expanded to
include other services such as symposia, product marketing and teleservices.
The Company believes that the quality and stability of its customer list
promotes the stability of its core business and that the scope and complexity
of its customers' marketing needs present opportunities for expansion into new
areas.
BLP's customer relations strategy focuses on maintaining strong
relationships with product managers and senior management at each of its
customers and providing creative, focused and result-oriented solutions to
their marketing needs. The Company's account managers (currently 12
individuals) develop relationships principally with the product managers at
the pharmaceutical companies and spend significant time on-site at customer
facilities. The Company's account managers work with the product managers to
implement, and in some cases assist in developing, the customer's marketing
plan within a prescribed budget. Although the Company markets competing
products from time to time, it does not market such products through the same
type of promotional or marketing service without the consent of its customers.
The Company's customer relations strategy involves obtaining preferred
provider status whenever possible. The Company has achieved preferred provider
status for its services with , and . Although preferred
provider status has different meanings with each customer, the Company
believes that such status generally provides a competitive advantage in
obtaining additional business from the customer.
The following table sets forth the customers which accounted for 10% or more
of the Company's revenues in 1994, 1995 and 1996 (after giving effect to
subsequent pharmaceutical company mergers):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C>
</TABLE>
COMPETITION
The business of providing promotional, marketing and educational services to
the pharmaceutical industry is competitive. The business of providing
pharmaceutical conferencing services is highly fragmented and the Company's
competitors in this area generally include smaller, regionally focused
companies that provide a limited number of promotional, marketing and
educational services, usually focused on the pharmaceutical industry. Several
of the Company's competitors in this area, however, offer services that are
somewhat wider in scope. Although BLP believes it is a leading provider of
peer-to-peer meetings, there are many larger providers of symposia and
educational conferences.
As BLP seeks to expand its range of services, it is likely to face
competition from companies which already have established a strong business
presence providing similar services to other businesses. The outsourced
product marketing business is currently in its formative stage and is expected
to become increasingly competitive. In addition, the sale of a pharmaceutical
product and its related assets to a third party is a competing strategy by
which pharmaceutical companies may seek to maximize returns from products that
might otherwise be candidates for the Company's product marketing services. A
large number of companies currently provide teleservices such as telemarketing
and teledetailing to companies in many industries including the pharmaceutical
industry, and many of these companies have greater resources and access to
capital than the Company.
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Overall, BLP believes that its most significant competition is potentially
from other companies that provide outsourced promotional, marketing and
educational services and large advertising agencies which may seek to expand
their service offerings. In addition, the pharmaceutical companies' in-house
marketing departments may provide similar services to those provided by BLP
and competition could increase as a result of the expansion of the in-house
marketing capabilities by BLP's customers or in the pharmaceutical industry
generally.
BLP competes against other companies offering pharmaceutical conferencing
and other outsourced promotional, marketing and educational services on the
basis of such factors as reputation, quality, experience, performance record,
effectiveness of service, ability to offer a range of integrated services and
price. Some of the Company's distinguishing characteristics are the longevity
of its relationships with its customers, its reputation for quality service
and its ability to offer a relatively broad range of services.
GOVERNMENT AND INDUSTRY REGULATION
The healthcare industry is subject to extensive regulation. Various laws,
regulations and guidelines promulgated by government, industry and
professional bodies affect, among other matters, the provision, licensing,
labeling, marketing, promotion and reimbursement of healthcare services and
products, including pharmaceutical products. Certain areas of the
telemarketing and teleservices industry recently also have become subjected to
increasing government regulation. It is possible that additional or amended
laws, regulations or guidelines could be adopted in the future.
BLP's service offerings are affected by various guidelines promulgated by
industry and professional organizations. For example, certain ethical
guidelines promulgated by the AMA govern, among other matters, the receipt by
physicians of gifts from health-related entities. These guidelines govern the
honoraria and other items of pecuniary value which AMA-member physicians may
receive in connection with peer-to-peer meetings and symposia sponsored by the
pharmaceutical company customers of the Company. Similar regulations have been
implemented by other professional and industry organizations, such as the
Pharmaceutical Manufacturers Association, and some of the Company's customers
also have their own policies regarding such matters. The provision of CE
services is subject to compliance with guidelines promulgated by various
accreditation bodies. For instance, providers of continuing medical education
programs must comply with the rules of the Accreditation Council of Continuing
Medical Education (the "ACCME") in order for the provider of the program to
receive accreditation from the ACCME. Other professional associations and some
of the Company's customers also have their own standards for continuing
education programs.
The pharmaceutical industry is subject to extensive federal regulation and
oversight by the FDA. For instance, the Federal Food, Drug and Cosmetic Act,
as supplemented by various other statutes, regulates, among other matters, the
approval, labeling, advertising, promotion, sale and distribution of drugs.
Under this statute, the FDA asserts its authority to regulate all promotional
activities involving prescription drugs. Accordingly, the businesses of BLP
and its customers, to the extent such business involves promotion and
marketing of pharmaceutical products, are subject to the extensive regulation
governing the pharmaceutical industry.
Certain portions of the telemarketing and teleservices industry have become
subject to increased federal and state regulation in recent years. The rules
of the Federal Communications Commission (the "FCC") under the Federal
Telephone Consumer Protection Act of 1991 limit the hours during which
telemarketers may call consumers and prohibit the use of automated telephone
dialing equipment to call certain telephone numbers. The Federal Telemarketing
and Consumer Fraud and Abuse Prevention Act of 1994 (the "TCFAPA") broadly
authorizes the Federal Trade Commission (the "FTC") to issue regulations
prohibiting misrepresentation in telephone sales. In August 1995, the FTC
issued regulations under the TCFAPA which, among other things, require
telemarketers to make certain disclosures when soliciting sales. The Company
believes its operating procedures comply with the telephone solicitation rules
of the FCC and the FTC. However, there can be no assurance that additional
federal or state legislation, or changes in the regulatory environment, would
not limit the activities of the Company or its customers in the future or
significantly increase the cost of regulatory compliance.
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The failure of BLP or its customers to comply with, or any change in, the
applicable regulatory requirements or professional organization or industry
guidelines could, among other things, limit or prohibit the Company or its
customers from conducting certain business activities, subject the Company or
its customers to adverse publicity, increase the costs of regulatory
compliance or subject the Company or its customers to monetary fines or other
penalties. Any such actions could have a material adverse effect on the
Company.
LIABILITY AND INSURANCE
Participants in the healthcare industry have become subject to an increasing
number of lawsuits alleging malpractice, product liability and other legal
theories, many of which involve large claims and significant legal costs. As a
provider of promotional, marketing and educational services to the
pharmaceutical industry, BLP is subject to the risk of being named as a party
in such lawsuits. As a result of its introduction of product marketing
services and teleservices, the Company believes that the relative likelihood
of becoming involved in litigation regarding the information given by its
personnel has increased, with the attendant risks of significant legal costs,
substantial damage awards and adverse publicity. Even if any such claims
ultimately prove to be without merit, defending against them can result in
adverse publicity, diversion of management's time and attention and
substantial expenses, which could have a material adverse effect on the
Company.
BLP maintains insurance policies, including liability insurance, which it
believes to be adequate in amount and coverage for the current size and scope
of its operations. There can be no assurance, however, that the coverage
maintained by the Company will be sufficient to cover all future claims or
will continue to be available in adequate amounts or at a reasonable cost.
Although the Company has not experienced difficulty in obtaining insurance
coverage in the past, the Company expects to seek increased insurance coverage
in connection with expanding its service offerings and there can be no
assurance that it will be able to obtain continued or increased insurance
coverage on acceptable terms or at all. In addition, although the Company's
contracts with its customers sometimes require the customer to indemnify the
Company for the customer's negligent conduct, the contracts do not provide for
adequate indemnification against many of the potential litigation risks facing
the Company and often require the Company to indemnify its customer for the
Company's negligence. BLP, therefore, could be held responsible for losses
incurred in connection with the performance of its services under the terms of
these contracts or otherwise and could incur substantial costs in connection
with legal proceedings associated with its services or the pharmaceutical
products with respect to which it provides services.
LEGAL PROCEEDINGS
From time to time the Company is subject to litigation incidental to its
business. BLP is not presently a party to any material litigation.
FACILITIES AND EMPLOYEES
BLP's corporate headquarters are located in Fair Lawn, New Jersey, in
approximately 14,520 square feet of space occupied under a lease which expires
on July 31, 1999. The Company currently leases an additional 5,247 square feet
of space for a call center in Fair Lawn, New Jersey.
The Company commenced operations at its teleservice center in Norfolk,
Virginia, in July 1997. The space for the teleservice center currently
consists of approximately 20,511 square feet under a lease expiring in July
2007, with options to expand the lease space. BLP also has leased a 4,660
square foot warehouse adjacent to the teleservice center which is intended to
be used for fulfillment functions.
As of May 31, 1997, BLP had 317 employees, including 100 full-time employees
and 217 part-time employees. Of the full-time employees, 35 were moderators,
12 were engaged in sales, 39 were engaged in sales support and production, 2
were engaged in business development and 12 were engaged in general and
administration. The Company is not party to a collective bargaining agreement
with a labor union and considers its relations with its employees to be good.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Executive officers and directors and their ages as of August 8, 1997, are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Patrick G. LePore............... 42 Chairman of the Board, Chief Executive
Officer, President and Director
Gregory F. Boron................ 44 Chief Operating Officer, Executive Vice
President--Administration and Director
Christopher J. Sweeney.......... 35 Executive Vice President--Corporate
Development
Timothy J. McIntyre............. 42 Executive Vice President and President--
Promotional Conferencing Services Division
Martin J. Veilleux.............. 35 Chief Financial Officer, Secretary and
Treasurer
Roger Boissonneault(1).......... 49 Director
Roger B. Kafker(1).............. 35 Director
Jacqueline C. Morby(2).......... 59 Director
Joseph E. Smith................. 58 Director
John A. Staley, IV(2)........... 54 Director
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Patrick G. LePore joined the Company in 1985 after six years at Hoffmann-La
Roche, a pharmaceutical company, where he worked as a product manager from
1982 to 1983 and as a product director from 1983 to 1985. He became President
and Chief Executive Officer of the Company in January 1992 and became Chairman
of the Board in December 1996.
Gregory F. Boron joined the Company in 1985 after leaving the U.S. Army as a
Major. He served as Vice President and Chief Financial Officer from January
1991 to November 1993 and as Executive Vice President, Administration and
Production from November 1993 to December 1996. Since December 1996, he has
served as Chief Operating Officer and Executive Vice President--Administration
of the Company.
Christopher J. Sweeney joined the Company in 1988 as a sales and marketing
representative. He served as Vice President--Sales from March 1991 to
September 1993 when he became Senior Vice President--Sales, a position he held
from September 1993 to December 1994. In December 1994, he became President--
Promotional Conferencing Services Division and he served in this position from
December 1994 until December 1996 when he became Executive Vice President--
Sales and Operations. In May 1997, he became Executive Vice President--
Corporate Development.
Timothy J. McIntyre joined the Company as Executive Vice President--
Corporate Development and became Executive Vice President of the Company and
President--Promotional Conferencing Services Division in June 1997. Prior to
joining the Company, he served as President and Chief Executive Officer of
Managed Marketing LLC, a healthcare marketing intelligence company, from
October 1995 until March 1997. From June 1991 until October 1995, he was
President of Medical News Network, a subdivision of Whittle Communications LP,
a marketing communications company, and from 1987 to 1991, he was Group
President of VNU Group, a conglomerate of healthcare and consumer marketing
intelligence companies.
Martin J. Veilleux joined the Company as Controller in March 1997 and became
Chief Financial Officer, Secretary and Treasurer in July 1997. Prior to
joining the Company, he served in positions of increasing responsibility over
a ten year period at Concurrent Computer Corporation, serving most recently as
Director of Finance from November 1991 to September 1994 and as Corporate
Controller until leaving Concurrent Computer in September 1996.
Roger Boissonneault has served as a director of the Company since April 1997
and is the President of Warner Chilcott Laboratories, Inc., a pharmaceutical
company. Before becoming President of Warner Chilcott in
33
<PAGE>
April 1996, he was associated with Warner-Lambert Co., the former parent
company of Warner Chilcott, since 1976, most recently as Vice President,
Female Health Care from October 1991 to January 1994 and Vice President and
General Manager from January 1994 to April 1996.
Roger B. Kafker has served as a director of the Company since December 1996.
He has been associated with TA Associates, Inc. or its predecessor since 1989
and became a Principal of that firm in 1994 and a Managing Director in 1995.
Mr. Kafker is also a director of ANSYS, Inc., a computer software company,
Monarch Dental Corporation, a manager of dental group practices, and
Affiliated Managers Group, Inc., an investment management holding company.
Jacqueline C. Morby has served as a director of the Company since December
1996. She has been Managing Director or a partner of TA Associates, Inc. or
its predecessor since 1982. Ms. Morby is also a director of ANSYS, Inc., a
computer software company, Axent Technologies Inc., a computer software
company, Ontrack Data International, Inc., a data recovery and software
company, NxTrend Technologies Inc., a computer software company, and Pacific
Mutual Life Insurance Co., a life insurance company.
Joseph E. Smith has served as a director of the Company since April 1997. He
has been a corporate Vice President of Warner-Lambert Co., a pharmaceutical
company, since 1989, serving as President, Pharmaceutical Sector from August
1991 to January 1994, Vice President, External Relations from January 1994 to
December 1995 and President, Shaving Products Group from December 1995 to the
present.
John A. Staley, IV has served as a director of the Company since May 1997.
Mr. Staley was Chief Executive Officer of Federated Research Corp., an
investment management firm and a subsidiary of Federated Investors Inc. which
is, in turn, a wholly owned subsidiary of Federated Investors, a Delaware
business trust, from 1984 through November 1994 when he retired. Upon his
retirement, Mr. Staley worked as a self-employed financial advisor from
November 1994 to November 1996 and has been the Chief Executive Officer of
Staley Capital Advisers, Inc., an investment advisory firm, from November 1996
to present. He is also a director of Robroy Industries, Inc., a manufacturer
of conduit products.
BOARD OF DIRECTORS
The number of directors of the Company is currently fixed at seven.
Following this offering, the Company's Board of Directors will be divided into
three classes, with the members of each class of directors serving for
staggered three-year terms. The Board will consist of two Class I Directors
(Ms. Morby and Mr. Staley), three Class II Directors (Mr. Boron, Mr. Kafker
and Mr. Smith) and two Class III Directors (Mr. Boissonneault and Mr. LePore),
whose initial terms will expire at the 1998, 1999 and 2000 annual meetings of
stockholders, respectively.
The Board of Directors has established an Audit Committee (the "Audit
Committee") and a Compensation and Option Committee (the "Compensation
Committee"). The Audit Committee recommends the firm to be appointed as
independent accountants to audit financial statements and to perform services
related to the audit, reviews the scope and results of the audit with the
independent accountants, reviews with management and the independent
accountants the Company's annual operating results, considers the adequacy of
the internal accounting procedures and considers the effect of such procedures
on the accountants' independence. Following the completion of this offering,
the Audit Committee will consist of Mr. Kafker and Mr. Boissonneault, neither
of whom is an officer nor an employee of the Company. The Compensation
Committee reviews and recommends the compensation arrangements for officers
and other senior level employees, reviews general compensation levels for
other employees as a group, determines the options or stock to be granted to
eligible persons under the 1996 Stock Plan and takes such other action as may
be required in connection with the Company's compensation and incentive plans.
The Compensation Committee consists of Ms. Morby and Mr. Staley.
Non-employee directors other than Mr. Kafker and Ms. Morby (the "Independent
Directors") each purchased 6,666 shares of restricted Class A Common Stock for
$3.00 per share upon joining the Board, and receive fees of $2,000 for each
meeting of the Board of Directors and $1,000 for each meeting of a Board
committee they attend. Further, each director is reimbursed for reasonable
travel and other expenses incurred in attending meetings. See "Management--
Employee Stock and Other Benefit Plans--Restricted Stock Grants."
34
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or
paid to the Chief Executive Officer and the other two executive officers of
the Company whose aggregate annual base salary and bonus for 1996 exceeded
$100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1996
ANNUAL
COMPENSATION
--------------------
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($)
- --------------------------- --------- -------- ---------------
<S> <C> <C> <C>
Patrick G. LePore......................... 421,226 998,700 1,769,301(1)(2)
Chief Executive Officer, President and
Chairman
Gregory F. Boron.......................... 392,886 897,200 719,263(1)(2)
Chief Operating Officer and Director
Christopher J. Sweeney.................... 325,884(3) 109,400 5,702,630(1)(4)
Executive Vice President
</TABLE>
- --------
(1) Includes special bonuses, including a bonus paid as part of the TA
Transactions, totaling the following amounts: Mr. LePore $1,739,499, Mr.
Boron $696,125 and Mr. Sweeney $5,694,230.
(2) Includes premiums on life insurance paid by the Company of $29,802 on
behalf of Mr. LePore and $23,138 paid on behalf of Mr. Boron.
(3) Includes $150,884 Mr. Sweeney earned in sales salaries prior to becoming
an executive officer in July 1996.
(4) Includes a car allowance of $8,400.
Option Grants, Exercises and Holdings. No options or stock appreciation
rights were granted to the Named Executive Officers in 1996.
Executive Bonuses. The Company has adopted an incentive bonus plan for its
senior executives. Under the plan, an amount equal to 10% of the Company's
annual earnings before interest, taxes, depreciation, amortization, commission
to sales personnel and payments of bonuses under the plan is reserved as a
bonus pool for plan participants. Bonuses are then awarded by the Compensation
Committee based on the recommendation of the Company's Chief Executive
Officer. The plan is administered by the Compensation Committee and will
remain in effect until the closing of the Company's first underwritten firm
commitment public offering. The Executive Bonus Plan will terminate upon
completion of this offering, except with respect to unpaid awards for the
partial year 1997 which accrued prior to the termination.
EMPLOYEE STOCK AND OTHER BENEFIT PLANS
1996 Stock Option and Grant Plan
The Boron, LePore & Associates 1996 Stock Option and Grant Plan (the "1996
Stock Plan") was initially adopted by the Board of Directors and approved by
the Company's stockholders in December 1996. The 1996 Stock Plan permits (i)
the grant of Incentive Options, (ii) the grant of Non-Qualified Options, (iii)
the issuance or sale of Common Stock with or without vesting or other
restrictions ("Restricted Stock") or without restrictions ("Unrestricted
Stock" collectively with Restricted Stock, "Stock Grants"), (iv) the grant of
Common Stock upon the attainment of specified performance goals ("Performance
Share Awards"), (v) the grant of the right to receive cash dividends with the
holders of the Common Stock as if the recipient held a specified number of
shares of the Common Stock ("Dividend Equivalent Rights") and (vi) the grant
of the right to receive the value of the excess of the fair market value of
the Common Stock over the exercise price of the Common Stock ("Stock
Appreciation Rights" or "SARs"). These grants may be made to officers and
other employees, directors, advisors, consultants and other key persons of the
Company and its subsidiaries. The 1996 Stock Plan provides for the issuance of
up to 1,733,333 shares of Common Stock. 194,687 shares of Common Stock are
available for future grants under the Plan. On and after the date the 1996
Stock Plan becomes
35
<PAGE>
subject to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), options with respect to no more than 150,000 shares of Common
Stock may be granted to any one individual in any calendar year.
The 1996 Stock Plan is administered by the Compensation Committee of the
Board of Directors. Subject to the provisions of the 1996 Stock Plan, the
Compensation Committee has full power to determine from among the persons
eligible for grants under the 1996 Stock Plan the individuals to whom grants
will be granted, the combination of grants to participants and the specific
terms of each grant, including vesting. Incentive Options may be granted only
to officers or other full-time employees of the Company or its subsidiaries,
including members of the Board of Directors who are also full-time employees
of the Company or its subsidiaries. The Compensation Committee may delegate
the power to grant options to non-executive employees to the Company's Chief
Executive Officer.
The 1996 Stock Plan also permits Stock Grants, Performance Share Awards,
grants of Dividend Equivalent Rights and SARs. Stock Grants may be made to
persons eligible under the 1996 Stock Plan, subject to such conditions and
restrictions as the Compensation Committee may determine. Prior to the vesting
of shares, recipients of Stock Grants generally will have all the rights of a
stockholder with respect to the shares, including voting and dividend rights,
subject only to the conditions and restrictions set forth in the 1996 Stock
Plan or in any agreement. The Compensation Committee may also make Stock
Grants to persons eligible under the 1996 Stock Plan in recognition of past
services or other valid consideration, or in lieu of cash compensation. In the
case of Performance Share Awards, the issuance of shares of Common Stock will
occur only after the conditions and restrictions set forth in the grant
agreement are satisfied. SARs may be granted in tandem with, or independently
of, Incentive Options or Non-Qualified Options. The Compensation Committee may
also grant Dividend Equivalent Rights in conjunction with any other grant made
pursuant to the 1996 Stock Plan or as a free standing grant. Dividend
Equivalent Rights may be paid currently or deemed to be reinvested in
additional shares of Common Stock, which may thereafter accrue further
dividends.
The Compensation Committee may, in its sole discretion, accelerate or extend
the date or dates on which all or any particular award or awards granted under
the 1996 Stock Plan may be exercised or vest. Vesting of options granted under
the 1996 Stock Plan generally does not accelerate on a dissolution,
liquidation or sale of the Company. Options held by directors and certain
employees vest in whole or part on such events. To the extent not fully vested
and exercised, options granted under the 1996 Plan terminate upon the
dissolution, liquidation or sale of the Company, except as the Compensation
Committee shall otherwise determine.
Options. The option exercise price of options granted under the 1996 Stock
Plan is determined by the Compensation Committee. In the case of Incentive
Options, the exercise price may not be less than 100% of the fair market value
of the underlying shares on the date of grant. If any employee of the Company
or any subsidiary owns (or is deemed to own) at the date of grant shares of
stock representing in excess of 10% of the combined voting power of all
classes of stock of the Company or any parent or subsidiary, the option
exercise price for Incentive Options granted to such employee may not be less
than 110% of the fair market value of the underlying shares on that date. Non-
Qualified Options may be granted at prices which are less than the fair market
value of the underlying shares on the date granted. Options typically are
subject to vesting schedules, terminate 10 years from the date of grant and
may be exercised for specified periods subsequent to the termination of the
optionee's employment or other business relationship with the Company. At the
discretion of the Compensation Committee, any option may include a "reload"
feature pursuant to which an optionee exercising an option, receives in
addition to the number of shares of Common Stock due on the exercise of such
an option, an additional option with an exercise price equal to the fair
market value of the Common Stock on the date such additional option is
granted. Upon the exercise of options, the option exercise price must be paid
in full either in cash or by certified or bank check or other instrument
acceptable to the Compensation Committee or, in the sole discretion of the
Compensation Committee, by delivery of shares of Common Stock already owned by
the optionee. The exercise price may also be delivered to the Company by a
broker pursuant to irrevocable instructions to the broker selling the
underlying shares from the optionee. Since adopting the 1996 Plan in
connection with the TA Transaction in December 1996, the Company has granted
options to purchase an aggregate of 325,660 shares of Common Stock to
employees of the Company under the 1996 Stock Plan at a weighted average
exercise price of $9.35 per share through August 8, 1997.
36
<PAGE>
Restricted and Unrestricted Stock Grants. Since adopting the 1996 Stock Plan
in connection with the TA Transaction in December 1996, the Company has sold
an aggregate of 802,988 shares of restricted Common Stock to employees and
directors of the Company under the 1996 Stock Plan for an aggregate cash
purchase price of $390,883, including an aggregate of 566,666 shares sold to
Messrs. LePore, Boron and Sweeney for an aggregate cash purchase price of
$242,250, and an aggregate of 409,998 shares of unrestricted Common Stock to
employees and consultants for an aggregate purchase price of $183,850,
including 300,000 shares sold to Mr. Sweeney for a cash purchase price of
$85,500. Restricted Shares sold to employees and directors generally vest upon
the achievement of specified performance objectives and/or at a specified date
or dates, with unvested shares subject to repurchase at cost upon the
termination of the purchaser's employment or other relationship with the
Company, either for any reason or in some cases upon a voluntary termination
or a termination for cause. Shares of restricted Common Stock generally are
treated as fully vested in the event of a sale of the Company.
1997 Employee Stock Purchase Plan
The Company's 1997 Employee Stock Purchase Plan (the "Purchase Plan") will
be considered by the Board of Directors in August 1997 and may subsequently be
approved by the Company's stockholders. As currently written, up to 225,000
shares of Common Stock are proposed to be issued under the Purchase Plan. The
Purchase Plan will be administered by the Compensation Committee.
If approved, the first offering under the Purchase Plan will begin on
October 1, 1997 and end on December 31, 1997. Subsequent offerings will
commence on each January 1 and July 1 thereafter and will have a duration of
six months. Generally, all employees who are customarily employed for more
than 20 hours per week as of the first day of the applicable offering period
will be eligible to participate in the Purchase Plan. An employee who owns or
is deemed to own shares of stock representing in excess of 5% of the combined
voting power of all classes of stock of the Company will not be able to
participate in the Purchase Plan.
During each offering, an employee will be able to purchase shares under the
Purchase Plan by authorizing payroll deductions of up to 10% of his cash
compensation during the offering period. If the Purchase Plan is approved, the
maximum number of shares which may be purchased by any participating employee
during any offering period is limited to 1,250 shares (as adjusted by the
Compensation Committee from time to time). Unless the employee has previously
withdrawn from the offering, his accumulated payroll deductions will be used
to purchase Common Stock on the last business day of the period at a price
equal to 85% of the fair market value of the Common Stock on the first or last
day of the offering period, whichever is lower. Under applicable tax rules, an
employee may purchase no more than $25,000 worth of Common Stock in any
calendar year.
EMPLOYMENT AGREEMENTS
In connection with the TA Transaction, the Company entered into Employment
Agreements with Patrick G. LePore, Gregory F. Boron and Christopher J.
Sweeney, each of which contains substantially the same terms (except for
titles, duties and base salary.) The Employment Agreements provide for base
salary payments to Mr. LePore at the annual rate of $315,000, Mr. Boron at the
annual rate of $285,000 and Mr. Sweeney at the annual rate of $265,000. Each
of these agreements provides for (i) an initial employment term ending on
December 4, 1999 with one year renewals thereafter, subject to earlier
termination by either party and (ii) the continuation of base salary payments
until the later of December 4, 1999 or one year following termination of
employment in the event the employee's employment is terminated by the Company
without cause (as defined) or by such employee following a material default by
the Company. In connection with the TA Transactions, the Company also entered
into Non-Competition Agreements with Messrs. LePore, Boron and Sweeney. These
agreements provide that these employees will not compete with the Company
until December 4, 2000 or the first anniversary of termination of their
employment, if later.
In June 1997, the Company entered into an Employment Agreement with Timothy
J. McIntyre. The agreement provides for (i) an annual base salary of $200,000,
(ii) a bonus of at least $100,000 in 1997, (iii) an employment term ending on
June 9, 1999 with potential one-year renewals thereafter, subject to earlier
termination by either party, and (iv) the continuation of base salary and
benefit payments until the later of June 9, 1999 or one year following
termination of employment in the event the employee's employment is terminated
37
<PAGE>
by the Company without cause (as defined) or by Mr. McIntyre following a
material default by the Company. Mr. McIntyre's agreement prohibits
competition with the Company until June 9, 1999 or the first anniversary of
the termination of his employment, if later.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to December 1996, Patrick G. LePore made compensation decisions as
Chief Executive Officer of the Company. Since December 1996, all executive
officer compensation decisions have been made by the Compensation Committee.
The current members of the Compensation Committee are Messrs. LePore and
Kafker and Ms. Morby. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding the compensation for
senior management and key employees of the Company, including salaries and
bonuses. Upon completion of this offering the members of the Compensation
Committee will be Ms. Morby and Mr. Staley. None of these individuals is an
executive officer of the Company.
CERTAIN TRANSACTIONS
In December 1996, the Company completed a series of transactions with TA
Associates, Inc. and the Company's senior executive officers. In connection
with these transactions:
(i) the Company, then a New Jersey corporation, was reorganized under the
laws of Delaware;
(ii) the Company incurred $21.0 million of senior secured indebtedness under
the Credit Facility;
(iii) the TA Investors, principally including investment funds associated
with TA Associates, Inc. and John A. Staley, IV, a director of the
Company, invested $12.5 million to acquire 7,000,000 shares of
Convertible Participating Preferred Stock which are convertible into
4,666,664 shares of Common Stock and 5,600,000 shares of Redeemable
Preferred Stock redeemable upon completion of this offering for an
aggregate cash payment of $10 million plus accumulated and unpaid
dividends;
(iv) the Company redeemed shares of Common Stock held by Patrick G. LePore,
Chief Executive Officer of the Company, for a cash payment of $9.4
million, paid or agreed to pay cash and in-kind bonuses to Mr. LePore
in the amount of $1,739,499 (which bonuses were fully paid by the end
of the first quarter of 1997), entered into an Employment Agreement
with Mr. LePore as described under "Management--Employment Agreements,"
and sold 200,000 shares of restricted Common Stock to Mr. LePore for an
aggregate purchase price of $85,500;
(v) the Company redeemed shares of Common Stock held by Gregory F. Boron,
Chief Operating Officer and Executive Vice President--Administration,
for a cash payment of $9.4 million, paid or agreed to pay cash and in-
kind bonuses to Mr. Boron in the amount of $696,125 (which bonuses were
fully paid by the end of the first quarter of 1997), entered into an
Employment Agreement with Mr. Boron as described under "Management--
Employment Agreements," and sold 200,000 shares of restricted Common
Stock to Mr. Boron for an aggregate purchase price of $85,500;
(vi) the Company paid or agreed to pay cash and in-kind bonuses to
Christopher J. Sweeney, Executive Vice President--Corporate
Development, in an aggregate amount of $5,694,230 (which bonuses were
fully paid by the end of the first quarter of 1997), entered into an
Employment Agreement with Mr. Sweeney as described under "Management--
Employment Agreements," and sold 166,666 shares of restricted Common
Stock to Mr. Sweeney for an aggregate purchase price of $71,250 and
300,000 shares of unrestricted Common Stock to Mr. Sweeney for an
aggregate purchase price of $128,250;
(vii) the Company paid or agreed to pay cash and in-kind bonuses to Michael
W. Foti, the former Chief Financial Officer of the Company, in an
aggregate amount of $1,894,139 (which bonuses were fully paid by the
end of the first quarter of 1997), entered into an Employment
Agreement with Mr. Foti as described below, and sold 100,000 shares
of restricted Common Stock to Mr. Foti for an aggregate purchase
price of $42,750 and 100,000 shares of unrestricted Common Stock to
Mr. Foti for an aggregate purchase price of $42,750; and
38
<PAGE>
(viii) the Company paid Thomas S. Boron, a former officer and shareholder
of the Company and the brother of Gregory F. Boron, Chief Operating
Officer and Executive Vice President--Administration, $6,175,000 in
satisfaction of obligations relating to the repurchase of Thomas
Boron's stock under a stock purchase agreement dated June 18, 1996
and a related consulting agreement, following payment by the
Company's predecessor to Mr. Boron of $549,662 in 1996 in connection
with these agreements.
See "Management--Employment Agreements," "--Employee Stock and Other Benefit
Plans--Restricted Stock Grants" and "Principal Shareholders."
In 1996, the Company entered into an Employment Agreement and a Non-
Competition Agreement with Mr. Foti, the Company's former Chief Financial
Officer, which agreement provides for base salary payments to Mr. Foti at the
annual rate of $185,000 through December 4, 1999. Mr. Foti is now a consultant
to the Company and is compensated therefor substantially in accordance with
the financial terms of the Employment Agreement.
In 1996, the Company rented a house from Mr. Thomas S. Boron for
approximately $84,000. This lease was canceled in connection with the TA
Transaction.
Mr. James LePore and Mr. Robert LePore, brothers of Patrick G. LePore, the
Company's Chief Executive Officer, are each partners of LePore, Zimmerer,
LePore & Luizzi, the Company's general counsel. During fiscal 1996, the
Company paid fees of approximately $54,885 to LePore, Zimmerer, LePore &
Luizzi for legal services rendered. The Company believes that the fees paid
for these services are at rates no less favorable to the Company than could
have been obtained from unaffiliated third parties.
Mr. Gerard LePore, brother of Patrick G. LePore, is employed as a Group
Account Supervisor for the Company. During 1996, Mr. Gerard LePore's salary
was approximately $76,000 plus a bonus of approximately $75,000.
Pursuant to a Stockholders' Agreement, as amended (the "Stockholders'
Agreement"), initially entered into in connection with the TA Transaction, to
which the Company, the TA Investors, Patrick G. LePore, Gregory Boron,
Christopher Sweeney and Michael W. Foti are parties, (i) each party received
"piggy back" registration rights, (ii) the TA Investors received demand
registration rights, (iii) each party received the right to demand one or more
registrations on Form S-3 if the Company becomes eligible to use Form S-3 and
if the anticipated net aggregate sale price of such registered shares exceeds
$500,000, (iv) each party granted to and received from the other investors
rights (the "Co-Sale Rights") to participate on a pro rata basis in certain
resales of Common Stock and agreed to restrictions on transfers of shares, (v)
each party was granted participation rights with respect to certain future
issuances of securities by the Company, and (vi) each party agreed to elect
and continue in office as Directors two individuals nominated by two-thirds
interest of the employee stockholders who are parties to the Stockholders'
Agreement. Mr. LePore and Mr. Boron have been elected as Directors of the
Company pursuant to the Stockholders' Agreement. Also in connection with the
TA Transactions, the Company agreed to indemnify the TA Investors and the
controlling persons of the TA Investors (of whom Mr. Kafker and Ms. Morby are
directors of the Company) against claims and liabilities including claims and
liabilities arising under the securities laws.
Effective upon and subject to the completion of this offering, provisions of
the Stockholders' Agreement relating to the participation rights, the Co-Sale
Rights, restrictions on transfers of shares and the election of the Board of
Directors contained in the Stockholders' Agreement will expire in accordance
with their original terms.
The Company intends to adopt a policy providing that all material
transactions between the Company and its officers, directors and other
affiliates must (i) be approved by a majority of the members of the Company's
Board of Directors and by a majority of the disinterested members of the
Company's Board of Directors and (ii) be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties. In addition,
this policy will require that any loans by the Company to its officers,
directors or other affiliates be for bona fide business purposes only.
39
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information as to the beneficial ownership of
the Company's Common Stock as of August 8, 1997 and as adjusted to reflect the
sale of the shares of Common Stock offered hereby of (i) each person known by
the Company to own beneficially five percent or more of the outstanding shares
of Common Stock, (ii) each director and the Named Executive Officers of the
Company and (iii) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------------
PERCENTAGE
NUMBER OF BENEFICIALLY OWNED
SHARES --------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER(2) OWNED OFFERING OFFERING(3)
- --------------------------- ------------ -------- -----------
<S> <C> <C> <C>
TA Associates Group (4)...................... 4,465,066 59.7% 41.3%
Patrick G. LePore (5)........................ 993,333 13.3% 9.2%
Gregory F. Boron (6)......................... 921,333 12.3% 8.5%
Christopher J. Sweeney (7)................... 466,666 6.2% 4.3%
Roger Boissonneault (8)...................... 6,666 * % * %
Roger B. Kafker (9).......................... 6,333 * % * %
Jacqueline C. Morby (10)..................... 6,930 * % * %
Joseph E. Smith (11)......................... 6,666 * % * %
John A. Staley, IV (12)...................... 193,332 2.6% 1.8%
Park Street Investors, L.P. (13)............. 400,000 5.3% 3.7%
All executive officers and directors as a
group (nine persons)........................ 2,601,259 34.8% 24.1%
</TABLE>
- -------
* Less than 1%.
(1) All percentages have been determined as of August 8, 1997 in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of this table, a person or group of persons
is deemed to have "beneficial ownership" of any shares of Common Stock
which such person has the right to acquire within 60 days after the date
of this Prospectus. For purposes of computing the percentage of
outstanding shares of Common Stock held by each person or group of persons
named above, any security which such person or persons has or have the
right to acquire within 60 days after the date of this Prospectus is
deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. As of
August 8, 1997, a total of 7,479,645 shares of Common Stock were issued
and outstanding and no options to acquire Common Stock were exercisable
within 60 days. The applicable percentage of "beneficial ownership" after
this offering is based upon 10,812,978 shares of Common Stock outstanding.
The number of shares of Common Stock set forth herein includes shares of
non-voting Class A Common Stock and Shares of Common Stock issuable upon
conversion of the Convertible Participating Preferred Stock which will
automatically convert into an equal number of shares of Common Stock upon
completion of this offering.
(2) The address of the TA Associates Group is High Street Tower, Suite 2500,
125 High Street, Boston, Massachusetts 02110-2720. The address of Mr.
Kafker and Ms. Morby is c/o TA Associates, Inc., High Street Tower, Suite
2500, 125 High Street, Boston, Massachusetts 02110-2720. The address of
all other listed stockholders is c/o Boron, LePore & Associates, Inc.,
17-17 Route 208 North, Fair Lawn, New Jersey 07410.
(3) Assumes no exercise of the Underwriters' over-allotment option. If the
Underwriters' over-allotment option to purchase 500,000 shares from the
Selling Stockholders is exercised in full, the TA Associates Group will
beneficially own 3,965,066 shares, or 36.7%, and all other stockholders
will beneficially own the same share amounts as set forth above.
(4) Includes (i) 2,736,533 shares of Common Stock owned by Advent VII L.P.,
(ii) 1,680,000 shares of Common Stock owned by Advent Atlantic and Pacific
III L.P., and (iii) 48,533 shares of Common Stock owned by TA Venture
Investors Limited Partnership of which , and respectively, will
be sold if the Underwriters exercise their over-allotment option. Advent
VII L.P., Advent Atlantic and Pacific III L.P., and TA Venture Investors
Limited Partnership are part of an affiliated group of investment
partnerships referred to, collectively, as the "TA Associates Group" or
the "Selling Stockholders." The general partner of Advent VII L.P. is TA
Associates VII L.P. The general partner of Advent Atlantic and Pacific III
L.P. is TA Associates AAP III Partners L.P. The general partner of each of
TA Associates VII
40
<PAGE>
L.P. and TA Associates AAP III Partners L.P. is TA Associates, Inc. In such
capacity, TA Associates, Inc. exercises sole voting and investment power
with respect to all of the shares held of record by the named investment
partnerships, with the exception of those shares held by TA Venture
Investors Limited Partnership; individually, no stockholder, director or
officer of TA Associates, Inc. is deemed to have or share such voting or
investment power. Principals and employees of TA Associates, Inc.
(including Ms. Morby and Mr. Kafker, directors of the Company) comprise the
general partners of TA Venture Investors Limited Partnership. In such
capacity, Ms. Morby and Mr. Kafker may each be deemed to share voting and
investment power with respect to the 48,533 shares held of record by TA
Venture Investors Limited Partnership. Ms. Morby and Mr. Kafker each
disclaim beneficial ownership of all shares, except as to 6,930 shares and
6,333 shares, respectively, held by TA Venture Investors Limited
Partnership, as to which each holds a pecuniary interest. See Notes 9 and
10.
(5) Includes 200,000 shares of restricted Common Stock held by Mr. LePore,
which shares vest on December 4, 2003 (subject to earlier vesting based on
achievement by the Company of specified performance objectives or a sale
of the Company) and which are subject to repurchase at a price of $.43 per
share upon a voluntary termination of Mr. LePore's employment or a
termination for cause prior to the relevant vesting date. Also includes
400,000 shares of Common Stock held by Park Street Investors, L.P., a
limited partnership in which Mr. LePore holds a 40% limited partnership
interest. The general partner of Park Street Investors, L.P. is Park
Street Investors, Inc., a corporation in which Mr. LePore shares voting
and investment power. See Note 13. Does not include 29,998 shares of
Common Stock held by siblings of Mr. LePore, as to which shares Mr. LePore
disclaims beneficial ownership.
(6) Includes 200,000 shares of restricted Common Stock held by Mr. Boron,
which shares vest on December 4, 2003 (subject to earlier vesting based on
achievement by the Company of specified performance objectives or a sale
of the Company) and which are subject to repurchase at a price of $.43 per
share upon a voluntary termination of Mr. Boron's employment or a
termination for cause prior to the relevant vesting date. Does not include
78,664 shares of Common Stock held by irrevocable trusts for the benefit
of members of Mr. Boron's family of which Mr. Boron is not a trustee, as
to which shares Mr. Boron disclaims beneficial ownership.
(7) Includes 166,666 shares of restricted Common Stock held by Mr. Sweeney,
which shares vest on December 4, 2003 (subject to earlier vesting based on
achievement by the Company of specified performance objectives or a sale
of the Company) and are subject to repurchase at a price of $.43 per share
upon a voluntary termination of Mr. Sweeney's employment or a termination
for cause prior to the relevant vesting date.
(8) Includes 6,666 shares of restricted Common Stock held by Mr.
Boissonneault, which shares vest in four equal annual installments
beginning on April 10, 1998 subject to earlier vesting upon a sale of the
Company, and which are subject to repurchase at a price of $3.00 per share
upon termination of Mr. Boissonneault's service as a director prior to the
relevant vesting date.
(9) Includes 6,333 shares of Common Stock beneficially owned by Mr. Kafker
through TA Venture Investors Limited Partnership, all of which shares are
included in the 4,465,066 shares described in footnote (4) above. Does not
include any shares beneficially owned by Advent VII L.P. or Advent
Atlantic and Pacific III L.P., of which Mr. Kafker disclaims beneficial
ownership.
(10) Includes 6,930 shares of Common Stock beneficially owned by Ms. Morby
through TA Venture Investors Limited Partnership, all of which shares are
included in the 4,465,066 shares described in footnote (4) above. Does
not include any shares beneficially owned by Advent VII L.P. or Advent
Atlantic and Pacific III L.P., of which Ms. Morby disclaims beneficial
ownership.
(11) Includes 6,666 shares of restricted Common Stock held by Mr. Smith, which
shares vest in four equal annual installments beginning on April 10, 1998,
subject to earlier vesting upon a sale of the Company and which are
subject to repurchase at a price of $3.00 per share upon termination of
Mr. Smith's service as a director prior to the relevant vesting date.
(12) Includes 186,666 shares held in an individual retirement rollover account
for Mr. Staley's benefit and 6,666 shares of restricted Common Stock held
by Mr. Staley, which shares vest in four equal annual installments
beginning on May 27, 1998 subject to earlier vesting upon a sale of the
Company, and which are subject to repurchase at a price of $3.00 per share
upon termination of Mr. Staley's service as a director prior to the
relevant vesting date.
(13) Patrick G. LePore is the principal stockholder of Park Street Investors,
Inc., the general partner of Park Street Investors, L.P.
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
Prior to the completion of this offering, there are 7,000,000 shares of
Convertible Participating Preferred Stock outstanding, 812,986 shares of Class
A Common Stock (including all outstanding stock grants) and 1,999,995 shares
of Common Stock outstanding. In connection with and subject to the completion
of this offering, each share of Convertible Participating Preferred Stock will
convert into 2/3 of a share of Common Stock and eight-tenths of a share of
Redeemable Preferred Stock. Pursuant to the terms of the Redeemable Preferred
Stock, all of the outstanding shares of Redeemable Preferred Stock will be
redeemed by the Company at the time of this offering for $10.0 million plus
accumulated and unpaid dividends of $332,000 at March 31, 1997. In connection
with and subject to the completion of this offering, each share of Class A
Common Stock will automatically convert into one share of Common Stock, and
each share of Common Stock will automatically convert into 2/3 of a share of
Common Stock.
Upon completion of this offering, the authorized capital stock of the
Company will consist of 50,000,000 shares of Common Stock, of which 10,812,978
shares will be issued and outstanding and 2,000,000 shares of undesignated
preferred stock issuable in one or more series by the Board of Directors
("Preferred Stock"), of which no shares will be issued and outstanding.
Common Stock. The holders of Common Stock are entitled to one vote per share
on all matters to be voted on by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. Any issuance of Preferred
Stock with a dividend preference over Common Stock could adversely affect the
dividend rights of holders of Common Stock. Holders of Common Stock are not
entitled to cumulative voting rights. Therefore, the holders of a majority of
the shares voted in the election of directors can elect all of the directors
then standing for election, subject to any voting rights of the holders of any
then outstanding Preferred Stock. The holders of Common Stock have no
preemptive or other subscription rights, and there are no conversion rights or
redemption or sinking fund provisions with respect to the Common Stock. All
outstanding shares of Common Stock, including the shares offered hereby, are,
or will be upon completion of the offering, fully paid and non-assessable.
The Company's By-laws, which will be effective upon completion of this
offering provide, subject to the rights of the holders of any Preferred Stock
then outstanding, that the number of directors shall be fixed by the
stockholders. The directors, other than those who may be elected by the
holders of any Preferred Stock, are divided into three classes, as nearly
equal in number as possible, with each class serving for a three-year term.
Subject to any rights of the holders of any Preferred Stock to elect
directors, and to remove any director whom the holders of any Preferred Stock
had the right to elect, any director of the Company may be removed from office
only with cause and by the affirmative vote of at least two-thirds of the
total votes which would be eligible to be cast by stockholders in the election
of such director.
Undesignated Preferred Stock. The Board of Directors of the Company is
authorized, without further action of the stockholders, to issue up to
2,000,000 shares of Preferred Stock in one or more series and to fix the
designations, powers, preferences and the relative, participating, optional or
other special rights of the shares of each series and any qualifications,
limitations and restrictions thereon as set forth in the Company's
Certificate. Any such Preferred Stock issued by the Company may rank prior to
the Common Stock as to dividend rights, liquidation preference or both, may
have full or limited voting rights and may be convertible into shares of
Common Stock.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring or seeking to acquire, a significant portion of the outstanding
Common Stock.
CERTAIN PROVISIONS OF CERTIFICATE AND BY-LAWS
A number of provisions of the Company's Amended and Restated Certificate of
Incorporation, as amended, and By-laws which will be effective upon completion
of this offering concern matters of corporate governance
42
<PAGE>
and the rights of stockholders. Certain of these provisions, as well as the
ability of the Board of Directors to issue shares of Preferred Stock and to
set the voting rights, preferences and other terms thereof, may be deemed to
have an anti-takeover effect and may discourage takeover attempts not first
approved by the Board of Directors, including takeovers which stockholders may
deem to be in their best interests. To the extent takeover attempts are
discouraged, temporary fluctuations in the market price of the Company's
Common Stock, which may result from actual or rumored takeover attempts, may
be inhibited. These provisions, together with the classified Board of
Directors and the ability of the Board to issue Preferred Stock without
further stockholder action, also could delay or frustrate the removal of
incumbent directors or the assumption of control by stockholders, even if such
removal or assumption would be beneficial to stockholders of Company. These
provisions also could discourage or make more difficult a merger, tender offer
or proxy contest, even if favorable to the interests of stockholders, and
could depress the market price of the Common Stock. The Board of Directors
believes that these provisions are appropriate to protect the interests of the
Company and all of its stockholders. The Board of Directors has no present
plans to adopt any other measures or devices which may be deemed to have an
"anti-takeover effect."
Meetings of Stockholders. The By-laws provide that a special meeting of
stockholders may be called only by the President or the Board of Directors
unless otherwise required by law. The By-laws provide that only those matters
set forth in the notice of the special meeting may be considered or acted upon
at that special meeting unless otherwise provided by law. In addition, the By-
laws set forth certain advance notice and informational requirements and time
limitations on any director nomination or any new proposal which a stockholder
wishes to make at an annual meeting of stockholders.
Indemnification and Limitation of Liability. The By-laws provide that
directors and officers of the Company shall be, and in the discretion of the
Board of Directors non-officer employees may be, indemnified by the Company to
the fullest extent authorized by Delaware law, as it now exists or may in the
future be amended, against all expenses and liabilities reasonably incurred in
connection with service for or on behalf of the Company. The By-laws also
provide that the right of directors and officers to indemnification shall be a
contract right and shall not be exclusive of any other right now possessed or
hereafter acquired under any by-law, agreement, vote of stockholders or
otherwise. The Certificate contains a provision permitted by Delaware law that
generally eliminates the personal liability of Directors for monetary damages
for breaches of their fiduciary duty, including breaches involving negligence
or gross negligence in business combinations, unless the director has breached
his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation
Law or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws and does not affect the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty. The Company also entered into indemnification
agreements with each of its directors reflecting the foregoing and requiring
the advancement of expenses in proceedings involving the directors in most
circumstances.
Amendment of the Certificate. The Certificate provides that an amendment
thereof must first be approved by a majority of the Board of Directors and
(with certain exceptions) thereafter approved by a majority (or 66 2/3% in the
case of any proposed amendment to the provisions of the Certificate relating
to the composition of the Board or amendments of the Certificate) of the total
votes eligible to be cast by holders of voting stock with respect to such
amendment.
Amendment of By-laws. The Certificate provides that the By-laws may be
amended or repealed by the Board of Directors or by the stockholders. Such
action by the Board of Directors requires the affirmative vote of a majority
of the directors then in office. Such action by the stockholders requires the
affirmative vote of at least two-thirds of the total votes eligible to be cast
by holders of voting stock with respect to such amendment or repeal at an
annual meeting of stockholders or a special meeting called for such purpose
unless the Board of Directors recommends that the stockholders approve such
amendment or repeal at such meeting, in which case such amendment or repeal
shall only require the affirmative vote of a majority of the total votes
eligible to be cast by holders of voting stock with respect to such amendment
or repeal.
43
<PAGE>
Ability to Adopt Shareholder Rights Plan. The Board of Directors may in the
future resolve to issue shares of Preferred Stock or rights to acquire such
shares to implement a shareholder rights plan. A shareholder rights plan
typically creates voting or other impediments or under which shares are
distributed to a third-party investor, to a group of investors or stockholders
or to an employee stock ownership plan, to discourage persons seeking to gain
control of the Company by means of a merger, tender offer, proxy contest or
otherwise if such change in control is not in the best interest of the Company
and its stockholders. The Board of Directors has no present intention of
adopting a shareholder rights plan and is not aware of any attempt to obtain
control of the Company.
STATUTORY BUSINESS COMBINATION PROVISION
Upon completion of the offering, the Company will be subject to the
provisions of Section 203 of the Delaware General Corporation Law ("Section
203"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations
with a person or affiliate, or associate of such person, who is an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder unless: (i) the transaction resulting in a person
becoming an interested stockholder, or the business combination, is approved
by the board of directors of the corporation before the person becomes an
interested stockholder; (ii) the interested stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction
that makes it an interested stockholder (excluding shares owned by persons who
are both officers and directors of the corporation, and shares held by certain
employee stock ownership plans); or (iii) on or after the date the person
becomes an interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined (with certain limited exceptions) as any
person that is (i) the owner of 15% or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which
it is sought to be determined whether such person is an interested
stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or by-laws by action
of its stockholders to exempt itself from coverage, provided that such by-law
or charter amendment shall not become effective until 12 months after the date
it is adopted. Neither the Certificate nor the By-laws contains any such
exclusion.
TRANSFER AGENT AND REGISTRAR
The Company has selected as the transfer agent and registrar for the
Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, the Company will have a total of 10,812,978
shares of Common Stock outstanding. Of these shares, the 3,333,333 shares of
Common Stock offered hereby will be freely tradable without restriction or
registration under the Securities Act by persons other than "affiliates" of
the Company, as defined in the Securities Act, who would be required to sell
such shares under Rule 144 under the Securities Act. The remaining 7,479,645
shares of Common Stock outstanding will be "restricted securities" as that
term is defined by Rule 144 (the "Restricted Shares"). The Restricted Shares
were issued and sold by the Company in private transactions in reliance upon
exemptions from registration under the Securities Act.
Of the Restricted Shares, 6,266,659 Restricted Shares will be eligible for
sale in the public market pursuant to Rule 144 under the Securities Act
beginning upon the later of 90 days after the date of this Prospectus or
December 4, 1997, and up to approximately 1,212,986 shares of Common Stock
will be eligible for sale in the public market in accordance with Rule 701
under the Securities Act as described below beginning 90 days after the date
of this Prospectus. In addition, 806,321 shares subject to sale under Rule 701
are subject to vesting provisions and will become eligible for sale in the
public market at various times as they become vested. All such shares are
subject to the lock-up agreements described below.
44
<PAGE>
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year (including the holding period of any prior owner except
an affiliate), including persons who may be deemed "affiliates" of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of one percent of the number of shares
of Common Stock then outstanding (approximately 108,129 shares upon completion
of the offering) or the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements, and to the availability of current public
information about the Company. In addition, a person who is not deemed to have
been an affiliate of the Company at the time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at
least two years (including the holding period of any prior owner except an
affiliate), would be entitled to sell such shares under Rule 144(k) without
regard to the requirements described above. Rule 144 also provides that
affiliates who are selling shares that are not Restricted Shares must
nonetheless comply with the same restrictions applicable to Restricted Shares
with the exception of the holding period requirement.
Rule 701 promulgated under the Securities Act provides that shares of Common
Stock acquired pursuant to the exercise of outstanding options or the grant of
Common Stock pursuant to written compensation plans or contracts prior to this
offering may be resold by persons other than affiliates beginning 90 days
after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and by affiliates, beginning 90 days after the date of
this Prospectus, subject to all provisions of Rule 144 except its one-year
minimum holding period requirement.
The stockholders of the Company (who in the aggregate will hold 7,479,645
Restricted Shares upon completion of the offering) will agree pursuant to
lock-up agreements not to sell or offer to sell or otherwise dispose of any
shares of Common Stock currently held by them, any right to acquire any shares
of Common Stock or any securities exercisable for or convertible into any
shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Bear, Stearns & Co. Inc.,
other than as gifts or transfers by will or the laws of descent and
distribution or pursuant to the Underwriters' over-allotment option. In
addition, the Company will agree that for a period of 180 days after the date
of this Prospectus it will not, without the prior written consent of Bear,
Stearns & Co. Inc., offer, sell or otherwise dispose of any shares of Common
Stock except for shares of Common Stock offered hereby, shares issued and
options granted pursuant to the 1996 Stock Plan, the Purchase Plan and shares
issued or to be issued in acquisitions, if any.
As of August 8, 1997, there were 325,660 outstanding options to purchase
shares of Common Stock. 1,733,333 and 225,000 shares of Common Stock are
reserved for issuance under the 1996 Stock Plan and the Purchase Plan,
respectively. The Company intends to file a registration statement on Form S-8
under the Securities Act to register all shares of Common Stock issuable
pursuant to the 1996 Stock Plan or the Purchase Plan. The Company expects to
file this registration statement within 90 days following the date of this
Prospectus, and such registration statement will become effective upon filing.
Shares covered by this registration statement will thereupon be eligible for
sale in the public markets, subject to Rule 144 limitations applicable to
affiliates and the lock-up agreements described above.
The holders of approximately 4,666,664 shares of Common Stock have the right
on two occasions (each of which must be at least six months apart) on any date
after three months after the closing of this offering to require the Company
to register their shares under the Securities Act for resale to the public (if
such right is exercised, the holders of 7,333,325 shares will have the right
to have their shares registered); holders of approximately 7,333,325 shares
have the right in primary and secondary offerings, excluding offerings
relating to employment plans, under Rule 145 under the Securities Act or
demand registrations, to include their shares in a registration statement
filed by the Company; and holders of approximately 7,333,325 shares have the
right on one or more occasions to request and have effected a registration of
shares on Form S-3 if the anticipated net aggregate sale price of such
registered shares exceeds $500,000. All of such holders will agree pursuant to
lock-up agreements
45
<PAGE>
not to sell or offer to sell or otherwise dispose of any shares of Common
Stock currently held by them, any right to acquire any shares of Common Stock
or any securities exercisable for or convertible into any shares of Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of Bear, Stearns & Co. Inc., other than as gifts or
transfers by will or the laws of descent and distribution or pursuant to the
Underwriters' over-allotment option.
Prior to this offering, there has been no public market for the Common Stock
and no predictions can be made of the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could materially and adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through
an offering of its equity securities.
46
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Bear, Stearns & Co.
Inc., Smith Barney Inc. and Wessels, Arnold & Henderson, L.L.C. have severally
agreed to purchase from the Company the following respective number of shares
of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Bear, Stearns & Co. Inc.........................................
Smith Barney Inc................................................
Wessels, Arnold & Henderson, L.L.C..............................
----
Total...........................................................
====
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase and pay for all of the
above shares of Common Stock if any are purchased.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus, and at such price less a concession not in excess of $ per
share of Common Stock to certain other dealers who are members of the National
Association of Securities Dealers, Inc. The Underwriters may allow, and such
dealers may reallow, concessions not in excess of $ per share to certain
other dealers. After the offering, the offering price, concessions and other
selling terms may be changed by the Underwriters. 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 Selling Stockholders have granted a 30-day over-allotment option to the
Underwriters to purchase up to 500,000 additional shares of Common Stock of
the Company exercisable at the public offering price less the underwriting
discount. If the Underwriters exercise such over-allotment option, then each
of 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. All Common Stock sold to the Underwriters upon
exercise of their over-allotment option will be sold by the Selling
Stockholders. The Underwriters may exercise such option only to cover over-
allotments made in connection with the sale of the shares of Common Stock
offered hereby. The underwriting agreement provides that the Company and the
Selling Stockholders will indemnify the Underwriters against certain
liabilities under the Securities Act or will contribute to payments that the
Underwriters may be required to make in respect thereof.
The Company's current stockholders holding an aggregate of 7,479,645 shares
of Common Stock have agreed that they will not sell, grant any option for the
sale of or otherwise dispose of, any shares of Common Stock or any other
equity securities of the Company (including options or warrants) other than
pursuant to the Underwriters' over-allotment option for a period of 180 days
after the date hereof without the prior written consent of the
Representatives, subject to certain limited exceptions.
In addition, the Company has agreed that for a period of 180 days after the
date of this Prospectus it will not, without the prior written consent of
Bear, Stearns & Co. Inc., offer, sell or otherwise dispose of any shares of
Common Stock except for shares of Common Stock offered hereby, shares issued
and options granted pursuant to the 1996 Stock Plan, the Purchase Plan and
shares issued or to be issued in acquisitions, if any.
47
<PAGE>
Prior to the offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial offering price for the Common Stock
will be determined by negotiations between the Company and the Representatives
of the Underwriters. Among the factors to be considered in such negotiations
are the results of operations of the Company in recent periods, estimates of
the prospects of the Company and the industry in which the Company competes,
an assessment of the Company's management, the general state of the securities
markets at the time of the offering and the prices of similar securities of
generally comparable companies. The Company has submitted an application for
approval of its Common Stock for quotation on the Nasdaq Stock Market's
National Market under the symbol "BLPG." There can be no assurance, however,
that an active or orderly trading market will develop for the Common Stock or
that the Common Stock will trade in the public markets subsequent to the
offering at or above the initial offering price.
In order to facilitate the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock during and after the Offering. Specifically, the Underwriters may
over-allot or otherwise create a short position in the Common Stock for their
own account by selling more shares of Common Stock than have been sold to them
by the Company. The Underwriters may elect to cover any such short position by
purchasing shares of Common Stock in the open market or by exercising the
over- allotment option granted to the Underwriters. In addition, the
Underwriters may stabilize or maintain the price of the Common Stock by
bidding for or purchasing shares of Common Stock in the open market and may
impose penalty bids, under which selling concessions allowed to syndicate
members or other broker-dealers participating in the offering are reclaimed if
shares of Common Stock previously distributed in the offering are repurchased
in connection with stabilization transactions or otherwise. The effect of
these transactions may be to stabilize or maintain the market price at a level
above that which might otherwise prevail in the open market. The imposition of
a penalty bid may also affect the price of the Common Stock to the extent that
it discourages resales thereof. No representation is made as to the magnitude
or effect of any such stabilization or other transactions. Such transactions
may be effected on the NASDAQ National Market or otherwise and, if commenced,
may be discontinued at any time.
Certain persons participating in this offering may engage in passive market
making transactions in the Common Stock on the Nasdaq National Market in
accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103
permits, upon the satisfaction of certain conditions, underwriting and selling
group members participating in a distribution that are also registered Nasdaq
market makers in the security being distributed (or a related security) to
engage in limited passive market making transactions during the period when
Regulation M would otherwise prohibit such activity. In general, a passive
market maker may not bid for or purchase a security at a price that exceeds
the highest independent bid for those securities by a person that is not
participating in the distribution and must identify its passive market making
bids on the Nasdaq electronic inter-dealer reporting system. In addition, the
net daily purchases made by a passive market maker generally may not exceed
30% of such market maker's average daily trading volume in the security for
the two full consecutive calendar months (or any 60 consecutive days ending
within 10 days) immediately preceding the date of filing of the Registration
Statement of which this Prospectus forms a part.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. Certain
legal matters related to this offering will be passed upon for the
Underwriters by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
As of the date of this Prospectus, a total of 22,400 shares of Convertible
Participating Preferred Stock were beneficially owned by partners of Goodwin,
Procter & Hoar LLP. Such shares will be convertible into an aggregate of
14,932 shares of Common Stock and 17,920 shares of Redeemable Preferred Stock
upon completion of this offering.
48
<PAGE>
EXPERTS
The financial statements of the Company as of December 31, 1996 included in
this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The financial
statements of the Company as of December 31, 1995 and for the years ended
December 31, 1995 and December 31, 1994 have been audited by M.R. Weiser & Co.
LLP, independent certified public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in accounting and auditing.
The Company retained Arthur Andersen LLP as its independent public
accountants and replaced M.R. Weiser & Co. LLP in February 1997. The report of
M.R. Weiser & Co. LLP on the financial statements of the Company as of
December 31, 1995 and 1994 contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
application of accounting principles. During the years ended December 31, 1995
and 1994 and through the date of replacement, there were no disagreements with
M.R. Weiser & Co. LLP on any matter of accounting principles or practices,
financial statements disclosure, or auditing scope or procedure. The change in
independent public accountants was approved by the Board of Directors.
49
<PAGE>
INDEX TO FINANCIAL STATEMENTS
BORON, LEPORE & ASSOCIATES, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Arthur Andersen LLP, Independent Public Accountants............. F-2
Report of M.R. Weiser & Co. LLP, Independent Public Accountants........... F-3
Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997 (unau-
dited)................................................................... F-4
Statements of Operations for the Years Ended December 31, 1994, 1995 and
1996 and the Three Months Ended March 31, 1996 and 1997 (unaudited)...... F-5
Statements of Stockholders' Equity (Deficit) for the Years Ended December
31, 1994, 1995 and 1996 and for the Three Months Ended March 31, 1997
(unaudited).............................................................. F-6
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the three months ended March 31, 1996 and 1997 (unaudited)...... F-7
Notes to Financial Statements............................................. F-9
</TABLE>
F-1
<PAGE>
The financial statements included herein have been adjusted to give effect
to the reverse common stock split and the anticipated increase in the
authorized common stock of the Company to 50,000,000 shares of $.01 par value
common stock as described in Note 16 to the financial statements. We expect to
be in a position to render the following audit report upon the effectiveness
of such events assuming that from March 3, 1997 to the effective date of such
events, no other events will have occurred that would affect the financial
statements or notes thereto.
Arthur Andersen LLP
Roseland, New Jersey
March 3, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Boron, LePore & Associates, Inc.:
We have audited the accompanying balance sheet of Boron, LePore &
Associates, Inc. (a Delaware Corporation) as of December 31, 1996, and the
related statements of operations, stockholders' equity (deficit), and cash
flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those statements 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 audit provides 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 Boron, LePore &
Associates, Inc. as of December 31, 1996 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Boron, LePore & Associates, Inc.
We have audited the accompanying balance sheet of Boron, LePore &
Associates, Inc. as of December 31, 1995, and the related statements of
operations, stockholders' equity, and cash flows for the years ended December
31, 1994 and 1995. 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 Boron, LePore &
Associates, Inc. as of December 31, 1995, and the results of its operations
and its cash flows for the years ended December 31, 1994 and 1995 in
conformity with generally accepted accounting principles.
M. R. Weiser & Co. LLP
Edison, NJ
April 10, 1996
F-3
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1995 1996 1997
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 3)... $ 962,660 $ 7,175,648 $ 749,593
Accounts receivable, net of allowance
for doubtful accounts of $0,
$300,000 and $300,000 as of December
31, 1995 and 1996, and March 31,
1997, respectively (Note 13)........ 7,408,018 14,969,261 16,678,203
Prepaid expenses and other current
assets.............................. 196,774 254,802 333,544
Due from affiliates (Note 4)......... 221,960 0 0
Due from officers (Note 5)........... 114,602 0 0
----------- ------------ ------------
Total current assets............... 8,904,014 22,399,711 17,761,340
FURNITURE AND FIXTURES, at cost, net
of accumulated depreciation of
$443,282, $554,232 and $581,732 as of
December 31, 1995 and 1996, and March
31, 1997, respectively (Note 3)...... 295,217 325,296 374,460
DUE FROM OFFICERS, long-term portion
(Note 5)............................. 557,722 0 0
DUE FROM AFFILIATES, long-term portion
(Note 4)............................. 714,095 0 0
SECURITY DEPOSITS..................... 27,802 27,166 28,557
INTANGIBLES, net of accumulated
amortization of $0, $7,733 and
$24,167 as of December 31, 1995 and
1996 and March 31, 1997, respectively
(Note 3)............................. 0 344,767 328,333
----------- ------------ ------------
Total assets....................... $10,498,850 $ 23,096,940 $ 18,492,690
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt
(Note 8)............................ $ 241,000 $ 1,000,000 $ 1,500,000
Accounts payable and accrued expenses
(Note 7)............................ 2,847,097 12,775,623 6,729,589
Deferred revenue (Note 3)............ 2,770,132 5,138,696 6,480,164
Billings in excess of costs (Note
3).................................. 0 1,069,850 856,900
----------- ------------ ------------
Total current liabilities.......... 5,858,229 19,984,169 15,566,653
----------- ------------ ------------
LONG-TERM DEBT, less current
maturities (Note 8).................. 904,833 19,000,000 18,500,000
----------- ------------ ------------
REVOLVING LINE OF CREDIT (Note 8)..... 1,156,000 1,000,000 0
----------- ------------ ------------
DEFERRED INCOME TAXES (Notes 3 and
6)................................... 75,000 0 400,000
----------- ------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 9)
CONVERTIBLE PARTICIPATING PREFERRED
STOCK, $.01 par value, 7,000,000
shares authorized, issued and
outstanding as of December 31, 1996
and March 31, 1997 (Note 11)......... 0 12,500,000 12,832,000
----------- ------------ ------------
REDEEMABLE PREFERRED STOCK, $.01 par
value, 5,600,000 shares authorized;
none issued and outstanding.......... 0 0 0
----------- ------------ ------------
STOCKHOLDER'S EQUITY (DEFICIT) (Notes
4, 5, 10, 11 and 12): Common Stock,
no par value at December 31, 1995 and
$.01 par value at December 31, 1996
and March 31, 1997; 215,053,763
shares authorized for December 31,
1995 and 12,000,000 shares authorized
at December 31, 1996 and March 31,
1997; 8,602,151 shares issued and
outstanding in 1995 and 5,733,328
shares issued and 1,999,995 shares
outstanding at December 31, 1996 and
March 31, 1997....................... 57,133 57,333 57,333
Class A common stock, $.01 par value,
1,333,333 shares authorized; 666,666
and 750,333 shares issued and
outstanding at December 31, 1996 and
March 31, 1997, respectively........ 0 6,667 7,504
Class B common stock, $.01 par value,
4,666,666 shares authorized; none
issued and outstanding.............. 0 0 0
Treasury stock, 3,733,333 shares at
cost at December 31, 1996 and March
31, 1997............................ 0 (18,850,000) (18,850,000)
Additional paid-in capital........... 0 1,887,406 1,922,337
Retained earnings (deficit).......... 2,447,655 (12,461,968) (11,916,470)
----------- ------------ ------------
Total stockholders' equity
(deficit)......................... 2,504,788 (29,387,229) (28,805,963)
----------- ------------ ------------
Total liabilities and stockholders'
equity (deficit).................. $10,498,850 $ 23,096,940 $ 18,492,690
=========== ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F- 4
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------- ----------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES (Notes 3 and
13).................... $20,580,038 $21,774,824 $40,219,534 $6,973,795 $13,672,863
COST OF SALES........... 12,378,250 12,788,018 26,004,405 4,496,394 9,736,739
----------- ----------- ----------- ---------- -----------
Gross profit.......... 8,201,788 8,986,806 14,215,129 2,477,401 3,936,124
----------- ----------- ----------- ---------- -----------
OFFICERS' COMPENSATION.. 2,003,000 1,336,000 13,351,000 683,000 286,000
OTHER SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES............... 4,533,004 5,004,631 6,644,398 1,487,989 1,963,522
----------- ----------- ----------- ---------- -----------
TOTAL SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES............... 6,536,004 6,340,631 19,995,398 2,170,989 2,249,522
----------- ----------- ----------- ---------- -----------
Income (loss) from
operations........... 1,665,784 2,646,175 (5,780,269) 306,412 1,686,602
INTEREST EXPENSE (net of
interest income of
$9,885, $33,370,
$56,561, $11,813 and
$18,257 for the years
and three month periods
ended December 31,
1994, 1995 and 1996 and
March 31, 1996 and
1997, respectively).... 43,063 85,593 254,676 55,158 409,104
NONRECURRING LOSS ON
FORGIVENESS OF RELATED
PARTY LOAN (Note 4).... 0 0 1,076,418 0 0
----------- ----------- ----------- ---------- -----------
Income (loss) before
provision for income
taxes................ 1,622,721 2,560,582 (7,111,363) 251,254 1,277,498
PROVISION FOR INCOME
TAXES (Notes 3 and 6).. 25,000 51,000 0 0 400,000
----------- ----------- ----------- ---------- -----------
Net income (loss)..... $ 1,597,721 $ 2,509,582 $(7,111,363) $ 251,254 $ 877,498
=========== =========== =========== ========== ===========
PRO FORMA NET INCOME
(LOSS) DATA (Unaudited)
(Notes 3 and 6):
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES................. $ 1,622,721 $ 2,560,582 $(7,111,363) $ 421,254 $ 1,277,498
PRO FORMA INCOME TAX
PROVISION (actual for
March 31, 1997) (Note
6).................... 663,000 1,046,000 (2,905,000) 103,000 400,000
----------- ----------- ----------- ---------- -----------
PRO FORMA NET INCOME
(LOSS)................ $ 959,721 $ 1,514,582 $(4,206,363) $ 318,254 $ 877,498
=========== =========== =========== ========== ===========
PRO FORMA NET INCOME
(LOSS) PER COMMON SHARE
(Unaudited) (Note 3)... $ (0.52) $ 0.11
=========== ===========
PRO FORMA WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING (Note 3)... 8,100,009 8,122,142
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CLASS A CLASS B ADDITIONAL RETAINED
COMMON COMMON COMMON TREASURY PAID-IN EARNINGS
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT)
------- ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF DECEMBER
31, 1993............... $57,133 $ 0 $ 0 $ 0 $ 0 $ (1,509,648)
Net income............ 0 0 0 0 0 1,597,721
------- ------ --- ------------ ---------- ------------
BALANCE AS OF DECEMBER
31, 1994............... 57,133 0 0 0 0 88,073
Net income............ 0 0 0 0 0 2,509,582
Stockholder
distributions........ 0 0 0 0 0 (150,000)
------- ------ --- ------------ ---------- ------------
BALANCE AS OF DECEMBER
31, 1995............... 57,133 0 0 0 0 2,447,655
Net loss.............. 0 0 0 0 0 (7,111,363)
Repurchase of minority
stockholder's
1,548,387 shares of
common stock......... 0 0 0 (643,674) 0 0
Repurchase of minority
stockholder's
1,720,430 shares of
common stock......... 0 0 0 (970,000) (6,175,000) 0
Capital contribution
by stockholders...... 0 0 0 0 451,000 0
Retirement of
3,268,817 treasury
shares of common
stock................ (3,800) 0 0 1,613,674 (451,000) (188,874)
Termination of S
Corporation.......... 0 0 0 0 7,609,386 (7,609,386)
Repurchase of
3,733,333 shares of
common stock as
treasury stock....... 0 0 0 (18,850,000) 0 0
Issuance of 666,666
shares Class A common
stock at $.428 per
share................ 0 6,667 0 0 278,333 0
Issuance of 400,000
shares common stock
at $.428 per share... 4,000 0 0 0 167,000 0
Stock issuance costs.. 0 0 0 0 (18,980) 0
------- ------ --- ------------ ---------- ------------
BALANCE AS OF DECEMBER
31, 1996............... 57,333 6,667 0 (18,850,000) 1,860,739 (12,461,968)
Net income............ 0 0 0 0 0 877,498
Dividends on
convertible
participating
preferred stock...... 0 0 0 0 0 (332,000)
Issuance of 83,667
shares of Class A
common stock at $.428
per share............ 0 837 0 0 34,931 0
------- ------ --- ------------ ---------- ------------
BALANCE AS OF MARCH 31,
1997................... $57,333 $7,504 $ 0 $(18,850,000) $1,895,670 $(11,916,470)
======= ====== === ============ ========== ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-6
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDING
FOR THE YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------- ---------------------
1994 1995 1996 1996 1997
---------- ---------- ----------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss)..... $1,597,721 $2,509,582 $(7,111,363) $ 421,254 $ 877,498
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities-
Depreciation and
amortization........ 78,672 93,818 112,618 24,523 53,934
Loss on sale of fixed
assets.............. 37,585 0 0 0 0
Nonrecurring loss on
forgiveness of
related party loan.. 0 0 1,076,418 0 0
Deferred income
taxes............... 25,000 50,000 (75,000) 0 400,000
Changes in operating
assets and
liabilities-
(Increase) decrease
in accounts
receivables, net... (1,298,816) (2,636,435) (7,561,243) 1,487,531 (1,708,942)
Increase in prepaid
expenses and other
current assets..... (52,099) (45,024) (58,028) (37,651) (78,742)
(Increase) decrease
in security
deposits........... 1,210 1,265 636 0 (1,391)
Increase in
intangible assets.. 0 0 (352,500) 0 0
Increase in due from
affiliates......... 0 0 (140,363) 0 0
(Increase) decrease
in due from
officers........... 0 (672,324) 28,651 186,167 0
(Decrease) increase
in payable to
affiliates......... 288,510 (2,218,176) 0 (613,307) 0
Increase (decrease)
in accounts payable
and accrued
expenses........... 209,615 1,381,141 9,928,526 (307,356) (6,046,034)
Increase (decrease)
in deferred revenue
and billings in
excess of costs.... (544,436) 945,751 3,438,414 (188,152) 1,128,518
---------- ---------- ----------- --------- ----------
Net cash (used in)
provided by
operating
activities........ 342,962 (590,402) (713,234) 973,009 (5,375,159)
---------- ---------- ----------- --------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of
furniture, fixtures
and equipment........ (269,096) (43,493) (134,965) (29,553) (86,664)
Proceeds from sale of
furniture, fixtures
and equipment........ 42,035 0 0 0 0
---------- ---------- ----------- --------- ----------
Net cash used in
investing
activities........ (227,061) (43,493) (134,965) (29,553) (86,664)
---------- ---------- ----------- --------- ----------
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDING
FOR THE YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- ------------------------
1994 1995 1996 1996 1997
--------- ---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES:
(Repayment of) proceeds
from stockholder
loan.................. 100,000 (100,000) 0 0 0
Stockholder
distributions......... 0 (150,000) 0 0 0
Proceeds from revolving
line of credit........ 0 1,156,000 1,000,000 0 0
(Repayment of) proceeds
from long-term debt... (161,833) 1,250,000 20,000,000 0 0
Repayments of long-term
debt and revolving
line of credit........ (25,468) (589,549) (2,301,833) (1,218,500) (1,000,000)
Proceeds from the
issuance of
convertible
participating
preferred stock....... 0 0 12,500,000 0 0
Proceeds from the
issuance of common
stock................. 0 0 171,000 0 0
Proceeds from the
issuance of Class A
common stock.......... 0 0 285,000 0 35,768
Repurchase of treasury
stock from
stockholders.......... 0 0 (18,850,000) 0 0
Repurchase of treasury
stock from former
stockholder........... 0 0 (6,175,000) (643,674) 0
Payment of stock
issuance costs........ 0 0 (18,980) 0 0
Capital contribution by
stockholders.......... 0 0 451,000 341,000 0
--------- ---------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities......... (87,301) 1,566,451 7,061,187 (1,521,174) (964,232)
--------- ---------- ----------- ----------- -----------
Net (decrease)
increase in cash... 28,600 932,556 6,212,988 (577,718) (6,426,055)
CASH AND CASH
EQUIVALENTS, beginning
of period.............. 1,504 30,104 962,660 962,660 7,175,648
--------- ---------- ----------- ----------- -----------
CASH AND CASH
EQUIVALENTS, end of
period................. $ 30,104 $ 962,660 $ 7,175,648 $ 384,942 $ 749,593
========= ========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION:
Cash paid during the
period for-
Interest.............. $ 71,000 $ 145,000 $ 321,000 $ 77,000 $ 402,000
========= ========== =========== =========== ===========
Taxes................. $ 0 $ 0 $ 20,015 $ 20,015 $ 0
========= ========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-8
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE BUSINESS:
Boron, LePore & Associates, Inc. was originally incorporated under the laws
of the State of New Jersey in July 1981 (see Note 2) and provides marketing
services to large national and international pharmaceutical companies.
The accompanying unaudited financial statements as of March 31, 1997 and for
the three months ended March 31, 1997 and 1996 have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and note disclosures normally
included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted. In the opinion
of the Company, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and changes in cash flows for the periods presented have been made.
(2) INCORPORATION AND MERGER:
On November 22, 1996, BLA Acquisition Corp. was incorporated in the State of
Delaware. On November 27, 1996, the stockholders of BLA Acquisition Corp. and
the stockholders of Boron LePore & Associates, Inc., all under common control,
unanimously approved the Agreement and Plan of Merger ("Merger Agreement"). On
December 3, 1996, the merger became effective and was accounted for comparable
to a pooling of interests. The surviving corporation was BLA Acquisition
Corp., which subsequently changed its name to Boron, LePore & Associates Inc.
(the "Company").
On December 4, 1996, the Company amended and restated its certificate of
incorporation to include the authority to issue 26,400,000 shares of stock
(See Note 16). The different classes of stock each contain various rights and
privileges.
Effective with the signing of the amended and restated certificate of
incorporation on December 4, 1996, each share of outstanding common stock was
converted into 129,032.2580645 shares of common stock, which has been
retroactively reflected in the financial statements.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates--
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents--
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
Revenue Recognition--
Revenue is recognized as services are performed. For conferencing services,
revenue is recorded upon completion of the meeting or symposia. Revenue for
multiple-meeting projects is attributed to individual meetings, based on an
average amount per meeting, and is recognized as individual meetings are
completed. Revenue for product marketing services is recognized in the period
contractual performance benchmarks are achieved and confirmed by the client.
Revenue for teleservices are recorded in the period the services are
performed, based on the specific terms of each contract.
Performance-based incentive revenue is recognized within the period in which
the related market share statistics have been measured and such statistics
indicate attainment of the applicable performance measures.
Customers are invoiced according to agreed upon billing terms. Items which
are invoiced prior to performance of the related services are recorded as
deferred revenue and are not recognized as revenue until the required service
is provided, as required by the Company's revenue recognition policy.
F-9
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company is entitled to additional revenues (performance incentives)
under certain contracts. The additional revenues are computed based on a
formula specified in each contract and are primarily dependent upon increases
in market share for a client's product. The market share statistics are
measured over a period of time in the future specified in the contract terms.
If contract terms permit invoicing for portions of the performance incentives
prior to the calculation of actual market share results, the revenues are
deferred at the time of invoicing. All performance based incentive revenues
that were invoiced at December 31, 1996 and March 31, 1997 approximated
$1,070,000 and $857,000, respectively, and are reflected as billings in excess
of costs in the accompanying balance sheets.
Depreciation and Amortization--
Depreciation and amortization is provided principally on the straight-line
method over the estimated useful lives of the related assets as follows--
<TABLE>
<S> <C>
Furniture, fixtures and equipment.............................. 5-7 years
</TABLE>
Expenditures for repairs and maintenance are expensed as incurred while
renewals and betterments are capitalized.
Intangibles--
During 1996, as part of a Preferred Stock Purchase Agreement (see Note 11),
the Company incurred certain financing costs related to the transaction. The
costs are comprised primarily of commitment fees related to long term debt
financing costs (see Note 8) and totaled $312,500. The Company is amortizing
these costs over 5 years.
Income Taxes--
The stockholders of the Company have elected to be treated as an "S"
Corporation for both Federal and state income tax purposes for all periods
through to December 4, 1996. The net income (loss) of the business for that
period will be included in the individual income tax returns of the
stockholders. Prior to December 4, 1996, the Company was subject to the State
of New Jersey "S" Corporation tax which is computed based on the difference
between corporate and personal income tax rates. On December 4, 1996, the
Company's S Corporation status was terminated and the Company, under the
Merger Agreement, began operations as a Delaware corporation and was subject
to Federal and state corporate tax rates as a "C" corporation.
The Company uses the asset and liability method to calculate deferred tax
assets and liabilities. Deferred taxes are recognized based on the differences
between the financial reporting and income tax bases of assets and liabilities
using enacted income tax rates.
Long-Lived Assets--
During 1996, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets" ("SFAS 121"). SFAS 121 requires, among other things, that an entity
review its long-lived assets and certain related intangibles for impairment
whenever changes in circumstances indicate that the carrying amount of an
asset may not be fully recoverable. As a result of its review, the Company
does not believe that any impairment currently exists related to its long-
lived assets.
Stock Based Compensation--
The Financial Accounting Standards Board has issued a new standard,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123 requires that
an entity account for employee stock compensation
F-10
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
under a fair value based method. However, SFAS 123 also allows an entity to
continue to measure compensation cost for employee stock-based compensation
using the intrinsic value based method of accounting prescribed by APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("Opinion 25"). Entities
electing to remain with the accounting under Opinion 25 are required to make
pro forma disclosures of net income and earnings per share as if the fair
value based method of accounting under SFAS 123 had been applied. The Company
will continue to account for employee stock-based compensation under Opinion
25 and will make the pro forma disclosures required under SFAS 123.
Pro Forma Net Income (Loss) Per Common Share--
Pro forma net income (loss) per common shares has been computed by dividing
pro forma net income (loss) by the pro forma number of common shares
outstanding, as adjusted. As required by the Securities and Exchange
Commission rules, all warrants, options and shares issued within one year of
the public offering at less than the public offering price are assumed to be
outstanding for each period presented for purposes of the per share
calculation.
In connection with the Securities and Exchange Commission rules described
above, the following unaudited table shows the calculation of pro forma
weighted average shares outstanding (using the treasury stock method for stock
options and $15 per share price for the conversion of the $10 million of
redeemable preferred stock and accumulated and unpaid dividends) as of
December 31, 1996 and March 31, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ---------
<S> <C> <C>
Common Stock........................................ 1,999,995 1,999,995
Class A common stock................................ 750,333 750,333
Convertible participating preferred stock........... 4,666,664 4,666,664
Share equivalent for redeemable preferred stock..... 666,667 666,667
Share equivalent for unpaid redeemable preferred
stock dividends.................................... -- 22,133
Stock options....................................... 16,350 16,350
--------- ---------
8,100,009 8,122,142
========= =========
</TABLE>
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128") which becomes effective for the period ending December 31, 1997,
establishes new standards for computing and presenting earnings per share
(EPS). The new standard requires the presentation of basic EPS and diluted
EPS. Basic EPS is calculated by dividing income available to common
shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is calculated by dividing income
available to common shareholders by the weighted average number of common
shares outstanding adjusted to reflect potentially dilutive securities.
Previously reported EPS amounts must be restated under the new standard when
it becomes effective. The impact of adopting SFAS 128 for the year ending
December 31, 1996 and for the three months ending March 31, 1997 would not
have been material.
Reclassifications--
Certain December 31, 1995 amounts have been reclassified in order to conform
to the December 31, 1996 presentation.
(4)DUE FROM AFFILIATES:
During 1996 and 1995, the Company advanced monies to two companies
affiliated through common ownership. These advances were noninterest bearing
and were payable on demand. Pursuant to the terms
F-11
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
contained in the Preferred Stock Purchase Agreement (see Note 11), one of the
receivables in the amount of $150,044 was distributed to four
officers/stockholders of the Company in the form of bonus compensation
payments of approximately $162,000, which provided them with the after-tax
funds to make the repayment. The remaining receivable was paid in cash
pursuant to the terms contained in the Preferred Stock Purchase Agreement.
In January 1996, the amounts due at December 31, 1995 from a former
affiliate were converted into a $1,000,000 promissory note bearing interest at
8.1% per annum payable in quarterly installments over six years. During 1996,
additional liabilities were satisfied by the Company on behalf of the former
affiliate and payments were received according to terms. On December 4, 1996,
the Company agreed to sell the amounts due from the former affiliate,
approximately $1,560,000 plus interest, to certain officers/stockholders of
the Company for $500,000. The balance of the amount was recorded as a
nonrecurring loss on forgiveness of related party loan in the accompanying
statement of operations. The $500,000 was received by the Company from the
stockholders, pursuant to the terms contained in the Preferred Stock Purchase
Agreement (see Note 11) in the form of bonus compensation payments of
approximately $865,000 which provided the stockholders with the after-tax
funds to make the repayment.
(5)DUE FROM OFFICER/STOCKHOLDERS:
On June 30, 1995, the Company loaned three officers/stockholders amounts
aggregating approximately $672,000. In January 1996, the Company forgave a
portion of the loan and accrued interest of approximately $194,000 due from a
stockholder as part of a stock repurchase agreement. The remaining officer
loans, bearing interest at 8% per annum, were payable in five equal
installments due on June 30 of each year. The total amount due from officers
of approximately $435,000, including accrued interest of $14,000, was repaid
pursuant to the terms contained in the Preferred Stock Purchase Agreement (see
Note 11) in the form of bonus compensation payments of approximately $761,000
which provided the officers with the after-tax funds to make the repayment.
(6)INCOME TAXES:
The components of the provision for income taxes are summarized as follows--
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ -----------------
1994 1995 1996 1996 1997
------- ------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current.......................... $ 0 $ 1,000 $ 75,000 $ 0 $ 0
Deferred......................... 25,000 50,000 (75,000) 0 400,000
------- ------- -------- -------- --------
$25,000 $51,000 $ 0 $ 0 $400,000
======= ======= ======== ======== ========
</TABLE>
On December 4, 1996, pursuant to a Preferred Stock Purchase Agreement (see
Note 11), the Company converted from a cash basis to accrual basis taxpayer.
In addition, the Company's S Corporation status was terminated and the Company
began operations as a C Corporation. Accordingly, the Company became subject
to Federal and state income taxes and the retained earnings of the Company
were transferred to paid-in capital.
The Company has also adopted the provisions of Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109) which
requires the use of the asset and liability method to calculate deferred tax
assets and liabilities for temporary differences between financial reporting
and income tax bases.
F-12
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The conversion from cash basis to accrual basis required the recognition of
a deferred tax liability of approximately $2,400,000. In addition, the Company
generated a net operating loss for the period from December 4, 1996 to
December 31, 1996. The net operating loss expires in 2012 and resulted in the
recognition of a deferred tax asset of approximately $4,700,000. The Company
has recorded a valuation allowance of $2,300,000 against the deferred tax
asset. The net remaining tax asset is offset against the $2,400,000 deferred
tax liability. All other temporary differences have been deemed immaterial.
As described above, the Company began operations as a C Corporation on
December 4, 1996. The following unaudited pro forma income tax information has
been determined as if the Company operated as a C Corporation from its
inception, without contemplating any applicable tax laws related to the
utilization of net operating losses. No pro forma income tax provision is
presented for the three months ending March 31, 1997 as the Company was
operating as a C Corporation during that period.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS
------------------------------- ENDED
1994 1995 1996 MARCH 31, 1996
-------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Federal tax provision (bene-
fit) at statutory rate....... $568,000 $ 896,000 $(2,489,000) $ 88,000
State income taxes net of Fed-
eral benefit................. 95,000 150,000 (416,000) 15,000
-------- ---------- ----------- --------
$663,000 $1,046,000 $(2,905,000) $103,000
======== ========== =========== ========
</TABLE>
(7) ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are comprised of the following--
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------- -----------
1995 1996 1997
---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accounts payable......................... $1,556,462 $ 1,729,688 $2,405,383
Accrued payroll.......................... 445,495 8,170,078 1,007,174
Accrued honoraria........................ 577,156 1,860,656 2,265,838
Other accrued expenses................... 267,984 1,015,201 1,051,194
---------- ----------- ----------
$2,847,097 $12,775,623 $6,729,589
========== =========== ==========
</TABLE>
(8)LONG-TERM DEBT:
During 1995, the Company entered into a term loan in the amount of
$1,250,000. The term loan was due in monthly installments of $20,833 plus
interest at 1% above the bank's prime lending rate (9.5% at December 31,
1995).
In addition, the Company entered into a line of credit agreement with a bank
which had available borrowings under the agreement of up to the lesser of
$1,500,000 or 100% of eligible accounts receivable. The amounts outstanding
bore interest at .75% above the bank's prime lending rate (9.25% at
December 31, 1995). Interest was payable and the principal portion was due on
July 1, 1997. During 1996, the Company repaid the term loan and the borrowings
under the line of credit agreement and terminated the agreement.
On December 4, 1996, the Company entered into an agreement with a bank. The
agreement provides for a $5,000,000 revolving credit facility and a
$20,000,000 term loan. On December 4, 1996, the Company received the
$20,000,000 term loan. As of December 31, 1996, $1,000,000 was outstanding
under the revolving credit facility. Borrowings under the revolving credit
facility are due on December 31, 2001. The interest rates on the
F-13
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
loans vary and are a function of the stated LIBOR rate and the effective prime
rate as defined in the agreement. The term loan is to be repaid in incremental
annual payments on a quarterly basis over five years. The agreement contains
various financial and reporting covenants beginning in 1997. Additionally, the
Company entered into an interest rate swap agreement in 1997 to provide
interest rate protection on 50% of the outstanding principal balance of the
term loan.
The following are the maturities of long-term debt as of December 31, 1996
for the next five years--
<TABLE>
<S> <C>
1997........................................................ $ 1,000,000
1998........................................................ 2,000,000
1999........................................................ 3,000,000
2000........................................................ 4,000,000
2001........................................................ 10,000,000
</TABLE>
(9) COMMITMENTS AND CONTINGENCIES:
Operating Leases--
The Company leases office space, automobiles, and equipment under various
operating leases expiring in 2001. Approximate annual lease commitments for
the next five years are as follows--
<TABLE>
<S> <C>
1997............................................................ $444,000
1998............................................................ 433,000
1999............................................................ 305,000
2000............................................................ 111,000
2001............................................................ 10,000
</TABLE>
Rent expense charged against operations approximated $350,000, $340,000,
$387,000, $95,000 and $95,000 for the years ended December 31, 1994, 1995 and
1996 and the three month periods ended March 31, 1996 and 1997, respectively.
Litigation--
The Company is involved in legal proceedings incurred in the normal course
of business. In the opinion of management and its counsel, none of these
proceedings would have a material effect on the financial position or results
of operations of the Company.
(10) PURCHASE OF TREASURY STOCK:
In January 1996, the Company paid a minority stockholder $450,000 and
forgave the stockholder's loan receivable and accrued interest of
approximately $194,000 in exchange for the stockholder's 1,548,387 shares of
common stock. The shares were held in treasury at a cost of $643,674.
Additionally, in January 1996, the remaining stockholders of the Company sold
their shares of common stock in an affiliated company. Subsequent to these
transactions there was no longer a common ownership relationship between the
two companies. Concurrent with the Merger Agreement (see Note 11) the stock
held in treasury was retired on December 4, 1996 and the $643,674 cost was
transferred to retained earnings on that date.
On June 18, 1996, the Company entered into a Stock Purchase Agreement to
repurchase 1,720,430 shares of common stock from a stockholder. The agreement
also contained a Disposition Benefit Agreement. The stockholder was a former
officer of the Company and the brother of the Company's current Chief
Operating
F-14
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Officer. The Disposition Benefit Agreement would only become effective if
there was a sale of a controlling interest of the outstanding stock within a
certain period of time. The stock was purchased with a promissory note payable
over five years with monthly payments of principal and interest of $10,417 and
annual payments of $125,000, including interest, commencing on January 1,
1997. The shares were held in treasury at a cost of $970,000, the present
value of the promissory note. Concurrently with the Merger Agreement on
December 4, 1996, the treasury shares were canceled, the promissory note
payable was canceled, the Disposition Benefit Agreement was canceled, the cost
of the shares was transferred to paid-in capital and retained earnings and the
former stockholder received a payment of $6,175,000 on that date. The terms of
the transaction were the result of arms-length negotiations.
(11) PREFERRED STOCK PURCHASE AGREEMENT AND STOCK REDEMPTION:
On December 4, 1996, a Preferred Stock Purchase Agreement was entered into,
between the Company and certain investment partnerships and individuals
(collectively the "Investors"). The Company sold 7,000,000 shares of its
authorized $.01 par value Convertible Participating Preferred Stock for
$12,500,000. The Convertible Participating Preferred Stock has a minimum
liquidation value of $10 million and is convertible to common stock and
redeemable preferred stock at various rates based on the occurrence of certain
events. In addition, the holders of the Convertible Participating Preferred
Stock are entitled to receive an annual cash dividend of approximately $.1429
per share. The convertible participating preferred shares have voting rights
similar to common stock and are subject to certain liquidating and redemption
features, as defined, at the option of the holder.
Concurrently with the closing of the sale of the preferred shares and with
financing provided by a bank, the Company redeemed 3,733,333 shares of common
stock from two individual shareholders for payments aggregating $18,850,000
pursuant to the terms contained in the Preferred Stock Purchase Agreement.
(12)STOCK OPTION AND GRANT PLAN:
During 1996 the Boron, LePore & Associates 1996 Stock Option and Grant Plan
(the "Plan") was established. The maximum number of shares of stock reserved
and available for issuance under the Plan was 400,000 shares of Common Stock
and 1,333,333 shares of Class A Common Stock.
On December 4, 1996, two officers of the Company exercised their rights to
purchase 400,000 shares of Common Stock under the terms contained in the Plan.
The exercise price established by the Company's Compensation Committee on
December 4, 1996 (grant date) was $.428 per share. The Company received
$171,000 in payment for the 400,000 shares on December 4, 1996. The Company
paid bonus compensation to the two officers on December 4, 1996 of
approximately $301,000 which provided them with the after-tax funds to make
the purchase.
On December 4, 1996, four officers of the Company exercised their rights to
purchase collectively, 666,666 shares of Class A Common Stock under the terms
and conditions in the Plan. The exercise price established by the Company's
Compensation Committee on December 4, 1996 (grant date) was $.428 per share.
The Company received $285,000 on December 4, 1996 in payment for the 666,666
shares. The Plan calls for certain performance levels to be attained or the
passage of a specified period of time before the officers are 100% vested in
the 666,666 shares of Class A Common Stock.
The Company has adopted the provisions of SFAS 123 "Accounting for Stock
Based Compensation." As permitted by the statement, the Company has elected to
continue to account for stock-based compensation using the intrinsic value
method. Accordingly, no compensation expense has been recognized for its stock
option plans. For the three months ended March 31, 1997, the Company granted
16,667 stock options. The effect of adopting
F-15
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SFAS 123 with respect to the 16,667 stock options was immaterial for the three
months ended March 31, 1997. There were no options granted for any periods
prior to December 31, 1996.
(13)MAJOR CUSTOMERS:
Revenue from three customers accounted for approximately $17,600,000 (44%),
$6,300,000 (16%) and $4,100,000 (10%) of total revenue for the year ending
December 31, 1996.
Revenue from four customers accounted for approximately $6,900,000 (34%),
$4,200,000 (20%), $3,800,000 (18%) and $2,900,000 (14%) of total revenue for
the year ending December 31, 1994 and $9,700,000 (45%), $4,400,000 (20%),
$2,300,000 (11%) and $2,300,000 (11%) of total revenue for the year ending
December 31, 1995.
Major customers accounted for approximately $12,199,000 or 80% and
$5,936,000 or 80% of accounts receivable at December 31, 1996 and 1995,
respectively.
(14)RELATED PARTY TRANSACTIONS:
The Company entered into a consulting agreement on December 23, 1991 with a
stockholder of the Company. The agreement provided, among other things for the
payment of monthly consulting fees through December 31, 2001. The total
consulting fees charged to operations during the years ended December 31,
1996, 1995 and 1994 approximated $516,000, $360,000 and $295,000,
respectively. The consulting agreement was terminated pursuant to the terms
contained in the Preferred Stock Purchase Agreement and the Company received
and executed a general release from the former stockholder in consideration
for the payment made.
During the years ending December 31, 1994, 1995 and 1996, the Company leased
space from a stockholder of the Company. The aggregate rent expense charged to
operations for those periods approximated $82,000, $82,000 and $84,000,
respectively.
(15)EMPLOYMENT AND NONCOMPETE AGREEMENTS:
Four officers/stockholders/consultants of the Company signed employment
agreements on December 4, 1996 at various compensation levels for a three year
term. The agreements specify duties, benefits, confidentiality provisions and
miscellaneous other provisions. Additionally, the same individuals signed
Noncompete Agreements on December 4, 1996. The agreements are in effect for a
maximum of four years and each individual received $10,000 in consideration.
During 1997, an officer of the Company became a consultant and is being
compensated in accordance with the terms of the employment agreement.
(16)SUBSEQUENT EVENT (UNAUDITED)
Proposed Public Offering
The Company is contemplating a proposed public offering of 3,333,333 shares
of Common Stock. Upon completion of such offering, the authorized common stock
of the Company will increase to 50,000,000 shares of $.01 par value common
stock.
Stock Split--
All share amounts have been retroactively adjusted to reflect a 2-for-3
reverse common stock split which will occur prior to the completion of the
proposed public offering.
F-16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS 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 THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAW-
FUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HERE-
UNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY 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
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Dilution................................................................. 13
Capitalization........................................................... 14
Selected Financial Information........................................... 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 23
Management............................................................... 33
Certain Transactions..................................................... 38
Principal Stockholders................................................... 40
Description of Capital Stock............................................. 42
Shares Eligible for Future Sale.......................................... 44
Underwriting............................................................. 47
Legal Matters............................................................ 48
Experts.................................................................. 49
Index to Financial Statements............................................ F-1
</TABLE>
---------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIRE-
MENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3,333,333 SHARES
BORON, LEPORE & ASSOCIATES, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
WESSELS, ARNOLD & HENDERSON
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)
The following table sets forth the estimated expenses payable by the Company
in connection with this offering (excluding underwriting discounts and
commissions):
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
----------------- -------
<S> <C>
SEC Registration Fee.............................................. $19,167
NASD Filing Fee................................................... 30,500
Nasdaq Listing Fee................................................ *
Accounting Fees and Expenses...................................... *
Legal Fees and Expenses........................................... *
Printing Expenses................................................. *
Blue Sky Qualification Fees and Expenses.......................... *
Transfer Agent's Fee.............................................. *
Miscellaneous..................................................... *
-------
Total......................................................... $ *
=======
</TABLE>
- --------
(1) The amounts set forth above, except for the SEC, NASD and Nasdaq fees, are
in each case estimated.
*To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Section 145 of the General Corporation Law of the State
of Delaware, Article VIII of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate") provides that no director of the Company
shall be personally liable to the Company 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 Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or
(iv) for any transaction from which the director derived an improper personal
benefit. In addition, the Certificate provides that if the Delaware General
Corporation Law is amended to authorize the further elimination or limitation
of the liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Article V of the Company's Amended and Restated By-laws provides for
indemnification by the Company of its officers and certain non-officer
employees under certain circumstances against expenses (including attorneys
fees, judgments, fines and amounts paid in settlement) reasonably incurred in
connection with the defense or settlement of any threatened, pending or
completed legal proceeding in which any such person is involved by reason of
the fact that such person is or was an officer or employee of the Company if
such person acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company, and, with
respect to criminal actions or proceedings, if such person had no reasonable
cause to believe his or her conduct was unlawful.
The Stockholder's Agreement, filed as Exhibit 2.4 hereto, provides for
indemnification by the Company of certain of its existing principal
stockholders and the controlling persons of such stockholders (two of whom are
directors of the Company) against claims and liabilities, including claims and
liabilities arising under the securities laws.
The Company has entered into indemnification agreements with certain of its
directors reflecting the foregoing provisions of its By-laws and requiring the
advancement of expenses in proceedings involving such directors in most
circumstances.
II-1
<PAGE>
Under Section 7 of the Underwriting Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain officers and persons who control the Company
within the meaning of the Securities Act of 1933 against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth in chronological order below is information regarding the number
of share of capital stock issued by the Registrant since its incorporation in
1996. Further included is the consideration, if any, received by the
Registrant for such shares, and information relating to the section of the
Securities Act of 1933, as amended (the "Securities Act"), or rule of the
Securities and Exchange Commission under which exemption from registration was
claimed. The following transactions give effect to the Company's three-for-two
reverse stock split of its Common Stock and Class A Common Stock, which will
become effective on 1997.
(1) In November 1996, the Company sold 3 shares of the Company's Common
Stock for an aggregate purchase price of $10.00 to Patrick G. LePore, and 3
shares of the Company's Common Stock for an aggregate purchase price of
$10.00 to Gregory F. Boron in reliance upon the exemption from registration
under section 4(2) of the Securities Act.
(2) In November 1996, the Company issued 6 shares of the Company's Common
Stock to Patrick G. LePore in exchange for 14 shares of common stock of the
predecessor held by Mr. LePore pursuant to a merger agreement, and the
Company issued 6 shares of the Company's Common Stock to Gregory F. Boron
in exchange for 14 shares of common stock of the predecessor held by Mr.
Boron pursuant to a merger agreement and in reliance upon the exemption
from registration under section 4(2) of the Securities Act.
(3) In December 1996, pursuant to a Preferred Stock Purchase Agreement,
the Company sold an aggregate of 4,666,664 shares of the Company's
Convertible Participating Preferred Stock for a aggregate purchase price of
$12,500,000 to Advent VII L.P., Advent Atlantic and Pacific III L.P., TA
Venture Investors Limited Partnership and four other accredited investors,
in reliance upon the exemption from registration under Regulation D of the
Securities Act.
(4) In December 1996, pursuant to the Company's 1996 Stock Option and
Grant Plan, the Company granted an aggregate of 666,666 shares of the
Company's restricted Class A Common Stock for an aggregate purchase price
of $285,500 and the Company granted an aggregate of 400,000 shares of the
Company's Common Stock for an aggregate purchase price of $171,000 to four
employees in reliance upon the exemption from registration under Rule 701
promulgated under the Securities Act.
(5) In January 1997, pursuant to the Company's 1996 Stock Option and
Grant Plan, the Company granted 96,992 shares of the Company's restricted
Class A Common Stock for an aggregate purchase price of $42,608 to
employees and granted 6,665 shares of the Company's Common Stock for an
aggregate purchase price of $2,850 to consultants of the Company in
reliance upon the exemption from registration under Rule 701 promulgated
under the Securities Act.
(6) In February 1997, pursuant to the Company's 1996 Stock Option and
Grant Plan, the Company granted 10,000 shares of the Company's restricted
Class A Common Stock for an aggregate purchase price of $4,275 to an
employee in reliance upon the exemption from registration under Rule 701
promulgated under the Securities Act.
(7) In March 1997, pursuant to the Company's 1996 Stock Option and Grant
Plan, the Company granted options to purchase 16,666 shares of the
Company's restricted Class A Common Stock for an aggregate exercise price
of $7,125 to an employee in reliance upon the exemption from registration
under Rule 701 promulgated under the Securities Act.
(8) In April 1997, pursuant to the Company's 1996 Stock Option and Grant
Plan, the Company granted 3,333 shares of the Company's Common Stock to a
consultant of the Company for an aggregate purchase price of $1,425 and
granted 6,666 shares of the Company's restricted Class A Common Stock to
each of two directors of the Company, for an aggregate purchase price of
$20,000 each in reliance upon the exemption from registration under Rule
701 promulgated under the Securities Act.
(9) In May 1997, pursuant to the Company's 1996 Stock Option and Grant
Plan, the Company granted 6,666 shares of the Company's restricted Class A
Common Stock to a director for an aggregate purchase
II-2
<PAGE>
price of $20,000 in reliance upon the exemption from registration under
Rule 701 promulgated under the Securities Act.
(10) In June 1997, pursuant to the Company's 1996 Stock Option and Grant
Plan, the Company granted options to purchase 262,327 shares of the
Company's restricted Class A Common Stock for an aggregate purchase price
of $2,479,050 to employees of the Company and granted 9,332 shares of the
Company's Class A Common Stock to employees of the Company for an aggregate
cash purchase price of $93 in reliance upon the exemption from registration
under Rule 701 promulgated under the Securities Act and the exemption from
registration under Section 4(2) of the Securities Act.
(11) In August 1997, pursuant to the Company's 1996 Stock Option and
Grant Plan, the Company granted options to purchase 46,666 shares of the
Company's restricted Class A Common Stock to the Chief Financial Officer of
the Company for an aggregate cash purchase price of $559,992 in reliance
upon the exemption from registration under Rule 701 promulgated under the
Securities Act and the exemption from registration under Section 4(2) of
the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
**1.1 Form of Underwriting Agreement.
*2.1 Agreement and Plan of Merger by and between the Predecessor and the
Company.
*2.2 Stock Redemption Agreement dated as of December 4, 1996 by and among the
Company and Patrick G. LePore, Gregory Boron, Christopher Sweeney and
Michael W. Foti (excluding schedules, which the Company agrees to
furnish supplementally to the Commission upon request).
*2.3 Preferred Stock Purchase Agreement dated as of December 4, 1996 by and
among the Company and the Investors named therein (excluding schedules,
which the Company agrees to furnish supplementally to the Commission
upon request).
*2.4 Stockholders' Agreement dated as of December 4, 1996, as amended, by
and among the Company, the Investors (as defined), Patrick G.
LePore, Gregory Boron, Christopher Sweeney and Michael W. Foti.
**3.1 Amended and Restated Certificate of Incorporation.
**3.2 Amendment to Amended and Restated Certificate of Incorporation.
**3.3 Form of Second Amended and Restated Certificate of Incorporation (to
be filed prior to the closing of the Offering referred to in the
Registration Statement.)
**3.4 Form of Third Amended and Restated Certificate of Incorporation (to
be filed upon the closing of the Offering referred to in the
Registration Statement).
**3.5 By-Laws.
**3.6 Form of Second Amended and Restated By-laws (to be effective upon
the closing of the Offering referred to in the Registration
Statement).
**4.1 Specimen certificate for shares of Common Stock, $.01 par value, of
the Company.
*4.2 Credit Agreement with Fleet National Bank as Agent and Lender, as
amended.
**5.1 Opinion of Goodwin, Procter & Hoar LLP as to the validity of the
securities being offered.
*10.1 Lease between MBM Associates and the Company.
*10.2 Lease by and between SPENCO, Ltd. and the Company.
*10.3 Deed of Lease Agreement by and between Norfolk Commerce Center
Limited Partnership and the Company.
*10.4 Employment Agreement for Patrick G. LePore.
*10.5 Employment Agreement for Gregory F. Boron.
II-3
<PAGE>
*10.6 Employment Agreement for Christopher Sweeney.
*10.7 Employment Agreement for Timothy J. McIntyre.
*10.8 Non-Competition Agreement for Patrick G. LePore.
*10.9 Non-Competition Agreement for Gregory F. Boron.
*10.10 Non-Competition Agreement for Christopher Sweeney.
10.11 Intentionally omitted.
*10.12 Boron, LePore & Associates, Inc. 1996 Stock Option and Grant Plan.
**10.13 Boron, LePore & Associates, Inc. 1997 Employee Stock Purchase Plan.
*10.14 Form of Indemnification Agreement between the Registrant and certain
directors.
*10.15 Stock Purchase Agreement of Christopher Sweeney.
*+10.16 Restricted Stock Agreement for Patrick G. LePore.
*+10.17 Restricted Stock Agreement for Gregory F. Boron.
*+10.18 Restricted Stock Agreement for Christopher Sweeney.
*10.19 Restricted Stock Agreement for Timothy J. McIntyre.
*+10.20 Incentive Stock Option Agreement for Timothy J. McIntyre.
**10.21 Non-qualified Stock Option Agreement for Timothy J. McIntyre.
**10.22 Incentive Stock Option Agreement for Martin J. Veilleux.
**11.1 Computation of income per common share.
++16.1 Letter re: Change in Certifying Accountant.
**23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of M.R. Weiser & Co. LLP.
*24.1 Power of Attorney (included on page II-7).
++27.1 Financial Data Schedule.
- --------
*Filed herewith.
**To be filed by amendment to this Registration Statement.
+Confidential treatment requested as to these Exhibits.
++ Previously filed as an exhibit to the Company's Registration Statement on
Form S-1, filed with the Commission on July 1, 1997.
(B) FINANCIAL STATEMENT SCHEDULES
Schedule II-Valuation and Qualifying Accounts.
All other schedules have been omitted because they are not required or
because the required information is given in the Financial Statements or Notes
thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant 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 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the 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 registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
II-4
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN FAIR LAWN, NEW
JERSEY, ON AUGUST 14, 1997.
Boron, LePore & Associates, Inc.
By: /s/ Patrick G. LePore
----------------------------------------------
PATRICK G. LEPORE
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Patrick G. LePore Chairman of the August 14, 1997
- ------------------------------------- Board, Chief
PATRICK G. LEPORE Executive Officer,
President and
Director (Principal
Executive Officer)
* Chief Operating
- ------------------------------------- Officer and August 14, 1997
GREGORY F. BORON Director
* Director August 14, 1997
- -------------------------------------
ROGER BOISSONNEAULT
* Director August 14, 1997
- -------------------------------------
ROGER B. KAFKER
* Director August 14, 1997
- -------------------------------------
JACQUELINE C. MORBY
* Director August 14, 1997
- -------------------------------------
JOSEPH E. SMITH
* Director August 14, 1997
- -------------------------------------
JOHN A. STALEY, IV
</TABLE>
*By: /s/ Patrick G. Lepore
---------------------------
PATRICK G. LEPORE, ATTORNEY-IN-FACT
II-6
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints each of Patrick G. LePore and Gregory F. Boron
such person's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including this amendment and any post-effective amendments) to the
Registration Statement (or to any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act), and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that any said attorney-in-fact and agent, or any substitute or
substitutes of any of them, may lawfully do or cause to be done by virtue
hereof.
/s/ Martin J. Veilleux Chief Financial August 14, 1997
- ------------------------------------- Officer, Secretary
and Treasurer
MARTIN J. VEILLEUX (Principal
Financial and
Accounting Officer)
II-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Boron, LePore & Associates, Inc.:
We have audited in accordance with generally accepted auditing standards,
the 1996 financial statements of Boron, LePore & Associates, Inc. included on
pages F-4 through F-16 of this registration statement and have issued our
report thereon dated March 3, 1997. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed in Item 16(b) of this registration statement 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 as of December 31, 1996 and for the year
then ended 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
Roseland, New Jersey
March 3, 1997
<PAGE>
SCHEDULE II
BORON, LEPORE & ASSOCIATES, INC.
VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
OF YEAR EXPENSES DEDUCTIONS END OF YEAR
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
For the year ended December 31,
1996............................ $ 0 300,000 0 300,000
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
**1.1 Form of Underwriting Agreement.
*2.1 Agreement and Plan of Merger by and between the Predecessor and
the Company.
*2.2 Stock Redemption Agreement dated as of December 4, 1996 by and
among the Company and Patrick G. LePore, Gregory Boron,
Christopher Sweeney and Michael W. Foti (excluding schedules,
which the Company agrees to furnish supplementally to the
Commission upon request).
*2.3 Preferred Stock Purchase Agreement dated as of December 4, 1996
by and among the Company and the Investors named therein
(excluding schedules, which the Company agrees to furnish
supplementally to the Commission upon request).
*2.4 Stockholders' Agreement dated as of December 4, 1996, as
amended, by and among the Company, the Investors (as defined),
Patrick G. LePore, Gregory Boron, Christopher Sweeney and
Michael W. Foti.
**3.1 Amended and Restated Certificate of Incorporation.
**3.2 Amendment to Amended and Restated Certificate of Incorporation.
**3.3 Form of Second Amended and Restated Certificate of
Incorporation (to be filed prior to the closing of the Offering
referred to in the Registration Statement).
**3.4 Form of Third Amended and Restated Certificate of Incorporation
(to be filed upon the closing of the Offering referred to in
the Registration Statement).
**3.5 By-Laws.
**3.6 Form of Second Amended and Restated By-laws (to be effective
upon the closing of the Offering referred to in the
Registration Statement).
**4.1 Specimen certificate for shares of Common Stock, $.01 par
value, of the Company.
*4.2 Credit Agreement with Fleet National Bank as Agent and Lender,
as amended.
**5.1 Opinion of Goodwin, Procter & Hoar LLP as to the validity of
the securities being offered.
*10.1 Lease between MBM Associates and the Company.
*10.2 Lease by and between SPENCO, Ltd. and the Company.
*10.3 Deed of Lease Agreement by and between Norfolk Commerce Center
Limited Partnership and the Company.
*10.4 Employment Agreement for Patrick G. LePore.
*10.5 Employment Agreement for Gregory F. Boron.
*10.6 Employment Agreement for Christopher Sweeney.
*10.7 Employment Agreement for Timothy J. McIntyre.
*10.8 Non-Competition Agreement for Patrick G. LePore.
*10.9 Non-Competition Agreement for Gregory F. Boron.
*10.10 Non-Competition Agreement for Christopher Sweeney.
10.11 Intentionally omitted.
*10.12 Boron, LePore & Associates, Inc. 1996 Stock Option and Grant
Plan.
**10.13 Boron, LePore & Associates, Inc. 1997 Employee Stock Purchase
Plan.
*10.14 Form of Indemnification Agreement between the Registrant and
certain directors.
*10.15 Stock Purchase Agreement of Christopher Sweeney.
<PAGE>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
*+10.16 Restricted Stock Agreement for Patrick G. LePore.
*+10.17 Restricted Stock Agreement for Gregory F. Boron.
*+10.18 Restricted Stock Agreement for Christopher Sweeney.
*10.19 Restricted Stock Agreement for Timothy J. McIntyre.
*+10.20 Incentive Stock Option Agreement for Timothy J. McIntyre.
**10.21 Non-qualified Stock Option Agreement for Timothy J. McIntyre
**10.22 Incentive Stock Option Agreement for Martin J. Veilleux
**11.1 Computation of income per common share.
++16.1 Letter re: Change in Certifying Accountant.
**23.1 Consent of Goodwin, Procter & Hoar LLP (included in
Exhibit 5.1 hereto).
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of M.R. Weiser & Co. LLP.
*24.1 Power of Attorney (included on page II-7).
++27.1 Financial Data Schedule.
- --------
* Filed herewith
** To be filed by amendment to this Registration Statement.
+ Confidential treatment requested as to these Exhibits.
++ Previously filed as an exhibit to the Company's Registration Statement on
Form S-1, filed with the Commission on July 1, 1997.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER BY AND BETWEEN
BORON, LePORE & ASSOCIATES, INC., a New Jersey corporation
AND
BLA ACQUISITION CORP., a Delaware corporation
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 27, 1996, by and
between Boron, LePore & Associates, Inc., a New Jersey corporation (the
"Company"), and BLA Acquisition Corp., a Delaware corporation (the "Surviving
Corporation").
WITNESSETH:
WHEREAS, the Company is a corporation duly organized and existing under the
laws of the State of New Jersey; and
WHEREAS, the Surviving Corporation is a corporation duly organized and
existing under the laws of the State of Delaware, having been incorporated on
November 22, 1996 pursuant to the filing of a Certificate of Incorporation with
the Secretary of State of Delaware; and
WHEREAS, the Boards of Directors of the parties hereto deem it desirable,
upon the terms and subject to the conditions herein stated, that the Company be
merged with and into the Surviving Corporation and that the Surviving
Corporation be the surviving corporation; and
WHEREAS, the Boards of Directors of the parties hereto have adopted and
approved this Agreement and have resolved to submit this Agreement to the
stockholders of the Company and the Surviving Corporation, having further
resolved that the adoption and approval of this Agreement by such stockholders
is desirable.
<PAGE>
NOW, THEREFORE, it is agreed as follows:
Section 1 - Terms
-----
1.1 At the effective time of the merger (as hereinafter defined), the
Company shall be merged with and into the Surviving Corporation in accordance
with the Delaware General Corporation Law and the General Law of Corporations of
the State of New Jersey, as amended, with the Surviving Corporation remaining in
existence as the surviving corporation.
1.2 As of the effective time of the merger:
(a) The Certificate of Incorporation of the Surviving Corporation
shall remain in effect until further amended in accordance with the terms
thereof.
(b) Each share of Common Stock of the Company then outstanding shall,
by virtue of the merger and without any action on the part of the holder
thereof, be converted into one (1) share of fully paid and non-assessable shares
of Common Stock of the Surviving Corporation.
(c) Each share of the Common Stock of the Surviving Corporation
outstanding prior to the merger shall be canceled.
(d) The Directors of the Surviving Corporation as of the effective
time of the merger shall continue in office as Directors of the Surviving
Corporation until the next annual meeting of stockholders and until their
successors shall have been duly elected and qualified or until their earlier
resignation or removal.
(e) The officers of the Surviving Corporation as of the effective
time of the merger shall continue in office as officers of the Surviving
Corporation until their successors are duly elected and qualified or until their
earlier resignation or removal.
2
<PAGE>
1.3 Each holder of a stock certificate or certificates representing
outstanding shares of Common Stock of the Company immediately prior to the
effective time of the merger, upon surrender of such certificate or certificates
to the Surviving Corporation after the effective time of the merger, shall be
entitled to receive a stock certificate or certificates representing the same
number of shares of Common Stock of the Surviving Corporation contemplated
hereby. Until so surrendered, each such stock certificate shall, by virtue of
the merger, be deemed for all purposes to evidence ownership of the same number
of shares of the Common Stock of the Surviving Corporation.
Section 2 - Effective Time
--------------
2.1 This Agreement shall be submitted to the stockholders entitled to vote
thereon of each of the Company and the Surviving Corporation as provided by the
applicable laws of the State of Delaware and the State of New Jersey. If this
Agreement is duly adopted by the requisite votes of such stockholders and is not
terminated as contemplated by Section 3, Certificates of Merger, executed in
accordance with the law of the State of Delaware and the law of the State of New
Jersey, shall be filed with the Secretary of State of the State of Delaware and
the Secretary of State of the State of New Jersey. The merger shall become
effective on December 3, 1996 or the completion of both such filings, if later,
herein sometimes referred to as the "effective time of the merger."
Section 3 - Amendment, Termination and Governing Law
----------------------------------------
3.1 At any time prior to the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of New Jersey, this Agreement may be amended by the Boards of Directors of
the Company and the Surviving
3
<PAGE>
Corporation to the extent permitted by Delaware and New Jersey law
notwithstanding favorable action on the merger by the stockholders of either or
both of the Company or the Surviving Corporation.
3.2 At any time prior to the filing of such Certificate of Merger with
each Secretary of State, this Agreement may be terminated and abandoned by the
Boards of Directors of the Company and the Surviving Corporation,
notwithstanding favorable action on the merger by the stockholders of either or
both of the Company and the Surviving Corporation.
3.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware and the State of New Jersey.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
<PAGE>
IN WITNESS WHEREOF, each of the Surviving Corporation and the Company have
caused this Agreement to be executed and its corporate seal affixed as of the
date first above written.
ATTEST: BORON, LePORE & ASSOCIATES, INC., a
New Jersey corporation
/s/ Michael W. Foli By: /s/ Patrick G. LePore
- ----------------------------- ---------------------------------
Secretary Patrick G. LePore, President
ATTEST: BLA ACQUISITION CORP., a Delaware
corporation
/s/ Michael W. Foli By: /s/ Patrick G. LePore
- ----------------------------- ---------------------------------
Secretary Patrick G. LePore, President
5
<PAGE>
Exhibit 2.2
STOCK REDEMPTION AGREEMENT
by and among
BORON, LePORE & ASSOCIATES, INC.
and
Patrick G. LePore,
Gregory Boron,
Christopher Sweeney
and
Michael W. Foti
As of December 4, 1996
<PAGE>
STOCK REDEMPTION AGREEMENT
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE 1. STOCK REDEMPTION; BONUSES; DEFERRED COMPENSATION; RESTRICTED
STOCK.............................................................1
1.1 Stock Redemption..................................................1
1.2 Bonuses; Deferred Compensation....................................2
1.3 Restricted Stock..................................................2
1.4 Time and Place of Closing.........................................3
1.5 Certain Closing Deliveries........................................3
1.6 Further Assurances................................................3
1.7 Transfer Taxes....................................................3
1.8 Other Agreements..................................................3
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF PRINCIPALS......................4
2.1 Making of Representations and Warranties..........................4
2.2 Organization and Qualification; Capital Stock.....................4
2.3 Subsidiaries......................................................4
2.4 Authority; Noncontravention.......................................5
2.5 Title to Properties; Ownership of Common Stock....................5
2.6 Financial Statements; Undisclosed Liabilities.....................6
2.7 Tax Matters.......................................................7
2.8 Collectibility of Accounts Receivable.............................7
2.9 Absence of Certain Changes........................................7
2.10 Ordinary Course...................................................9
2.11 Banking Relations................................................10
2.12 Intellectual Property Rights; Employee Restrictions..............10
2.13 Certain Contracts and Arrangements...............................11
2.14 Litigation.......................................................12
2.15 Business; Compliance with Laws...................................13
2.16 Investment Banking; Brokerage....................................13
2.17 Insurance........................................................13
2.18 Transactions with Affiliates.....................................13
2.19 Employee Benefit Plans...........................................14
2.20 Hazardous Waste, Etc.............................................14
2.21 List of Certain Employees and Suppliers..........................14
2.22 Employees; Labor Matters.........................................14
2.23 Customers, Distributors, Meeting Moderators, Salespersons........15
2.24 Corporate Records................................................15
2.25 Solvency.........................................................16
2.26 Disclosure.......................................................16
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE 3. COVENANTS OF PRINCIPALS..........................................16
3.1 Making of Covenants and Agreements...............................16
3.2 Cooperation......................................................16
3.3 Consents.........................................................16
3.4 Notice of Default................................................16
ARTICLE 4. COVENANTS OF THE COMPANY.........................................17
4.1 Making of Covenants and Agreements...............................17
4.2 Availability of Records..........................................17
4.3 Expenses.........................................................17
ARTICLE 5. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ARRANGEMENTS,
COVENANTS AND OBLIGATIONS........................................17
ARTICLE 6. INDEMNIFICATION..................................................17
6.1 Indemnification by the Principals................................17
6.2 Limitations on Indemnification by the Principals.................18
6.3 Indemnification by the Company...................................19
6.4 Notice; Defense of Claims........................................20
6.5 Satisfaction of Indemnification Obligations......................21
6.6 Tax Effects of Losses; Meaning of After-Tax Basis................21
ARTICLE 7. MISCELLANEOUS....................................................22
7.1 Governing Law....................................................22
7.2 Notices..........................................................22
7.3 Entire Agreement.................................................22
7.4 Assignability; Binding Effect....................................22
7.5 Captions and Gender..............................................23
7.6 Execution in Counterparts........................................23
7.7 Amendments.......................................................23
7.8 Dispute Resolution...............................................23
7.9 Remedies; Severability...........................................23
7.10 Certain Definitions..............................................24
7.11 Release..........................................................24
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
SCHEDULES
- ---------
<C> <S> <C>
Schedule 1.2 - Deferred Compensation of Selling Shareholders
Schedule 2.2 - Foreign Qualification Jurisdictions
Schedule 2.4(c) - Non-contravention
Schedule 2.5 - Leased Premises
Schedule 2.6(a) - GAAP Preparation of Financial Statements
Schedule 2.6(b) - Obligations of the Company
Schedule 2.7 - Tax Matters
Schedule 2.8 - Aging of Accounts Receivable
Schedule 2.9 - Absence of Certain Changes
Schedule 2.10 - Ordinary Course
Schedule 2.11 - Banking Relations
Schedule 2.12 - Intellectual Property Rights; Employee Restrictions
Schedule 2.13 - Certain Contracts and Arrangements
Schedule 2.14 - Litigation
Schedule 2.18 - Transactions with Affiliates
Schedule 2.19 - Employee Benefit Plans
Schedule 2.21 - List of Certain Employees and Suppliers
Schedule 2.23 - Customers, Distributors, Meeting Moderators, Salespersons
Schedule 7.11 - Exceptions to Release
</TABLE>
(iii)
<PAGE>
STOCK REDEMPTION AGREEMENT
STOCK REDEMPTION AGREEMENT entered into as of December 4, 1996 by and
between Boron, LePore & Associates, Inc., a Delaware corporation (together with
its predecessors as the context requires, the "Company"), and Patrick G. LePore
("LePore") and Gregory Boron ("Boron" and together with LePore, the "Selling
Shareholders" and each individually, the "Selling Shareholder") and Christopher
Sweeney ("Sweeney") and Michael W. Foti ("Foti" and together with "Sweeney", the
"Executives" and each individually, the "Executive") (the Selling Shareholders
together with the Executives, the "Principals").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, immediately prior hereto each of the Selling Shareholders owns
beneficially and of record the number of shares of common stock, par value $.01
per share, of the Company (the "Common Stock") as set forth on Schedule 2.2
------------
attached hereto;
WHEREAS, subject to the terms and conditions hereof the Company wishes to
redeem and each of the Selling Shareholders wishes to have redeemed, the number
of shares of Common Stock owned beneficially and of record by him set forth on
Schedule 2.2 attached hereto;
- ------------
WHEREAS, simultaneously herewith the Company has entered into (i) the
Preferred Stock Purchase Agreement dated as of December 4, 1996, by and among
the Company and the purchasers named therein (such purchasers hereinafter
collectively, the "Investors") (the "TA Purchase Agreement"); (ii) the
Stockholders' Agreement dated December 4, 1996 by and among the Company and the
stockholders named therein (the "Stockholders' Agreement") and (iii) the Loan
Agreement dated as of December 4, 1996 with Fleet National Bank, as agent and
lender, and the other financial institutions party thereto (the "Bank
Financing");
NOW, THEREFORE, in order to consummate said stock redemption and in
consideration of the payments to and deliveries contemplated hereby and of the
mutual agreements set forth herein and other valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1. STOCK REDEMPTION; BONUSES; DEFERRED COMPENSATION; RESTRICTED STOCK.
------------------------------------------------------------------
1.1 Stock Redemption. Subject to and in reliance upon the
----------------
representations and warranties and terms, provisions and conditions of this
Agreement and subject to the closing of the transactions contemplated by the TA
Purchase Agreement and the Bank Financing, at the Closing (as defined in Section
1.4 hereof), the Company shall redeem: (a) 2,800,000 shares of Common Stock (the
"LePore Redeemed Shares") from LePore for a total purchase price of $9,425,000
(the "LePore Redemption Price"); and (b) 2,800,000 shares of Common Stock (the
<PAGE>
"Boron Redeemed Shares" and collectively with the LePore Redeemed Shares, the
"Redeemed Shares") from Boron for a total purchase price of $9,425,000 (the
"Boron Redemption Price"). At the Closing each Selling Shareholder shall
surrender to the Company a certificate or certificates, together with duly
executed stock transfer powers, representing the Redeemed Shares and the Company
shall pay each Selling Shareholder cash in the amount set forth above, with such
amount to be paid by wire transfer in immediately available funds to such
account as such Selling Shareholder shall have indicated in writing to the
Company.
1.2 Bonuses; Deferred Compensation.
------------------------------
(a) Selling Shareholders. Subject to and in reliance upon the
--------------------
representations and warranties and the terms, provisions and conditions of this
Agreement and subject to the closing of the transactions contemplated by this
Agreement and the TA Purchase Agreement and the Bank Financing, the Company
shall: (i) on the date of Closing and promptly following completion of the
transactions described herein, make payments of in-kind bonuses to each of the
Selling Shareholders in the form of assignments of undivided interests in the
receivables listed on Schedule 1.2(a)(i) attached hereto; (ii) on or by the
------------------
dates indicated in Schedule 1.2(a)(ii), make deferred compensation payments to
-------------------
LePore and Boron in the amounts indicated on Schedule 1.2(a)(ii); and (iii)
-------------------
promptly following determination of the taxable income of the Company (including
its predecessor) for federal income tax purposes for the period beginning
January 1, 1996 and ending immediately prior to the Closing Date, pay additional
bonuses in the form of deferred compensation to each of LePore and Boron in an
amount equal to 19.2% of such taxable income allocated to him for federal income
tax purposes in respect of such period.
(b) Executives. Subject to and in reliance upon the
----------
representations and warranties and the terms, provisions and conditions of this
Agreement and subject to the closing of the transactions contemplated by this
Agreement and by the TA Purchase Agreement and the Bank Financing, the Company
shall (i) on the date of Closing and promptly following completion of the
transactions described herein, make payments of in-kind bonuses to each of
Sweeney and Foti in the form of assignments of undivided interests in the
receivables listed on Schedule 1.2(a)(i) attached hereto; and (ii) on or by the
------------------
dates indicated on Schedule 1.2(a)(ii), make deferred compensation payments to
-------------------
Sweeney and Foti in the amounts indicated on Schedule 1.2(a)(ii). In addition,
-------------------
it is the Company's intention to sell promptly following the closing 450,000
shares of Common Stock to Sweeney and 150,000 shares of Common Stock to Foti for
a purchase price of $.285 per share pursuant to the Company's 1996 Stock Option
and Grant Plan.
1.3 Restricted Stock. Subject to and in reliance upon the
----------------
representations and warranties and terms, provisions and conditions of this
Agreement and subject to the closing of the transactions contemplated by this
Agreement and the TA Purchase Agreement and the Bank Financing, it is the
Company's intention promptly following the Closing to sell to the Principals
pursuant to Restricted Stock Agreements an aggregate of 1,000,000 shares of
restricted Class A Common Stock of the Company for a purchase price of $.285 per
share
2
<PAGE>
pursuant to the Company's 1996 Stock Option and Grant Plan as follows: (a)
300,000 shares to LePore; (b) 300,000 shares to Boron; (c) 250,000 shares to
Sweeney; and (d) 150,000 shares to Foti.
1.4 Time and Place of Closing. The closing of the transactions provided
-------------------------
for in this Agreement (herein called the "Closing") shall be held at the offices
of Goodwin, Procter & Hoar LLP at Exchange Place, Boston, Massachusetts on the
date hereof (such date being herein called the "Closing Date").
1.5 Certain Closing Deliveries. Subject to the closing of the
--------------------------
transactions contemplated herein, and the execution and delivery of such other
documents and agreements, and satisfaction of such other conditions, as the
Company may require:
(a) Consideration Price. At the Closing, the Company shall
-------------------
deliver to each Selling Shareholder the applicable Redemption Price;
(b) Surrender of Redeemed Shares. At the Closing, each Selling
----------------------------
Shareholder shall surrender to the Company a certificate or certificates
representing the Redeemed Shares owned by him, together with stock transfer
powers duly endorsed in blank transferring to the Company good title to such
Redeemed Shares free and clear of all liens, restrictions and encumbrances.
1.6 Further Assurances. Each Selling Shareholder from time to time
------------------
after the Closing at the request of the Company and without further
consideration shall execute and deliver such further instruments of transfer and
assignment and take such other action as the Company may reasonably require to
more effectively transfer and assign to, and vest in, the Company the Redeemed
Shares.
1.7 Transfer Taxes. All transfer taxes, fees and duties under
--------------
applicable law incurred in connection with the transfer of the Redeemed Shares
owned by each Selling Shareholder under this Agreement will be borne and paid by
such Selling Shareholder, and each Selling Shareholder hereby covenants to
promptly reimburse the Company for any such tax, fee or duty which either the
Company or such Selling Shareholder is required to pay under applicable law.
1.8 Other Agreements. As a material inducement to and a condition
----------------
precedent of the Company's redemption of the Redeemed Shares and making of the
deferred compensation payments and the sale of the shares of Common Stock and
Class A Common Stock described above, each Principal is executing and delivering
at the Closing a Non-Competition Agreement, a Stockholders' Agreement and an
Employment Agreement and hereafter will execute and deliver a Restricted Stock
Agreement, in each case in form satisfactory to the Company (collectively with
this Agreement, the "Principal Agreements" and each individually a "Principal
Agreement").
3
<PAGE>
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF PRINCIPALS.
--------------------------------------------
2.1 Making of Representations and Warranties. As a material inducement
----------------------------------------
to the Company to enter into this Agreement and to consummate the transactions
contemplated hereby, each Principal hereby makes to the Company the
representations and warranties contained in this Section 2.
2.2 Organization and Qualification; Capital Stock. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware with full corporate authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of the charter documents of the Company as
amended to date and certified by the Secretary of State of Delaware or by-laws
of the Company, as amended to date, certified by its Secretary, and heretofore
delivered to the Investors, are complete and correct, no amendments thereto are
pending, and the Company is not in violation thereof.
The Company is duly qualified to do business as a corporation in the
states or the jurisdictions listed in Schedule 2.2, and is not required to be
------------
licensed or qualified to conduct its business or own its properties in any other
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, operations, results of operations, properties,
assets, condition (financial or other) or prospects of the Company (a "Material
Adverse Effect"). Immediately prior to the Closing, all of the issued and
outstanding capital stock of the Company is owned beneficially and of record as
set forth in Schedule 2.2, free and clear of any lien, restrictions or
------------
encumbrances and there are no outstanding options, warrants, rights,
commitments, pre-emptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
capital stock of any class of the Company.
From and after the Closing, and after giving effect to each of the
transactions contemplated by (i) this Agreement, (ii) the TA Purchase Agreement,
and (iii) the Bank Financing (including, without limitation, the issuance of the
stock referred to in Sections 1.2(b) and 1.4) all of the issued and outstanding
capital stock or other equity interests of the Company will be owned
beneficially and of record as set forth in Schedule 2.2, will be free and clear
------------
of any lien, restrictions or encumbrances and there will be no outstanding
options, warrants, rights, commitments, pre-emptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional shares of capital stock of any class of the Company, except
pursuant to the Stockholders' Agreement, the Company's Amended and Restated
Certificate of Incorporation and the Restricted Stock Agreements referred to in
Section 1.4.
2.3 Subsidiaries. The Company does not have any subsidiaries (as
------------
defined in Section 7.10(d)) or own any securities issued by any other business
organization or governmental authority or any direct or indirect interest in or
control over any corporation,
4
<PAGE>
partnership, joint venture or entity of any kind relating to the business
conducted by the Company.
2.4 Authority; Noncontravention. The Company has full corporate power
---------------------------
and authority, and each Principal has full right, power, authority and capacity,
to enter into this Agreement, each agreement, document and instrument to be
executed and delivered by it or him pursuant to or contemplated by this
Agreement, (including, without limitation, each Principal Agreement) and to
carry out the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Company and the Principal of this Agreement and
each such other agreement, document and instrument to which it or he is party
have been duly authorized by all necessary action of the Company and such
Principal and no other action on the part of the Company or the Principal is
required in connection therewith. This Agreement and each such agreement,
document and instrument executed and delivered by the Company and/or the
Principal pursuant to this Agreement constitute valid and binding obligations of
the Company and/or the Principal enforceable in accordance with their respective
terms.
The execution, delivery and performance by the Company and the Principal
of this Agreement and each such agreement, document and instrument contemplated
by this Agreement to which it is a party:
(a) do not and will not violate any provision of the charter, by-
laws or equivalent constituent documents of the Company;
(b) do not and will not violate any laws of the United States or
any state or other jurisdiction applicable to the Company or the Principal or
require the Company or the Principal to obtain any approval, consent or waiver
of, or make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made; and
(c) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award, whether
written or oral, to which the Company or the Principal is a party or by which
the property of the Company or the Principal is bound or affected, or result in
the creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the Redeemed Shares except as described in
Schedule 2.4.
- ------------
2.5 Title to Properties; Ownership of Common Stock.
----------------------------------------------
(a) Schedule 2.5 hereto sets forth the addresses and uses of all
------------
real property that the Company owns, leases or subleases. The Company has good,
valid and (if applicable) marketable title to all of its assets, including those
assets reflected on the Base Balance Sheet (as defined in Section 2.6) or
acquired by it after the date thereof (except for properties disposed of since
that date in the ordinary course of business), free and clear of all liens,
5
<PAGE>
claims or encumbrances of any nature. The equipment included in such properties
which is necessary to the business of the Company is in good condition and
repair (ordinary wear and tear excepted) and all leases of real or personal
property to which the Company is a party are fully effective and afford the
Company peaceful and undisturbed possession of the subject matter of the lease.
The property and assets of the Company are sufficient for the conduct of its
business as presently conducted. The Company is not in violation of any zoning,
building or safety ordinance, regulation or requirement or other law or
regulation applicable to the operation of its owned or leased properties, which
violation would have a Material Adverse Effect, nor has it received any notice
of any such violation. There are no defaults by the Company or to the best
knowledge of the Principal, by any other party, which might curtail in any
material respect the present use of the Company's property. The performance by
the Company of this Agreement will not result in the termination of, or in any
increase of any amounts payable under, any of its leases.
(b) The Selling Shareholder is the sole legal and beneficial owner
of the Common Stock set forth opposite his name on Schedule 2.2 attached hereto,
------------
free and clear of all claims, encumbrances, liens, pledges, security interests
and rights of any kind or nature whatsoever after giving effect to Section 7.11.
2.6 Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) The Company has previously furnished to the Investors copies
of its unaudited financial statements for the fiscal year ended December 31,
1993 and its audited financial statements for the fiscal years ended December
31, 1994 and 1995 together with copies of its unaudited financial statements for
the nine month period ended September 30, 1995 and September 30, 1996. Except as
described in Schedule 2.6(a), such financial statements referred to in this
---------------
Section 2.6(a) were prepared in conformity with generally accepted accounting
principles applied on a consistent basis, are complete, correct and consistent
in all material respects with the books and records of the Company and fairly
and accurately present the financial position of the Company as of the dates
thereof and the results of operations and cash flows of the Company for the
periods shown therein (subject to the absence of footnotes and normal year-end
adjustments in the case of the unaudited statements).
(b) Prior to giving effect to the transactions contemplated by
this Agreement, including without limitation the TA Purchase Agreement and the
Bank Financing, excluding the effect of the payment of all fees and expenses of
the Company incurred or to be incurred in connection with the transactions
contemplated hereby, including, without limitation, legal, accounting and
investment banking, the Company's assets include cash in the amount of not less
than $250,000 and the Company's working capital and stockholders' equity are not
less than $2.5 million and $2.5 million, respectively.
(c) The projections which have been separately disclosed in
writing to the Investors represent good faith estimates of the Company's
performance for the fourth quarter of 1996 and for 1997 and future years based
upon assumptions which are set forth therein and
6
<PAGE>
which were in good faith believed to be reasonable when made and continue to be
reasonable as of the date hereof.
(d) Except as and to the extent reflected or reserved against in
the unaudited balance sheet of the Company at September 30, 1996 contained in
the financial statements referred to in Section 2.6(a) (the "Base Balance
Sheet") or as listed on Schedule 2.6(d), the Company does not have and is not
---------------
subject to any material liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise.
2.7 Tax Matters. The Company has filed all federal, state, local and
-----------
foreign income, excise and franchise tax returns, real estate and personal
property tax returns, sales and use tax returns and other tax returns required
to be filed by it and has paid all Taxes (as defined below) owing by it, except
Taxes which have not yet accrued or otherwise become due, for which adequate
provision has been made in the pertinent financial statements referred to in
Section 2.6 above. The provision for taxes on the Base Balance Sheet is
sufficient as of its date for the payment of all accrued and unpaid federal,
state, county and local taxes of any nature of the Company, and any applicable
taxes owing to any foreign jurisdiction (collectively, "Taxes"), whether or not
assessed or disputed. All Taxes and other assessments and levies which the
Company is required to withhold or collect have been withheld and collected and
have been paid over to the proper governmental authorities. With regard to the
federal income tax returns of the Company, the Company has never received notice
of any audit or of any proposed deficiencies from the Internal Revenue Service
except as described in Schedule 2.7. There are in effect no waivers of
------------
applicable statutes of limitations with respect to any Taxes owed by the Company
for any year. Neither the Internal Revenue Service nor any other taxing
authority is now asserting or, to the best knowledge of the Company, threatening
to assert against the Company any deficiency or claim for additional Taxes or
interest thereon or penalties in connection therewith. The Company is and has
been since 1987 an "S Corporation" within the meaning of Section 1361(a)(1) of
the Internal Revenue Code of 1986, as amended, and the applicable laws of the
State of New Jersey.
2.8 Collectibility of Accounts Receivable. All of the accounts
-------------------------------------
receivable of the Company (less the reserve for bad debts set forth on the Base
Balance Sheet and subject to contractual allowances consistent with the past
practices of the Company) are valid and enforceable claims, and are not subject
to set off or counterclaim, provided that the foregoing representation is not a
guarantee of collectibility. The Company does not have any accounts receivable
or loans receivable from any person, firm or corporation which is affiliated
with the Company or any Principal or from any stockholder, director, officer or
employee of the Company or any affiliate thereof, except as referred to in
Schedule 1.2(a)(i). Schedule 2.8 lists the accounts receivable of the Company as
- ------------------ ------------
of September 30, 1996.
2.9 Absence of Certain Changes. Except as disclosed in Schedule 2.9 or
-------------------------- ------------
in connection with the transactions contemplated hereby, since the date of the
Base Balance Sheet there has not been:
7
<PAGE>
(a) Any adverse change in the business, operations, results of
operation, properties, assets, liabilities, condition (financial or other) or
prospects of the Company which change by itself or in conjunction with all other
such changes, whether or not arising in the ordinary course of business, has
been material;
(b) Any contingent liability relating to the Company as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the
Company;
(c) Any mortgage, encumbrance or lien placed on any of the properties
used in the Company's business which remains in existence on the date hereof;
(d) Any obligation or liability of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown,
incurred by the Company other than obligations and liabilities incurred in the
ordinary course of business and otherwise consistent with the terms of this
Agreement;
(e) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets relating to the Company's business other than in the
ordinary course of business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the properties, assets or
business relating to the Company's business;
(g) Any declaration, setting aside or payment of any dividend by the
Company, or the making of any other distribution in respect of the capital stock
or other equity interest of the Company or any direct or indirect redemption,
purchase or other acquisition by the Company of its own capital stock or other
equity interest;
(h) Any labor trouble or claim of unfair labor practices involving
the Company;
(i) Any change in the compensation (in the form of salaries, wages,
incentive arrangements or otherwise) payable or to become payable by the Company
to any officers, employees, agents or independent contractors other than normal
merit increases in accordance with its usual practices, or any bonus payment or
arrangement made to or with any such person or entity; or any entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any such person or entity;
(j) Any change, or the obtaining of information concerning a
prospective change, with respect to any officers or management employees
involved in the Company's business, any grant of any severance or termination
pay to any officer, employee, agent or
8
<PAGE>
independent contractor involved in the Company's business or any increase in
benefits payable under any existing severance or termination pay policies or
employment agreement or relationship;
(k) Any payment or discharge of a material lien or liability relating
to the Company's business which was not shown on the Base Balance Sheet or
incurred in the ordinary course of business thereafter;
(l) Any payment made or obligation or liability incurred by the
Company to, or any other transaction by the Company with, any of its officers,
directors, partners, stockholders, employees or independent contractors, or any
loans or advances made by the Company to any of its officers, directors,
partners, stockholders, employees or independent contractors, except normal
compensation and expense allowances consistent with past practice;
(m) Any change in accounting methods or practices, credit practices,
collection policies or payment policies used by the Company including without
limitation any change in the discharge or recording of payables relative to past
practices;
(n) Any cancellation or loss of any material right or asset, or
waiver of any right, of the Company;
(o) Any change in the relationships with suppliers, distributors,
licensees, licensors, customers or others with whom the Company has business
relationships which would have a Material Adverse Effect on the Company, and the
Principal does not have knowledge of any fact or contemplated event which may
cause any such change;
(p) Any alteration or change in the methods of operation employed by
the Company;
(q) Any amendment of the Company's certificate of incorporation or
by-laws;
(r) Any other transaction relating to the Company other than
transactions in the ordinary course of business; or
(s) Any agreement or understanding whether in writing or otherwise,
by the Company or any other person that would result in any of the transactions
or events or require the Company to take any of the actions specified in
paragraphs (a) through (r) above.
2.10 Ordinary Course. Since the date of the Base Balance Sheet, the
---------------
Company has conducted its business only in the ordinary course and in a manner
consistent with prior practices except in connection with the transactions
contemplated by this Agreement and the agreements referred to herein.
9
<PAGE>
2.11 Banking Relations. All of the arrangements with any banking
-----------------
institution relating to the Company are accurately and in all material respects
described in Schedule 2.11, indicating with respect to each of such arrangements
-------------
the type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.12 Intellectual Property Rights; Employee Restrictions. Except as set
---------------------------------------------------
forth in Schedule 2.12:
-------------
(a) The Company has exclusive ownership of, with the right to use,
sell, license, dispose of, and bring actions for infringement of, all
Intellectual Property Rights (as hereinafter defined) material to the conduct of
its business as presently conducted (the "Company Rights"), provided that no
representation is made with respect to "off the shelf" software used by the
Company that is generally commercially available.
(b) The business of the Company as presently conducted does not
violate any agreements which the Company has with any third party or infringe
any patent, trademark, copyright or trade secret or, to the best knowledge of
the Principal, any other Intellectual Property Rights of any third party.
(c) No claim is pending or, to the best knowledge of the Principal,
threatened against the Company nor has the Company received any notice or claim
from any person asserting that any of the Company's present or contemplated
activities infringe or may infringe any Intellectual Property Rights of such
person, and the Principal is not aware of any infringement by any other person
of any rights of the Company under any Intellectual Property Rights.
(d) The Company has taken all commercially reasonable steps required
to establish and preserve its ownership of all of the Company Rights; each
current and former employee of the Company, and each of the Company's
consultants and independent contractors involved in development of any of the
Company Rights, has executed an agreement regarding confidentiality, proprietary
information and assignment of inventions and copyrights to the Company, and, to
the best knowledge of the Company, none of such employees, consultants or
independent contractors is in violation of any agreement or in breach of any
agreement or arrangement with former or present employers relating to
proprietary information or assignment of inventions.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights, including, without limitation, all of the
registered rights set forth on Schedule 2.12 and all patents, patent
-------------
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms,
10
<PAGE>
promotional materials, customer lists, supplier and dealer lists and marketing
research, and all documentation and media constituting, describing or relating
to the foregoing, including without limitation, manuals, memoranda and records.
Schedule 2.12 contains a list and brief description of all Intellectual Property
- -------------
Rights (other than with respect to "off the shelf" software that is generally
commercially available) owned by or registered in the name of the Company or of
which the Company is the licensor or a licensee of a material right or in which
the Company has any material right and, in each case, a brief description of the
nature of the right.
2.13 Certain Contracts and Arrangements. Except as set forth in
----------------------------------
Schedule 2.13 (with true and correct copies delivered to the Investors prior to
- -------------
the Closing Date), the Company is not a party or subject to or bound by:
(a) any plan or contract providing for collective bargaining or the
like, or any contract or agreement with any labor union;
(b) any contract, lease or agreement creating any obligation of the
Company to pay to any third party $5,000 or more with respect to any single such
contract or agreement;
(c) any contract or agreement for the sale, license, lease or
disposition of products in excess of $50,000;
(d) any contract or agreement for the provision of meeting services
for a price in excess of $800,000;
(e) [Intentionally Omitted];
(f) any contract containing covenants directly or explicitly limiting
the freedom of the Company to compete in any line of business or with any person
or entity;
(g) any license agreement (as licensor or licensee);
(h) any contract or agreement for the purchase of any leasehold
improvements, equipment or fixed assets for a price in excess of $50,000;
(i) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for borrowing in excess of $250,000 or
any pledge or security arrangement;
(j) any material joint venture, partnership, manufacturing,
development or supply agreement;
(k) any endorsement or any other advertising, promotional or
marketing agreement;
11
<PAGE>
(l) any employment contracts, or agreements with former or present
officers, directors, employees or shareholders of the Company or persons or
organizations related to or affiliated with any such persons;
(m) any stock redemption or purchase agreements or other agreements
affecting or relating to the capital stock of the Company, including without
limitation any agreement with any shareholder of the Company which includes
without limitation, anti-dilution rights, registration rights, voting
arrangements, operating covenants or similar provisions, except in connection
with the transactions contemplated hereby;
(n) any pension, profit sharing, retirement or stock options plans;
(o) any royalty, dividend or similar arrangement based on the sales
volume of the Company;
(p) any acquisition, merger or similar agreement;
(q) any contract with a governmental body under which the Company may
have an obligation for renegotiation;
(r) any outstanding power of attorney;
(s) any agreement with any shareholder of the Company or any
affiliate of any shareholder; or
(t) any other contract not executed in the ordinary course of
business.
All of the Company's contracts and commitments are in full force and effect
and neither the Company, nor, to the knowledge of the Principal, any other party
is in default thereunder (nor, to the knowledge of the Principal, has any event
occurred which with notice, lapse of time or both would constitute a default
thereunder), except to the extent that any such default would not have a
Material Adverse Effect and the Company has not received notice of any alleged
default under any such contract, agreement, understanding or commitment.
2.14 Litigation. Schedule 2.14 lists all currently pending litigation
---------- -------------
and governmental or administrative proceedings or investigations to which the
Company is a party. Except for matters described in Schedule 2.14, there is no
-------------
litigation or governmental or administrative proceeding or investigation pending
or, to the best knowledge of the Principal, threatened relating to the Company
which may have a Material Adverse Effect which could prevent or hinder the
consummation of the transactions contemplated by this Agreement or any other
transaction contemplated by or referred to herein. With respect to each matter
set forth therein, Schedule 2.14 sets forth a description of the forums for the
-------------
matter, the parties thereto and the type and amount of relief sought.
12
<PAGE>
2.15 Business; Compliance with Laws. The Company has all necessary
------------------------------
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as it is presently or
contemplated to be conducted. The Company is currently and has heretofore been
in compliance in all material respects with all federal, state, local and
foreign laws, regulations and guidelines, including without limitation all laws,
regulations and guidelines of the Food and Drug Administration, the Federal
Trade Commission, the American Medical Association and the Pharmaceutical
Marketing Association, in each case to the extent applicable. Neither the
Company nor the Principal or any of its respective affiliates has been: (a)
convicted in a criminal proceeding or named as a subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses); (b) subject
to any order, judgment, or decree (not subsequently reversed, suspended or
vacated) of any court of competent jurisdiction permanently or temporarily
enjoining it or him from, or otherwise imposing limits or conditions on its or
his engaging in any securities, investment advisory, banking, insurance or other
type of business or acting as an officer or director of a public company; or (c)
found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated any federal or state commodities, securities or unfair trade
practices law, which such judgment or finding has not been subsequently
reversed, suspended, or vacated.
2.16 Investment Banking; Brokerage. There are no claims for investment
-----------------------------
banking fees, brokerage commissions, finder's fees or similar compensation
(exclusive of professional fees to lawyers and accountants) in connection with
the transactions contemplated by this Agreement payable by the Company or based
on any arrangement or agreement made by or on behalf of the Company or any of
the Principals other than a fee of $212,500 payable to Glen Arden Associates.
2.17 Insurance. The Company has fire, casualty, product liability and
---------
business interruption and other insurance policies, with extended coverage,
sufficient in amount to allow it to replace any of its material properties which
might be damaged or destroyed or sufficient to cover liabilities to which the
Company may reasonably become subject, and such types and amounts of other
insurance with respect to its business and properties, on both a per occurrence
and an aggregate basis, as are customarily carried by persons engaged in the
same or similar business as the Company. There is no default or event which
could give rise to a default under any such policy.
2.18 Transactions with Affiliates. There are no loans, leases, contracts
----------------------------
or other transactions between the Company and any officer, director or five
percent (5%) shareholder of the Company or any family member or affiliate of the
foregoing persons and there have been no such transactions within the past three
(3) years except as set forth in Schedule 2.18.
-------------
2.19 Employee Benefit Plans. The Company does not maintain or contribute
----------------------
to any employee benefit plan, stock option, bonus or incentive plan, severance
pay policy or agreement, deferred compensation agreement, or any similar plan or
agreement (an "Employee
13
<PAGE>
Benefit Plan") other than the Employee Benefit Plans identified in
Schedule 2.19. The terms and operation of each Employee Benefit Plan comply in
- -------------
all material respects with all applicable laws and regulations relating to such
Employee Benefit Plans. There are no unfunded obligations of the Company under
any retirement, pension, profit-sharing, deferred compensation plan or similar
program. The Company is not required to make any payments or contributions to
any Employee Benefit Plan pursuant to any collective bargaining agreement or, to
the knowledge of the Principals, any applicable labor relations law, and all
Employee Benefit Plans are terminable at the discretion of the Company without
liability to the Company upon or following such termination. The Company has
never maintained or contributed to any Employee Benefit Plan providing or
promising any health or other nonpension benefits to terminated employees except
with respect to the continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. (S) 1161 et seq. (commonly known as
"COBRA").
2.20 Hazardous Waste, Etc. No hazardous wastes, substances or materials or
---------------------
oil or petroleum products have been generated, transported, used, disposed,
stored or treated by the Company and no hazardous wastes, substances or
materials, or oil or petroleum products have been released, discharged,
disposed, transported, placed or otherwise caused to enter the soil or water in,
under or upon any real property owned, leased or operated by the Company, in
each case in violation of any applicable federal, state or local law,
regulation, rule or order.
2.21 List of Certain Employees and Suppliers. Schedule 2.21 contains a
--------------------------------------- -------------
list of all managers, employees and consultants and independent contractors of
the Company who, individually, have received or are scheduled to receive
compensation or payments for the fiscal year ended December 31, 1995 in excess
of $75,000. In each case such Schedule includes the current job title and
aggregate annual compensation of each such individual. Schedule 2.21 sets forth
-------------
a list of all suppliers to whom the Company made payments aggregating $75,000 or
more during the fiscal year ended December 31, 1995 showing, with respect to
each, the name, address and dollar volume involved. To the knowledge of the
Principal, no supplier has any plan or intention to terminate or reduce its
business with the Company or to materially and adversely modify its relationship
therewith.
2.22 Employees; Labor Matters. The Company employs approximately 40
------------------------
full-time employees and 200 part-time employees, has 35 contracts with
independent contracts and generally enjoys a good employer-employee
relationship. The Company is not delinquent in payments to any of its employees
or independent contractors for any wages, salaries, commissions, bonuses or
other direct compensation for any services performed for it to the date hereof
or amounts required to be reimbursed to such employees or independent
contractors. Upon termination of the employment of any of said employees or
independent contractors, no severance or other payments will become due. The
Company has no policy, practice, plan or program of paying severance pay or any
form of severance compensation in connection with the termination of employment
or services. The Company is in compliance in all material respects with all
applicable laws and regulations respecting labor, employment, fair employment
practices, terms and conditions of employment, and wages and hours. There are
14
<PAGE>
no charges of employment discrimination or unfair labor practices, nor are there
any strikes, slowdowns, stoppages of work, or any other concerted interference
with normal operations existing, pending or to the best knowledge of the
Principal threatened against or involving the Company. No question concerning
representation exists respecting the employees of the Company. To the best
knowledge of the Principal, there are no grievances, complaints or charges that
have been filed under any dispute resolution procedure (including, but not
limited to, any proceedings under any dispute resolution procedure under any
collective bargaining agreement) that might have an adverse effect on the
Company. No arbitration or similar proceeding is pending and no claim therefor
has been asserted. To the best knowledge of the Principal, no collective
bargaining agreement is in effect or is currently being or is about to be
negotiated by the Company. The Company is, and at all times has been, in
compliance in all material respects with the requirements of the Immigration
Reform Control Act of 1986. There are no changes pending, or of which the
Principal has knowledge threatened with respect to (including, without
limitation, resignation of) the senior management or key supervisory personnel
or independent contractors of the Company nor has the Principal or the Company
received any notice or information concerning any prospective change with
respect to such senior management or key supervisory personnel.
2.23 Customers, Distributors, Meeting Moderators, Salespersons.
---------------------------------------------------------
Schedule 2.23 sets forth each representative, distributor, independent
- -------------
contractor and meeting moderator of the Company at the date hereof (whether
pursuant to a commission, royalty or other arrangement), and each customer,
salesperson and/or broker of the Company who accounted for more than 5% of the
sales of the Company for the twelve (12) months ended December 31, 1995
(collectively, the "Customers, Distributors and Brokers"). The relationships of
the Company with its Customers, Distributors, and Brokers are good commercial
working relationships. No Customer, Distributor or Broker of the Company has
canceled or otherwise terminated its relationship with the Company, or has
during the last twelve months decreased materially its services, supplies or
materials to the Company or its usage or purchases of the services or products
of the Company. No Customer, Distributor or Broker has, to the best knowledge
of the Principal, any plan or intention to terminate, to cancel or otherwise
materially and adversely modify its relationship with the Company or to decrease
materially or limit its services, supplies or materials to the Company or its
usage, purchase or distribution of the services or products of the Company.
2.24 Corporate Records. The corporate record books of the Company
-----------------
accurately record all corporate or partnership action taken by its stockholders,
board of directors, governing bodies and committees. The copies of the
corporate records of the Company provided to the Investors for review, are true
and complete copies of the originals of such documents.
2.25 Solvency. The Company has not: (a) made a general assignment for the
--------
benefit of creditors; (b) filed any voluntary petition in bankruptcy or suffered
the filing of any involuntary petition by its creditors; (c) suffered the
appointment of a receiver to take possession of all, or substantially all, of
its assets; (d) suffered the attachment or other judicial
15
<PAGE>
seizure of all, or substantially all, of its assets; (e) admitted in writing its
inability to pay its debts as they come due; or (f) made an offer of settlement,
extension or composition to its creditors generally. After giving effect to the
transactions provided for or contemplated herein (including the payment of the
distribution to the Company's existing shareholders) (a) the Company will be
able to pay its debts as they come due in the usual course of business and will
have adequate capital to conduct its business; (b) the Company will have funds
and capital sufficient to carry on its business and all businesses in which it
is about to engage; and (c) the Company will own property in the aggregate
having a value both at fair valuation and at fair saleable value in the ordinary
course of the Company's business greater than the amount required to pay its
indebtedness, including for this purpose unliquidated and disputed claims.
2.26 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered by
the Company and the Principal pursuant to this Agreement, together with all
materials provided by the Company and the Principal or their agents with respect
to the Company, do not contain any untrue statement of a material fact, and,
when taken together, do not omit to state a material fact required to be stated
therein or necessary in order to make such representations, warranties or
statements not misleading in light of the circumstances under which they were
made. There are no facts known to the Principal which presently or may in the
future have a Material Adverse Effect which have not been specifically disclosed
herein or in a Schedule attached hereto.
ARTICLE 3. COVENANTS OF PRINCIPALS.
-----------------------
3.1 Making of Covenants and Agreements. Each Principal hereby makes the
----------------------------------
covenants and agreements as set forth in this Article 3 for the period from and
after the Closing.
3.2 Cooperation. The Principal shall cooperate with all reasonable
-----------
requests of the Company or any of its representatives and agents to more
effectively consummate the transactions contemplated hereby and the transactions
referred to herein.
3.3 Consents. The Principal shall assist the Company in obtaining any
--------
and all consents, authorizations and approvals necessary in connection with the
consummation of the transactions contemplated hereby or referred to herein.
3.4 Notice of Default. Promptly upon the occurrence of, or promptly upon
-----------------
the Principal becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to the
Principal prior to the date hereof, of any of the representations, warranties or
covenants of the Principal contained in or referred to in this Agreement or in
any Schedule or Exhibit referred to in this Agreement, the Principal shall give
detailed written notice thereof to the Company and the Principal shall use his
best efforts to prevent or promptly remedy the same.
16
<PAGE>
ARTICLE 4. COVENANTS OF THE COMPANY.
------------------------
4.1 Making of Covenants and Agreements. The Company hereby makes the
----------------------------------
covenants and agreements set forth in this Section 4.
4.2 Availability of Records. After the Closing, the Company shall make
-----------------------
available to each Principal, as reasonably requested by him and at his expense,
or any taxing authority all information, records or documents relating to the
Company's business in respect of all periods prior to Closing and shall preserve
all such information, records and documents until the later of four (4) years
after the Closing or the expiration of all statutes of limitations or extensions
thereof, provided that the Principals shall hold the same in confidence. The
Company shall also make available to each Principal, as reasonably requested by
him and at his expense, personnel responsible for preparing or maintaining
information, records and documents, both in connection with tax matters as well
as litigation.
4.3 Expenses. The Company agrees to pay all legal, accounting and
--------
investment banking fees and expenses incurred in connection with the
transactions described herein.
ARTICLE 5. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ARRANGEMENTS, COVENANTS AND
--------------------------------------------------------------------
OBLIGATIONS.
-----------
All representations, warranties, agreements, covenants and obligations
herein or in any schedule, exhibit or certificate delivered by any party to any
other party hereto incident to the transactions contemplated hereby are
material, shall be deemed to have been relied upon by such other party and shall
survive the Closing regardless of any investigation and shall not merge in the
performance of any obligation by any party hereto, subject to the provisions of
Article 5 hereof; provided, however, that the survival of the representations
-------- -------
and warranties shall be limited as and to the extent provided in Sections
6.2(a).
ARTICLE 6. INDEMNIFICATION.
---------------
6.1 Indemnification by the Principals. Each Principal on behalf of
---------------------------------
himself and his successors, executors, administrators, estate, heirs and assigns
(collectively, for the purposes of this Article 6, the "Principal") agrees to
defend, indemnify and hold the Company and all subsidiaries and affiliates of
any Company (including without limitation stockholders of the Company (other
than the Principals) and persons serving as officers, directors, partners,
employees or agents of the Company or such subsidiaries or affiliates thereof
(in each case, other than the Principals) (individually a "Company Indemnified
Party" and collectively the "Company Indemnified Parties") harmless from and
against any and all damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including without limitation, reasonable fees of counsel)
of any kind or nature whatsoever ("Claims") (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing) which may be sustained or suffered by any such
Company Indemnified Party (a
17
<PAGE>
"Loss" or "Losses"), based upon, arising out of, by reason of or otherwise in
respect of or in connection with:
(a) any inaccuracy in or breach of any representation or warranty
made by a Principal in this Agreement, or in any Schedule, exhibit or
certificate delivered by or on behalf of a Principal as part of or pursuant to
this Agreement, or any claim, action or proceeding asserted or instituted or
arising out of any matter or thing covered by such representations or warranties
(collectively, "Warranty Claims");
(b) any breach of any covenant or agreement made by or on behalf of a
Principal in this Agreement, or in any Schedule, exhibit or certificate
delivered by or on behalf of the Principal as part of or pursuant to this
Agreement; or
(c) any liability of the Company for Taxes in respect of any period
ending on or before the Closing Date, including without limitation, any increase
in Taxes due to the unavailability of any loss or deduction claimed by the
Company.
The rights of Company Indemnified Parties to recover indemnification in
respect of any occurrence referred to in either of clauses (b) and (c) of this
Section 6.1 shall not be limited by the fact that such occurrence may not
constitute an inaccuracy in or breach of any representation, warranty or
agreement referred to in clause (a) of this Section 6.1.
6.2 Limitations on Indemnification by the Principals.
------------------------------------------------
The right of Company Indemnified Parties to indemnification under Section
6.1 shall be subject to the following provisions:
(a) Indemnification with respect to Warranty Claims shall expire
eighteen (18) months after the Closing; provided, however, that the
limitation of this clause (i) shall not apply to Warranty Claims involving
fraud, intentional misrepresentation, title to the Redeemed Shares or
Taxes, for which the period for making such claims shall expire on the date
which is six (6) months after the termination of the applicable statute of
limitations relating thereto. If prior to the relevant date of expiration a
specific state of facts shall have become known which may constitute or
give rise to any Warranty Claim as to which indemnity may be payable and a
Company Indemnified Party shall have given notice of such facts to the
Principal, then the right to indemnification with respect thereto shall
remain in effect without regard to when such matter shall have been finally
determined and disposed of, according to the date on which notice of the
applicable claim is given.
(b) No indemnification shall be payable with respect to Claims
involving Taxes (including any Claims arising as a result of the audit
referred to in Schedule 2.7) unless the total of all such Claims exceeds
------------
$100,000 in the aggregate, whereupon only the amount of such Claims in
excess of $100,000 shall be recoverable in accordance
18
<PAGE>
with the terms hereof. Further, no indemnification shall be payable with
respect to Warranty Claims (other than any such claims involving fraud,
intentional misrepresentation, title to the Redeemed Shares or arising
under Section 2.6(b) or 2.16 hereof) to Company Indemnified Parties unless
the total of all Warranty Claims plus all Claims relating to Taxes (whether
recoverable or subject to the foregoing $100,000 limitation) exceeds
$300,000 in the aggregate, whereupon only the amount of such claims in
excess of $300,000 shall be recoverable in accordance with the terms
hereof.
(c) The Principals shall not be obligated to indemnify the Company
Indemnified Parties for Warranty Claims (other than any such claims
involving fraud, intentional misrepresentation, title to the Redeemed
Shares or Taxes arising under Section 2.6(b) or 2.16 hereof) after the
cumulative amount of all amounts paid by the Principals to the Company
Indemnified Parties with respect thereto exceeds Twelve Million Five
Hundred Thousand Dollars ($12,500,000) (the "Maximum Warranty Claim
Amount"); provided, further, that each Principal shall not be individually
obligated to indemnify the Indemnified Parties for Warranty Claims (other
than any such claims involving fraud, intentional misrepresentation, title
to the Redeemed Shares or Taxes or arising under Section 2.6(b) or 2.16
hereof) or Claims involving Taxes in excess of his Pro Rata Share of the
relevant Claim as set forth opposite such Principal's name below:
<TABLE>
<CAPTION>
Principal Pro Rata Share
--------- --------------
<S> <C>
LePore 39.5%
Boron 35.8%
Sweeney 18.5%
Foti 6.2%
</TABLE>
(d) The limitations herein with respect to Warranty Claims shall not
limit the rights of any Company Indemnified Party with respect to any other
claims arising under provisions of Section 6.1.
6.3 Indemnification by the Company. The Company agrees to defend,
------------------------------
indemnify and hold each Principal and his successors, executors, administrators,
estate, heirs and assigns (collectively, for the purposes of this Article 6, the
"Principal Indemnified Parties") harmless from and against all Claims (whether
or not arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) which may be sustained or
suffered by any such Principal Indemnified Party (a "Loss" or "Losses"), based
upon, arising out of, by reason of or otherwise in respect of or in connection
with any breach of any covenant or agreement made by or on behalf of the Company
in this Agreement, or in any Schedule, exhibit or certificate delivered by or on
behalf of the Company as part of or pursuant to this Agreement.
19
<PAGE>
6.4 Notice; Defense of Claims. Promptly after receipt by an indemnified
-------------------------
party of notice of any third party or other claim, liability or expense to which
the indemnification obligations hereunder would apply, including in connection
with any governmental related proceeding, the indemnified party shall give
notice thereof in writing to the indemnifying party or parties, but the omission
to so notify the indemnifying party or parties promptly will not relieve the
indemnifying party or parties from any liability except to the extent that the
indemnifying party or parties shall have been materially prejudiced as a result
of the failure or delay in giving such notice. Such notice shall state the
information then available regarding the amount and nature of such claim,
liability or expense and shall specify the provision or provisions of this
Agreement under which the liability or obligation is asserted.
In the case of any third party claim, if within twenty (20) days after
receiving the notice described in the preceding paragraph the indemnifying party
or parties (i) give written notice to the indemnified party or parties stating
that they would be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were valid and that they dispute and intend
to defend against such claim, liability or expense at their own cost and expense
and (ii) provide assurance and security reasonably acceptable to such
indemnified party or parties that such indemnification will be paid fully and
promptly if required and such indemnified party or parties will not incur cost
or expense during the proceeding, then counsel for the defense shall be selected
by the indemnifying party or parties (subject to the consent of such indemnified
party or parties which consent shall not be unreasonably withheld) and such
indemnified party or parties shall not be required to make any payment with
respect to such claim, liability or expense as long as the indemnifying party or
parties are conducting a good faith and diligent defense at their own expense;
provided, however, that the assumption of defense of any such matters by the
indemnifying party or parties shall relate solely to the claim, liability or
expense that is subject or potentially subject to indemnification. If the
indemnifying party or parties assume such defense in accordance with the
preceding sentence, they shall have the right, with the consent of such
indemnified party or parties, which consent shall not be unreasonably withheld,
to settle all Indemnifiable matters related to claims by third parties which are
susceptible to being settled provided the indemnifying party or parties'
obligation to indemnify such indemnified party or parties therefor will be fully
satisfied by payment of money by the indemnifying party and the settlement
includes a complete release of such indemnified party or parties. The
indemnifying party or parties shall keep the such indemnified party or parties
apprised of the status of the claim, liability or expense and any resulting
suit, proceeding or enforcement action, shall furnish such indemnified party or
parties with all documents and information that such indemnified party or
parties shall reasonably request and shall consult with such indemnified party
or parties prior to acting on major matters, including settlement discussions.
Notwithstanding anything herein stated, such indemnified party or parties shall
at all times have the right to fully participate in such defense at its own
expense directly or through counsel; provided, however, if the named parties to
the action or proceeding include both the indemnifying party or parties and the
indemnified party or parties and representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the expense of separate counsel for such indemnified party or parties
shall be paid by the indemnifying party or parties. If no such notice of intent
to dispute and
20
<PAGE>
defend is given by the indemnifying party or parties, or if such diligent good
faith defense is not being or ceases to be conducted, such indemnified party or
parties shall, at the expense of the indemnifying party or parties, undertake
the defense of (with counsel selected by such indemnified party or parties), and
shall have the right to compromise or settle, such claim, liability or expense.
If such claim, liability or expense is one that by its nature cannot be defended
solely by the indemnifying party or parties, then such indemnified party or
parties shall make available all information and assistance that the
indemnifying party or parties may reasonably request and shall cooperate with
the indemnifying party or parties in such defense.
In the event of any disagreement among the Principals with respect to any
matter arising under or relating to this Article 6, including with respect to
the defense, prosecution or settlement or claims, the written instructions of
Principals having at least fifty percent (50%) of the Pro Rata Share of
indemnification obligations hereunder (as provided in Section 6.2(c) shall
control.
6.5 Satisfaction of Indemnification Obligations. Any indemnity payable
-------------------------------------------
pursuant to this Section 6 shall be paid within the later of (a) ten (10) days
after the indemnified party's request therefor or (b) ten (10) days prior to the
date on which the Loss upon which the indemnity is based is required to be
satisfied by the indemnified party.
6.6 Tax Effects of Losses; Meaning of After-Tax Basis.
-------------------------------------------------
(a) In calculating any Losses for which indemnification is provided
under this Article 6, such indemnification payment shall be made on an after-tax
basis such that the amount of any such losses shall in each case be reduced to
take account of any Tax Benefit to the indemnified party arising from the
payment of or relating to any such Loss, as described in and subject to
paragraph (b) below.
(b) For purposes of this Article 6, an indemnification payment that
is to be made on an "after-tax" basis to an indemnified party shall be made net
of Tax Benefits which the indemnified party has received or is entitled to
receive in respect to the Loss giving rise to such payment. As used herein, the
term "Tax Benefit" shall mean the federal, state and local tax savings that have
resulted or will result from any tax deduction or tax credit that (i) the
indemnified party has claimed or is entitled to claim on a Federal, state or
local income tax return filed for the tax year of such party in which the Loss
is paid or incurred and (ii) is directly attributable to such Loss. In the event
the Company realizes tax savings attributable to depreciation, amortization or
similar deduction attributable to the required capitalization of a Loss in years
following the payment of the Loss, the Company shall make an appropriate
adjustment and repayment of indemnification amounts previously paid. It shall be
assumed that the indemnified party is subject to the maximum marginal federal,
state and local tax rates for a corporation doing business in the jurisdiction
in which such person has its principal place of business or primary residence
unless the indemnified party's independent certified public accountant certifies
that such indemnified party is subject to a different rate, in which case such
different rate shall apply.
21
<PAGE>
ARTICLE 7. MISCELLANEOUS.
-------------
7.1 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of the State of New Jersey without regard to its conflict
of laws provisions.
7.2 Notices. Any notice, request, demand other communication required or
-------
permitted hereunder shall be in writing and shall be deemed to have been given
if delivered or sent by facsimile transmission, upon receipt, or if sent by
registered or certified mail, upon the sooner of the expiration of three days
after deposit in United States post office facilities properly addressed with
postage prepaid or acknowledgment of receipt. All notices and payments to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO THE COMPANY: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Fax: (201) 791-1121
TO ANY
- ------
PRINCIPAL To the address listed on its signature page hereto.
- ---------
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
7.3 Entire Agreement. This Agreement, including the Schedules referred
----------------
to herein and the other writings specifically identified herein or contemplated
hereby or delivered in connection with the transactions contemplated hereby, is
complete, reflects the entire agreement of the parties with respect to its
subject matter hereof, and supersedes all previous written or oral negotiations,
commitments and writings as to such subject matter.
7.4 Assignability; Binding Effect. This Agreement and any rights
-----------------------------
hereunder shall be assignable by the Company to one or more corporations
controlling, controlled by or under common control with the Company, directly or
indirectly, provided the Company shall remain liable for its obligations
hereunder in connection with any such assignment, or to any successor or
acquiror of the Company or its affiliates provided such entity assumes or agrees
to be bound by the Company's obligations hereunder, or to any entity providing
financing in connection with the transactions contemplated hereby or to any
successor or assign or such an entity (including without limitation any such
successor or assign in connection with any refinancing, renewal or extension of
such financing), upon written notice to the Principal. This Agreement and any
rights or obligations of the Principals herein may not be assigned by the
Principal without the prior written consent of the Company; provided, however,
-------- -------
that nothing herein shall limit the right of any Principal to assign or transfer
any Common Stock held by such Principal
22
<PAGE>
in accordance with the Stockholders' Agreement. This Agreement shall be binding
upon and enforceable by, and shall inure to the benefit of, the parties hereto
and their respective successors, heirs and permitted assigns (including without
limitation the estate and heirs of the Principal in the event of his death).
7.5 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
7.6 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
7.7 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each of the parties hereto or in the case
of a waiver, the party or parties waiving compliance.
7.8 Dispute Resolution. Except with respect to matters as to which
------------------
injunctive relief is being sought, any dispute arising out of or relating to
this Agreement that has not been settled within thirty (30) days by good faith
negotiation between the parties to this Agreement shall be submitted to the
American Arbitration Association ("AAA") for final and binding arbitration
pursuant to the commercial arbitration rules and regulations of AAA. Any such
arbitration shall be conducted in New York, New York.
7.9 Remedies; Severability. Notwithstanding Section 7.8, it is
----------------------
specifically understood and agreed that any breach of the provisions of this
Agreement by any Person subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy
for such breach, and that, in addition to any other legal or equitable remedies
which they may have, such other parties may enforce their respective rights by
actions for specific performance (to the extent permitted by law) and the
Company may refuse to recognize any unauthorized Transferee as one of its
stockholders for any purpose, including, without limitation, for purposes of
dividend and voting rights, until the relevant party or parties have complied
with all applicable provisions of this Agreement.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
23
<PAGE>
7.10 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "affiliate" of a person shall (i) with respect to a person,
any member of such person's family (including any child, step-child, parent,
step-parent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law); (ii) with respect to an
entity, any officer, director, stockholder, partner or investor in such entity
or of or in any affiliate of such entity; and (iii) with respect to a person or
entity, any person or entity which directly or indirectly controls, is
controlled by, or is under common control with such person or entity.
(b) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(c) "person" means an individual, corporation, partnership,
association, trust or any unincorporated organization; and
(d) "subsidiary" of a person means any corporation more than 50
percent of whose outstanding voting securities, or any partnership, joint
venture or other entity more than fifty percent (50%) of whose total equity
interest, is directly or indirectly owned by such person.
7.11 Release. Each Principal hereby generally releases and discharges
-------
the Company and its subsidiaries (which for purposes hereof, shall also include
each of the Company's predecessors, each of the present and former shareholders,
directors, officers, employees and agents of the Company or its subsidiaries and
any and all affiliates of any of the foregoing and their successors and assigns)
(each a "Released Party") of and from any and all commitments, indebtedness,
suits, demands, obligations and liabilities, contingent or otherwise, of every
kind and nature, including claims and causes of action both in law and in
equity, which the Principal and/or his heirs, executors, administrators or
assigns ever had, now has or, to the extent arising from or in connection with
any act, omission or state of facts taken or existing on or prior to the date
hereof, may have after the date hereof, against any Released Party, whether
asserted, unasserted, absolute, contingent, known or unknown, other than claims
or causes of action arising under or pursuant to (i) any of the Agreements
listed on Schedule 7.11 hereto or (ii) all indemnification rights of the
-------------
Principal in his capacity as a director and officer of each of the Company and
its subsidiaries to the same extent such rights exist as of the date hereof
under the charter documents and by-laws of each of the Company and its
subsidiaries and under applicable state law. The Principal hereby represents to
the Released Parties that (i) he has not assigned any claim or possible claim
against any Released Party, (ii) he fully intends to release all claims against
the Released Parties including without limitation unknown and contingent claims
(other than those specifically reserved above), and (iii) he has consulted with
counsel with respect to the execution and delivery of this general release and
has been fully apprised of the consequences hereof. Without limitation of the
foregoing, the Company and
24
<PAGE>
each of the Selling Stockholders agree that the Stockholders' Agreement between
Gregory Boron and Patrick LePore and Boron, LePore & Associates, Inc. dated July
1, 1996 is hereby terminated.
[END OF TEXT]
25
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
THE COMPANY:
-----------
ATTEST BORON, LePORE & ASSOCIATES, INC.
/s/ Michael W. Foti By: /s/ Patrick G. LePore
- ------------------------- ------------------------------
Secretary Name: Patrick G. LePore
Title: President
26
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
PRINCIPAL
---------
/s/ Patrick G. LePore
-------------------------------------
Patrick G. LePore
Address: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Fax No.: (201) 791-1121
27
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
PRINCIPAL
---------
/s/ Gregory Boron
-----------------------------------------
Gregory Boron
Address: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Fax No.: (201) 791-1121
28
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
PRINCIPAL
---------
/s/ Christopher Sweeney
------------------------------------------
Christopher Sweeney
Address: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Fax No.: (201) 791-1121
29
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date set forth above by their
duly authorized representatives.
PRINCIPAL
---------
/s/ Michael W. Foti
------------------------------------------
Michael W. Foti
Address: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Fax No.: (201) 791-1121
30
<PAGE>
Exhibit 2.3
BORON, LEPORE & ASSOCIATES, INC.
7,000,000 Shares of
Convertible Participating Preferred Stock
_______________________________
PREFERRED STOCK PURCHASE AGREEMENT
_______________________________
December 4, 1996
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
Preferred Stock Purchase Agreement
December 4, 1996
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1. PURCHASE AND SALE OF PREFERRED SHARES...........................1
1.1 Description of Securities.......................................1
1.2 Sale and Purchase...............................................1
1.3 Closing.........................................................1
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.................3
SECTION 4. CONDITIONS OF PURCHASE..........................................3
4.1 [Omitted].......................................................3
4.2 Satisfaction of Conditions......................................3
4.3 Opinion of Counsel..............................................4
4.4 Authorization...................................................4
4.5 Cash; Working Capital; Net Worth................................4
4.6 Senior Debt Facility............................................4
4.7 Payment and Release.............................................4
4.8 Closing of Stock Redemption.....................................4
4.9 Stockholders' Agreement.........................................5
4.10 Employment and Non-Competition Agreements.......................5
4.11 Repayment of Loans..............................................5
4.12 Election of Directors...........................................5
4.13 All Proceedings Satisfactory....................................5
4.14 No Violation or Injunction......................................5
4.15 Consents and Waivers............................................5
4.16 No Material Adverse Change......................................6
4.17 Investors' Fees.................................................6
SECTION 5. COVENANTS OF THE COMPANY........................................6
5.1 Financial Statements............................................6
5.2 Budget and Operating Forecast; Inspection.......................7
5.3 Board Meetings; Indemnification.................................7
5.4 Conduct of Business.............................................7
5.5 Payment of Taxes, Compliance with Laws, etc.....................7
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
5.6 Insurance.......................................................8
5.7 Key Person Insurance............................................8
5.8 Maintenance of Properties.......................................8
5.9 Material Adverse Changes........................................8
5.10 Management Compensation.........................................8
5.11 Stock Grants....................................................9
5.12 Affiliated Transactions.........................................9
5.13 Managing Underwriter............................................9
5.15 Enforcement of Rights...........................................9
5.16 Distributions on, and Redemptions of, Capital Stock............10
5.17 Merger, Consolidation, Sale of Assets, Acquisitions and Other
Actions........................................................10
5.18 No Amendments to Certificate of Incorporation..................11
SECTION 6. GENERAL........................................................11
6.1 Amendments, Waivers and Consents...............................11
6.2 Actions or Consents of Investors...............................11
6.3 Indemnification from the Company; Expenses.....................11
6.4 Survival of Representations; Assignability of Rights;
No Third Party Beneficiaries...................................13
6.5 Governing Law..................................................14
6.6 Section Headings and Gender....................................14
6.7 Counterparts...................................................14
6.8 Notices and Demands............................................14
6.9 Dispute Resolution.............................................14
6.10 Remedies; Severability.........................................14
6.11 Integration....................................................15
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
Exhibit A - List of Investors
Exhibit B - Amended and Restated Certificate of Incorporation
Exhibit C - Outstanding Capital Stock
Exhibit D - General Release of Thomas S. Boron
</TABLE>
(ii)
<PAGE>
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT made as of this 4th day of December, 1996,
by and between BORON, LePORE & ASSOCIATES, INC., a Delaware corporation (the
"Company"), and each of the investment partnerships and individuals named in
Exhibit A hereto (including their assignees as provided in Section 6.4,
- ---------
collectively the "Investors," and each individually an "Investor").
SECTION 1. PURCHASE AND SALE OF PREFERRED SHARES
-------------------------------------
1.1 Description of Securities. The Company has authorized the issuance and
-------------------------
sale to the Investors of 7,000,000 shares (the "Preferred Shares") of its
authorized but unissued Convertible Participating Preferred Stock, par value
$.01 per share (the "Preferred Stock"), having the rights, preferences and other
terms set forth on Exhibit B hereto (the "Preferred Stock Terms"). The Company
---------
has authorized and has reserved, and covenants to continue to reserve, a
sufficient number of shares of its Common Stock, par value $.01 per share (the
"Common Stock"), Class B Common Stock, par value $.01 per share ("Class B Common
Stock"), and Redeemable Preferred Stock, par value $.01 per share (the
"Redeemable Preferred Stock"), to satisfy the rights of conversion of the
holders of the Preferred Shares. Any shares of Common Stock or Class B Common
Stock and Redeemable Preferred Stock or any successor class of capital stock of
the Company hereafter issued or issuable upon conversion of the Preferred Shares
are herein referred to as "Conversion Shares," and the Preferred Shares and the
Conversion Shares are herein collectively referred to as the "Securities."
1.2 Sale and Purchase. Subject to the terms and conditions herein, at the
-----------------
Closing (as hereinafter defined), the Company shall issue and sell to each of
the Investors, and each Investor shall purchase from the Company, the number of
Preferred Shares set forth opposite the name of such Investor in Exhibit A
---------
hereto for a purchase price of $1.785714286 for each Preferred Share.
1.3 Closing. A closing (the "Closing") shall take place at the offices of
-------
Goodwin, Procter & Hoar LLP, Boston, Massachusetts, together with the closing
of the transactions contemplated by each of the Stock Redemption Agreement of
even date and the Bank Financing Agreement of even date (each as hereinafter
defined), subject to satisfaction or waiver of all of the conditions set forth
herein and therein. At the Closing, the Company shall deliver to each Investor
a certificate or certificates representing the Preferred Shares being acquired
by such Investor in such Investor's name or in the name of its nominee, against
payment of the full purchase price therefor by or on behalf of each Investor to
the Company by wire transfer of same day available funds. The day on which the
Closing occurs is referred to herein as the Closing Date.
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents, warrants and covenants to the Investors as
follows: (a) the Company has full corporate authority and power to enter into
this Agreement; (b) this Agreement constitutes the valid and binding obligation
of the Company enforceable against it in accordance with its terms; and (c) the
execution, delivery and performance by the Company of this Agreement: (i) does
not and will not violate any laws, rules or regulations of the United States or
any state or other jurisdiction applicable to the Company, or require the
Company to obtain any approval, consent or waiver of, or to make any filing
with, any Person that has not been obtained or made; and (ii) does not and will
not result in a breach of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of any indenture or loan or credit
agreement or any other material agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Company or any of its
subsidiaries is a party or by which the property of the Company is bound or
affected, or result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the assets or
properties of the Company.
The Company hereby further represents and warrants that immediately after the
Closing, and after giving effect to each of the transactions contemplated by (i)
this Agreement (hereinafter the "Agreement"), (ii) the Stock Redemption
Agreement dated as of December 4, 1996 by and between the Company and Patrick G.
LePore, Gregory Boron, Christopher Sweeney and Michael W. Foti executed
concurrently herewith (the "Stock Redemption Agreement"), (iii) the
Stockholders' Agreement dated as of December 4, 1996 among the Company, the
Investors named therein and the Founders named therein executed concurrently
herewith (the "Stockholders' Agreement), (iv) the Loan Agreement dated as of
December 4, 1996 and related agreements in connection with the financing of the
transactions contemplated hereby (the "Bank Financing Agreement"), and (v) the
sale of 600,000 shares of Common Stock in the aggregate to Sweeney and Foti and
the sale of 1,000,000 shares of restricted Class A Common Stock in the aggregate
to Messrs. LePore, Boron, Sweeney and Foti under the Company's 1996 Stock Option
and Grant Plan, all of the Company's outstanding capital stock will be owned
beneficially and of record as set forth in Exhibit C hereto, will be free and
---------
clear of any lien, restriction or encumbrance except pursuant to the terms of
the Stockholders' Agreement and the Restricted Stock Agreements to which Messrs.
LePore, Boron, Sweeney and Foti are parties and there will be no outstanding
options, warrants, rights, commitments, pre-emptive rights or agreements of any
kind for the issuance and sale of, or outstanding securities convertible into,
any additional shares of any class of the Company's capital stock, except as
provided by the terms of the Preferred Shares.
Each of the representations and warranties of the Company set forth in the
Stock Redemption Agreement and the Bank Financing Agreement is true and correct
at the date hereof.
2
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
-----------------------------------------------
Each Investor represents that it is an "accredited investor" as such term is
defined in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act"). Each Investor represents to the Company that it is
purchasing the Securities for its own account, for investment only and not with
a view to, or any present intention of, effecting a distribution of such
securities or any part thereof except pursuant to a registration or an available
exemption under applicable law. Each such Investor acknowledges that its
respective Securities have not been registered under the Securities Act or the
securities laws of any state or other jurisdiction and cannot be disposed of
unless they are subsequently registered under the Securities Act and any
applicable state laws or an exemption from such registration is available.
Each of the Investors, hereby further represents, warrants and covenants to
the Company and to the Founders as follows: (a) such Investor has full
authority and power under its charter, by-laws, governing partnership agreement
or comparable document to enter into this Agreement; (b) this Agreement
constitutes the valid and binding obligation of such Investor; and (c) the
execution, delivery and performance by such Investor of this Agreement: (i) does
not and will not violate any laws, rules or regulations of the United States or
any state or other jurisdiction applicable to such Investor, or require such
Investor to obtain any approval, consent or waiver of, or to make any filing
with, any person that has not been obtained or made; and (ii) does not and will
not result in a breach of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Investor is a party or by which the property
of such Investor is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or encumbrance
on any of the assets or properties of such Investor.
SECTION 4. CONDITIONS OF PURCHASE
----------------------
Each of the Investor's obligation to purchase and pay for its respective
Preferred Shares shall be subject to compliance by the Company with its
agreements herein contained and to the fulfillment to the Investors'
satisfaction on or before the Closing Date of the following conditions:
4.1 [Omitted].
-------
4.2 Satisfaction of Conditions. The representations and warranties of the
--------------------------
Company contained in this Agreement and in the Stock Redemption Agreement, the
Stockholders' Agreement and the Bank Financing Agreement shall be true and
correct on and as of the Closing Date; each of the conditions specified in this
Section 4 shall have been satisfied or waived in writing; and on the Closing
Date a certificate to such effect executed by the Chief
3
<PAGE>
Executive Officer and the Chief Financial Officer of the Company shall be
delivered to the Investors.
4.3 Opinion of Counsel. The Company shall have received opinions of
------------------
Kirkpatrick & Lockhart LLP and LePore, Zimmerer, LePore & Luizzi in form and
substance satisfactory to them.
4.4 Authorization. The Board of Directors and the stockholders of the
-------------
Company shall have duly adopted resolutions in form reasonably satisfactory to
the Investors and shall have taken all action necessary for the purpose of
authorizing the Company to consummate the transactions contemplated by the Stock
Redemption Agreement, the Stockholders' Agreement, the Bank Financing Agreement
and this Agreement in accordance with the terms thereof and hereof, including
without limitation the authorization of the issuance of the Preferred Shares and
the filing of an Amended and Restated Certificate of Incorporation in the form
attached hereto as with the Secretary of State for the State of Delaware
establishing the Preferred Shares, and the Investors shall have received a duly
executed certificate of the Secretary of the Company setting forth a copy of
such resolutions and as to such other matters as may be requested by the
Investors together with a copy of the Amended and Restated Certificate of
Incorporation certified by the Secretary of State of the State of Delaware.
4.5 Cash; Working Capital; Net Worth. Prior to giving effect to the
--------------------------------
transactions contemplated by this Agreement, including without limitation the
Stock Redemption Agreement and the Bank Financing Agreement, excluding the
effect of the payment of all fees and expenses of the Company incurred or to be
incurred in connection with the transactions contemplated hereby, including
without limitation, legal, accounting and investment banking, the Company's
assets shall include cash in the amount of not less than $250,000, the Company's
working capital and stockholders' equity shall not be less than $2.5 million and
$2.5 million, respectively, and the Investors shall have received a certificate
to such effect from the Company executed by its Chief Executive Officer and
Chief Financial Officer.
4.6 Senior Debt Facility. The Company shall have obtained at least
--------------------
$20,000,000 in funds (the "Senior Debt") pursuant to the Bank Financing
Agreement on terms acceptable to the Investors.
4.7 Payment and Release. The Company shall have received an executed general
-------------------
release in the form attached hereto as Exhibit D from Thomas S. Boron in
---------
consideration of the payment of $6,213,173 concurrently with the closing of the
purchase and sale of the Preferred Shares under this Agreement and the funding
pursuant to the Bank Financing Agreement.
4.8 Closing of Stock Redemption. Concurrently with the closing of the
---------------------------
purchase and sale of the Preferred Shares and the financing contemplated by the
Bank Financing Agreement, the Company shall complete the redemption of an
aggregate of 5,600,000 shares of Common Stock of the Company from Patrick G.
LePore and Gregory Boron in
4
<PAGE>
consideration of payments aggregating $18,850,000 pursuant to the Stock
Redemption Agreement.
4.9 Stockholders' Agreement. The Stockholders' Agreement shall have been
-----------------------
executed and delivered by the parties hereto.
4.10 Employment and Non-Competition Agreements. Each of Patrick G. LePore,
-----------------------------------------
Gregory Boron, Christopher Sweeney and Michael W. Foti (the "Principal
Stockholders") shall have executed and delivered an Employment Agreement and a
Non-Competition Agreement in the form and substance satisfactory to the
Investors.
4.11 Repayment of Loans. Promptly upon the Closing, Patrick G. LePore and
------------------
Gregory Boron shall have repaid in full indebtedness owed to the Company in the
aggregate amount of $403,644.
4.12 Election of Directors. Effective subsequent to the transactions
---------------------
contemplated hereby, the Company's Board of Directors shall include Jacqueline
C. Morby and Roger B. Kafker as designees of the Investors pursuant to the terms
of the Amended and Restated Certificate of Incorporation, each of whom shall
also be appointed to a three-person Compensation Committee of the Company, and
the Company shall have entered into Director Indemnification Agreements with
such designees the form and substance satisfactory to the Investors.
4.13 All Proceedings Satisfactory. All corporate and other proceedings taken
----------------------------
prior to or at the Closing in connection with the transactions contemplated by
this Agreement and all documents and evidences incident hereto shall be
reasonably satisfactory in form and substance to the Investors and the issuance
and sale of the Preferred Shares shall be made in compliance with all applicable
federal and state laws and evidence thereof shall have been provided to the
Investors.
4.14 No Violation or Injunction. The consummation of the transactions
--------------------------
contemplated by this Agreement, the Stock Redemption Agreement and the Bank
Financing Agreement and the transactions contemplated hereby and thereby shall
not be in violation of any law or regulation, and shall not be subject to any
injunction, stay or restraining order.
4.15 Consents and Waivers. The Company and each party to each to the Stock
--------------------
Redemption Agreement, the Stockholders' Agreement and the Bank Financing
Agreement shall have obtained all consents or waivers necessary to execute this
Agreement, the Stock Redemption Agreement, the Stockholders' Agreement and the
Bank Financing Agreement and the other agreements and documents contemplated
herein, to issue the Securities and to carry out the transactions contemplated
hereby and thereby and shall have delivered satisfactory evidence thereof to the
Investors. All governmental filings necessary to effectuate the terms of this
Agreement, the Securities, the Stock Redemption Agreement, the Stockholders'
Agreement, the Bank Financing Agreement and the other agreements and instruments
executed
5
<PAGE>
and delivered by the Company in connection herewith and therewith shall have
been made or taken.
4.16 No Material Adverse Change. Between October 31, 1996 and the Closing
--------------------------
Date, there shall have been no material adverse change in the financial
condition, properties, assets, liabilities, business, operations or prospects of
the Company, whether or not in the ordinary course of business.
4.17 Investors' Fees. The Company shall have paid all legal and accounting
---------------
fees and related expenses incurred by the Investors in connection with the
transactions contemplated by this Agreement, the Stock Redemption Agreement, the
Stockholders' Agreement and the Bank Financing Agreement and concurrent or
related transactions.
SECTION 5. COVENANTS OF THE COMPANY
------------------------
The Company (which term shall be deemed to include, for purposes of this
Section 5, any subsidiary or subsidiaries of the Company formed after the date
of this Agreement) shall comply with the following covenants except as shall
otherwise be expressly agreed pursuant to a written consent or consents executed
by Investors holding not less than two-thirds of the shares of Convertible
Preferred Stock (or Class B Common Stock or Common Stock, as applicable) held by
the Investors as a group, until the closing of a Qualified Public Offering (as
defined in the Company's Amended and Restated Certificate of Incorporation).
5.1 Financial Statements. The Company will maintain a comparative system of
--------------------
accounts in accordance with generally accepted accounting principles, keep full
and complete financial records and furnish to the Investors the following
reports: (a) within 60 days after the end of each fiscal year, a copy of the
consolidated balance sheet of the Company as at the end of such year, together
with a consolidated statement of income and retained earnings of the Company for
such year, audited and certified by independent public accountants of recognized
national standing reasonably satisfactory to the Investors, prepared in
accordance with generally accepted accounting principles and practices
consistently applied; (b) within 45 days after the end of each quarter
commencing with the quarter ending March 31, 1997, a consolidated unaudited
balance sheet of the Company as at the end of such quarter and a consolidated
unaudited statement of income and retained earnings for the Company for such
quarter and for the year to date; (c) within 30 days after the end of each month
commencing with the month ending December 31, 1996 a consolidated unaudited
balance sheet of the Company as at the end of such month and an unaudited
statement of income and retained earnings for the Company for such month and for
the year to date, each of the foregoing balance sheets and statements of
earnings and retained earnings to set forth in comparative form the
corresponding figures for the prior fiscal period and to include a brief written
discussion and analysis by management of such annual, quarterly and monthly
financial statements; and (d) such other financial information as a two-thirds
in interest of the Investors may reasonably request, including without
limitation certificates of the principal financial
6
<PAGE>
officer of the Company concerning compliance with the covenants of the Company
under this Section 5.
5.2 Budget and Operating Forecast; Inspection. The Company will prepare and
-----------------------------------------
submit to the Board of Directors of the Company a budget for the Company for
each fiscal year of the Company at least 30 days prior to the beginning of such
fiscal year, together with management's written discussion and analysis of such
budget. The budget shall be accepted as the budget for such fiscal year when it
has been approved by a majority of the full Board of Directors of the Company
and, thereupon, a copy of such budget promptly shall be sent to the Investors.
The Company shall review the budget periodically and shall advise the Board of
Directors and the Investors of all changes therein and all material deviations
therefrom.
The Company will, upon reasonable prior notice to the Company, permit
authorized representatives of the Investors to visit and inspect any of the
properties of the Company and its subsidiaries, including its books of account
(and to make copies thereof and take extracts therefrom), and to discuss its
affairs, finances and accounts with its officers, administrative employees and
independent accountants, all at such reasonable times and as often as may be
reasonably requested.
5.3 Board Meetings; Indemnification. The Company will ensure that meetings
-------------------------------
of its Board of Directors are held at least four times each year. The Company
will pay the nominees of the Investors who serve as directors fees in an amount
equal to any fees that are paid to other non-management directors of the Company
and will reimburse such Directors for their reasonable travel expenses incurred
in connection with attending meetings of the Board of Directors and for their
reasonable direct costs associated with any other work on behalf of the Company.
The Amended and Restated Certificate of Incorporation and By-laws of the Company
will in respect of all times during which any nominee of any of the Investors
serves as a director of the Company provide for exculpation and indemnification
of the directors and limitations on the liability of the directors to the
fullest extent permitted under applicable state law, and the Company will use
its best efforts to obtain and maintain on reasonable business terms directors
and officers' liability insurance coverage of at least $2 million per
occurrence.
5.4 Conduct of Business. The Company will continue to engage principally in
-------------------
the business now conducted by the Company or a business or businesses similar
thereto or reasonably compatible therewith. The Company will keep in full force
and effect its corporate existence and all intellectual property rights useful
in its business (except such rights as the Board of Directors has reasonably
determined are not material to the Company's continuing operations).
5.5 Payment of Taxes, Compliance with Laws, etc. The Company will pay and
-------------------------------------------
discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that the Company shall not be
7
<PAGE>
required to pay and discharge any such tax, assessment, charge, levy or claim so
long as the validity thereof is being contested by the Company in good faith by
appropriate proceedings and an adequate reserve therefor has been established on
its books. The Company will comply with all applicable laws and regulations in
the conduct of its business, including, without limitation, all applicable
federal and state securities laws in connection with the issuance of any shares
of its capital stock.
5.6 Insurance. The Company will keep its insurable properties insured, upon
---------
reasonable business terms, by financially sound and reputable insurers against
liability, and the perils of casualty, fire and extended coverage in amounts of
coverage at least equal to those customarily maintained by companies in the same
or similar business as the Company. The Company will also maintain with such
insurers insurance against other hazards and risks and liability to persons and
property to the extent and in the manner customary for companies engaged in the
same or similar business.
5.7 Key Person Insurance. The Company will use reasonable commercial efforts
--------------------
to promptly increase the coverage under the existing "key person" term life
insurance policies on the lives of Patrick G. LePore and Gregory Boron to $5
million for each such individual provided such an increase can be obtained at a
commercially reasonable cost to the Company.
5.8 Maintenance of Properties. The Company will maintain all properties used
-------------------------
or useful in the conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted, as necessary to permit such business
to be properly and advantageously conducted.
5.9 Material Adverse Changes. The Company will promptly advise the Investors
------------------------
of any event which represents or is reasonably likely to result in a material
adverse change in the condition (financial or otherwise), business or prospects
of the Company and its subsidiaries, and of each suit or proceeding commenced or
threatened against the Company or any of its subsidiaries which, if adversely
determined, in the reasonable judgment of the Company, is reasonably likely to
have a material adverse effect on the Company and its subsidiaries or their
condition (financial or otherwise), business or prospects.
5.10 Management Compensation. Compensation paid by the Company to its
-----------------------
management will be comparable to compensation paid to management in companies in
the same or similar businesses of similar size and maturity and with comparable
financial performance. Base compensation (not including bonuses and benefits or
amounts paid in connection with the transactions contemplated hereby as
described in Schedule 4.1 or otherwise) paid to the Principal Stockholders as a
group shall not exceed $1,050,000 (subject to proportionate reduction in the
event any Principal Stockholder ceases to be an employee) in the aggregate for
1997 and for each succeeding year shall not exceed an amount which is 5% higher
than the maximum amount for the prior year. Any bonuses paid to employees of
the Company shall be approved by a three-person Compensation Committee of the
Company including two designees of the Investors.
8
<PAGE>
5.11 Stock Grants. The Company and its subsidiaries will not issue stock
------------
or grant stock options, warrants, other rights to purchase stock or phantom
stock rights in the Company or its subsidiaries to their employees, officers,
directors, consultants, advisers or independent contractors except for the
future issuance of up to 1,000,000 shares or options on shares of Class A Common
Stock to employees of the Company other than the Principal Stockholders and the
sale promptly following the Closing of 600,000 shares of Common Stock and
1,000,000 shares of restricted Class A Common Stock to the Principal
Stockholders (in each case subject to adjustments for stock splits, stock
dividends and the like), pursuant to and in accordance with the terms of the
Company's 1996 Stock Option and Grant Plan (the "Plan") as in effect on the
Closing Date. Future options and restricted stock may be granted to such
employees, officers, directors, consultants, advisors or independent contractors
(other than the Principal Stockholders) as the Compensation Committee of the
Company or the Board of Directors may determine, at prices determined in good
faith by the Compensation Committee or Board of Directors, and otherwise on such
terms as the Compensation Committee or Board of Directors shall determine. The
Plan may not be amended, revised or waived after the Closing Date without the
consent of two-thirds in interest of the Investors. Any grants of capital stock
or options to a Principal Stockholder shall be conditioned upon the grantee
agreeing to be bound by the terms of the Stockholders' Agreement with respect to
the shares covered thereby.
5.12 Affiliated Transactions. All transactions by and between the
-----------------------
Company and any of the Principal Stockholders or any other officer or key
employee of the Company or persons controlling, controlled by, under common
control with or otherwise affiliated with such Principal Stockholder, officer or
key employee, shall be conducted on an arm's-length basis, shall be on terms and
conditions no less favorable to the Company than could be obtained from
nonrelated persons and shall be approved in advance by the Board of Directors
after full disclosure of the terms thereof, provided that all of the
transactions contemplated by Schedule 4.1 to this Agreement and the other
agreements referred to herein shall be deemed consistent with this Section 5.12.
5.13 Managing Underwriter. Selection of the managing or lead underwriter
--------------------
for the Company's initial public offering shall be approved by two-thirds-in-
interest of the Investors, which approval shall not be unreasonably withheld.
5.14 Use of Proceeds. The Company will use the proceeds from the sale of
---------------
the Preferred Shares and the funding of the Senior Indebtedness under the Bank
Financing Agreement as provided in Schedule 5.14 hereto.
5.15 Enforcement of Rights. The Company will diligently enforce all of
---------------------
its rights, including rights of indemnification, under the Stock Redemption
Agreement, the Employment and Non-Competition Agreements referred to in Section
4.10 and the Restricted Stock Agreements relating to the grants referred to in
Section 5.11. The Company will not effect any transfer of any of the
outstanding capital stock of the Company on the stock record books of the
Company unless such transfer is made in accordance with the terms of the
Stockholders'
9
<PAGE>
Agreement. The Company will not waive or release any rights under, or consent
to the amendment of, any such agreement without the written consent of two-
thirds-in-interest of the Investors.
5.16 Distributions on, and Redemptions of, Capital Stock. Except as
---------------------------------------------------
otherwise expressly provided in this Agreement, including Schedule 4.1, or the
Amended and Restated Certificate of Incorporation, the Company will not declare
or pay any dividends or make any distributions of cash, property or securities
of the Company with respect to any shares of its Common Stock or any other class
of its capital stock, or directly or indirectly redeem, purchase, or otherwise
acquire for consideration any shares of its Common Stock or any other class of
its capital stock; provided, however, that this restriction shall not apply to
the repurchase of up to 2,000,000 shares of Class A Common Stock pursuant to
agreements under which the Company has the option or obligation to repurchase
such shares upon the occurrence of certain events, including termination of
employment, and a right of first refusal to acquire shares in the event of
certain proposed transfers. Any redemption, repurchase or other acquisition by
the Company of any shares of its capital stock shall be made in compliance with
all laws, including but not limited to federal and state securities laws.
5.17 Merger, Consolidation, Sale of Assets, Acquisitions and Other
-------------------------------------------------------------
Actions. The Company will not: (a) sell, lease or otherwise dispose of (whether
- -------
in one transaction or a series of related transactions) all or substantially all
of its assets, (b) merge with or into or consolidate with another entity (except
into or with a wholly-owned subsidiary of the Company with the requisite
shareholder approval), (c) acquire any other corporation or business concern,
whether by acquisition of assets, capital stock or otherwise, and whether in
consideration of the payment of cash, the issuance of capital stock or
otherwise, or make any material investment in another business entity, (d)
voluntarily liquidate or wind up its operations, (e) authorize the issuance of,
issue or reserve for issuance, any equity securities (including without
limitation options, warrants, convertible or exchangeable securities or rights
giving the holder thereof the right to acquire equity securities or any of the
foregoing) or otherwise engage in any equity financing, including without
limitation in connection with a stock acquisition, but excluding the issuance of
stock options and/or restricted stock as contemplated by Section 5.11, (f)
create, or obligate itself to create, any class or series of shares having
preference over or being on a parity with the Preferred Shares or the Redeemable
Preferred Stock, (g) create, incur, assume, become liable for, or permit to
exist any indebtedness for borrowed money (other than the Senior Debt), capital
leases, or other similar commitments or obligations, which, for any one such
borrowing or series of related borrowings, is in excess of $250,000, other than
equipment loans in the ordinary course of business, or (h) enter into any
agreement or arrangement or take any other action that eliminates, amends,
restricts or otherwise adversely affects the rights of the holders of the
Preferred Shares or the Company's ability to perform its obligations hereunder
or under the Amended and Restated Certificate of Incorporation or the
Stockholders' Agreement; without limitation of the foregoing, the Company shall
take all action necessary or appropriate, to the extent reasonably within its
control, to remove promptly any impediment to the redemption of the Preferred
Shares or the
10
<PAGE>
Redeemable Preferred Stock as contemplated by the Amended and Restated
Certificate of Incorporation.
5.18 No Amendments to Certificate of Incorporation. The Company will not
---------------------------------------------
make any amendment to Article IV of its Amended and Restated Certificate of
Incorporation or make any other amendment to its Amended and Restated
Certificate of Incorporation or any amendment to its By-laws that eliminates,
amends or restricts the rights and preferences of or otherwise adversely affects
the holders of the Preferred Stock or the Redeemable Preferred Stock.
SECTION 6. GENERAL
-------
6.1 Amendments, Waivers and Consents. For the purposes of this
--------------------------------
Agreement and all agreements executed pursuant hereto, no course of dealing
between or among any of the parties hereto and no delay on the part of any party
hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No provision hereof may be waived
otherwise than by a written instrument signed by the parties so waiving such
covenant or other provision; provided, however, in the case of the Investors,
changes in or additions to, and any consents or waivers given pursuant to, this
Agreement may be made, and compliance with any term, covenant, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) by a consent of
the Investors in accordance with Section 6.2. Any amendment or waiver effected
in accordance with this Section 6.1 shall be binding upon each holder of
Preferred Shares or Conversion Shares at the time outstanding, each future
holder of all such securities and the Company and each of their assigns.
6.2 Actions or Consents of Investors. Any actions required to be taken
--------------------------------
or consents, approvals, votes or waivers required or contemplated to be given by
the Investors shall require a vote of two-thirds-in-interest of the Investors
based on their relative holdings of Preferred Shares or Conversion Shares at the
relevant time.
6.3 Indemnification from the Company; Expenses.
------------------------------------------
(a) Without limitation of any other provision of this Agreement,
the Company agrees to defend, indemnify and hold the Investors and their
affiliates and their respective direct and indirect partners, members,
Stockholders, directors, officers, employees and agents and each person who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act of 1934, as amended (the "Exchange Act") (parties
receiving the benefit of the indemnification agreement herein shall be referred
to collectively as "Indemnified Parties" and individually as an "Indemnified
Party") harmless from and against any and all losses, claims, damages,
obligations, liens, assessments, judgments, fines, liabilities, and other costs
and expenses (including without limitation interest, penalties and any
investigation, reasonable, legal and accountant fees and other expenses
11
<PAGE>
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, as the same are incurred) of any kind
or nature whatsoever which may be sustained or suffered by any such Indemnified
Party, without regard to any investigation by any of the Indemnified Parties,
based upon, arising out of, by reason of or otherwise in respect of or in
connection with (i) any breach of any covenant or agreement made by the Company
in this Agreement or in any agreement or instrument delivered pursuant to or in
connection with this Agreement, or of (ii) their status as a securityholder,
creditor, director, agent, representative or controlling person of the Company
(including, without limitation, any and all Losses under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, which relates directly or indirectly to the registration,
purchase, sale or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto), including without limitation in
connection with any third party or governmental action or claim relating to any
action taken or omitted to be taken or alleged to have been taken or omitted to
have been taken by any Indemnified Party as shareholder, director, agent,
representative or controlling person of the Company or otherwise, alleging so-
called control person liability or securities law liability; provided, however,
that the Company will not be liable to the extent that such loss, claim, damage,
expense or liability arises from and is based on (A) an untrue statement or
omission or alleged untrue statement or omission in a registration statement or
prospectus which is made in reliance on and in conformity with written
information furnished to the Company in an instrument duly executed by or on
behalf of such Indemnified Party specifically stating that it is for use in the
preparation thereof or (B) a knowing and willful violation of the federal
securities laws by an Indemnified Party, as finally determined by a court of
competent jurisdiction.
(b) If the indemnification provided for in Section 6.3(a) above for
any reason is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party in respect of any losses, claims, damages, expenses or
liabilities referred to therein, then the Company, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages, expenses or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Investors, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Investors in connection with the action or inaction which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In connection with any registration of the Company's
securities, the relative benefits received by the Company and the Investors
shall be deemed to be in the same respective proportions that the net proceeds
from the offering (before deducting expenses) received by the Company and the
Investors, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the
securities so offered. The relative fault of the Company and the Investors shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied
12
<PAGE>
by the Company or the Investors and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Investors agree that it would not be just and equitable if
contribution pursuant to this Section 6.3(b) were determined by pro rata or per
capita allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. In connection with the registration of the Company's securities, in
no event shall an Investor be required to contribute any amount under this
Section 6.3(b) in excess of the lesser of (i) that proportion of the total of
such losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement which
is being sold by such Investor or (ii) the proceeds received by such Investor
from its sale of securities under such registration statement. No person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation.
(c) The indemnification and contribution provided for in this
Section 6.3 will remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Parties or any officer, director,
partner, employee, agent or controlling person of the Indemnified Parties.
(d) The provisions of this Section 6.3 are in addition to and shall
supplement those set forth in the Stockholders' Agreement which shall apply in
the case of the registration and sale of Registrable Securities held by any of
the Investors registered as provided in the Stockholders' Agreement.
(e) The Company agrees to pay and hold the Investors harmless
against liability for payment of all reasonable out-of-pocket costs and expenses
incurred in connection with their ongoing investment in the Company, including
without limitation the fees and disbursements of counsel and other professionals
and any costs and expenses associated with the performance and enforcement of
this Agreement and the agreements, documents and instruments contemplated hereby
or executed pursuant hereto. In addition, the Company agrees to pay any and all
stamp, transfer and other similar taxes (together in each case with interest and
penalties, if any) payable or determined to be payable in connection with the
execution and delivery of this Agreement and the issuance of securities
hereunder.
6.4 Survival of Representations; Assignability of Rights; No Third Party
--------------------------------------------------------------------
Beneficiaries. All covenants and agreements of the Company made herein and in
- -------------
the certificates, exhibits and schedules delivered to any Investor in connection
herewith (a) are material and shall be deemed to have been relied upon by such
Investor, and shall survive the delivery of the Securities and (b) shall bind
the Company's successors and assigns, whether so expressed or not, and, except
as otherwise provided in this Agreement, all such covenants, agreements,
representations and warranties shall inure to the benefit of the Investors'
successors and assigns and to transferees of the Securities, whether so
expressed or not, with
13
<PAGE>
any such assignee (and any successive assignee thereof) being deemed an
"Investor" for purposes hereof. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
6.5 Governing Law. This Agreement shall be deemed to be a contract made
-------------
under, and shall be construed in accordance with, the laws of Delaware, without
giving effect to conflict of laws principles thereof.
6.6 Section Headings and Gender. The descriptive headings in this
---------------------------
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or hereof.
The use in this Agreement of the masculine pronoun in reference to a party
hereto shall be deemed to include the feminine or neuter, and vice versa, as the
context may require.
6.7 Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
6.8 Notices and Demands. Any notice or demand which is required or
-------------------
provided to be given under this Agreement shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy, telex or other method of facsimile, or five (5) days after being sent
by certified or registered mail, postage and charges prepaid, return receipt
requested, or two (2) days after being sent by overnight delivery providing
receipt of delivery, to the addresses shown on the signature page hereof or
Exhibit A hereto or at any other address designated by such Investor to the
- ---------
Company; and if to an assignee of an Investor, at its address as designated to
the Company and the other Investors in writing.
6.9 Dispute Resolution. Except with respect to matters as to which
------------------
injunctive relief is being sought, any dispute arising out of or relating to
this Agreement that has not been settled within thirty (30) days by good faith
negotiation between the parties to this Agreement shall be submitted for final
and binding arbitration pursuant to the commercial arbitration rules of the
American Arbitration Association. Any such arbitration shall be conducted in
New York City.
6.10 Remedies; Severability. Notwithstanding Section 6.9, it is
----------------------
specifically understood and agreed that any breach of the provisions of this
Agreement by any person subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy
for such breach, and that, in addition to any other legal or equitable remedies
which they may have, such other parties may enforce their respective rights by
actions for specific performance (to the extent permitted by law). Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be deemed prohibited or invalid under such applicable law, such
provision shall be ineffective to
14
<PAGE>
the extent of such prohibition or invalidity, and such prohibition or invalidity
shall not invalidate the remainder of such provision or the other provisions of
this Agreement.
6.11 Integration. This Agreement, including the exhibits, documents and
-----------
instruments referred to herein or therein, constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
[Remainder of Page Intentionally Left Blank]
15
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a sealed
instrument as of the day and year first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
-----------------------------------
Name: Patrick G. LePore
Title: President
Address: 17-17 Route 208 North
Fair Lawn, NJ 07410
Attn: President
16
<PAGE>
TA INVESTORS ADVENT VII L.P.
By: TA Associates VII L.P.,
its General Partner
By: TA Associates, Inc.,
its General Partner
*
----------------------------------------
Name: Jacqueline C. Morby
Title: Managing Director
ADVENT ATLANTIC AND PACIFIC III L.P.
By: TA Associates AAP III Partners,
its General Partner
By: TA Associates, Inc.,
its General Partner
*
----------------------------------------
Name: Jacqueline C. Morby
Title: Managing Director
TA VENTURE INVESTORS LIMITED PARTNERSHIP
*
----------------------------------------
Name: Jacqueline C. Morby
Title: General Partner
* /s/ Jacqueline C Morby
- --------------------------
By: Jacqueline C Morby
17
<PAGE>
/s/ MLPFS FBO John A. Staley, IV IRRA
----------------------------------------
MLPFS FBO
John A. Staley, IV IRRA
/s/ Howard A. Cubell
----------------------------------------
Howard A. Cubell
/s/ John R. LeClaire
----------------------------------------
John R. LeClaire
/s/ Marian A. Tse
----------------------------------------
Marian A. Tse
18
<PAGE>
Exhibit 2.4
================================================================================
STOCKHOLDERS' AGREEMENT
By and Among
Boron, LePore & Associates, Inc.,
Patrick G. LePore,
Gregory Boron,
Christopher Sweeney
and
Michael W. Foti
and
The Investors
as defined herein and set forth
on the signature pages hereto
Dated as of December 4, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I. DEFINITIONS.....................................................2
Section 1.1 Construction of Terms..................................2
Section 1.2 Terms Not Defined......................................2
Section 1.3 Number of Shares of Stock..............................2
Section 1.4 Defined Terms..........................................2
ARTICLE II. REPRESENTATIONS AND WARRANTIES.................................4
Section 2.1 Representations and Warranties of the Investors........4
Section 2.2 Representations and Warranties of the Founders.........4
Section 2.3 Representations and Warranties of the Company..........5
ARTICLE III. RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL;
CO-SALE AND DRAG-ALONG PROVISION.......................5
Section 3.1 Restrictions on Transfer...............................5
Section 3.2 Right of Last Refusal..................................6
Section 3.3 Co-Sale Option.........................................8
Section 3.4 Drag-Along Obligations................................10
Section 3.4A Founder Co-Sale Option................................11
Section 3.5 Contemporaneous Transfers.............................12
Section 3.6 Assignment............................................13
Section 3.7 Prohibited Transfers..................................13
ARTICLE IV. RIGHTS TO PURCHASE...........................................13
Section 4.1 Right to Participate in Certain Sales of
Additional Securities.................................13
Section 4.2 Assignment of Rights..................................14
ARTICLE V. REGISTRATION RIGHTS...........................................14
Section 5.1 Piggyback Registration Rights.........................15
Section 5.2 Demand Registration Rights............................15
Section 5.3 Form S-3..............................................16
Section 5.4 Registrable Shares....................................17
Section 5.5 Further Obligations of the Company....................18
Section 5.6 Indemnification; Contribution.........................19
Section 5.7 Rule 144 Requirements.................................21
</TABLE>
(i)
<PAGE>
<TABLE>
Page
----
<S> <C> <C> <C>
Section 5.8 Market Stand-Off......................................22
Section 5.9 Transfer of Registration Rights.......................22
ARTICLE VI. ELECTION OF DIRECTORS........................................22
Section 6.1 Management Representatives............................22
Section 6.2 Committees of the Board...............................23
Section 6.3 Assignment............................................23
ARTICLE VII. MISCELLANEOUS PROVISIONS.....................................23
Section 7.1 Survival of Representations and Covenants.............23
Section 7.2 Legend on Securities..................................23
Section 7.3 Amendment and Waiver..................................24
Section 7.4 Notices...............................................24
Section 7.5 Headings..............................................25
Section 7.6 Counterparts..........................................25
Section 7.7 Dispute Resolution....................................25
Section 7.8 Remedies; Severability................................26
Section 7.9 Entire Agreement......................................26
Section 7.10 Adjustments...........................................26
Section 7.11 Law Governing.........................................26
Section 7.12 Successors and Assigns................................26
</TABLE>
Exhibit A - Form of Joinder Agreement
Exhibit B - Amended and Restated Certificate of Incorporation
(ii)
<PAGE>
STOCKHOLDERS' AGREEMENT
-----------------------
This Stockholders' Agreement is made as of this 4th day of December,
1996 by and among Boron, LePore & Associates, Inc., a Delaware corporation (the
"Company"), Patrick G. LePore, Gregory Boron, Christopher Sweeney and Michael W.
Foti (collectively, the "Founders" and individually, a "Founder"), the
investment funds and other persons identified on the signature pages hereto as
the TA Investors (the "Investors"), and any other stockholder or optionholder
who from time to time becomes party to this Agreement by execution of a Joinder
Agreement in substantially the form attached hereto as Exhibit A.
---------
W I T N E S S E T H
-------------------
WHEREAS, the Founders own shares of the Company's outstanding capital
stock;
WHEREAS, reference is made to the Preferred Stock Purchase Agreement,
dated as of the date hereof, by and between the Company and the Investors (the
"Investment Agreement"), pursuant to which the Investors have purchased
7,000,000 shares of the Company's Convertible Participating Preferred Stock, par
value $.01 per share (the "Convertible Preferred Stock"); and
WHEREAS, the effectiveness of this Agreement is a condition to the
consummation of the Investment Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS
--------- -----------
Section 1.1 Construction of Terms. As used herein, the masculine,
------------ ---------------------
feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.
Section 1.2 Terms Not Defined. Capitalized terms used herein and
------------ -----------------
not otherwise defined shall have the meanings ascribed to them in the Investment
Agreement.
Section 1.3 Number of Shares of Stock. Whenever any provision of
------------ -------------------------
this Agreement calls for any calculation based on a number of shares of capital
stock held by a Founder or an Investor, the number of shares deemed to be held
by that Founder or Investor shall be the total number of shares of Common Stock
then owned by the Founder or Investor which are vested, plus the total number of
shares of Common Stock (or Class B Common Stock, as applicable) issuable upon
conversion of any Convertible Preferred Stock or other convertible securities or
<PAGE>
exercise of any vested options, warrants or subscription rights then owned by
the Founder or Investor.
Section 1.4 Defined Terms. The following capitalized terms, as used
------------ -------------
in this Agreement, shall have the meanings set forth below.
An "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company, as the context requires, and any other common equity securities now
or hereafter issued by the Company (but not including the Preferred Stock), and
any other shares of stock issued or issuable with respect thereto (whether by
way of a stock dividend or stock split or in exchange for or upon conversion of
such shares or otherwise in connection with a combination of shares,
recapitalization, merger, consolidation or other corporate reorganization).
"Convertible Preferred Stock" means the Convertible Participating
Preferred Stock, par value $.01 per share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Independent Third Party" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 10% of the Company's
Common Stock on a fully-diluted basis, who is not controlling, controlled by or
under common control with any such 10% owner of the Company's Common Stock and
who is not the spouse or descendent (by birth or adoption) of any such 10% owner
of the Company's Common Stock.
"Offer Notice" has the meaning specified in Section 3.2(a)
"Offeror" has the meaning specified in Section 3.2.
"Permitted Transferee" has the meaning specified in Section 3.1.
"Person" means an individual, a corporation, an association, a
partnership, an estate, a trust, and any other entity or organization,
governmental or otherwise.
2
<PAGE>
"Preferred Stock" means the Convertible Preferred Stock and the
Redeemable Preferred Stock (as hereinafter defined), each issued or to be issued
in accordance with and subject to the terms of the Amended and Restated
Certificate of Incorporation of the Company substantially in the form attached
hereto as Exhibit B (the "Charter"), together with any other shares issued or
---------
issuable with respect thereto (whether by way of a stock dividend, stock split
or in exchange for or in replacement or upon conversion of such shares or
otherwise in connection with a combination of shares, recapitalization, merger,
consolidation or other corporate reorganization).
"Qualified Public Offering" means the first underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Common Stock to the public in which the
proceeds received by the Company and any selling stockholders, net of
underwriting discounts and commissions, equal or exceed $25 million.
"Redeemable Preferred Stock" means the Company's Redeemable Preferred
Stock, par value $.01 per share.
"Sale of the Company" means the sale of the Company to an Independent
Third Party or affiliated group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing the
voting power to elect a majority of the Board of Directors of the Company
(whether by merger, consolidation or sale or transfer of the Company's capital
stock); or (ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Shares" means the shares of Common Stock, Preferred Stock and any
other equity securities now or hereafter issued by the Company, together with
any options thereon and any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend, stock split or in exchange
for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Transaction Offer" has the meaning specified in Section 3.2.
"Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights. "Transferred" means the accomplishment of a Transfer, and "Transferee"
means the recipient of a Transfer.
"Transferring Stockholder" has the meaning specified in Section 3.2.
3
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ARTICLE II. REPRESENTATIONS AND WARRANTIES
- ---------- ------------------------------
Section 2.1 Representations and Warranties of the Investors. Each
------------ -----------------------------------------------
of the Investors, individually and not jointly, hereby represents, warrants and
covenants to the Company and to the Founders as follows: (a) such Investor has
full authority and power under its charter, by-laws, governing partnership
agreement or comparable document (if applicable) to enter into this Agreement;
(b) this Agreement constitutes the valid and binding obligation of such Investor
enforceable against it in accordance with its terms; and (c) the execution,
delivery and performance by such Investor of this Agreement: (i) does not and
will not violate any laws, rules or regulations of the United States or any
state or other jurisdiction applicable to such Investor, or require such
Investor to obtain any approval, consent or waiver of, or to make any filing
with, any Person that has not been obtained or made; and (ii) does not and will
not result in a breach of, constitute a default under, accelerate any obligation
under or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Investor is a party or by which the property
of such Investor is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or encumbrance
on any of the assets or properties of such Investor.
Section 2.2 Representations and Warranties of the Founders. Each of
------------ ----------------------------------------------
the Founders, individually and not jointly, hereby represents, warrants and
covenants to the Company and to the Investors as follows: (a) such Founder has
full authority, power and capacity to enter into this Agreement; (b) this
Agreement constitutes the valid and binding obligation of such Founder
enforceable against him in accordance with its terms; and (c) the execution,
delivery and performance by such Founder of this Agreement: (i) does not and
will not violate any laws, rules or regulations of the United States or any
state or other jurisdiction applicable to such Founder, or require such Founder
to obtain any approval, consent or waiver of, or to make any filing with, any
Person that has not been obtained or made; and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under or
give rise to a right of termination of any indenture or loan or credit agreement
or any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Founder is a party or by which the property
of such Founder is bound or affected, or result in the creation or imposition of
any mortgage, pledge, lien, security interest or other charge or encumbrance on
any of the assets or properties of such Founder.
Section 2.3 Representations and Warranties of the Company. The
----------- ----------------------------------------------
Company hereby represents, warrants and covenants to the Founders and to the
Investors as follows: (a) the Company has full corporate authority and power to
enter into this Agreement; (b) this Agreement constitutes the valid and binding
obligation of the Company enforceable against it in accordance with its terms;
and (c) the execution, delivery and performance by the Company of this
Agreement: (i) does not and will not violate any laws, rules or regulations of
the United States or any state or other jurisdiction applicable to the Company,
or require the Company to
4
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obtain any approval, consent or waiver of, or to make any filing with, any
Person that has not been obtained or made; and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under or
give rise to a right of termination of any indenture or loan or credit agreement
or any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which the Company is a party or by which the property of
the Company is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance on any
of the assets or properties of the Company.
ARTICLE III. RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
- ----------- --------------------------------------------------------
AND DRAG-ALONG PROVISIONS
-------------------------
The following provisions of this Article III shall terminate
immediately upon, and shall not apply with respect to, the closing of a
Qualified Public Offering.
Section 3.1 Restrictions on Transfer. Each Founder agrees that it
----------- ------------------------
or he will not, without the prior written consent of two-thirds-in-interest of
the Investors, Transfer all or any portion of the Shares now owned or hereafter
acquired by it or him, except in connection with, and strictly in compliance
with the conditions of, any of the following (along with any other applicable
restrictions):
(a) Transfers effected pursuant to Sections 3.2, 3.3, 3.4
and 3.4A, in each case made in accordance with the procedures set
forth therein;
(b) Transfers by any Founder to his spouse or children or
to a trust of which he is the settlor, provided that any such trust
--------
does not require or permit distribution of such Shares during the term
of this Agreement unless the beneficiaries are bound by the terms of
this Agreement, and provided further that the Transferee shall have
-------- -------
entered into an enforceable written agreement consented to by two-
thirds-in-interest of the Investors, which consent shall not be
unreasonably withheld, providing that all Shares so Transferred shall
continue to be subject to all provisions of this Agreement as if such
Shares were still held by such Founder, except that no further
Transfer shall thereafter be permitted hereunder except in compliance
with Sections 3.2, 3.3, 3.4 and 3.4A; and
(c) Transfers upon the death of any Founder to his heirs,
executors or administrators or to a trust under his will or Transfers
between such Founder and his guardian or conservator, provided that
--------
the Transferee shall have entered into an enforceable written
agreement consented to by two-thirds-in-interest of the Investors,
which consent shall not be unreasonably withheld, providing that all
Shares so Transferred shall continue to be subject to all provisions
of this Agreement as if such
5
<PAGE>
Shares were still held by Founder, except that no further Transfer
shall thereafter be permitted hereunder except in compliance with
Sections 3.2, 3.3, 3.4 and 3.4A.
Any permitted Transferee described in the preceding clauses (b) or (c)
shall be referred to herein as a "Permitted Transferee." Anything to
the contrary in this Agreement notwithstanding, Permitted Transferees
shall take any Shares so Transferred subject to all provisions of this
Agreement as if such Shares were still held by the Transferring
Founder, whether or not they so agree with the transferor and/or the
Company. Without limitation of the foregoing, in connection with any
otherwise permitted transfer of shares of capital stock that are
restricted shares and are subject to any stock restriction agreement,
any transferee of any such shares shall agree in writing to be bound
by the terms of any such stock restriction or similar agreement,
including, without limitation, any repurchase or similar right
contained therein.
Section 3.2 Right of Last Refusal. In the event that any of the
----------- ----------------------
Founders, including any of their Permitted Transferees, receives a bona fide
offer to purchase all or any portion of the Shares held by such stockholder (a
"Transaction Offer") from a non-Affiliate (the "Offeror"), such Founder or
Permitted Transferee (a "Transferring Stockholder") may, subject to the
provisions of Section 3.3 hereof, Transfer such Shares pursuant to and in
accordance with the following provisions of this Section 3.2:
(a) Such Transferring Stockholder shall cause the
Transaction Offer and all of the terms thereof to be reduced to
writing and shall notify each Investor of his wish to accept the
Transaction Offer and otherwise comply with the provisions of this
Section 3.2 and, if applicable, Section 3.3 (such notice, the "Offer
Notice"). The Transferring Stockholder's Offer Notice shall constitute
an irrevocable offer to sell such shares to the Investors on the basis
described below at a purchase price equal to the price contained in,
and on the same terms and conditions of, the Transaction Offer. The
notice shall be accompanied by a true copy of the Transaction Offer
(which shall identify the Offeror and all relevant information in
connection therewith). In the event of any conflict between the terms
of the Transaction Offer and the offer to sell such shares to the
Investors on the basis described below, the terms described below
shall control.
(b) Each Investor shall have the right (the "Right of
Last Refusal") to offer to purchase up to that number of Shares
covered by the Transaction Offer as shall be equal to the product
obtained by multiplying (i) the total number of Shares subject to the
Transaction Offer by (ii) a fraction, the numerator of which is the
total number of shares of Common Stock owned by such Investor on the
date of the Offer Notice on an as converted basis (including for this
purpose any shares of Common Stock or Class B Common Stock, as
applicable, that may be received upon conversion of the Convertible
Preferred Stock), and the denominator of which is the total number of
shares of Common Stock or Class B Common Stock, as applicable, then
held by all Investors on the date of the Offer Notice on an as
converted basis, subject to increase as hereinafter
6
<PAGE>
provided. The number of Shares that each Investor is entitled to
purchase under this Section 3.2 shall be referred to as its "Pro Rata
Fraction". Each Investor shall have the right to transfer its right to
any Pro Rata Fraction or part thereof with respect to any proposed
Transaction Offer to any transferee. In the event an Investor does not
wish to purchase or to transfer its right to purchase its Pro Rata
Fraction, then any Investors who so elect shall have the right to
offer to purchase, on a pro rata basis with any other Investors who so
elect, any Pro Rata Fraction not purchased by an Investor or its
transferee. Each Investor shall have the right to accept the
Transaction Offer by giving notice of such acceptance to the
Transferring Stockholder as provided in Section 7.4 within thirty (30)
days after receipt of the Offer Notice, which notice shall indicate
the maximum number of Shares subject thereto which the Investor and
its transferee(s) are willing to purchase in the event fewer than all
Investors elect to purchase their Pro Rata Fractions; provided that
the Investors as a group may not exercise the Right of Last Refusal
with respect to fewer than all of the Shares which are subject to the
Transaction Offer. In the event that the price set forth in the Offer
Notice is stated in consideration other than cash or cash equivalents,
the Board of Directors of the Company with the agreement of the TA
Associates, Inc. as representative of the Investors may determine the
fair market value of such consideration, reasonably and in good faith,
and the Investors may exercise their Right of Last Refusal by payment
of such fair market value in cash or cash equivalents. The
Transferring Stockholder shall notify the Investors promptly following
any lapse of the Right of Last Refusal without acceptance thereof or
any rejection of the Right of Last Refusal.
Upon the expiration of thirty (30) days following receipt of the
Offer Notice by all Investors, the number of Shares to be purchased by
each Investor and transferee shall be determined as follows: (x) there
shall first be allocated to each Investor and transferee electing to
purchase a number of Shares equal to the lesser of (A) the number of
Shares as to which such Investor accepted the Transaction Offer or (B)
such Investor's Pro Rata Fraction, and (y) the balance, if any, not
allocated under clause (x) above, shall be allocated to those
Investors and transferees who accepted the Transaction Offer as to a
number of Shares which exceeded their respective Pro Rata Fractions,
in each case on a pro rata basis in proportion to the amount of such
excess. The closing for any purchase of Shares by the Investors and
their transferees hereunder shall take place within thirty (30) days
after the expiration of the first thirty (30) day period following the
Investors' receipt of the Offer Notice at the place and on the date
specified by a two-thirds-in-interest of the Investors.
(c) In the event that the Investors do not elect to exercise
the Right of Last Refusal with respect to all of the Shares proposed
to be sold, the Investors shall not be entitled to purchase any such
Shares and the Transferring Stockholder may sell all such Shares
proposed to be sold to the Offeror on the terms and conditions set
forth in the Offer Notice, subject to the provisions of Section 3.3.
If the Transferring Stockholder's transfer to an Offeror is not
consummated in accordance with the terms of the Transaction Offer
within the later of (i) ninety (90) days after the expiration of
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<PAGE>
the Right of Last Refusal and the Co-Sale Option set forth in Section
3.3 below, if applicable, and (ii) the satisfaction of all
governmental approval or filing requirements, the Transaction Offer
shall be deemed to lapse, and any Transfers of Shares pursuant to such
Transaction Offer shall be deemed to be in violation of the provisions
of this Agreement unless the Investors are once again afforded the
Right of Last Refusal provided for herein with respect to such
Transaction Offer.
Section 3.3 Co-Sale Option. In the event that any Transferring
----------- ---------------
Stockholder receives a Transaction Offer from an Offeror, and the Right of Last
Refusal is not exercised, such Transferring Stockholder may Transfer such Shares
only pursuant to and in accordance with the following provisions of this Section
3.3:
(a) Each of the Investors shall have the right to participate in
the Transaction Offer by giving written notice (the "Acceptance
Notice") to the Transferring Stockholder within forty-five (45) days
after delivery to it of the Offer Notice (the "Co-Sale Option"). The
Acceptance Notice shall indicate the maximum number of Shares such
Investor wishes to sell including the number of Shares it would sell
if one or more other Investors do not elect to participate in the sale
on the terms and conditions stated in the Offer Notice. Any Investor
who holds Preferred Stock shall be permitted to sell to the relevant
purchaser in connection with any exercise of the Co-Sale Option Shares
of Common Stock (or Class B Common Stock, as applicable) acquired upon
conversion thereof or, at its election, an option to acquire such
Common Stock (or Class B Common Stock, as applicable) when it receives
the same upon such conversion at the election of such Investor or as
otherwise provided in the Company's Amended and Restated Certificate
of Incorporation (the "Charter") with the same effect as if Common
Stock were being conveyed, or, at its election, shares of Convertible
Preferred Stock provided the acquiror pays the full liquidation
preference of the shares being sold plus the relevant price per share
for the underlying Common Stock.
(b) Each of the Investors shall have the right to sell a portion
of its Shares pursuant to the Transaction Offer which is equal to or
less than the product obtained by multiplying (i) the total number of
Shares subject to the Transaction Offer by (ii) a fraction, the
numerator of which is the total number of vested shares of Common
Stock owned by such Investor on the date of the Offer Notice on an as
converted basis (including any Common Stock (or Class B Common Stock,
as applicable) issuable upon conversion of the Convertible Preferred
Stock), and the denominator of which is the total number of vested
shares of Common Stock then held by all Investors and Founders
(including any Permitted Transferees) on the date of the Offer Notice
on an as converted basis. To the extent one or more Investors elect
not to sell, or fail to exercise their right to sell, the full amount
of such Shares which they are entitled to sell pursuant to this
Section 3.3, the right of Investors who have elected to sell Shares
shall be increased proportionately based on their relative holdings
and such other Investors shall have an additional five (5) days from
the date upon which they are
8
<PAGE>
notified of such election or failure to exercise in which to increase
the number of Shares to be sold by them hereunder.
(c) Within ten (10) days after the date by which the Investors
were first required to notify the Transferring Stockholder of their
intent to participate, the Transferring Stockholder shall notify each
participating Investor of the number of Shares held by such Investor
that will be included in the sale and the date on which the
Transaction Offer will be consummated, which shall be no later than
the later of (i) thirty (30) days after the date by which the
Investors were required to notify the Transferring Stockholder of
their intent to participate and (ii) the satisfaction of any
governmental approval or filing requirements, if any.
(d) Each of participating Investors may effect its participation
in any Transaction Offer hereunder by delivery to the Offeror, or to
the Transferring Stockholder for delivery to the Offeror, of one or
more instruments or certificates, properly endorsed for transfer,
representing the Shares it elects to sell therein, provided that no
Investor shall be required to make any representations or warranties
or to provide any indemnities in connection therewith other than with
respect to title to the stock being conveyed. At the time of
consummation of the Transaction Offer, the Offeror shall remit
directly to each Investor that portion of the sale proceeds to which
each Investor is entitled by reason of its participation therein (less
any adjustments due to the conversion of any convertible securities or
the exercise of any exercisable securities). No Shares may be
purchased by a purchaser from the Transferring Stockholder or any or
his Permitted Transferees unless the purchaser simultaneously
purchases from the Investors all of the Shares that they have elected
to sell pursuant to this Section 3.3.
(e) Any shares held by a Transferring Stockholder that the
Transferring Stockholder desires to sell following compliance with
this Section 3.3 may be sold to the purchaser only during the period
specified in Section 3.3(c) and only on terms no more favorable to the
Transferring Stockholder than those contained in the Offer Notice.
Promptly after such sale, the Transferring Stockholder shall notify
the Investors of the consummation thereof and shall furnish such
evidence of the completion and time of completion of such sale and of
the terms thereof as may reasonably be requested by the Investors. So
long as the purchaser is neither a party, nor an affiliate or relative
of a party, to this Agreement, such purchaser shall take the Shares so
Transferred free and clear of any further restrictions of this Article
III. In the event that the Transaction Offer is not consummated within
the period required by this Section 3.3 or the Offeror fails timely to
remit to each Investor its portion of the sale proceeds, the
Transaction Offer shall be deemed to lapse, and any Transfers of
Shares pursuant to such Transaction Offer shall be deemed to be in
violation of the provisions of this Agreement unless the Transferring
Stockholder once again complies with the provisions of Section 3.2 and
this Section 3.3 hereof with respect to such Transaction Offer.
9
<PAGE>
Section 3.4 Drag-Along Obligations.
----------- -----------------------
(a) In the event that two-thirds-in-interest of the Investors
determine to sell or otherwise dispose of all or substantially all of the
assets of the Company or all or substantially all of the capital stock of
the Company owned by the Investors to any non-Affiliate(s) of the Company
or any of the Investors, or to cause the Company to merge with or into or
consolidate with any non-Affiliate(s) of the Company or any of the
Investors (in each case, the "Buyer") in a bona fide negotiated transaction
(a "Sale"), each of the Founders, including any of their respective
Permitted Transferees (collectively, the "Non-Investor Stockholders"),
shall be obligated to and shall upon the written request of two-thirds-in-
interest of the Investors: (i) sell, transfer and deliver, or cause to be
sold, transferred and delivered, to the Buyer, his Shares (including for
this purpose all of such Non-Investor Stockholder's Shares that presently
or as a result of any such transaction may be acquired upon the exercise of
options (following the payment of the exercise price therefor)) on
substantially the same terms applicable to the Investors (with appropriate
adjustments to reflect the conversion of convertible securities, the
redemption of redeemable securities and the exercise of exercisable
securities as well as the relative preferences and priorities of the
Preferred Stock); and (ii) execute and deliver such instruments of
conveyance and transfer and take such other action, including voting such
Shares in favor of any Sale proposed by the Investors and executing any
purchase agreements, merger agreements, indemnity agreements, escrow
agreements or related documents, as the Investors or the Buyer may
reasonably require in order to carry out the terms and provisions of this
Section 3.4.
(b) In the event of a Sale to a Buyer as contemplated in Section
3.4(a) above, each Founder, including each Founder's Permitted Transferees,
shall in the event that the Investors do not exercise their "drag-along"
rights in Section 3.4(a) above, have the right to require the Investors to
include such Founder's or Permitted Transferee's Shares in the Sale on the
same terms as the Investors' Shares (with appropriate adjustments to
reflect the conversion of convertible securities, the redemption of
redeemable securities and the exercise of exercisable securities as well as
the relative priorities and preferences of the Preferred Stock and the
terms of any options issued by the Company), which such right shall be
exercisable by the delivery of written notice to the Company and each of
the Investors at least twenty (20) days prior to the date proposed for the
closing of the Sale.
(c) Not less than thirty (30) days prior to the date proposed for
the closing of any Sale, the Investors shall give written notice to each
Non-Investor Stockholder, setting forth in reasonable detail the name or
names of the Buyer, the terms and conditions of the Sale, including the
purchase price, and the proposed closing date. In furtherance of the
provisions of this Section 3.4, each of the Non-Investor Stockholders
hereby (i) irrevocably appoints TA Associates, Inc. as its agent and
attorney-in-fact (the "Agent") (with full power of substitution) to execute
all agreements, instruments and certificates and take all actions necessary
or desirable to
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<PAGE>
effectuate any Sale hereunder; and (ii) grants to the Agent a proxy (which
shall be deemed to be coupled with an interest and irrevocable) to vote the
Shares held by such Non-Investor Stockholder and exercise any consent
rights applicable thereto in favor of any Sale hereunder; provided,
--------
however, that the Investors shall not exercise such powers-of-attorney or
-------
proxies with respect to any Non-Investor Stockholder unless such Non-
Investor Stockholders are in breach of their obligations under this
Section 3.4.
Section 3.4A Founder Co-Sale Option. In the event that any Investor
------------ ----------------------
(a "Transferring Investor") receives a bona fide offer from an Offeror to
purchase a portion of the Shares of Common Stock held by an Investor, to which
Offer the provisions of Section 3.4 do not apply (an "Investor Transaction
Offer"), such Transferring Investor may Transfer such Shares only pursuant to
and in accordance with the following provisions of this Section 3.4A:
(a) Each of the Founders (including for purposes of this
paragraph (a) and the following paragraphs (b), (c), (d) and (e) any
Permitted Transferee) shall have the right to participate in the Investor
Transaction Offer by giving written notice (the "Founder Acceptance
Notice") to the Transferring Investor within forty-five (45) days after
delivery to it of a written notice (the "Investor Offer Notice") notifying
each Founder of the Investor's receipt of the Investor Transaction Offer
and all of the terms of such Investor Transaction Offer (the "Founder Co-
Sale Option"). The Founder Acceptance Notice shall indicate the maximum
number of Shares such Founder wishes to sell including the number of Shares
it would sell if one or more other Founders do not elect to participate in
the sale on the terms and conditions stated in the Investor Offer Notice.
(b) Each of the Founders shall have the right to sell a
portion of his Shares pursuant to the Investor Transaction Offer which is
equal to or less than the product obtained by multiplying (i) the total
number of Shares subject to the Investor Transaction Offer by (ii) a
fraction, the numerator of which is the total number of vested shares of
Common Stock owned by such Founder on the date of the Investor Offer
Notice, and the denominator of which is the total number of vested shares
of Common Stock then held by all Investors and Founders (including any
Permitted Transferees) on the date of the Investor Offer Notice on an as
converted basis. To the extent one or more Founders elect not to sell, or
fail to exercise their right to sell, the full amount of such Shares which
they are entitled to sell pursuant to this Section 3.4A, the right of
Founders who have elected to sell Shares shall be increased proportionately
based on their relative holdings and such other Founders shall have an
additional five (5) days from the date upon which they are notified of such
election or failure to exercise in which to increase the number of Shares
to be sold by them hereunder.
(c) Within ten (10) days after the date by which the Founders
were first required to notify the Transferring Investor of their intent to
participate, the Transferring Investor shall notify each participating
Founder of the number of Shares held by such Founder that will be included
in the sale and the date on which the
11
<PAGE>
Investor Transaction Offer will be consummated, which shall be no later
than the later of (i) thirty (30) days after the date by which the Founders
were required to notify the Transferring Investor of their intent to
participate and (ii) the satisfaction of any governmental approval or
filing requirements, if any.
(d) Each of the participating Founders may effect his
participation in any Investor Transaction Offer hereunder by delivery to
the Offeror, or to the Transferring Investor for delivery to the Offeror,
of one or more instruments or certificates, properly endorsed for transfer,
representing the Shares it elects to sell therein, provided that no Founder
shall be required to make any representations or warranties or to provide
any indemnities in connection therewith other than with respect to title to
the stock being conveyed. At the time of consummation of the Investor
Transaction Offer, the Offeror shall remit directly to each Founder that
portion of the sale proceeds to which each Founder is entitled by reason of
his participation therein (less any adjustments due to the conversion of
any convertible securities or the exercise of any exercisable securities).
No Shares may be purchased by a purchaser from the Transferring Investor or
any of his Permitted Transferees unless the purchaser simultaneously
purchases from the Founders all of the Shares that they have elected to
sell pursuant to this Section 3.4A.
(e) Any shares held by a Transferring Investor that the
Transferring Investor desires to sell following compliance with this
Section 3.4A may be sold to the purchaser only during the period specified
in Section 3.4A(c) and only on terms no more favorable to the Transferring
Investor than those contained in the Investor Offer Notice. Promptly after
such sale, the Transferring Investor shall notify the Founders of the
consummation thereof and shall furnish such evidence of the completion and
time of completion of such sale and of the terms thereof as may reasonably
be requested by the Founders. So long as the purchaser is neither a party,
nor an affiliate or relative of a party, to this Agreement, such purchaser
shall take the Shares so Transferred free and clear of any further
restrictions of this Article III. In the event that the Investor
Transaction Offer is not consummated within the period required by this
Section 3.4A or the Offeror fails timely to remit to each Founder his
portion of the sale proceeds, the Investor Transaction Offer shall be
deemed to lapse, and any Transfers of Shares pursuant to such Investor
Transaction Offer shall be deemed to be in violation of the provisions of
this Agreement unless the Transferring Investor once again complies with
the provisions of this Section 3.4A hereof with respect to such Investor
Transaction Offer.
(f) Notwithstanding anything to the contrary contained in
this Agreement, the provisions of this Section 3.4A shall not apply to any
Transfer by any Investor to any other Investor or to any TA Fund (as
defined in Section 3.6).
Section 3.5 Contemporaneous Transfers. If two or more Founders (or their
----------- -------------------------
Permitted Transferees) or Investors propose concurrent Transfers which are
subject to this
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<PAGE>
Article III, then the relevant provisions of Sections 3.2, 3.3 and 3.4A shall
apply separately to each such proposed Transfer.
Section 3.6 Assignment. Each Investor and each Founder shall have
----------- ----------
the right to assign its rights under this Article III in connection with any
transaction or series of related transactions involving the transfer to a
transferee or two or more transferees that are Affiliates of each other of at
least 10,000 Shares of capital stock of the Company (subject to adjustment for
stock splits, stock dividends, reclassifications, reorganizations and the like
and aggregating all contemporaneous transfers), or to any fund managed by or
associated with TA Associates, Inc. (a "TA Fund"), and upon any such transfer,
any such transferee or TA Fund thereupon shall be deemed an "Investor" or a
"Founder" in connection with its ownership of the Shares Transferred for
purposes of this Article III, without limitation of Section 3.3(e).
Section 3.7 Prohibited Transfers. If any Transfer is made or attempted
----------- --------------------
contrary to the provisions of this Agreement, such purported Transfer shall be
void ab initio; the Company and the other parties hereto shall have, in addition
-- ------
to any other legal or equitable remedies which they may have, the right to
enforce the provisions of this Agreement by actions for specific performance (to
the extent permitted by law); and the Company shall have the right to refuse to
recognize any Transferee as one of its stockholders for any purpose. Without
limitation to the foregoing, each of the Investors and Founders further agrees
that the provisions of Section 7.8 shall apply in the event of any violation or
threatened violation of this Agreement.
ARTICLE IV. RIGHTS TO PURCHASE
- ---------- ------------------
Notwithstanding anything herein to the contrary, the following provisions
of this Article IV shall terminate immediately prior to the closing of a
Qualified Public Offering and shall not apply with respect to any Qualified
Public Offering.
Section 4.1 Right to Participate in Certain Sales of Additional
---------------------------------------------------
Securities. The Company agrees that it will not sell or issue any shares of
- ----------
capital stock of the Company, or other securities convertible into or
exchangeable for capital stock of the Company, or options, warrants or rights
carrying any rights to purchase capital stock of the Company unless the Company
first submits a written offer to the Investors and the Founders (including their
Permitted Transferees) (collectively, the "Offerees") identifying the terms of
the proposed sale (including price, number or aggregate principal amount of
securities and all other material terms), and offers to each Investor and
Founder (including each Permitted Transferee) the opportunity to purchase its
Pro Rata Allotment (as hereinafter defined) of the securities (subject to
increase for over-allotment if some Investors do not fully exercise their
rights) on terms and conditions, including price, not less favorable than those
on which the Company proposes to sell such securities to a third party or
parties. Each Offeree's "Pro Rata Allotment" of such securities shall be based
on the ratio which the number of vested shares of Common Stock or Class B Common
Stock, as applicable (including shares issuable upon conversion of Preferred
13
<PAGE>
Stock), owned by it bears to the number of all the issued and outstanding vested
shares of Common Stock (including shares of Common Stock or Class B Common Stock
issuable upon conversion of Preferred Stock) calculated in each case on a fully-
diluted basis giving effect to the conversion of convertible securities and
assuming the exercise of all outstanding vested options, in each case as of the
date of such written offer. The Company's offer pursuant to this Section 4.1
shall remain open and irrevocable for a period of 30 days, and the recipients of
such offer shall elect to purchase by giving written notice thereof to the
Company within such 30-day period, including therein the maximum number of
shares or other securities which the Offeree would purchase if other Offerees do
not elect to purchase, with the rights of electing Offerees to purchase such
additional shares to be based upon the relative holdings of Common Stock
(including shares of Common Stock or Class B Common Stock issuable upon
conversion of Preferred Stock) of the electing Offerees in the case of over-
subscription. Any securities so offered which are not purchased pursuant to
such offer may be sold by the Company but only on the terms and conditions set
forth in the initial offer, at any time within 120 days following the
termination of the above-referenced 30-day period but may not be sold to any
other person or on terms and conditions, including price, that are more
favorable to the purchaser than those set forth in such offer or after such 120-
day period without renewed compliance with this Section 4.1.
Notwithstanding the foregoing, the right to purchase granted under this
Article IV shall be inapplicable with respect to any issuance or proposed
issuance by the Company of (i) securities issued in connection with the
acquisition of another corporation by the Company, whether by merger, purchase
of all or substantially all of the assets of such corporation, or otherwise,
(ii) up to 600,000 shares (or options to purchase shares) of Common Stock and
2,000,000 shares of Class A Common Stock (subject to adjustment in the event of
stock splits, stock dividends, recapitalizations and like events) issued or
granted to employees, consultants, officers, directors, advisors or independent
contractors of the Company or of any Affiliate of the Company pursuant to the
Company's 1996 Stock Option and Grant Plan, (iii) securities issued as a result
of any stock split, stock dividend, reclassification or reorganization of the
Company's stock or (iv) Common Stock, Class B Common Stock or Redeemable
Preferred Stock issued upon conversion of the Convertible Preferred Stock in
accordance with the terms of the Charter.
Section 4.2 Assignment of Rights. Each Investor and Founder (including
--------------------
each Permitted Transferee) shall have to right to assign its rights under this
Article IV in connection with any transaction or series of related transactions
involving the transfer to one or more transferees of at least 10,000 shares of
capital stock of the Company (subject to adjustment for stock splits, stock
dividends and the like and aggregating all contemporaneous transfers), or to any
TA Fund, and upon any such transfer such transferee or TA Fund shall be deemed
an Offeree for purposes of Sections 4.1 and 4.2 with the rights set forth in
such Sections.
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<PAGE>
ARTICLE V. REGISTRATION RIGHTS
- --------- -------------------
The Company's obligation to register shares of Common Stock under this
Article V shall terminate seven (7) years following the closing by the Company
of its first underwritten public offering pursuant to a registration statement
under the Securities Act (an "IPO") or, with respect to Shares held by
particular Investors or the Founders (including Permitted Transferees), whenever
such shares are no longer Registrable Shares (as defined below).
Section 5.1 Piggyback Registration Rights. If at any time or times after
----------- -----------------------------
the date hereof, the Company shall determine to register any shares of its
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock under the Securities Act (whether in connection with a
public offering of securities by the Company (a "primary offering"), a public
offering of securities by stockholders (a "secondary offering"), or both, but
not in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable or a registration effected
pursuant to Sections 5.2 or 5.3 hereof), the Company will promptly give written
notice thereof to the Investors and the Founders (including for purpose of this
Section 5.1 each Permitted Transferee). In connection with any such
registration, if within thirty (30) days after their receipt of such notice (or
10 days in the case of a proposed registration on Form S-3) any Investor or
Founder requests in writing the inclusion in such registration of some or all of
the Registrable Shares (as hereinafter defined) owned by such Investor or
Founder, or into which any Shares held by such Investor or Founder are
convertible or exchangeable, the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares which such
Investors and Founders so request; provided, however, that in the case of an
-------- -------
underwritten public offering, if the underwriter determines that a limitation on
the number of shares to be underwritten is required, (i) if such registration is
the first registered offering of the Company's securities to the public, the
underwriter may exclude from such registration and underwriting some or all of
the Registrable Shares which would otherwise be underwritten pursuant to the
notice described herein, and (ii) if such registration is other than the first
registered offering of the sale of the Company's securities to the public, the
underwriter may limit the number of Registrable Shares to be included in the
registration and underwriting to not less than thirty percent (30%) of the
securities included therein (based on aggregate market values). The Company
shall advise all Investors and Founders promptly after such determination by the
underwriter, and the number of Registrable Shares that may be included in the
registration and underwriting shall be allocated among all Investors and
Founders requesting registration in proportion, as nearly as practicable, to
their respective holdings of Registrable Shares. All expenses of the
registration and offering (including the reasonable fees and expenses of one
independent counsel for the Investors as a group and the Founders as a group,
elected by a majority in interest (based on Registrable Shares proposed to be
sold) of the Investors and Founders proposing to sell), shall be borne by the
Company, except that the Investors and the Founders shall bear underwriting and
selling commissions and transfer taxes attributable to the sale of their
Registrable Shares.
15
<PAGE>
Section 5.2 Demand Registration Rights. If on any two (2) occasions
----------- --------------------------
(which occasions shall in no event be less than six months apart from each
other) after the earlier of (i) two (2) years after the date of this Agreement
or (ii) three (3) months after the closing of the Company's first public
offering pursuant to a registration statement under the Securities Act,
Investors holding a majority in interest of the Registrable Shares then held by
all of the Investors shall notify the Company in writing that it or they intend
to offer or cause to be offered for public sale all or any portion of its or
their Registrable Shares, the Company will notify all of the Investors and the
Founders (including for purposes of this Section 5.2 all Permitted Transferees)
of its receipt of such notification from such Investors. If within thirty (30)
days after their receipt of such notice any Investor or Founder requests the
inclusion of some or all of the Registrable Shares owned by such Investor or
Founder in such registration, the Company will use its best efforts to cause
such Registrable Shares so requested (including the Registrable Shares held by
the Investor(s) or Founder(s) giving the initial notice of intent to register
hereunder) to be registered under the Securities Act in accordance with the
terms of this Section 5.2; provided, however, that unless such registration
-------- -------
becomes effective, the Investors shall be entitled to require an additional
registration pursuant to this Section 5.2; and, provided further that if such
-------- -------
registration is underwritten and the underwriter determines that a limitation on
the number of shares to be underwritten is required, the first shares to be
excluded from such registration shall be any shares registered for the benefit
of the Company, and thereafter any shares which the Investors and the Founders
have requested to be registered shall be limited, to the extent necessary, based
upon the respective holdings of Registrable Shares of the Investors and Founders
proposing to sell.
All expenses of such registrations and offerings (including the reasonable
fees and expenses of one independent counsel for the Investors as a group, and
the Founders as a group, selected in the manner contemplated by Section 5.1)
shall be borne by the Company. The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed 90 days during any twelve-month period, if the Company determines in
good faith that such filing would require the disclosure of a material
transaction or other matter and the Company determines reasonably and in good
faith that such disclosure would have a material adverse effect on the Company
or otherwise would not be in the best interest of the Company. The Company shall
not be required to cause a registration statement requested pursuant to this
Section 5.2 to become effective prior to 90 days following the effective date of
a Registration Statement initiated by the Company, if the request for
registration has been received by the Company subsequent to the giving of
written notice by the Company, made in good faith, to the Investors to the
effect that the Company is commencing to prepare a Company-initiated
Registration Statement (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 or any other similar
rule of the Commission under the Securities Act is applicable); provided,
however, that the Company shall use its best efforts to achieve such
effectiveness promptly following such 90-day period if the request pursuant to
this Section 5.2 has been made prior to the expiration of such 90-day period. If
so requested by any Investor or Founder in connection with a registration under
this paragraph, the Company shall take such steps as are required to register
the Investors' and the Founders' Registrable Shares for sale on a delayed or
continuous
16
<PAGE>
basis under Rule 415, and also take such steps as are required to keep any
registration effective until all of the Investors' and the Founders' Registrable
Shares registered thereunder are sold. Notwithstanding the foregoing, the
Company shall have no obligation to keep any registration pursuant to this
Section 5.2 effective more than 120 days after the initial date of effectiveness
of such registration.
Section 5.3 Form S-3. If the Company becomes eligible to use Form S-3
----------- --------
under the Securities Act or a comparable successor form, (a) the Company shall
use its best efforts to continue to qualify at all times for registration of its
capital stock on Form S-3 or such successor form, and (b) holders of Registrable
Shares anticipated to have an aggregate sale price (net of underwriting
discounts and Commission, if any) in excess of $500,000 shall have the right on
one or more occasions to request and have effected the registration of their
Shares on Form S-3 or such successor form (such requests shall be in writing and
shall state the number of Shares to be disposed of and the intended method of
disposition of such Shares by Investor(s) or Founder(s), including for purposes
of this Section 5.3 all Permitted Transferees). The Company will use its best
efforts to effect promptly the registration of all Shares on Form S-3 or such
successor form to the extent requested by such Investor(s) or Founder(s). If so
requested by such Investor(s) or Founder(s) in connection with a registration
under this Section 5.3, the Company shall take such steps as are required to
register such Investor's or Founder's Registrable Shares for sale on a delayed
or continuous basis under Rule 415, and to keep such registration effective
until all of such Investor's or Founder's Registrable Shares registered
thereunder are sold. Notwithstanding the foregoing, the Company shall have no
obligation to keep any registration effective more than 120 days after the
initial date of effectiveness of such registration. All expenses incurred in
connection with a registration requested pursuant to this Section 5.3 (including
the reasonable fees and expenses of one independent counsel for the Investors as
a group and the Founders as a group, selected in this manner contemplated as of
Section 5.1) shall be borne by the Company. The Company may postpone the filing
of any registration statement required hereunder for a reasonable period of
time, not to exceed 90 days during any twelve month period, if the Company
determines in good faith that such filing would require the disclosure of a
material transaction or other matter and the Company determines reasonably and
in good faith that such disclosure would have a material adverse effect on the
Company or otherwise would not be in the best interest of the Company. The
Company shall not be required to cause a Registration Statement requested
pursuant to this Section 5.3 to become effective prior to 90 days following the
effective date of a Registration Statement initiated by the Investors pursuant
to Section 5.2 or by the Company, if the request for registration has been
received by the Company subsequent to the giving of written notice by the
Company, made in good faith, to the Investors and the Founders to the effect
that the Company is commencing to prepare a Company-initiated Registration
Statement (other than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable); provided, however, that the
-------- -------
Company shall use its best efforts to achieve such effectiveness promptly
following such 90-day period if the request pursuant to this Section 5.3 has
been made prior to the expiration of such 90-day period.
17
<PAGE>
Section 5.4 Registrable Shares. For the purposes of this Article V, the
----------- ------------------
term "Registrable Shares" shall mean any shares of Common Stock held by an
Investor, Founder or Permitted Transferee or subject to acquisition by an
Investor upon conversion of Convertible Preferred Stock or Class B Common Stock,
as applicable, including any shares issued by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization; provided, however, that if an Investor
owns Convertible Preferred Stock or Class B Common Stock, the Investor may
exercise its registration rights hereunder by converting the shares to be sold
publicly into Common Stock as of the closing of the relevant offering and shall
not be required to cause such Convertible Preferred Stock or Class B Common
Stock to be converted to Common Stock until and unless such Closing occurs, it
being understood that the Company shall at the request of the relevant Investor
effect the reconversion of Common Stock or Class B Common Stock and any
Redeemable Preferred Stock acquired upon conversion of Convertibly Preferred
Stock to Convertible Preferred Stock if such a conversion occurs notwithstanding
the foregoing and a public offering does not close; and provided, further, that
any Common Stock that is sold in a registered sale pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
thereunder, or that may then be sold without restriction as to volume or
otherwise pursuant to Rule 144 under the Securities Act, including by reason of
Rule 701(c) under the Securities Act or any restricted stock that is not then
vested, shall not be deemed Registrable Shares.
Section 5.5 Further Obligations of the Company. Whenever, under the
----------- ----------------------------------
provisions of Sections 5.1, 5.2 or 5.3 of this Agreement, the Company is
required to register any Registrable Shares, it agrees that it shall also do the
following:
(a) Use its best efforts to diligently prepare and file with
the Commission a registration statement and such amendments, post-effective
amendments and supplements to said registration statement and the
prospectus used in connection therewith as may be necessary to keep said
registration statement effective as contemplated herein and to comply with
the provisions of the Securities Act with respect to the sale of securities
covered by said registration statement for the period necessary to complete
the proposed public offering as provided herein;
(b) Furnish to each selling Investor or Founder (including
for purposes of this Section 5.4 each Permitted Transferee) such copies of
each preliminary and final prospectus and such other documents as such
Investor or Founder may reasonably request to facilitate the public
offering of its Registrable Shares;
(c) Enter into any reasonable underwriting agreement required
by the proposed underwriter for the selling Investors or Founders, if any
(which underwriter shall be selected by the selling Investors in connection
with any registration requested pursuant to Section 5.2); provided,
however, that no Founder or Investor shall be required to make any
representations or warranties other than with respect to its title to the
Registrable Shares and any written information provided by it to the
Company
18
<PAGE>
specifically for us in the Registration Statement, and if the underwriter
requires that representations or warranties be made and that
indemnification be provided, the Company shall make all such
representations and warranties and provide all such indemnities, including,
without limitation, in respect of the Company's business, operations and
financial information and the disclosures relating thereto in the
prospectus;
(d) Use its best efforts to register or qualify the
securities covered by said registration statement under the securities or
"blue-sky" laws of such jurisdictions as any selling Investors or Founders
may reasonably request, provided that the Company shall not be required to
register or qualify the securities in any jurisdictions which require it to
qualify to do business or subject itself to general service of process
therein;
(e) Immediately notify each selling Investor or Founder, at
any time when a prospectus relating to his Registrable Shares is required
to be delivered under the Securities Act, of the happening of any event as
a result of which such prospectus contains an untrue statement of a
material fact or omits any material fact necessary to make the statements
therein not misleading, and, at the request of any such selling Investor or
Founder, prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading;
(f) Cause all such Registrable Shares to be listed on or
included in each securities exchange or quotation system on which similar
securities issued by the Company are then listed;
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its stockholders, in each case as soon as practicable, but not
later than 30 days after the close of the period covered thereby an
earnings statement of the Company which will satisfy the provisions of
Section 11(a) of the Securities Act;
(h) Cooperate with each Investor and Founder and each
underwriter participating in the disposition of Registrable Shares and
their respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.;
(i) During the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to
be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act;
19
<PAGE>
(j) Appoint a transfer agent and registrar for all
Registrable Shares covered by a Registration Statement not later than the
effective date of such Registration Statement;
(k) In connection with an underwritten offering, to the
extent reasonably requested by the managing underwriter for the offering or
the Investors or the Founders, participate in and support customary efforts
to sell the securities in the offering, including, without limitation,
participating in "road shows"; and
(l) Otherwise cooperate with the underwriter or underwriters,
the Commission and other regulatory agencies and take all actions and
execute and deliver or cause to be executed and delivered all documents
necessary to effect the registration of any Registrable Shares under this
Article V,
Section 5.6 Indemnification; Contribution.
----------- -----------------------------
(a) Incident to any registration statement referred to in
this Article V, and subject to applicable law, the Company will indemnify and
hold harmless each underwriter, each Investor or Founder (including for purposes
of this Article V each Permitted Transferee) who offers or sells any such
Registrable Shares in connection with such registration statement (including its
partners (including partners of partners and stockholders of any such partners),
and directors, officers, employees and agents of any of them (a "Selling
Stockholder"), and each person who controls any of them within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934 (the "Exchange Act") (a "Controlling Person"), from and against any and all
losses, claims, damages, expenses and liabilities, joint or several (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), as the same are incurred to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based on (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement (including any related preliminary or definitive
prospectus, or any amendment or supplement to such registration statement or
prospectus), (ii) any omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it not misleading, or (iii) any violation by the Company of the Securities Act,
any state securities or "blue sky" laws or any rule or regulation thereunder in
connection with such registration; provided, however, that the Company will not
be liable to the extent that such loss, claim, damage, expense or liability
arises from and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
furnished in writing to the Company by such underwriter, Selling Stockholder or
Controlling Person expressly for use in such registration statement. With
respect to such untrue statement or omission or alleged untrue statement or
omission in the information furnished in writing to the Company by such Selling
Stockholder expressly for use in such registration statement, such Selling
Stockholder will indemnify and hold harmless
20
<PAGE>
each underwriter, the Company (including its directors, officers, employees and
agents), and each other Selling Stockholder (including its partners (including
partners of partners and stockholders of such partners) and directors, officers,
employees and agents of any of them), and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, expenses and
liabilities, joint or several, to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise to the same extent provided in the
immediately preceding sentence. In no event, however, shall the liability of a
Selling Stockholder for indemnification under this Section 5.6(a) in its
capacity as such exceed the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement which
is being sold by such Selling Stockholder or (ii) the proceeds received by such
Selling Stockholder from its sale of Registrable Shares under such registration
statement.
(b) If the indemnification provided for in Section 5.6(a)
above for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims, damages,
expenses or liabilities referred to therein, then each indemnifying party under
this Section 5.6, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the other Selling Stockholders and the underwriters from the offering
of the Registrable Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the other Selling Stockholders and the
underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Stockholders and the underwriters shall be deemed to be in
the same respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders and the
underwriting discount received by the underwriters, in each case as set forth in
the table on the cover page of the applicable prospectus, bear to the aggregate
public offering price of the Registrable Shares. The relative fault of the
Company, the Selling Stockholders and the underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders, and the underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 5.6(b) were determined by pro rata or per capita allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
21
<PAGE>
paragraph. In no event, however, shall a Selling Stockholder be required to
contribute any amount under this Section 5.6(b) in excess of the lesser of (i)
that proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Registrable Shares sold
under such registration statement which are being sold by such Selling
Stockholder or (ii) the proceeds received by such Selling Stockholder from its
sale of Registrable Shares under such registration statement. No person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation.
(c) The amount paid by an indemnifying party or payable to an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in this Section 5.6 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim, payable as the same are incurred. The indemnification and
contribution provided for in this Section 5.6 will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
parties or any officer, director, employee, agent or controlling person of the
indemnified parties.
Section 5.7 Rule 144 Requirements. If the Company becomes subject to the
----------- ---------------------
reporting requirements of either Section 13 or 15(d) of the Exchange Act, the
Company will use its best efforts thereafter to file with the Commission such
information as is specified under either of said Sections for so long as any of
the Investors hold any Registrable Shares; and in such event, the Company shall
use its best efforts to take all action as may be required as a condition to the
availability of Rule 144 under the Securities Act (or any successor or similar
exemptive rules hereafter in effect). The Company shall furnish to any holder of
Registrable Shares upon request a written statement executed by the Company as
to the steps it has taken to comply with the current public information
requirement of Rule 144 or such successor rules.
Section 5.8 Market Stand-Off. Each Investor and Founder agrees, if
----------- ----------------
requested by the Company and an underwriter of Registrable Shares of the Company
in connection with the Company's initial public offering, not to sell or
otherwise transfer or dispose of any Shares (with the exception of any
Registrable Shares sold in such offering in accordance with the provisions of
Article V) held by it for such period, not to exceed 180 days following the
effective date of the relevant registration statement filed under the Securities
Act in connection with such initial public offering, as such underwriter shall
specify reasonably and in good faith.
Section 5.9 Transfer of Registration Rights. The registration rights and
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related obligations under this Article V of the Investors and Founders with
respect to their Registrable Securities may be assigned in connection with any
transaction or series of related transactions involving the transfer to one or
more transferees of at least 10,000 shares of capital stock of the Company,
other than pursuant to an effective registration statement under the Securities
Act or pursuant to Rule 144 thereunder (subject to adjustments for stock splits,
stock dividends and the like and aggregating all contemporaneous transfers), or
to any TA Fund, and upon any
22
<PAGE>
such transfer such transferee or TA Fund shall be deemed to be included within
the definition of an "Investor" or a "Founder" as applicable, for purposes of
this Article V with the rights set forth herein.
ARTICLE VI. ELECTION OF DIRECTORS
- ---------- ---------------------
Section 6.1 Management Representatives. Each Investor and each Founder
----------- --------------------------
(including, for purposes of this Section 6.1, each Permitted Transferee) agrees
to vote all its shares of the Company's capital stock having voting power (and
any other shares over which it exercises voting control) in connection with the
election of Directors and to take such other actions as are necessary so as to
establish a Board of Directors of not more than seven (7) members and to elect
and continue in the office as directors two (2) individuals nominated by two-
thirds interest of the Founders who shall initially be Patrick G. LePore and
Gregory Boron, it being understood, however, that all Directors other than the
nominees of the Founders shall be subject to election by the holders of the
Preferred Stock and the holders of the Company's outstanding voting stock as
provided in the Company's Amended and Restated Certificate of Incorporation.
Each Investor and each Founder further agrees to vote all of its shares of the
Company's capital stock having voting power (and any other shares over which he
or it exercises voting control) for the removal of any Director designated
pursuant to this Section 6.1 upon the request of two-thirds in interest of the
Founders and for the election to the Board of Directors of a substitute
designated by such parties in accordance with the provisions this Section 6.1,
and to vote all shares of the Company's capital stock having voting power (and
any other shares over which he or it exercises voting control) in such manner as
shall be necessary or appropriate to ensure that any vacancy on the Board of
Directors of the Company occurring for any reason shall be filled only in
accordance with the provisions of this Article VI.
Section 6.2 Committees of the Board. The Company and each of Investors
----------- -----------------------
and Founders agree to use their best efforts to cause the Board of Directors to
establish a Compensation Committee (which shall be charged with exclusive
authority over all compensation and employee stock and option matters) and an
Audit Committee (which shall be charged with reviewing the Company's financial
statements and accounting practices). The Compensation Committee shall consist
of three (3) Directors, two (2) of whom shall have been designated by two-thirds
in interest of the Investors and one (1) of whom shall be the Company's Chief
Executive Officer; provided, that if the Company's 1996 Stock Option and Grant
--------
Plan must be administered solely by outside directors in order to comply with
relevant tax and securities law requirements, the Chief Executive Officer shall
be permitted to consult with the Compensation Committee without being a voting
member thereof and the Compensation Committee shall consult with the Chief
Executive Officer on such matters. The Audit Committee shall consist of such
individuals as the Board of Directors shall appoint from time to time. In
addition, should an Executive Committee be established, the Investors and
Founders agree that such Committee shall consist of two nominees of the
Investors and one nominee of the Founders.
23
<PAGE>
Section 6.3 Assignment. Each Investor and each Founder agrees, as a
----------- ----------
condition to any transfer of its Shares, to cause the transferee to agree to the
provisions of this Article VI, whereupon such transferee shall be subject to the
provisions hereof as an Investor or Founder, as applicable, in connection with
its ownership of the shares Transferred for purposes of this Article VI.
Section 6.4 Term. This Article VI shall remain in effect until the
----------- ----
closing of a Qualified Public Offering or, if sooner, the date which is 10 years
after the date hereof.
ARTICLE VII. MISCELLANEOUS PROVISIONS
- ----------- ------------------------
Section 7.1 Survival of Representations and Covenants. Each of the
----------- -----------------------------------------
parties hereto agrees that each representation, warranty, covenant and agreement
made by it in this Agreement or in any certificate, instrument or other document
delivered pursuant to this Agreement is material, shall be deemed to have been
relied upon by the other parties and shall remain operative and in full force
and effect after the date hereof regardless of any investigation. This
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties hereto and their respective successors and
permitted assigns to the extent contemplated herein.
Section 7.2 Legend on Securities. The Company, the Investors and the
----------- --------------------
Founders acknowledge and agree that the following legend shall be typed on each
certificate evidencing any of the securities issued hereunder held at any time
by any of the Investors, Founders or their Permitted Transferees:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR
(2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS
OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF DECEMBER 4, 1996, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Section 7.3 Amendment and Waiver. Any party may waive any provision
----------- --------------------
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to any party hereto
at law or in equity or otherwise. This Agreement may be
24
<PAGE>
amended with the prior written consent of the Company, a two-thirds-in-interest
of the Founders (based on the Shares held by the Founders and their Permitted
Transferees as a group), and two-thirds-in-interest of the Investors (based on
the Shares held by the Investors as a group); provided, however, that any
-------- -------
amendment which directly, materially and adversely affects any right
specifically granted to a particular Investor or Founder in a manner different
than other Investors or Founders shall not be effective unless such Person has
consented to that amendment. All actions by the Company hereunder shall be
taken by or upon the direction of a majority of the members of the Company's
Board of Directors.
Section 7.4 Notices. All notices and other communications provided
------------ -------
for herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the following addresses (or at such other address for
any party as shall be specified by notice given in accordance with the
provisions hereof, provided that notices of a change of address shall be
effective only upon receipt thereof). Notices delivered personally shall be
effective on the day so delivered, notices sent by registered or certified mail
shall be effective three days after mailing, notices sent by telex shall be
effective when answered back, notices sent by facsimile shall be effective when
receipt is acknowledged, and notices sent by courier guaranteeing next day
delivery shall be effective on the earlier of the second business day after
timely delivery to the courier or the day of actual delivery by the courier:
(a) if to the Company:
Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Facsimile: (201) 791-1121
Attention: Patrick G. LePore
Chief Executive Officer
(b) if to the Investors:
TA Associates, Inc.
116 Woodland Road
Pittsburgh, PA 15232
Facsimile: (412) 441-5784
Attention: Jacqueline C. Morby
25
<PAGE>
TA Associates, Inc.
High Street Tower, Suite 2500
125 High Street
Boston, MA 02110
Facsimile: (617) 574-6728
Attention: Roger B. Kafker
(c) if to the Founders:
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Facsimile: (201) 791-1121
Attention: Patrick G. LePore, Gregory Boron, Christopher
Sweeney and Michael W. Foti
Section 7.5 Headings. The Article and Section headings used or contained
----------- --------
in this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
Section 7.6 Counterparts. This Agreement may be executed in one or more
----------- ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which together
shall be deemed to constitute one and the same agreement.
Section 7.7 Dispute Resolution. Except with respect to matters as to
----------- ------------------
which injunctive relief is being sought, any dispute arising out of or relating
to this Agreement that has not been settled within thirty (30) days by good
faith negotiation between the parties to this Agreement shall be submitted to
the American Arbitration Association ("AAA") for final and binding arbitration
pursuant to AAA's commercial Arbitration Rules. Any such arbitration shall be
conducted in New York, New York.
Section 7.8 Remedies; Severability. Notwithstanding Section 7.7, it is
----------- ----------------------
specifically understood and agreed that any breach of the provisions of this
Agreement by any Person subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy
for such breach, and that, in addition to any other legal or equitable remedies
which they may have, such other parties may enforce their respective rights by
actions for specific performance (to the extent permitted by law) and the
Company may refuse to recognize any unauthorized Transferee as one of its
stockholders for any purpose, including, without limitation, for purposes of
dividend and voting rights, until the relevant party or parties have complied
with all applicable provisions of this Agreement.
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any
26
<PAGE>
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
Section 7.9 Entire Agreement. This Agreement, together with the
----------- ----------------
Preferred Stock Purchase Agreement and other agreements specifically
contemplated hereby and thereby, is intended by the parties as a final
expression of their agreement and intended to be complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement and the
Preferred Stock Purchase Agreement and other agreements contemplated hereby and
thereby (including the exhibits hereto and thereto) supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
Section 7.10 Adjustments. All references to share prices and amounts
------------ -----------
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
Section 7.11 Law Governing. This Agreement shall be construed and
------------ -------------
enforced in accordance with and governed by the laws of New Jersey (without
giving effect to principles of conflicts of law), except that any Delaware
corporate law matters relating to the Company shall be construed and enforced in
accordance with and governed by the Delaware General Corporation Law (without
giving effect to principles of conflicts of law). Each party also waives trial
by jury in any action relating to this Agreement.
Section 7.12 Successors and Assigns. This Agreement shall be binding
------------ ----------------------
upon and inure to the benefit of the respective successors and permitted assigns
of the parties hereto as contemplated herein, and any successor to the Company
by way of merger or otherwise shall specifically agree to be bound by the terms
hereof as a condition of such successor. This Agreement may not be assigned by
any Founder or Permitted Transferee except as contemplated by Article IV without
the prior written consent of two-thirds-in-interest of the Investors, and
without such prior written consent any attempted transfer shall be null and
void.
[Remainder of Page Intentionally Left Blank]
27
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
---------------------------------
President
FOUNDERS:
/s/ Patrick G. Lepore
------------------------------------
Patrick G. LePore
/s/ Gregory Boron
------------------------------------
Gregory Boron
/s/ Christopher Sweeney
------------------------------------
Christopher Sweeney
/s/ Michael W. Foti
------------------------------------
Michael W. Foti
28
<PAGE>
TA INVESTORS ADVENT VII L.P.
By: TA Associates VII L.P.,
its General Partner
By: TA Associates, Inc.,
its General Partner
*
------------------------------------
Name: Jacqueline C. Morby
Title: Managing Director
ADVENT ATLANTIC AND PACIFIC III L.P.
By: TA Associates AAP III Partners,
its General Partner
By: TA Associates, Inc.,
its General Partner
*
------------------------------------
Name: Jacqueline C. Morby
Title: Managing Director
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
*
------------------------------------
Name: Jacqueline C. Morby
Title: General Partner
* /s/ Jacqueline C Morby
- -----------------------------
By: Jacqueline C Morby
29
<PAGE>
/s/ MLPFS FBO John A. Staley, IV IRRA
------------------------------------
MLPFS FBO
John A. Staley, IV IRRA
/s/ Howard A. Cubell
------------------------------------
Howard A. Cubell
/s/ John R. LeClaire
------------------------------------
John R. LeClaire
/s/ Marian A. Tse
------------------------------------
Marian A. Tse
30
<PAGE>
EXHIBIT A
---------
Form of Joinder Agreement
-------------------------
The undersigned hereby agrees, effective as of the date hereof, to become a
party to that certain Stockholders' Agreement (the "Agreement") dated as of
December 4, 1996 by and among Boron, LePore & Associates, Inc. (the "Company")
and the parties named therein and for all purposes of the Agreement, the
undersigned shall be included within the term ["Investor"] ["Founder"] (each as
defined in the Agreement). As of the date hereof the undersigned makes each of
the representations and warranties set forth in Section 2.2 of the Agreement.
The address and facsimile number to which notices may be sent to the undersigned
is as follows:
- --------------------------------------------------------------------------------
Facsimile No. :
----------------
---------------------------------
[NAME OF UNDERSIGNED]
31
<PAGE>
EXHIBIT 4.2
LOAN AGREEMENT
BY AND BETWEEN
BORON, LEPORE & ASSOCIATES, INC.
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS NOW OR
HEREAFTER PARTIES HERETO
$20,000,000 SECURED TERM LOAN
AND
$5,000,000 SECURED REVOLVING CREDIT LOAN
December 4, 1996
<PAGE>
INDEX TO
LOAN AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS............................. 1
Section 1.1. Certain Defined Terms.......................................... 1
- ----------- ---------------------
Section 1.2. Accounting Terms............................................... 13
- ------------ ----------------
Section 1.3. Other Terms.................................................... 14
- ------------ -----------
ARTICLE 2. AMOUNT AND TERMS OF THE LOANS 14
Section 2.1. The Loans...................................................... 14
- ------------ ---------
Section 2.1.0. The Revolving Credit Loans..................................... 14
- -------------- --------------------------
Section 2.1.1. Term Loans..................................................... 15
- -------------- ----------
Section 2.2. Interest and Fees on the Loans................................. 16
- ------------ ------------------------------
Section 2.2.1. Interest....................................................... 16
- -------------- --------
Section 2.2.2. Fees........................................................... 16
- -------------- ----
Section 2.2.3. Increased Costs - Capital...................................... 17
- -------------- -------------------------
Section 2.3. Notations...................................................... 17
- ------------ ---------
Section 2.4. Computation of Interest........................................ 18
- ------------ -----------------------
Section 2.5. Time of Payments and Prepayments in
- ------------ -----------------------------------
Immediately Available Funds.................................... 18
---------------------------
Section 2.5.1. Time........................................................... 18
- -------------- ----
Section 2.5.2. Setoff, etc.................................................... 19
- -------------- ------------
Section 2.5.3. Unconditional Obligations and No Deductions.................... 19
- -------------- -------------------------------------------
Section 2.6. Prepayment and Certain Payments................................ 19
- ------------ -------------------------------
Section 2.6.1. Mandatory Payments............................................. 19
- -------------- ------------------
Section 2.6.2. Voluntary Prepayments.......................................... 19
- -------------- ---------------------
Section 2.6.3. Prepayment of Libor Loans...................................... 21
- -------------- -------------------------
Section 2.6.4. Permanent Reduction of Commitment.............................. 21
- -------------- ---------------------------------
Section 2.7. Payment on Non-Business Days................................... 21
- ------------ ----------------------------
Section 2.8. Use of Proceeds................................................ 21
- ------------ ---------------
Section 2.9. Special Libor Loan Provisions.................................. 21
- ------------ -----------------------------
Section 2.9.1. Requests....................................................... 21
- -------------- --------
Section 2.9.2. Libor Loans Unavailable........................................ 22
- -------------- -----------------------
Section 2.9.3. Libor Lending Unlawful......................................... 22
- -------------- ----------------------
Section 2.9.4. Additional Costs on Libor Loans................................ 23
- -------------- -------------------------------
Section 2.9.5. Libor Funding Losses........................................... 24
- -------------- --------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 2.9.6. Banking Practices.............................................. 25
- -------------- -----------------
Section 2.9.7. Borrower's Options on Unavailability or
- -------------- ---------------------------------------
Increased Cost of Libor Loans.................................. 25
-----------------------------
Section 2.9.8. Assumptions Concerning Funding of Libor Loans.................. 26
- -------------- ---------------------------------------------
Section 2.10. Interest Rate Protection....................................... 26
- ------------- ------------------------
ARTICLE 3. CONDITIONS OF LENDING.................................................. 26
Section 3.1. Conditions Precedent to the Commitment and to all Loans........ 26
- ------------ -------------------------------------------------------
Section 3.1.1. The Commitment and Initial Loans............................... 26
- -------------- --------------------------------
Section 3.1.2. The Commitment and the Loans................................... 29
- -------------- ----------------------------
ARTICLE 4. REPRESENTATIONS AND WARRANTIES......................................... 29
Section 4.1. Representations and Warranties of the Borrower................. 29
- ------------ ----------------------------------------------
Section 4.1.1. Organization and Existence..................................... 29
- -------------- --------------------------
Section 4.1.2. Authorization and Absence of Defaults.......................... 30
- -------------- -------------------------------------
Section 4.1.3. Acquisition of Consents........................................ 30
- -------------- -----------------------
Section 4.1.4. Validity and Enforceability.................................... 30
- -------------- ---------------------------
Section 4.1.5. Financial Information.......................................... 30
- -------------- ---------------------
Section 4.1.6. No Litigation.................................................. 31
- -------------- -------------
Section 4.1.7. Regulation U................................................... 31
- -------------- ------------
Section 4.1.8. Absence of Adverse Agreements.................................. 31
- -------------- -----------------------------
Section 4.1.9. Taxes.......................................................... 31
- -------------- -----
Section 4.1.10. ERISA.......................................................... 31
- --------------- -----
Section 4.1.11. Ownership of Properties........................................ 32
- --------------- -----------------------
Section 4.1.12. Accuracy of Representations and Warranties..................... 32
- --------------- ------------------------------------------
Section 4.1.13. No Investment Company.......................................... 32
- --------------- ---------------------
Section 4.1.14. Solvency, etc.................................................. 32
- --------------- --------------
Section 4.1.15. [Intentionally omitted.] ...................................... 33
- --------------- ------------------------
Section 4.1.16. Ownership Interests............................................ 33
- --------------- -------------------
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc............. 33
- --------------- ---------------------------------------------------
Section 4.1.18. Principal Place of Business; Books and Records................. 33
- --------------- ----------------------------------------------
Section 4.1.19. Subsidiaries................................................... 33
- --------------- ------------
Section 4.1.20. Copyright...................................................... 33
- --------------- ---------
Section 4.1.21. Environmental Compliance....................................... 33
- --------------- ------------------------
Section 4.1.22. Material Agreements, etc....................................... 34
- --------------- -------------------------
Section 4.1.23. Patents, Trademarks and Other Property Rights.................. 34
- --------------- ---------------------------------------------
Section 4.1.24. Related Transaction Documents.................................. 34
- --------------- -----------------------------
ARTICLE 5. COVENANTS OF THE BORROWER.............................................. 34
Section 5.1. Affirmative Covenants of the Borrower
- ------------ -------------------------------------
Other than Reporting Requirements.............................. 34
---------------------------------
Section 5.1.1. Payment of Taxes, etc.......................................... 35
- -------------- ----------------------
Section 5.1.2. Maintenance of Insurance....................................... 35
- -------------- ------------------------
Section 5.1.3. Preservation of Existence, etc................................. 36
- -------------- -------------------------------
Section 5.1.4. Compliance with Laws, etc...................................... 36
- -------------- --------------------------
Section 5.1.5. Visitation Rights.............................................. 36
- -------------- -----------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.1.6. Keeping of Records and Books of Account........................ 36
- -------------- ---------------------------------------
Section 5.1.7. Maintenance of Properties, etc................................. 36
- -------------- -------------------------------
Section 5.1.8. Post-Closing Items............................................. 36
- -------------- ------------------
Section 5.1.9. Other Documents, etc........................................... 36
- -------------- ---------------------
Section 5.1.10. Minimum Interest Coverage Ratio................................ 36
- --------------- -------------------------------
Section 5.1.11. Minimum Debt Service Coverage Ratio............................ 37
- --------------- -----------------------------------
Section 5.1.12. Maximum Ratio of Total Indebtedness for
- --------------- ---------------------------------------
Borrowed Money to EBITDA....................................... 37
------------------------
Section 5.1.13. Minimum EBITDA................................................. 37
- --------------- --------------
Section 5.1.14. Minimum Quick Ratio............................................ 37
- --------------- -------------------
Section 5.1.15. Officer's Certificates and Requests............................ 38
- --------------- -----------------------------------
Section 5.1.16. Depository..................................................... 38
- --------------- ----------
Section 5.1.17. Chief Executive Officer........................................ 38
- --------------- -----------------------
Section 5.1.18. Notice of Purchase of Real Estate and Leases................... 38
- --------------- --------------------------------------------
Section 5.1.19. Additional Assurances.......................................... 38
- --------------- ---------------------
Section 5.1.20. Appraisals..................................................... 38
- --------------- ----------
Section 5.1.21. Environmental Compliance....................................... 38
- --------------- ------------------------
Section 5.1.22. Remediation.................................................... 39
- --------------- -----------
Section 5.1.23. Site Assessments............................................... 39
- --------------- ----------------
Section 5.1.24. Indemnity...................................................... 39
- --------------- ---------
Section 5.1.25. Trademarks, Copyrights, etc.................................... 39
- --------------- ----------------------------
Section 5.1.26. Database....................................................... 39
- --------------- --------
Section 5.1.27. Employee Confidentiality....................................... 39
- --------------- ------------------------
Section 5.2. Negative Covenants of the Borrower............................. 39
- ------------ ----------------------------------
Section 5.2.1. Liens, etc..................................................... 40
- -------------- -----------
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other Persons. 41
- -------------- ---------------------------------------------------------------
Section 5.2.3. Acquisitions, Dissolution, etc................................. 41
- -------------- -------------------------------
Section 5.2.4. Change in Nature of Business................................... 42
- -------------- ----------------------------
Section 5.2.5. Ownership...................................................... 42
- -------------- ---------
Section 5.2.6. Sale and Leaseback............................................. 42
- -------------- ------------------
Section 5.2.7. Sale of Accounts, etc.......................................... 42
- -------------- ----------------------
Section 5.2.8. Indebtedness................................................... 42
- -------------- ------------
Section 5.2.9. Other Agreements............................................... 43
- -------------- ----------------
Section 5.2.10. Payment or Prepayment of Equity................................ 43
- --------------- -------------------------------
Section 5.2.11. Dividends, Payments and Distributions.......................... 43
- --------------- -------------------------------------
Section 5.2.12. Investments in or to Other Persons............................. 43
- --------------- ----------------------------------
Section 5.2.13. Transactions with Affiliates................................... 44
- --------------- ----------------------------
Section 5.2.14. Change of Fiscal Year.......................................... 44
- --------------- ---------------------
Section 5.2.15. Subordination of Claims........................................ 44
- --------------- -----------------------
Section 5.2.16. Compliance with ERISA.......................................... 44
- --------------- ---------------------
Section 5.2.17. Capital Expenditures........................................... 44
- --------------- --------------------
Section 5.2.18. Hazardous Waste................................................ 45
- --------------- ---------------
Section 5.3. Reporting Requirements......................................... 45
- ------------ ----------------------
ARTICLE 6. EVENTS OF DEFAULT...................................................... 47
Section 6.1. Events of Default.............................................. 47
- ------------ -----------------
ARTICLE 7. REMEDIES OF LENDERS.................................................... 48
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 8. AGENT.................................................................. 49
Section 8.1. Appointment.................................................... 49
- ------------ -----------
Section 8.2. Powers; General Immunity....................................... 49
- ------------ ------------------------
Section 8.2.1. Duties Specified............................................... 49
- -------------- ----------------
Section 8.2.2. No Responsibility For Certain Matters.......................... 50
- -------------- -------------------------------------
Section 8.2.3. Exculpatory Provisions......................................... 50
- -------------- ----------------------
Section 8.2.4. Agent Entitled to Act as Lender................................ 50
- -------------- -------------------------------
Section 8.3. Representations and Warranties; No Responsibility
- ------------ -------------------------------------------------
for Appraisal of Creditworthiness.............................. 51
---------------------------------
Section 8.4. Right to Indemnity............................................. 51
- ------------ ------------------
Section 8.5. Payee of Note Treated as Owner................................. 51
- ------------ ------------------------------
Section 8.6. Resignation by Agent........................................... 51
- ------------ --------------------
Section 8.7. Successor Agent................................................ 52
- ------------ ---------------
ARTICLE 9. MISCELLANEOUS.......................................................... 52
Section 9.1. Consent to Jurisdiction and Service of Process................. 52
- ------------ ----------------------------------------------
Section 9.2. Rights and Remedies Cumulative................................. 53
- ------------ ------------------------------
Section 9.3. Delay or Omission not Waiver................................... 53
- ------------ ----------------------------
Section 9.4. Waiver of Stay or Extension Laws............................... 53
- ------------ --------------------------------
Section 9.5. Amendments, etc................................................ 53
- ------------ ----------------
Section 9.6. Addresses for Notices, etc..................................... 54
- ------------ ---------------------------
Section 9.7. Costs, Expenses and Taxes...................................... 55
- ------------ -------------------------
Section 9.8. Participations................................................. 55
- ------------ --------------
Section 9.9. Binding Effect; Assignment..................................... 56
- ------------ --------------------------
Section 9.10. Actual Knowledge............................................... 56
- ------------- ----------------
Section 9.11. Substitutions and Assignments.................................. 56
- ------------- -----------------------------
Section 9.12. Payments Pro Rata.............................................. 58
- ------------- -----------------
Section 9.13. Indemnification................................................ 58
- ------------- ---------------
Section 9.14. Confidentiality................................................ 60
- ------------- ---------------
Section 9.15. Governing Law.................................................. 60
- ------------- -------------
Section 9.16. Severability of Provisions..................................... 60
- ------------- --------------------------
Section 9.17. Headings....................................................... 60
- ------------- --------
Section 9.18. Counterparts................................................... 60
- ------------- ------------
</TABLE>
iv
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT 1.0 EXTRAORDINARY COSTS AND GAINS
- ----------- -----------------------------
EXHIBIT 1.1 EQUITY INVESTMENTS, OWNERSHIP INTERESTS
- ----------- ---------------------------------------
AND SUBSIDIARIES
----------------
EXHIBIT 1.2 RELATED TRANSACTION DOCUMENTS
- ----------- -----------------------------
EXHIBIT 1.4 FORM OF INTEREST RATE ELECTION
- ----------- ------------------------------
EXHIBIT 1.5 FORM OF REVOLVING CREDIT NOTE
- ----------- -----------------------------
EXHIBIT 1.6 FORM OF TERM NOTE
- ----------- -----------------
EXHIBIT 1.8 PERMITTED ENCUMBRANCES
- ----------- ----------------------
EXHIBIT 1.9 PRO RATA SHARES AGENT'S AND LENDERS'
- ----------- ------------------------------------
NOTICE ADDRESSES AND WIRE TRANSFER
----------------------------------
INSTRUCTIONS
------------
EXHIBIT 1.10 FORM OF REQUEST
- ------------ ---------------
EXHIBIT 2.1.0 FORM OF BORROWING BASE CERTIFICATE
- ------------- ----------------------------------
EXHIBIT 3.1.1.8 PERMITTED INDEBTEDNESS AND CAPITALIZED
- --------------- --------------------------------------
LEASES
------
EXHIBIT 3.1.1.10 FORM OF COMPLIANCE CERTIFICATE
- ---------------- ------------------------------
EXHIBIT 4.1.1 FOREIGN QUALIFICATIONS
- ------------- ----------------------
EXHIBIT 4.1.2 AUTHORIZATIONS
- ------------- --------------
EXHIBIT 4.1.3 CONSENTS
- ------------- --------
EXHIBIT 4.1.5 FINANCIAL STATEMENT EXCEPTIONS
- ------------- ------------------------------
EXHIBIT 4.1.6 LITIGATION
- ------------- ----------
EXHIBIT 4.1.8 ADVERSE AGREEMENTS
- ------------- ------------------
EXHIBIT 4.1.9 TAXES
- ------------- -----
EXHIBIT 4.1.11 REAL PROPERTY
- -------------- -------------
EXHIBIT 4.1.17 GOVERNMENTAL PERMITS
- -------------- --------------------
EXHIBIT 4.1.20 COPYRIGHTS
- -------------- ----------
EXHIBIT 4.1.21 HAZARDOUS WASTE
- -------------- ---------------
EXHIBIT 4.1.22 MATERIAL CONTRACTS
- -------------- ------------------
EXHIBIT 4.1.23 INTELLECTUAL PROPERTY
- -------------- ---------------------
EXHIBIT 5.2.2 GUARANTIES
- ------------- ----------
EXHIBIT 5.2.13 TRANSACTIONS WITH AFFILIATES
- -------------- ----------------------------
EXHIBIT 9.11.1 FORM OF SUBSTITUTION AGREEMENT
- -------------- ------------------------------
v
<PAGE>
LOAN AGREEMENT
Boron, LePore & Associates, Inc., a Delaware corporation and formerly
a New Jersey corporation with a principal place of business at 17-17 Route 208
North, Fairlawn, NJ 07410 (hereinafter the "Borrower") and Fleet National Bank,
a national banking association organized under the laws of the United States and
having an office at 75 State Street, Boston, MA 02109 (hereinafter sometimes the
"Agent" as Agent for itself and the other Lenders, sometimes "Fleet" and
sometimes a "Lender") and each of the other Lenders who now are or hereafter
become parties to this Agreement pursuant to the terms of Section 9.11 hereof,
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hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Libor Rate" means, with respect to any Libor Loan to be made
-------------------
by the Lenders for the Interest Period applicable to such Libor Loan, the
interest rate per annum determined by the Agent (fixed throughout such Interest
Period (subject to adjustments for the Libor Rate Reserve Percentage)) and
rounded upwards, if necessary, to the next 1/16 of 1%) which is equal to the
quotient of (i) the rate of interest determined by the Agent to be the average
of the interest rates per annum at which Dollar deposits in immediately
available funds are offered to each Reference Lender by first-class banks in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the Business Day on which such Interest Period begins, in an
amount approximately equal to the principal amount of such Libor Loan, for a
period of time equal to such Interest Period and (ii) a number equal to the
number one minus the Libor Rate Reserve Percentage. The "Libor Rate Reserve
Percentage" applicable to any Interest Period means the average of the maximum
effective rates (expressed as a decimal) of the statutory reserve requirements
(without duplication, but including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to each Reference Lender during such
Interest Period under regulations of the Board of Governors of the Federal
Reserve System (or any successor), including without limitation Regulation D or
any other regulation dealing with maximum reserve requirements which are
applicable to each Reference Lender with respect to its "Eurocurrency
Liabilities", as that term may be defined from time to time by the Board of
Governors of the Federal Reserve System (or any successor) or are otherwise
imposed by the Board of Governors of the Federal Reserve System (or any
successor) and which in any other respect relate directly to the funding of
loans bearing interest at rates based on the interest rates at which Dollar
deposits in immediately available funds are offered to banks by first-class
banks in the London interbank market. If any Reference Lender fails to provide
its offered quotation to the Agent, the Adjusted Libor Rate shall be determined
on the basis of the offered quotation of the other Reference Lender. The
Adjusted Libor Rate shall be adjusted automatically on and as of the effective
date of any change in the Libor Rate Reserve Percentage.
"Advance" and "Advances" means the funding by any Lender of all or a
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portion of the Loans in accordance with this Agreement.
"Affiliate" means singly and collectively, the New Stockholders and
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any Person (other than a Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the Borrower.
For purposes of this definition, a Person shall be deemed to
<PAGE>
be "controlled by" the Borrower if the Borrower possesses, directly or
indirectly, power either to (i) vote 20% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii)
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise, and the legal representative, successor or
assign of any such Person.
"Agent" means Fleet or any other Person which is at the time in
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question serving as the agent under the terms of Article 8 hereof and the other
Financing Documents.
"Agreement" means this loan agreement, as the same may from time to
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time be amended.
"A.M." means a time from and including 12 o'clock midnight to and
----
excluding 12 o'clock noon on any Business Day using Eastern Standard (Daylight
Savings) time.
"Applicable Margin" means for each Libor Loan, two and one-quarter
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percent (2.25%) per annum; provided, however, that if, at any time on or after
the receipt by the Agent of the quarterly financial statements for the
Borrower's December 31, 1996 fiscal quarter and each subsequent Borrower fiscal
quarter provided to the Agent by the Borrower pursuant to Section 5.3.3 hereof,
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the ratio of (a) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the most recently
ended fiscal quarter of the Borrower to (b) EBITDA for such fiscal quarter and
for the three immediately preceding Borrower fiscal quarters, (i) is less than
2.00:1.0, but greater than or equal to 1.50:1.0 and if and so long as no Event
of Default or Default exists and is continuing, the Applicable Margin shall,
subject to the next-to-last sentence of this definition, be two percent (2.0%),
or (ii) is less than 1.50:1.0 and if and so long as no Event of Default or
Default exists and is continuing, the Applicable Margin shall, subject to the
next-to-last sentence of this definition, be one and one-half percent (1.50%).
Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the first day of the Borrower fiscal quarter
immediately succeeding the Borrower fiscal quarter for which the Agent receives
a Borrower financial statement establishing that a change in the Applicable
Margin is so required together with, in the case of a decrease in the Applicable
Margin, a written request for such rate decrease from the Borrower; provided,
however, that each of the above-referenced interest rates shall remain in effect
only so long as Borrower qualifies therefor and provided further, however, that
interest rate reductions shall become final only on the basis of Borrower's
annual audited financial statements and in the event that such annual audited
financial statements establish that the Borrower was not entitled to a rate
reduction which was previously granted, the Borrower shall, upon written demand
by the Agent, repay to the Agent for the account of each Lender an amount equal
to the excess of interest at the rate which should have been charged based on
such annual audited financial statements and the rate actually charged on the
basis of Borrower's quarterly financial statement(s) (provided that in the
event of a dispute as to the appropriate fiscal quarter as to which any
adjustment should be allocated, the decision of the independent accountants of
the Borrower shall be made in accordance with GAAP and shall be binding upon the
Agent, the Lenders and the Borrower absent manifest error); and provided
further, however, that in the event that Borrower fails to provide any financial
statement on a timely basis in accordance with Section 5.3.3, any interest rate
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increase payable as a result thereof shall be retroactively effective to the
date on which such increase would have been effective if the financial statement
in question had been received by the Agent in accordance with Section 5.3.3, and
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the Borrower shall pay any amount due as a result thereof upon written demand
from the Agent. The Agent shall send the Borrower written acknowledgment of
each change in the Applicable Margin in accordance with the Agent's customary
procedures as in effect from time to time, but the failure to send such
acknowledgment
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<PAGE>
shall have no effect on the effectiveness or applicability of the foregoing
provisions of this definition or Borrower's obligations with respect to payment
and calculation of interest on Libor Loans.
"Authorized Representative" means the chief financial officer or the
-------------------------
president or such other senior personnel of the Borrower as shall be duly
authorized and designated from time to time in writing by the Borrower to
execute documents, instruments and agreements on its behalf and to perform the
functions of Authorized Representative under any of the Financing Documents.
"Borrowed Money" means any obligation to repay funded Indebtedness,
--------------
any Indebtedness evidenced by notes, bonds, debentures, guaranties or similar
obligations including without limitation the Loans and any obligation to pay
money under a conditional sale or other title retention agreement, the net
aggregate rentals payable under any Capitalized Lease Obligation, any
reimbursement obligation for any letter of credit and any obligations in respect
of banker's and other acceptances or similar obligations.
"Borrower" has the meaning assigned in the first paragraph of this
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Agreement.
"Budget" has the meaning assigned to such term in Section 5.3.7.
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"Business Condition" means the financial condition, business and
------------------
assets of a Person.
"Business Day" means (i) for all purposes other than as covered by
------------
clause (ii) below, any day on which banks in Boston, Massachusetts or New York,
New York are not authorized or required by applicable law to close; and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Libor Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in Dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures paid or incurred by the
--------------------
Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, any other
fixed assets or leaseholds and (ii) to the extent related to and not included in
(i) above, materials, contract labor and direct labor, which expenditures have
been or should be, in accordance with GAAP, capitalized on the books of the
Borrower or such Subsidiary. Where a fixed asset is acquired by a lease which is
required to be capitalized pursuant to Statement of Financial Accounting
Standards number 13 or any successor thereto, the amount required to be
capitalized in accordance therewith shall be considered to be an expenditure in
the year such asset is first leased.
"Capitalized Lease Obligations" means all lease obligations which have
-----------------------------
been or should be, in accordance with GAAP, capitalized on the books of the
lessee.
"Cash Equivalent Investments" means any Investment in (i) direct
---------------------------
obligations of the United States or any agency, authority or instrumentality
thereof, or obligations guaranteed by the United States or any agency, authority
or instrumentality thereof, whether or not supported by the full faith and
credit of, a right to borrow from or the ability to be purchased by the United
States; (ii) commercial paper rated in the highest grade by a nationally
recognized statistical rating agency or which, if not rated, is issued or
guaranteed by any issuer with outstanding long-term debt rated A or better by
any nationally recognized statistical rating agency; (iii) demand and time
deposits with, and certificates of deposit and bankers acceptances issued by,
any office of the Agent, any Lender or any other bank or trust company which is
organized under the laws of
3
<PAGE>
the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500,000,000, the outstanding long-term debt of
which or of the holding company of which it is a subsidiary is rated A or better
by any nationally recognized statistical rating agency; (iv) any short-term note
which has a rating of MIG-2 or better by Moody's Investors Service Inc. or a
comparable rating from any other nationally recognized statistical rating
agency; (v) any municipal bond or other governmental obligation (including
without limitation any industrial revenue bond or project note) which is rated A
or better by any nationally recognized statistical rating agency; (vi) any other
obligation of any issuer, the outstanding long-term debt of which is rated A or
better by any nationally recognized statistical rating agency; (vii) any
repurchase agreement with any financial institution described in clause (iii)
above, relating to any of the foregoing instruments and fully collateralized by
such instruments; (viii) shares of any open-end diversified investment company
that has its assets invested only in investments of the types described in
clause (i) through (vii) above at the time of purchase and which maintains a
constant net asset value per share; and (ix) shares of any open-end diversified
investment company registered under the Investment Company Act of 1940, as
amended, which maintains a constant net asset value per share in accordance with
regulations of the Securities & Exchange Commission, has aggregate net assets of
not less than $50,000,000 on the date of purchase and either derives at least
95% of its gross income from interest on or gains from the sale of investments
of the type described in clauses (i) through (vii), above or has at least 85% of
the weighted average value of its assets invested in investments of such types;
provided that the purchase of any shares in any particular investment company
shall be limited to an aggregate amount owned at any one time of $500,000. Each
Cash Equivalent Investment shall have a maturity of less than one year at the
time of purchase; provided that the maturity of any repurchase agreement shall
be deemed to be the repurchase date and not the maturity of the subject security
and that the maturity of any variable or floating rate note subject to
prepayment at the option of the holder shall be the period remaining (including
any notice period remaining) before the holder is entitled to prepayment.
"Change of Control" means, at any time prior to the completion of an
-----------------
Initial Public Offering, any one of the following events: (i) any change in the
ownership of the Borrower such that the New Stockholders and the Old
Stockholders in the aggregate own less than 51% or the New Stockholders own less
than 35% of the equity interests in the Borrower or (ii) any decrease in any of
the voting rights in the Borrower now held by the New Stockholders and/or the
Old Stockholders such that they cease to collectively hold 51% or more or the
New Stockholders cease to hold 35% or more of the voting rights in the Borrower.
"Closing Date" means the date on which all of the conditions precedent
------------
set forth in Section 3.1 of this Agreement have been satisfied and the Term Loan
-----------
is funded in accordance with this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Commitment" means the Lenders' several commitments to make or
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maintain the Loans as set forth in Section 2.1.1 hereof in the maximum
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outstanding amount of each Lender's Pro Rata Share of $25,000,000 less the
reductions set forth in Section 2.1 and less any reductions and prepayments or
-----------
repayments of the Term Loan as set forth in Section 2.6.
-----------
"Commonly Controlled Entity" means a Person, whether or not
--------------------------
incorporated, which is under common control with the Borrower within the meaning
of section 414(b) or (c) of the Code.
4
<PAGE>
"Current Liabilities" means all liabilities of the Borrower and the
-------------------
Subsidiaries which would, in accordance with GAAP on a consolidated basis, be
classified as current liabilities of corporations conducting a business the same
as or similar to that of the Borrower and any Subsidiaries, including without
limitation, all lease rental payments under Capitalized Lease Obligations and
fixed prepayments of, and sinking fund payments and reserves with respect to,
Indebtedness, in each case required to be made within one year from the date of
determination.
"Database" means that certain database owned and maintained by the
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Borrower containing a listing of doctors and other information utilized by the
Borrower in its pharmaceutical marketing business.
"Default" means an event or condition which with the giving of notice
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or lapse of time or both would become an Event of Default.
"Discharged Rights and Obligations" shall have the meaning assigned
---------------------------------
to such term in Section 9.11.4.
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"Dollars" and the sign "$" mean lawful money of the United States of
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America.
"EBITDA" means, for any fiscal period, Net Income plus, to the extent
------ ----
accounted for in Net Income, Interest Expense, taxes, depreciation, amortization
and other noncash charges minus non-cash gains and plus non-recurring
----- ----
extraordinary costs (minus non-recurring extraordinary gains) incurred by the
-----
Borrower and any Subsidiaries prior to December 31, 1996 in connection with
closing of the Loans and the Related Transactions including without limitation
nonrecurring extraordinary costs and gains listed on Exhibit 1.0, for such
-----------
period, all determined on an accrual and consolidated basis.
"Effective Prime" means the Prime Rate plus three quarters of one
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percent (.75%) per annum; provided, however, that if, at any time on or after
the receipt by the Agent of the quarterly financial statements for the
Borrower's December 31, 1996 fiscal quarter and each subsequent Borrower fiscal
quarter provided to the Agent by the Borrower pursuant to Section 5.3.3 hereof,
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the ratio of (a) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the most recently
ended fiscal quarter of the Borrower to (b) EBITDA for such fiscal quarter and
for the three immediately preceding Borrower fiscal quarters, (i) is less than
2.00:1.0, but greater than or equal to 1.50:1.0 and if and so long as no Event
of Default or Default exists and is continuing, Effective Prime shall, subject
to the next-to-last sentence of this definition, be the Prime Rate plus one-half
of one percent (.50%), or (ii) is less than 1.50:1.0 and if and so long as no
Event of Default or Default exists and is continuing, Effective Prime shall,
subject to the next-to-last sentence of this definition, be the Prime Rate.
Any change in Effective Prime required pursuant to the foregoing shall
become effective on the first day of the Borrower fiscal quarter immediately
succeeding the Borrower fiscal quarter for which the Agent receives a Borrower
financial statement establishing that a change in the Applicable Margin is so
required together with, in the case of a decrease in Effective Prime, a written
request for such rate decrease from the Borrower; provided, however, that each
of the above-referenced interest rates shall remain in effect only so long as
Borrower qualifies therefor and provided further, however, that interest rate
reductions shall become final only on the basis of Borrower's annual audited
financial statements and in the event that such annual audited financial
statements establish that the Borrower was not entitled to a rate reduction
which was previously granted, the Borrower shall, upon written demand by the
Agent repay to the Agent for the account of each Lender an amount equal to the
excess of interest at the rate which should
5
<PAGE>
have been charged based on such annual audited financial statements and the rate
actually charged on the basis of Borrower's quarterly financial statement(s)
(provided that in the event of a dispute as to the appropriate fiscal quarter as
to which any adjustment should be allocated, the decision of the independent
accountants of the Borrower shall be made in accordance with GAAP and shall be
binding upon the Agent, the Lenders and the Borrower absent manifest error); and
provided further, however, that in the event that Borrower fails to provide any
financial statement on a timely basis in accordance with Section 5.3.3, any
-------------
interest rate increase payable as a result thereof shall be retroactively
effective to the date on which such increase would have been effective if the
financial statement in question had been received by the Agent in accordance
with Section 5.3.3, and the Borrower shall pay any amount due as a result
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thereof upon written demand from the Agent. The Agent shall send the Borrower
written acknowledgment of each change in the Effective Prime in accordance with
the Agent's customary procedures as in effect from time to time, but the failure
to send such acknowledgment shall have no effect on the effectiveness or
applicability of the foregoing provisions of this definition or Borrower's
obligations with respect to payment and calculation of interest on Prime Rate
Loans.
"Eligible Receivables" means accounts receivable of the Borrower
--------------------
evidencing Indebtedness of Persons to the Borrower for goods actually sold and
delivered or services actually performed in the ordinary course of business by
the Borrower to or for such Person, which accounts receivable have been
outstanding for less than ninety (90) days since their respective invoice dates,
but excluding, however, (i) accounts receivable owing by officers, directors,
shareholders or employees of Borrower, (ii) accounts receivable with respect to
which goods are placed on consignment, guaranteed sale, "bill and hold" or other
terms by reason of which the payment by the account debtor may be conditional,
(iii) accounts receivable owing by the United States or any agency, department
or instrumentality thereof unless such accounts are freely assignable to the
Agent under the United States Assignment of Claims Act and the Borrower has
separately assigned each such account to the Agent in compliance with such Act,
(iv) accounts receivable owing by any Subsidiary or Affiliate of Borrower, (v)
accounts receivable with respect to which Borrower or any Subsidiary or
Affiliate is liable to the account debtor for goods sold or services provided to
Borrower or any Subsidiary or Affiliate by such account debtor to the extent of
Borrower's or any Subsidiary's or Affiliate's liability to such account debtor,
(vi) accounts receivable which are due and payable to Borrower from an account
debtor located outside the United States of America unless supported by a letter
of credit from a financial institution reasonably satisfactory to the Agent,
(vii) any accounts receivable as to which the account debtor has claimed any
setoff or dispute to the extent of the amount in dispute, (viii) any accounts
receivable subject to any Lien other than pursuant to the Security Documents,
(ix) any accounts receivable owing by any Person which is insolvent and/or the
subject of any bankruptcy, receivership or other insolvency proceeding and (x)
any accounts receivable arising out of bills for customer deposits.
"Equity" means the Investments in Dollars by the New Stockholders in
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the Borrower, made on or prior to the date of this Agreement in the aggregate
amount of not less than $12,500,000 as set forth in Exhibit 1.1.
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"Equity Documents" means, collectively, all documents entered into by
----------------
the Borrower, the Old Stockholders and/or any of the New Stockholders in
connection with the investment of the Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974
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as amended from time to time.
6
<PAGE>
"Events of Default" has the meaning assigned to that term in
-----------------
Section 6.1 of this Agreement.
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"Excess Cash Flow" means, for any fiscal year of the Borrower, the sum
----------------
of EBITDA for each Borrower fiscal quarter in such fiscal year, minus the sum of
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(i) an amount equal to the sum of payments included in Total Debt Service paid
during each fiscal quarter in such fiscal year, (ii) to the extent not included
in Total Debt Service, all Capital Expenditures permitted under Section 5.2.17
--------------
and paid during each Borrower fiscal quarter in such fiscal year and (iii) taxes
payable during each Borrower fiscal quarter in such fiscal year.
"Exhibit" means, when followed by a letter, the exhibit attached to
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this Agreement bearing that letter and by such reference fully incorporated in
this Agreement.
"Facility Fee" means, the fee payable by the Borrower on the Closing
------------
Date in accordance with Section 2.2.2 as set forth in the Side Letter.
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"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, provided that (i) if such day is not a
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Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent in its discretion exercised
in good faith.
"Financing Documents" means, collectively, this Agreement, each Note,
-------------------
the Security Documents, the Side Letter, the Post-Closing Letter, any agreement
with any Lender providing any interest rate protection arrangement and each
other agreement, instrument or document now or hereafter executed in connection
herewith or therewith.
"GAAP" means generally accepted accounting principles in effect
----
from time to time in the United States of America.
"Hazardous Material" shall mean any substance or material defined or
------------------
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any United States federal, state
or local environmental statute, regulation or ordinance.
"Indebtedness" means, without duplication for any Person, (i) all
------------
indebtedness or other obligations of said Person for Borrowed Money or for the
deferred purchase price of property or services, including, without limitation,
all reimbursement obligations of said Person with respect to standby and/or
documentary letters of credit (ii) all indebtedness or other obligations of any
other Person ("Other Person") for Borrowed Money or for the deferred purchase
price of property or services, the payment or collection of which said Person
has guaranteed (except by reason of endorsement for deposit or collection in the
ordinary course of business) or in respect of which said Person is liable,
contingently or otherwise, including, without limitation, liable by way of
agreement to purchase or lease, to provide funds for payment, to supply funds to
purchase, sell or lease property or services primarily to assure a creditor of
such Other Person against loss or otherwise to invest in or make a loan to the
Other Person, or otherwise to assure a creditor of such Other Person against
loss, (iii) all indebtedness or other obligations of any Person for Borrowed
Money or for the deferred purchase price of property or services secured by (or
for
7
<PAGE>
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in any property owned by said
Person, whether or not said Person has assumed or become liable for the payment
of such indebtedness or obligations, (iv) Capitalized Lease Obligations of said
Person, (v) obligations of such Person under contracts pursuant to which such
Person has agreed to purchase interest rate protection or swap interest rate
obligations and (vi) all other liabilities or obligations of said Person which
would, in accordance with GAAP, be classified as liabilities of such a Person.
"Initial Public Offering" means the Borrower and/or any Subsidiary
-----------------------
filing a Form S-1 or any other form of registration statement then available for
registration with the Securities and Exchange Commission or otherwise conducting
an initial public offering of any class of the Borrower's or any Subsidiary's
securities.
"Interest Adjustment Date" means (i) as to any Prime Rate Loan to be
------------------------
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3) Business
Days after the receipt by the Agent before 12:00 o'clock P.M. on a Business Day
of an Interest Rate Election electing the Libor Rate as the interest rate on
such Loan; and (ii) as to any Libor Loan, the last Business Day of the Interest
Period pertaining to such Libor Loan.
"Interest Expense" means, with respect to any fiscal quarter, the
----------------
aggregate amount required to be accrued by the Borrower and any Subsidiaries in
such fiscal quarter for interest, fees (excluding, however, the Facility Fee
being paid to the Agent on the Closing Date), charges and expenses, however
characterized, on its Indebtedness, including, without limitation, all such
interest, fees, charges and expenses required to be accrued with respect to
Indebtedness under the Financing Documents.
"Interest Period" means:
---------------
With respect to each Libor Loan:
(i) initially, the period commencing on the date of such Libor Loan
and ending one, two, three, four or six months thereafter as the
Borrower may elect in the applicable Interest Rate Election and
subject to Section 2.9; and
-----------
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan
and ending one, two, three, four or six months thereafter as the
Borrower may elect in the applicable Interest Rate Election and
subject to Section 2.9;
-----------
provided that clauses (i) and (ii) of this definition are subject to
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the following:
(A) any Interest Period (other than an Interest Period determined pursuant
to clause (C) below) which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (C) below, end on the last Business Day of a calendar month; and
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<PAGE>
(C) for the Term Loan, no Interest Period shall end after the Term Loan
Repayment Date and for the Revolving Credit Loan, no Interest Period shall end
after the Revolving Credit Repayment Date; and
(D) with respect to all Libor Loans, no more than five (5) Interest
Periods may be in effect at any time.
"Interest Rate Election" means the Borrower's irrevocable telecopied or
----------------------
telephonic notice of election, which shall be promptly confirmed by a written
notice of election that Effective Prime or the Libor Rate shall apply to all or
any portion of the Loans, which shall, subject to this Agreement, be effective
on the next Interest Adjustment Date, such telecopied or telephonic notice and
written confirmation thereof to be in the form of Exhibit 1.4 and to be received
-----------
by the Agent prior to 12:00 o'clock P.M. on a Business Day and at least three
(3) Business Days prior to an Interest Adjustment Date in the case of a Libor
Loan, and by 12:00 p.m. on an Interest Adjustment Date in the case of a Prime
Rate Loan, each such Interest Rate Election, subject to the terms of this
Agreement to apply to the Advance or the Loan referred to in such Interest Rate
Election or to effect a change in the interest rate on the applicable portion of
the Loans then outstanding, as applicable, with respect to which such Interest
Rate Election was made, such change to occur on the Interest Adjustment Date
next succeeding receipt of such Interest Rate Election by the Agent. Any
Interest Rate Election received by the Agent after 12 o'clock P.M. on a Business
Day shall be deemed, for all purposes of this Agreement to have been received
prior to 12 o'clock P.M. on the next succeeding Business Day.
"Investment" means any investment in any Person whether by means of a
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purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or other means.
"Lender" means Fleet, or any financial institution which hereafter becomes
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a party hereto pursuant to the terms of Section 9.11, each in their individual
------------
capacity, and "Lenders" means Fleet and each of such financial institutions.
"Libor Loan" means any portion of any Loan bearing interest at the Libor
----------
Rate.
"Libor Rate" means, for any Interest Period, the Adjusted Libor Rate in
----------
effect on the first day of such Interest Period (subject to adjustment as
provided in the definition of Adjusted Libor Rate) plus the Applicable Margin
for Libor Loans from time to time in effect.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other) or other security agreement
or preferential arrangement of any kind or nature whatsoever (including without
limitation any conditional sale or other title retention agreement and any
Capitalized Lease Obligation) having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the
applicable Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing.
"Loan Formula Amount" means the lesser of (a) the Revolving Credit Loan
-------------------
Commitment, or (b) an amount equal to eighty percent (80%) of the Net
Outstanding Amount of Eligible Receivables.
"Loans" and "Loan" means at any time the outstanding principal amount of
----- ----
Indebtedness owed to the Lenders or to any lender, as the context may require
pursuant to this Agreement.
9
<PAGE>
"Majority Lenders" means Lenders holding an aggregate Pro Rata Share of the
----------------
outstanding principal balance of the Loans in an amount equal to or in excess of
66.67% of the total outstanding principal balance of the Loans and if there is
no outstanding principal balance of the Loans, Lenders having at least 66.67% of
the Commitment.
"Material Adverse Effect" means material adverse effect on (i) the ability
-----------------------
of the Borrower or any Subsidiary to fulfill their obligations under any of the
Financing Documents or (ii) the Business Condition of the Borrower or any
Subsidiary.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Income" means, for any fiscal period, the net after tax income (loss)
----------
of the Borrower and any Subsidiaries for such period determined on an accrual
and consolidated basis.
"Net Outstanding Amount of Eligible Receivables" means the net amount of
----------------------------------------------
Eligible Receivables outstanding after eliminating from the aggregate amount of
outstanding Eligible Receivables all payments, adjustments and credits
applicable thereto, all as determined by the Agent in its discretion, which
determination shall be final and binding upon the Borrower absent manifest
error.
"New Stockholders" means TA.
----------------
"Note" means any promissory note of the Borrower payable to the order of a
----
Lender and substantially in the form of Exhibit 1.5 or Exhibit 1.6 and
----------- -----------
evidencing all or a portion of the Loan and "Notes" means all of the Notes,
collectively.
"Obligations" mean any and all Indebtedness, obligations and liabilities of
-----------
Borrower and/or any Subsidiaries under any of the Financing Documents to any one
or more of the Lenders and/or the Agent of every kind and description, absolute
or contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including, without limitation, all Loans,
interest, taxes, fees, charges, and expenses under the Financing Documents and
attorneys' fees chargeable to the Borrower and/or any Subsidiaries or incurred
by any of the Lenders and/or the Agent under any of the Financing Documents.
"Officer's Certificate" means a certificate signed by an Authorized
---------------------
Representative and delivered to the Agent on behalf of the Lenders.
"Old Stockholders" means Patrick LePore, Gregory Boron, Chris Sweeney and
----------------
Michael Foti.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
----
to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business Day
----
to the end of such Business Day using Eastern Standard (Daylight Savings) time.
"Permitted Encumbrances" means each Lien granted pursuant to any of the
----------------------
Security Documents, those Liens, security interests and defects in title
permitted under Section 5.2.1 and those Liens listed on Exhibit 1.8 hereto.
------------- -----------
10
<PAGE>
"Person" means an individual, corporation, partnership, limited liability
------
company, joint venture, trust, or unincorporated organization, or a government
or any agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of ERISA
----
maintained for employees of the Borrower or any Commonly Controlled Entity.
"Post-Closing Letter" means that certain letter agreement between the
-------------------
Borrower and the Agent dated the Closing Date and listing certain post-closing
actions to be completed by the Borrower.
"Premises" has the meaning assigned to such term in Section 4.1.22.1.
-------- ----------------
"Prime Rate" means (i) the floating rate of interest per annum designated
----------
from time to time by the Agent as being its "prime rate" of interest, such
interest rate to be adjusted on the effective date of any change thereof by the
Agent, it being understood that such rate of interest may not be the lowest rate
of interest from time to time charged by the Agent or (ii) during the last four
(4) Business Days of each calendar year and the first two (2) Business Days of
the immediately succeeding calendar year, if higher than (i), the Federal Funds
Rate, such interest rate to be adjusted on the effective date of any change
thereof by the Federal Reserve Bank of New York.
"Prime Rate Loan(s)" means any portion of the Loans bearing interest at
------------------
Effective Prime.
"Projections" means the Borrower's and the New Stockholders' written
-----------
projections of Borrower's five-year future performance on a consolidated basis
delivered to the Agent prior to the Closing Date and updated and delivered to
the Agent on the Closing Date.
"Pro Rata Share" means (i) with respect to the Commitment, each Lender's
--------------
percentage share of the Commitment as set forth immediately opposite such
Lender's name on Exhibit 1.9, and (ii) with respect to the Loans, each Lender's
-----------
percentage share of the aggregate outstanding principal balance of the Loans and
"Pro Rata Shares" means such percentage shares of the Lenders.
"Reference Lender(s)" means the Agent unless the Agent resigns said
-------------------
responsibility, at which time and thereafter such term means one or two Lenders
selected by the Agent in its discretion from time to time as a reference lender
for purposes of determining the Adjusted Libor Rate.
"Related Transactions" means the Borrower's receipt of the Equity, the
--------------------
Borrower's repurchase of certain capital stock from certain of the Old
Stockholders on or prior to the Closing Date, the Borrower's issuance of capital
stock to the New Stockholders, the completion of the conditions precedent to
the Borrower's receipt of the Equity as set forth in the Related Transaction
Documents and any other transactions described in the Related Transaction
Documents including those to be completed after the Closing Date.
"Related Transaction Documents" means the documents listed on Exhibit 1.2.
----------------------------- -----------
"Reportable Event" shall have the meaning assigned to that term in Section
----------------
4043 of ERISA for which the requirement of 30 days' notice to the PBGC has not
been waived by the PBGC.
11
<PAGE>
"Request" means a written request for the Loans in the form of Exhibit
------- -------
1.10, received by the Agent on behalf of the Lenders from the Borrower in
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"Revolving Credit Loan" means the revolving credit loans to be made by the
---------------------
Lenders to the Borrower from time to time in the maximum outstanding principal
amount of the Revolving Credit Loan Commitment, all subject and pursuant to
Section 2.1.0.
- -------------
"Revolving Credit Loan Commitment" means the Lenders' several commitments
--------------------------------
to make Revolving Credit Loans to the Borrower in accordance with Section 2.1.0
-------------
and this Agreement and in the maximum outstanding amount of each Lender's Pro
Rata Share of $5,000,000, as such amount may be reduced pursuant to
Section 2.6.4.
- -------------
"Revolving Credit Note" means each revolving credit note of the Borrower,
---------------------
payable to the order of a Lender in the form of Exhibit 1.5 hereto evidencing
-----------
the Indebtedness of the Borrower to such Lender with respect to the Revolving
Credit Loan.
"Revolving Credit Repayment Date" means the earlier to occur of (i)
-------------------------------
December 31, 2001 and (ii) such earlier date on which the Revolving Credit Loan
becomes due and payable pursuant to the terms hereof.
"Section" means, when followed by a number, the section or subsection of
-------
this Agreement bearing that number.
"Security Documents" means any and all documents, instruments and
------------------
agreements now or hereafter providing security for the Loans and any other
Indebtedness of the Borrower or any Subsidiary to any of the Lenders and/or the
Agent, including without limitation the following documents, instruments and
agreements between the Agent and the Borrower or any Subsidiary: any mortgages
on and collateral assignments of real property interests (fee, leasehold and
easement) of the Borrower and any Subsidiary granting Liens thereon; landlord
lien waivers and consents as may be reasonably requested by the Agent; security
agreements granting first Liens on all Borrower's and any Subsidiary's fixtures
and tangible and intangible personal property; collateral assignments of
Borrower's and any Subsidiary's contracts, licenses, permits, easements and
leases; collateral assignments of Borrower's and any Subsidiary's copyrights;
conditional assignments of Borrower's and any Subsidiary's trademarks; any
subordination agreement; any guaranty by a Subsidiary; any pledge of the capital
stock of any Subsidiary; casualty and liability insurance policies providing
coverage to the Agent for the benefit of the Lenders, UCC-1 financing
statements or similar filings perfecting the above-referenced security
interests, pledges and assignments, all as executed, delivered to and accepted
by the Agent on or prior to the Closing Date or subsequent to the Closing Date
as may be required by this Agreement, as any of the foregoing may be amended in
writing by the Agent and any other party or parties thereto.
"Selling Lender" shall have the meaning assigned to such term in Section
-------------- -------
9.11.1.
- ------
"Side Letter" means that certain side letter of even date with this
-----------
Agreement between the Borrower and the Agent regarding certain fees payable by
the Borrower.
"Single Employer Plan" means any Plan as defined in Section 4001(a)(15) of
--------------------
ERISA.
"Stockholders" means, collectively, the Old Stockholders and the New
------------
Stockholders.
12
<PAGE>
"Subsidiary" means any corporation or entity other than the Borrower of
----------
which more than 50% of the outstanding capital stock or voting interests or
rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not at
the time capital stock or voting interests or rights of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by the Borrower or
by the Borrower and/or one or more Subsidiaries or the management of which
corporation or entity is under control of the Borrower and/or any other
Subsidiary, directly or indirectly through one or more Persons and any other
Person which, under GAAP, should at any time for financial reporting purposes be
consolidated or combined with the Borrower and/or any other Subsidiary.
"Substituted Lender" has the meaning set forth in Section 9.11 hereof.
------------------ ------------
"Substitution Agreement" has the meaning assigned to such term in
----------------------
Section 9.11.1.
- --------------
"TA" means any venture capital or other fund or entity for which TA
--
Associates, Inc., a Delaware corporation and/or one or more general partners of
TA Associates, Inc. directly or indirectly through one or more intermediaries
serves as general partner, manager or in a like capacity.
"Term Loan" means the term loan in the aggregate principal amount of
---------
$20,000,000 to be made or maintained by the Lenders pursuant to Section 2.1.1
-------------
hereof.
"Term Note" means a term note of the Borrower payable to the order of a
---------
Lender in the form of Exhibit 1.6 hereto evidencing the Indebtedness of the
-----------
Borrower to such Lender with respect to the Term Loan.
"Term Loan Repayment Date" means the earlier to occur of (i) December 31,
------------------------
2001 and (ii) such earlier date on which the Term Loan becomes due and payable
pursuant to the terms hereof.
"Total Debt Service" means, at any date of determination, the sum of (i)
------------------
Interest Expense and (ii) scheduled and mandatory principal payments for the
fiscal period in question due on account of any Indebtedness of the Borrower,
but excluding any mandatory payments of principal required pursuant to Sections
--------
2.6.1.2, 2.6.1.3, 2.6.1.4, 2.6.1.5 and 2.6.1.6.
- ------- ------- -------- -------- -------
"Unused Fees" has the meaning assigned to such term in Section 2.2.2.
----------- -------------
Section 1.2. Accounting Terms. All accounting terms not specifically
----------- ----------------
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the Borrower's financial statements referred to in Section
-------
4.1.5 (other than departures therefrom not material in their impact), and all
- -----
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP (except, in the case of unaudited financial statements, the
absence of footnotes and that such statements are subject to changes resulting
from year-end adjustments made in accordance with GAAP).
Section 1.3. Other Terms. References to "Articles", "Sections",
----------- -----------
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits and
of this Agreement unless otherwise specifically provided. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or clause
in which the respective word appears; words importing any gender include the
other
13
<PAGE>
genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Financing Document or are otherwise consented to by the Majority Lenders
or the Lenders in accordance with Section 9.5; references to Persons include
-----------
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. The Loans.
----------- ---------
Section 2.1.0. The Revolving Credit Loans. Each of the Lenders
------------- --------------------------
severally agrees, subject to the terms and conditions of this Agreement, to make
Advances of Revolving Credit Loans to the Borrower from time to time after
receipt by the Agent from time to time before the Revolving Credit Repayment
Date of, and at the times provided for in, a Request and an Interest Rate
Election from the Borrower in accordance with this Agreement, during the period
commencing on the Closing Date and ending on the Business Day immediately
preceding the Revolving Credit Repayment Date, in an aggregate principal amount
at any one time outstanding not to exceed the lesser of (i) such Lender's Pro
Rata Share of the Loan Formula Amount less (ii) in each case, such Lender's Pro
Rata Share of the aggregate amount of any reductions of the Loan Commitment made
pursuant to Section 2.6.4.
-------------
Promptly after receipt of a Request and Interest Rate Election, Agent shall
promptly notify each Lender by telephone, telex or telecopy of the proposed
borrowing. Subject to the immediately preceding paragraph, each Lender agrees
that after its receipt of notification from Agent of Agent's receipt of a
Request and Interest Rate Election, such Lender shall send its Pro Rata Share
(or such portion thereof as may be necessary to provide Agent with such Pro Rata
Share in Dollars and in immediately available funds, without consideration or
use of any contra accounts of any Lender) of the requested Loan by wire transfer
to Agent so that Agent receives such Pro Rata Share in Dollars and in
immediately available funds not later than 12:00 P.M. (Boston, Massachusetts
time) on the first day of the Interest Period for any such requested Libor Loan
and on the Business Day for such Advance set forth in Borrower's Request for any
such requested Prime Rate Loan, and Agent shall advance funds to the Borrower by
depositing such funds in Borrower's account with the Agent upon Agent's receipt
of such Pro Rata Shares in the amount of the Pro Rata Shares of such Loan in
Agent's possession. Unless Agent shall have been notified by any Lender (which
notice may be telephonic if confirmed promptly in writing) prior to the first
day of the Interest Period in respect of any Loan which such Lender is obligated
to make under this Agreement, that such Lender does not intend to make available
to Agent such Lender's Pro Rata Share of such Loan on such date, Agent may
assume that such Lender has made such amount available to Agent on such date and
Agent in its sole discretion may, but shall not be obligated to, make available
to the Borrower a corresponding amount on such date. If such corresponding
amount is not in fact made available to Agent by such Lender, Agent shall be
entitled to recover such corresponding amount from such Lender promptly upon
demand by Agent together with interest thereon, for each day from such date
until the date such amount is paid to Agent, at the Federal Funds Rate for three
(3) Business Days and thereafter at the interest
14
<PAGE>
rate on the Loan in question. If such Lender does not pay such corresponding
amount plus any interest accrued thereon forthwith upon Agent's demand therefor,
Agent shall promptly notify the Borrower and the Borrower shall within five (5)
Business Days thereafter pay such corresponding amount plus any interest accrued
thereon to Agent. Nothing contained in this Section shall be deemed to relieve
any Lender from its obligation to fulfill its obligations hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any default by such Lender hereunder.
As soon as is practicable following the close of each month after the
Closing Date and in any event within fifteen (15) days thereafter, the Borrower
will submit to the Agent a borrowing base certificate in the form of
Exhibit 2.1.0 or in such other form as the Agent may from time to time
- -------------
reasonably prescribe, which certificate shall contain information adequate to
identify accounts receivable which the Borrower wishes to include in Eligible
Receivables. Concurrently with each of such reports, and immediately if material
in amount, the Borrower shall notify the Agent of each return or adjustment,
rejection, repossession or loss, theft or damage of or to merchandise
represented by Eligible Receivables and involving amounts in excess of $100,000
in the aggregate or singly or any other collateral for any Indebtedness of the
Borrower to the Agent and/or any Lender and of any credit, adjustment or dispute
arising in connection with the goods or services represented by Eligible
Receivables and involving amounts in excess of $100,000 in the aggregate or
singly. All payments on Eligible Receivables and all adjustments and credits
with respect thereto, whether unilateral, negotiated or otherwise, shall be
immediately reflected in the Net Outstanding Amount of Eligible Receivables.
Section 2.1.1. Term Loans. Each of the Lenders severally agrees, subject
------------- ----------
to the terms and conditions of this Agreement, to make a Term Loan to the
Borrower in the amount of its respective Pro Rata Share of $20,000,000.
Borrower shall pay on the last day of each calendar quarter ending on or in
between the dates set forth below the amount of the Term Loans set forth
immediately opposite such dates below:
<TABLE>
<CAPTION>
Repayment Quarterly
Dates Payment Amount
--------- --------------
<S> <C>
Jan. 1, 1997 through Dec. 31, 1997 $ 250,000
Jan. 1, 1988 through Dec. 31, 1998 $ 500,000
Jan. 1, 1999 through Dec. 31, 1999 $ 750,000
Jan. 1, 2000 through Dec. 31, 2000 $1,000,000
Jan. 1, 2001 through Dec. 31, 2001 $2,500,000
</TABLE>
Section 2.2. Interest and Fees on the Loans.
----------- ------------------------------
Section 2.2.1. Interest. Interest shall accrue and be paid currently
------------- --------
on the Loans at Effective Prime or the Libor Rate for each of the Loans'
Interest Periods in accordance with the Borrower's Interest Rate Elections for
the Loans subject to and in accordance with the terms and conditions of this
Agreement and the Note(s); provided that if a Default or an Event of Default
exists and is continuing, no Interest Rate Election electing the Libor Rate
shall be effective and any Loan or portion thereof with respect to which any
such Interest Rate Election would otherwise have been effective shall bear
interest at Effective Prime plus, so long as an Event of Default exists and is
continuing, two percent (2.00%); all of the foregoing being applicable until
such Default or Event of Default is cured or waived and an Interest Rate
Election electing the Libor Rate for such Loan or portion thereof which is
effective in accordance with this Agreement is submitted to the Agent; and
provided further that the Borrower shall submit Interest Rate Elections so that
on any date on which under Section 2.1.1 a regularly scheduled payment of
-------------
15
<PAGE>
principal of the Term Loans is to be made, at least the amount of the Term Loans
to be so repaid is bearing interest at Effective Prime and/or such payment date
is an Interest Adjustment Date for outstanding Libor Loans in such amount of the
Term Loans. The Borrower shall pay such interest to the Agent for the pro rata
account of each Lender in arrears on the Loans (including without limitation
Libor Loans) outstanding from time to time after the Closing Date, such
payments to be made monthly on the last Business Day of each calendar month of
each year commencing December 31, 1996. All provisions of each Note and any
other agreements between the Borrower and the Lenders are expressly subject to
the condition that in no event, whether by reason of acceleration of maturity of
the Indebtedness evidenced by any Note or otherwise, shall the amount paid or
agreed to be paid to the Lenders which is deemed interest under applicable law
exceed the maximum permitted rate of interest under applicable law (the "Maximum
Permitted Rate"), which shall mean the law in effect on the date of this
Agreement, except that if there is a change in such law which results in a
higher Maximum Permitted Rate, then each Note shall be governed by such amended
law from and after its effective date. In the event that fulfillment of any
provision of any Note, or this Agreement or any document, instrument or
agreement providing security for any Note results in the rate of interest
charged under any Note being in excess of the Maximum Permitted Rate, the
obligation to be fulfilled shall automatically be reduced to eliminate such
excess. If, notwithstanding the foregoing, any Lender receives an amount which
under applicable law would cause the interest rate under any Note to exceed the
Maximum Permitted Rate, the portion thereof which would be excessive shall
automatically be deemed a prepayment of and be applied to the unpaid principal
balance of such Note to the extent of then outstanding Prime Rate Loans and not
a payment of interest and to the extent said excessive portion exceeds the
outstanding principal amount of Prime Rate Loans, said excessive portion shall
be repaid to the Borrower.
Section 2.2.2. Fees. On the Closing Date the Borrower shall pay the
------------- ----
Facility Fee to the Agent. In addition, on the last Business Day of each March,
June, September and December commencing December 31, 1996 and continuing through
the Revolving Credit Repayment Date, the Borrower shall pay to the Agent for the
pro rata account of each Lender, a fee in an amount equal to .50% per annum of
the amount, if any, by which the average actual daily amount of the Revolving
Credit Loan Commitment for the quarterly period just ended (or in the case of
the first such payment, the period from the Closing Date to the date such
payment is due) exceeds the average of the actual daily outstanding principal
balances of the Revolving Credit Loans (the "Unused Fees"). In addition, the
Borrower shall pay to the Agent for its own account certain fees as specified in
the Side Letter.
Section 2.2.3. Increased Costs - Capital. If, after the date hereof,
------------- -------------------------
any Lender shall have reasonably determined that the adoption after the date
hereof of any applicable law, governmental rule, regulation or order regarding
capital adequacy of banks or bank holding companies, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender or such Lender's holding
company with any policy, guideline, directive or request regarding capital
adequacy (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or such Lender's holding company as a consequence
of the obligations hereunder of such Lender to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration the policies of such Lender or such Lender's holding company
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that the capital of such Lender or such Lender's holding
company was fully utilized prior to such adoption, change or compliance) by an
amount reasonably deemed by such Lender to be material, then such Lender shall
notify the
16
<PAGE>
Agent and the Borrower thereof and the Borrower shall pay to the Agent for the
account of such Lender from time to time as specified by such Lender such
additional amounts as shall be sufficient to compensate such Lender for such
reduced return, each such payment to be made by the Borrower within five (5)
Business Days after each demand by such Lender; provided that the liability of
the Borrower to pay such costs shall only accrue with respect to costs accruing
from and after the 180th day prior to the date of each such demand. A
certificate in reasonable detail of one of the officers of such Lender
describing the event giving rise to such reduction and setting forth the amount
to be paid to such Lender hereunder and a computation of such amount shall
accompany any such demand and shall, in the absence of manifest error, be
conclusive. In determining such amount, such Lender shall act reasonably and
will use any reasonable averaging and attribution methods. If the Borrower
shall, as a result of the requirements of this Section 2.2.3 above, be required
-------------
to pay any Lender the additional costs referred to above and the Borrower, in
its sole discretion, shall deem such additional amounts to be material, the
Borrower shall have the right to substitute another bank reasonably satisfactory
to the Agent for such Lender which has certified the additional costs to the
Borrower, and the Agent shall use reasonable efforts at no cost to the Agent to
assist the Borrower to locate such substitute bank. Any such substitution shall
take place in accordance with Section 9.11 and shall otherwise be on terms and
------------
conditions reasonably satisfactory to the Agent, and until such time as such
substitution shall be consummated, the Borrower shall continue to pay such
additional costs. Upon any such substitution, the Borrower shall pay or cause
to be paid to the Lender that is being replaced, all principal, interest (to the
date of such substitution) and other amounts owing hereunder to such Lender and
such Lender will be released from liability hereunder.
Section 2.3. Notations. At the time of (i) the making of each Advance
----------- ---------
evidenced by any Note, (ii) each change in the interest rate under any Note
effected as a result of an Interest Rate Election; and (iii) each payment or
prepayment of any Note, each Lender may enter upon its records an appropriate
notation evidencing (a) such Lender's Pro Rata Share of the Loans and (b) the
interest rate and Interest Adjustment Date applicable thereto or (c) such
payment or prepayment (voluntary or involuntary) of principal and (d) in the
case of payments or prepayments (voluntary or involuntary) of principal, the
portion of the applicable Loan which was paid or prepaid. No failure to make
any such notation shall affect the Borrower's unconditional obligations to repay
the Loans and all interest, fees and other sums due in connection with this
Agreement and/or any Note in full, nor shall any such failure, standing alone,
constitute grounds for disproving a payment of principal by the Borrower.
However, in the absence of manifest error, such notations and each Lender's
records containing such notations shall constitute presumptive evidence of the
facts stated therein, including, without limitation, the outstanding amount of
such Lender's Pro Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records containing
such notations may be introduced in evidence in any judicial or administrative
proceeding relating to this Agreement, the Loans or any Note.
Section 2.4. Computation of Interest. Interest due under this Agreement
----------- -----------------------
and any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Section 2.5. Time of Payments and Prepayments in Immediately Available
----------- ---------------------------------------------------------
Funds.
- -----
Section 2.5.1. Time. All payments and prepayments of principal,
------------- ----
fees, interest and any other amounts owed from time to time under this Agreement
and/or under each Note shall be made to the Agent for the pro rata account of
each Lender at the address referred to in Section 9.6 in Dollars and in
-----------
immediately available funds prior to 12:00 o'clock P.M. on the Business Day that
such payment is due, provided that the Borrower hereby authorizes and instructs
the Agent to charge against the Borrower's accounts with the Agent on each date
on
17
<PAGE>
which a payment is due hereunder and/or under any Note and on any subsequent
date if and to the extent any such payment is not made when due an amount up to
the principal, interest and fees due and payable to the Lenders, the Agent or
any Lender hereunder and/or under any Note and such charge shall be deemed
payment hereunder and under the Note(s) in question to the extent that
immediately available funds are then in such accounts. The Agent shall use
reasonable efforts in accordance with the Agent's customary procedures to give
subsequent notice of any such charge to the Borrower, but the failure to give
such notice shall not affect the validity of any such charge. To the extent
that immediately available funds are then in such accounts, the failure of the
Agent to charge any such account or the failure of the Agent to charge any such
account prior to 12 o'clock P.M. shall not be basis for an Event of Default
under Section 6.1.1 and any amount due on the Loans on such date shall be deemed
-------------
paid; provided that the Agent shall have the right to charge any such account on
any subsequent date for such unpaid payment and an Event of Default shall exist
if sufficient immediately available funds are not in such accounts on the date
the Agent so charges such account after the expiration of any applicable cure
period. In the event of any charge against the Borrower's accounts by the Agent
pursuant to the immediately preceding sentence, the Agent shall use reasonable
efforts to provide notice to the Borrower of such charge in accordance with the
Agent's customary procedures, but the failure to provide such notice shall not
in any way be a basis for any liability of the Agent nor shall such failure
adversely affect the validity and effectiveness of any such action by the Agent.
Any such payment or prepayment which is received by the Agent in Dollars and in
immediately available funds after 12 o'clock P.M. on a Business Day shall be
deemed received for all purposes of this Agreement on the next succeeding
Business Day unless the failure by Agent to receive such funds prior to 12
o'clock P.M. is due to Agent's failure to charge the account of Borrower prior
to 12 o'clock P.M., except that solely for the purpose of determining whether a
Default or Event of Default has occurred under Section 6.1.1, any such payment
-------------
or prepayment, if received by the Agent prior to the close of the Agent's
business on a Business Day, shall be deemed received on such Business Day. All
payments of principal, interest, fees and any other amounts which are owing to
any or all of the Lenders or the Agent hereunder and/or under any of the Notes
that are received by the Agent in immediately available Dollars prior to 12:00
o'clock P.M. on any Business Day shall, to the extent owing to the Lenders other
than the Agent, be sent by wire transfer by the Agent to any such other Lenders
(in each case, without deduction for any claim, defense or offset of any type)
before 3:00 o'clock P.M. on the same Business Day. Each such wire transfer
shall be addressed to each Lender in accordance with the wire instructions set
forth in Exhibit 1.9 hereto. The amount of each payment wired by the Agent to
-----------
each such Lender shall be such amount as shall be necessary to provide such
Lender with its Pro Rata Share of such payment (without consideration or use of
any contra accounts of any Lender), or with such other amount as may be owing to
such Lender in accordance with this Agreement (in each case, without deduction
for any claim, defense or offset of any type). Each such wire transfer shall be
sent by the Agent only after the Agent has received immediately available
Dollars from or on behalf of the Borrower and each such wire transfer shall
provide each Lender receiving same with immediately available Dollars on receipt
by such Lender. Any such payments of immediately available Dollars received by
the Agent after 12:00 o'clock P.M. and before 3:00 o'clock P.M. on any Business
Day shall be forwarded in the same manner by the Agent to such Lender(s) as soon
as practicable on said Business Day, and if any such payments of immediately
available Dollars are received by the Agent after 3:00 o'clock P.M. on a
Business Day, the Agent shall so forward same to such Lender(s) before 10:00
o'clock A.M. on the immediately succeeding Business Day.
Section 2.5.2. Setoff, etc. Regardless of the adequacy of any
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collateral for any of the Obligations, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
18
<PAGE>
deposits (general or special, time or demand, provisional or final) at any time
held and any other Indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower irrespective of whether or not such Lender shall have made any
demand under this Agreement or any Note and although such obligations may be
unmatured. Each such Lender agrees to promptly notify the Borrower and the
Agent after any such setoff and application; provided that the failure to give
such notice shall not affect the validity of such setoff and application.
Promptly following any notice of setoff received by the Agent from a Lender
pursuant to the foregoing, the Agent shall notify each other Lender thereof.
The rights of each Lender under this Section 2.5.2 are in addition to all other
-------------
rights and remedies (including, without limitation, other rights of setoff)
which such Lender may have and are subject to Section 9.12.
------------
Section 2.5.3. Unconditional Obligations and No Deductions. The
------------- -------------------------------------------
Borrower's obligation to make all payments provided for in this Agreement and
the other Financing Documents shall be unconditional. Each such payment shall
be made without deduction for any claim, defense or offset of any type,
including without limitation any withholdings and other deductions on account of
income or other taxes and regardless of whether any claims, defenses or offsets
of any type exist.
Section 2.6. Prepayment and Certain Payments.
----------- -------------------------------
Section 2.6.1. Mandatory Payments.
------------- ------------------
Section 2.6.1.1. In addition to each other principal payment required
---------------
hereunder, the outstanding principal balances of the Term Loans shall be repaid
on the Term Loan Repayment Date and the outstanding principal balances of the
Revolving Credit Loans shall be repaid on the Revolving Credit Repayment Date.
Section 2.6.1.2. On or before the 90th day after the end of each
---------------
fiscal year of the Borrower commencing with the fiscal year ending December 31,
1997, the Borrower shall prepay to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares an amount of the outstanding principal
balances of the Term Loans equal to (i) 60% of the amount, if any, of Excess
Cash Flow for such fiscal year less (ii) voluntary prepayments of the Term Loan
----
made during such fiscal year. Such prepayments shall be in addition to any and
all other mandatory prepayments required hereunder and voluntary payments and
prepayments of the Revolving Credit Loans and shall be applied to the principal
installments of the Term Loans in the inverse order of their maturities except
that the first $5,000,000 of such prepayments of the Term Loans shall be applied
pro rata over the final 4 principal installments of the Term Loans until such
final 4 installments are reduced to $1,250,000 each.
Section 2.6.1.3. In the event that the Borrower or any Subsidiary is
----------------
entitled to receive, collectively, proceeds from any casualty insurance policies
maintained by any of them on account of any interest of the Borrower and/or any
Subsidiary in any property, which proceeds are in an amount in excess of
$100,000 during the term of this Agreement, (a) so long as no Default or Event
of Default exists and is continuing and the Borrower elects to repair, replace
or restore such property, such proceeds shall be retained by the Borrower to the
extent necessary to so repair, replace or restore such property within 3 months
(or as soon as reasonably practicable if such restoration, replacement or repair
is not susceptible to being completed within 3 months) from the date of receipt
of such proceeds or (b) if a Default or Event of Default exists and is
continuing or if the Borrower does not elect to so repair, replace or restore
such property, the Borrower shall make a prepayment of the Term Loans for the
accounts of the Lenders in accordance with their Pro Rata Shares upon written
notice from the Agent. All such prepayments
19
<PAGE>
shall be applied to the principal installments of the Term Loans in the inverse
order of their maturities except that the first $5,000,000 of such prepayments
of the Term Loans shall be applied pro rata over the final 4 principal
installments of the Term Loans until such final 4 installments are reduced to
$1,250,000 each.
Section 2.6.1.4. In the event that the Borrower and/or any Subsidiary
---------------
sells, assigns or otherwise transfers title to any asset other than in the
ordinary course of its business for net cash proceeds in the aggregate since the
Closing Date in excess of $100,000, the Borrower and/or such Subsidiary shall
remit 100% of the net cash proceeds of such sale, assignment or other transfer
to the Agent for the accounts of the Lenders in accordance with their Pro Rata
Shares to be applied to the principal installments of the Term Loans in the
inverse order of their maturities within 10 Business Days of the date of
Borrower's or any Subsidiary's receipt of such net cash proceeds except that the
first $5,000,000 of such prepayments of the Term Loans shall be applied pro rata
over the final 4 principal installments of the Term Loans until such final 4
installments are reduced to $1,250,000 each; provided, however, that Borrower
may sell any of its equipment which is obsolete, worn-out or no longer used or
useful in Borrower's business and Borrower may use the proceeds of such sale to
purchase other equipment which is useful or necessary in the operation of
Borrower's business.
Section 2.6.1.5. In the event that the Borrower and/or any Subsidiary
---------------
files a Form S-1 or any other form of registration statement then available for
registration with the Securities and Exchange Commission (other than an offering
on Form S-8 in respect of employee stock options) or otherwise conducts an
Initial Public Offering of any class of the Borrower's or any Subsidiary's
securities, the Borrower and/or such Subsidiary upon receipt of the net
aggregate cash consideration from the sale of any such registered shares of its
capital stock shall prepay to the Agent for the accounts of the Lenders in
accordance with their Pro Rata Shares an amount equal to the net proceeds (prior
to any redemption of any and all classes of preferred stock of the Borrower) of
such offering.
Section 2.6.1.6. If at any time the aggregate principal amount of the
---------------
Revolving Credit Loans shall exceed the Loan Formula Amount, the Borrower shall
immediately pay to the Agent in immediately available Dollars the amount of such
excess.
Section 2.6.2. Voluntary Prepayments. All or any portion of the
------------- ---------------------
unpaid principal balance of the Loans (other than portions of any Loans
constituting Libor Loans) may be prepaid at any time, without premium or
penalty, by giving the Agent at least 1 Business Day's prior written notice of
such prepayment and by a payment to the Agent for the accounts of the Lenders
in accordance with their Pro Rata Shares of such prepayment in immediately
available Dollars by the Borrower; provided that each such partial payment or
prepayment of principal of the Loans shall be in a principal amount of at least
$100,000 or an integral multiple of $10,000 in excess thereof and provided
further that each such prepayment of the Term Loans shall be applied to the
principal installments of the Term Loans in the inverse order of their
maturities except that the first $5,000,000 of such prepayments of the Term
Loans shall be applied pro rata over the final 4 principal installments of the
Term Loans until such final 4 installments are reduced to $1,250,000 each.
Section 2.6.3. Prepayment of Libor Loans. Notwithstanding anything to
------------- -------------------------
the contrary contained in any Note or in any other agreement executed in
connection herewith or therewith, the Borrower shall be permitted to prepay any
portion of the Loans constituting Libor Loans only in accordance with
Section 2.9 hereof.
- -----------
20
<PAGE>
Section 2.6.4. Permanent Reduction of Commitment. At the Borrower's
------------- ---------------------------------
option the Commitment and the Revolving Credit Loan Commitment may be
permanently and irrevocably reduced in whole or in part by an amount of at least
$100,000 and to the extent in excess thereof in integral multiples of $50,000 at
any time; provided that (i) the Borrower gives the Agent written notice of the
exercise of such option at least three (3) Business Days prior to the effective
date thereof, (ii) the aggregate outstanding balance of the Loans, if any, does
not exceed the Commitment and the aggregate outstanding balance of the Revolving
Credit Loans, if any, does not exceed the Revolving Credit Loan Commitment, both
as so reduced in any such case on the effective date of such reduction and (iii)
the Borrower is not, and after giving effect to such reduction, would not be in
violation of Section 2.6.3. Any such reduction shall concurrently reduce the
-------------
Dollar amount of each Lender's Pro Rata Share of the Commitment and the
Revolving Credit Loan Commitment.
Section 2.7. Payment on Non-Business Days. Whenever any payment to be
----------- ----------------------------
made hereunder or under any Note shall be stated to be due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of fees, if any, and interest under this Agreement and under such Note.
Section 2.8. Use of Proceeds. The Borrower shall use the proceeds of the
----------- ---------------
Term Loans to repurchase capital stock from the Old Stockholders and to pay
costs incurred by the Borrower in connection with the closing of the Loans,
including without limitation, the Facility Fee and costs incurred in connection
with the Related Transactions and shall use the proceeds of the Revolving Credit
Loans to repurchase such capital stock, pay such costs, for Borrower's working
capital needs and for Investments permitted by Section 5.2.12.
--------------
Section 2.9. Special Libor Loan Provisions. The Libor Loans shall be
----------- -----------------------------
subject to and governed by the following terms and conditions:
Section 2.9.1. Requests. Each Request accompanied by an Interest
------------- --------
Rate Election selecting the Libor Rate must be received by the Agent in
accordance with the definition of Interest Rate Election.
Section 2.9.2. Libor Loans Unavailable. Notwithstanding any other
------------- -----------------------
provision of this Agreement, if, prior to or on the date on which all or any
portion of the Loans is to be made as or converted into a Libor Loan, any of the
Lenders (or the Agent with respect to (ii) below) shall reasonably determine
(which determination shall be conclusive and binding on the Borrower), that
(i) Dollar deposits in the relevant amounts and for the relevant
Interest Period are not offered to such Lender in the London interbank
market,
(ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer represent the effective
cost to such Lender for Dollar deposits in the London interbank market for
reasons other than the fact, standing alone, that the Adjusted Libor Rate is
based on an averaging of rates determined by the Agent and that such Lender's
rate may exceed such average,
such Lender may elect not to accept any Interest Rate Election electing a Libor
Loan and such Lender shall notify the Agent by telephone or telex thereof,
stating the reasons therefor, not later
21
<PAGE>
than the close of business on the second Business Day prior to the date on which
such Libor Loan is to be made. The Agent shall promptly give notice of such
determination and the reason therefor to the Borrower, and all or such portion
of the Loans, as the case may be, which are subject to any of Section 2.9.2 (i),
-------------
(ii) or (iii) as a result of such Section Lender's determination shall be made
as or converted into, as the case may be, Prime Rate Loans and such Lender shall
have no further obligation to make Libor Loans, until further written notice to
the contrary is given by the Agent to the Borrower. If such circumstances
subsequently change so that such Lender shall no longer be so affected, such
Lender's obligation to make or maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans shall be reinstated when such Lender obtains actual
knowledge of such change of circumstances and promptly after obtaining such
actual knowledge such Lender shall forward written notice thereof to the Agent.
After receipt of such notice, the Agent shall promptly forward written notice
thereof to the Borrower. Upon or after receipt by the Borrower of such written
notice, the Borrower may submit an Interest Rate Election in accordance with
this Agreement electing an Interest Period ending no later than the Interest
Adjustment Date for the then current Interest Period for the other Lenders' Pro
Rata Shares of Libor Loans and electing the Libor Rate for such Lenders' or
Lender's Pro Rata Share(s) of the Loans as to which such Lender's or Lenders'
obligation(s) to make or maintain its or their Pro Rata Share(s) of the Loans as
Libor Loans was suspended and such Pro Rata Share(s) shall be converted to Libor
Loans in accordance with this Agreement. During any period throughout which any
of the Lenders has or have no obligation to make or maintain its or their Pro
Rata Share(s) of the Loans as Libor Loans, no Interest Rate Elections electing
the Libor Rate shall be effective with regard to the Loans to the extent of the
Pro Rata Share(s) of such Lender(s), but shall be effective as to the other
Lenders.
Section 2.9.3. Libor Lending Unlawful. In the event that any change
------------- ----------------------
in applicable laws or regulations (including the introduction of any new
applicable law or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory authority
charged with the administration thereof, shall make it unlawful for any of the
Lenders to make or continue to maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans, each such Lender shall promptly notify the Agent by
telephone or telex thereof, and of the reasons therefor, and the obligation of
such Lender to make or maintain its Pro Rata Share of the Loans or such portion
thereof as Libor Loans shall, upon the happening of such event, terminate and
the Agent shall, by telephonic notice to the Borrower, declare that such
obligation has so terminated with respect to such Lender, and such Pro Rata
Share of the Loans or any portion thereof to the extent then maintained as Libor
Loans, shall, on the last day on which such Lender can lawfully continue to
maintain such Pro Rata Share of the Loans or any portion thereof as Libor Loans,
automatically convert into Prime Rate Loans without additional cost to the
Borrower. If circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or maintain its Pro Rata
Share of all or any portion of the Loans as Libor Loans shall be reinstated when
such Lender obtains actual knowledge of such change of circumstances, and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent. After receipt of such notice, the Agent shall
promptly forward written notice thereof the Borrower. Upon or after receipt by
the Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make or
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate
22
<PAGE>
shall be effective with regard to the Loans to the extent of the Pro Rata
Share(s) of such Lender(s), but shall be effective as to the other Lenders.
Section 2.9.4. Additional Costs on Libor Loans. The Borrower further
------------- -------------------------------
agrees to pay to the Agent for the account of the applicable Lender or Lenders
such amounts as will compensate any of the Lenders for any increase in the cost
to such Lender of making or maintaining (or of its obligation to make or
maintain) all or any portion of its Pro Rata Share of the Loans as Libor Loans
and for any reduction in the amount of any sum receivable by such Lender under
this Agreement in respect of making or maintaining all or any portion of such
Lender's Pro Rata Share of the Loans as Libor Loans, in either case, from time
to time by reason of:
(i) any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Lender, under or pursuant to any law, treaty, rule, regulation (including,
without limitation, any Regulations of the Board of Governors of the Federal
Reserve System) or requirement in effect on or after the date hereof, any
interpretation thereof by any governmental authority charged with
administration thereof or by any central bank or other fiscal or monetary
authority or other authority, or any requirement imposed by any central bank
or such other authority whether or not having the force of law; or
(ii) any change in (including the introduction of any new) applicable
law, treaty, rule, regulation or requirement or in the interpretation thereof
by any official authority, or the imposition of any requirement of any
central bank, whether or not having the force of law, which shall subject
such Lender to any tax (other than taxes on net income imposed on such
Lender), levy, impost, charge, fee, duty, deduction or withholding of any
kind whatsoever or change the taxation of such Lender with respect to making
or maintaining all or any portion of its Pro Rata Share of the Loans as Libor
Loans and the interest thereon (other than any change which affects, and to
the extent that it affects, the taxation of net income of such Lender);
provided, that with respect to any withholding the foregoing shall not apply
to any withholding tax described in sections 1441, 1442 or 3406 of the Code,
or any succeeding provision of any legislation that amends, supplements or
replaces any such section, or to any tax, levy, impost, duty, charge, fee,
deduction or withholding that results from any noncompliance by a Lender with
any federal, state or foreign law or from any failure by a Lender to file or
furnish any report, return, statement or form the filing or furnishing of
which would not have an adverse effect on such Lender and would eliminate
such tax, impost, duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent thereof, and of
the reasons therefor, and the Agent shall promptly notify the Borrower thereof
in writing stating the reasons provided to the Agent by such Lender therefor and
the additional amounts required to fully compensate such Lender for such
increased or new cost or reduced amount as reasonably determined by such Lender.
Such additional amounts shall be payable on each date on which interest is to be
paid hereunder or, if there is no outstanding principal amount under any of the
Notes, within 10 Business Days after the Borrower's receipt of said notice.
Such Lender's certificate as to any such increased or new cost or reduced amount
(including calculations, in reasonable detail, showing how such Lender computed
such cost or reduction) shall be submitted by the Agent to the Borrower and
shall, in the absence of manifest error, be conclusive. In determining any such
amount, the Lender(s) may use any reasonable averaging and attribution methods.
Notwithstanding anything to the contrary set forth above, the Borrower shall not
be obligated to pay any amounts pursuant to this Section 2.9.4 as a result of
-------------
any requirement or change referenced above with respect to any period prior to
the one hundred and eightieth (180th)
23
<PAGE>
day prior to the date on which the Borrower is first notified thereof (other
than any amounts which relate to any such requirement or change which is adopted
with retroactive effect in which case the Borrower shall be obligated to pay all
such amounts accrued from the date as of which such requirement or change is
retroactively effective) unless the failure to give such notice within such one
hundred and eighty (180) day period resulted from reasonable circumstances
beyond such Lender's reasonable control.
Section 2.9.5. Libor Funding Losses. In the event that any payment
------------- --------------------
or prepayment of a Libor Loan is received on a date other than the last day of
an Interest Period, such payment or prepayment shall be held by the Agent in a
separate interest-bearing account and be pledged to the Agent as collateral for
the obligations of the Borrower arising in connection with this Agreement, the
Notes and the other Financing Documents until the end of the then current
Interest Period, at which time the Agent shall apply such payment or prepayment
plus all interest accrued thereon, for the accounts of the Lenders in accordance
with their Pro Rata Shares, to the outstanding Libor Loans. Notwithstanding the
foregoing, in the event any of the Lenders shall incur any loss or expense
(including, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund or maintain all or any portion of the Loans as Libor Loans) as a result
of:
(i) payment or prepayment by the Borrower of all or any portion of
any Libor Loan on a date other than the Interest Adjustment Date for such
Libor Loan, for any reason; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor Loan to a Prime
Rate Loan prior to the end of any Interest Period or to imply such right;
(ii) conversion of all or any portion of any Libor Loan on a day
other than the last day of an Interest Period applicable to such Loan to a
Prime Rate Loan for any reason including, without limitation, acceleration of
the Loans upon or after an Event of Default, any Interest Rate Election or
any other cause whether voluntary or involuntary and whether or not referred
to or described in this Agreement, other than any such conversion resulting
solely from application of Sections 2.9.2 or 2.9.3 by any Lender; or
-------------- -----
(iii) any failure by the Borrower to borrow the Loans as Libor Loans
on the date specified in any Interest Rate Election selecting the Libor Rate,
other than any such failure resulting solely from application of Sections
--------
2.9.2 or 2.9.3 by any Lender;
----- -----
such Lender shall promptly notify the Agent thereof, and of the reasons
therefor. Upon the request of the Agent, the Borrower shall pay directly to the
Agent for the account of such Lender such amount as will (in the reasonable
determination of such Lender, which shall be correct in the absence of manifest
error) reimburse such Lender for such loss or expense. Each Lender shall
furnish to the Borrower, upon written request from the Borrower received by the
Agent, a written statement setting forth the computation of any such amounts
payable to such Lender under this Section 2.9.5.
-------------
Section 2.9.6. Banking Practices. Each Lender agrees that upon the
------------- -----------------
occurrence of any of the events described in Sections 2.2.3 and/or 2.9.2, 2.9.4
-------------- ----- -----
or 2.9.5, such Lender will exercise all reasonable efforts to take such
-----
reasonable actions at no expense to such Lender (other than reasonable expenses
which are covered by the Borrower's advance deposit of funds with such Lender
for such purpose, or if such Lender agrees, which the Borrower has agreed to pay
or reimburse to such Lender in full upon demand), in accordance with such
Lender's usual banking practices in such situations and subject to any statutory
or regulatory requirements applicable to such Lender, as such Lender may take
without the consent or participation of any other Person to,
24
<PAGE>
in the case of an event described in Sections 2.2.3 and/or 2.9.4 or 2.9.5,
-------------- ----- -----
mitigate the cost of such events to the Borrower and, in the case of an event
described in Sections 2.9.2(i), (ii) or (iii), to seek Dollar deposits in
----------------- ---- -----
any other interbank Libormarket in which such Lender regularly participates and
in which the applicable determination(s) described in Sections 2.9.2(i), (ii)
----------------- ----
or (iii), as the case may be, does not apply.
-----
Section 2.9.7. Borrower's Options on Unavailability or Increased Cost
------------- ------------------------------------------------------
of Libor Loans. In the event of any conversion of all or any portion of any
- --------------
Lender's Pro Rata Share of any Libor Loans to a Prime Rate Loan for reasons
beyond the Borrower's control or in the event that any Lender's Pro Rata Share
of all or any portion of the Libor Loans becomes subject, under Sections 2.9.4
--------------
or 2.9.5, to additional costs, the Borrower shall have the option, subject to
-----
the other terms and conditions of this Agreement, to convert such Lender's Pro
Rata Share to a Prime Rate Loan by making Interest Rate Elections for Interest
Periods which (i) end on the Interest Adjustment Date for such Libor Loan or
(ii) end on Business Days occurring prior to such Interest Adjustment Date, in
which case, at the end of the last of such Interest Periods any such Libor Rate
Loan shall automatically convert to a Prime Rate Loan and the Borrower shall
have no further right to make an Interest Rate Election with respect to such
Prime Rate Loan other than an Interest Rate Election which is effective on the
Interest Adjustment Date for such Libor Loan. The Borrower's options set forth
in this Section 2.9.7 may be exercised, if and only if the Borrower pays,
-------------
concurrently with delivery to the Agent of each such Interest Rate Election and
thereafter in accordance with Sections 2.9.4, 2.9.5 and 2.9.6 all amounts
-------------- ----- -----
provided for therein to the Agent in accordance with this Agreement.
If the Borrower shall, as a result of the requirements of Section
-------
2.9.4 above, be required to pay any Lender the additional costs referred to
- -----
therein, but not be required to pay such additional costs to the other Lender or
Lenders and the Borrower, in its sole discretion, shall deem such additional
amounts to be material or in the event that Libor Loans from a Lender are
unavailable to the Borrower as a result solely of the provisions of Sections
--------
2.9.2, 2.9.3 or 2.9.4, but are available from the other Lender or Lenders, the
- ----- ----- -----
Borrower shall have the right to substitute another bank satisfactory to the
Agent for such Lender which is entitled to such additional costs or which is
relieved from making Libor Loans and the Agent shall use reasonable efforts
(with all reasonable costs of such efforts by the Agent to be borne by the
Borrower) to assist the Borrower to locate such substitute bank. Any such
substitution shall take place in accordance with Section 9.11 and otherwise be
------------
on terms and conditions reasonably satisfactory to the Agent, and until such
time as such substitution shall be consummated, the Borrower shall continue to
pay such additional costs and comply with the above-referenced Sections. Upon
any such substitution, the Borrower shall pay or cause to be paid to the Lender
that is being replaced, all principal, interest (to the date of such
substitution) and other amounts owing hereunder to such Lender and such Lender
will be released from liability hereunder.
Section 2.9.8. Assumptions Concerning Funding of Libor Loans. The
------------- ---------------------------------------- -----
calculation of all amounts payable to the Lenders under this Section 2.9 shall
-----------
be made as though each Lender actually funded its relevant Libor Loans through
the purchase of a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America; provided, however, that each Lender may
fund each of its Libor Loans in any manner it sees fit and the foregoing
assumption shall be utilized solely for the calculation of amounts payable under
this Section 2.9.
-----------
Section 2.10. Interest Rate Protection. On or before the 60/th/ day after
------------ ------------------------
the Closing Date, the Borrower shall enter into an interest rate protection
arrangement covering not less than fifty
25
<PAGE>
percent (50%) of the then outstanding principal balance of the Term Loans. Such
interest rate protection arrangement may consist of any one or a combination of
the following: (i) the purchase of an interest rate swap arrangement from a
financial institution reasonably acceptable to the Majority Lenders covering
such Loans effectively converting the Borrower's interest payment obligations
with respect to such portion of the Term Loans to a fixed rate per annum equal
to the Libor Rate as of the Closing Date, plus four and one-quarter percent
(4.25%) for a term expiring not earlier than February 3, 1998 or (ii) the
purchase of an interest rate cap from a financial institution reasonably
acceptable to the Majority Lenders covering such Loans at a cap rate per annum
equal to the Libor Rate as of the Closing Date, plus four and one-quarter
percent (4.25%) for a term expiring not earlier than February 3, 1998. The other
terms and conditions of any such interest rate swap or interest rate cap shall
be reasonably satisfactory to the Majority Lenders.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Commitment and to all Loans.
----------- -------------------------------------------------------
Section 3.1.1. The Commitment and Initial Loans. The Commitment and
------------- --------------------------------
the obligation of the Lenders to make the initial Advances of the Loans are
subject to performance by the Borrower of all of its obligations under this
Agreement and to the satisfaction (or waiver) of the conditions precedent that
all legal matters incident to the transactions contemplated hereby or incidental
to the Loans shall be reasonably satisfactory to counsel for the Agent and that
the Lenders shall have received on or before the Closing Date all of the
following, each dated the Closing Date or another date reasonably acceptable to
the Lenders and each to be in form and substance reasonably satisfactory to the
Agent or if any of the following is not a deliverable, the satisfaction of such
condition in form and substance reasonably satisfactory to the Agent:
Section 3.1.1.1. The Financing Documents, including, without
---------------
limitation, those hereinafter set forth and the Borrower's and any Subsidiary's
certificate of incorporation or other organizational documents.
Section 3.1.1.2. Certificate of the secretary of the Borrower and
---------------
each Subsidiary certifying as to the resolutions of the shareholders or board of
directors of the Borrower and each Subsidiary authorizing and approving each of
the Financing Documents to which the Borrower and each Subsidiary is a party and
other matters contemplated hereby and certifying as to the names and signatures
of the Authorized Representative(s) of the Borrower and each Subsidiary
authorized to sign each Financing Document to be executed and delivered by or on
behalf of the Borrower and each Subsidiary. The Agent and the Lenders may
conclusively rely on each such certificate until the Agent shall receive a
further certificate canceling or amending the prior certificate and submitting
the signatures of the Authorized Representative(s) named in such further
certificate.
Section 3.1.1.3. Favorable opinions of Goodwin, Proctor & Hoar,
---------------
LLP, counsel for the Borrower, in form and substance reasonably satisfactory to
the Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
---------------
Section 3.1.1.4.1. The representations and warranties
-----------------
contained in Section 4.1 and/or contained in any of the other Financing
Documents are correct on and as of the Closing Date as though made on and
- -----------
as of such date; and
26
<PAGE>
Section 3.1.1.4.2. No Default or Event of Default has occurred
-----------------
and is continuing, or would result from the making of the Loans.
Section 3.1.1.4.3. No Material Adverse Effect has occurred
-----------------
since the date of the Borrower's most recent audited financial statements
delivered to the Lenders except as set forth or reflected in the financial
statements described in Section 4.1.5 or otherwise disclosed in writing and
-------------
acceptable to the Agent.
Section 3.1.1.5. Certificates of good standing or legal
---------------
existence of the secretaries of state of the states of organization and
qualification of and covering the Borrower and any Subsidiaries dated reasonably
near the Closing Date.
Section 3.1.1.6. Evidence that (i) the ownership interests in
---------------
the Borrower are as set forth in Exhibit 1.1, (ii) the New Stockholders have
-----------
invested the Equity in the Borrower on or prior to the Closing Date, as set
forth on Exhibit 1.1 and (iii) that except for receipt and application of
-----------
certain proceeds of the Loans and except for certain actions required to be
completed after the Closing Date, the Related Transactions have been completed
in accordance with the Related Transaction Documents.
Section 3.1.1.7. A Request and an Interest Rate Election.
---------------
Section 3.1.1.8. All documents, instruments and agreements
---------------
necessary to terminate, cancel and discharge the documents, instruments and
agreements evidencing or securing any and all existing Indebtedness of the
Borrower and any Subsidiary and Liens securing such Indebtedness other than
those listed in Exhibit 3.1.1.8.
---------------
Section 3.1.1.9. Payment to the Agent and the Lenders of the
---------------
fees specified in this Agreement or in the Side Letter as being payable on the
Closing Date and all reasonable out-of-pocket costs and expenses incurred by the
Agent in connection with the transactions contemplated hereby, including, but
not limited to, reasonable outside legal expenses and any accounting fees,
auditing fees, appraisal fees, and other fees associated with any independent
analyses of the Borrower and any Subsidiary and evidence that all other
reasonable fees and costs payable by the Borrower in connection with the
transactions contemplated by this Agreement and completed on the Closing Date
have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of
----------------
Exhibit 3.1.1.10, duly completed and reflecting, inter alia, compliance by the
- ---------------- ----- ----
Borrower as of the opening of business on the first Business Day after the
Closing Date but based on the Borrower's financial information as of the last
day of the Borrower's most recent fiscal quarter, adjusted to give effect to the
Loans made on the Closing Date and completion of the Related Transactions to be
completed on or prior to the Closing Date, with the financial covenants provided
for herein.
Section 3.1.1.11. Such other information about the Borrower
----------------
and/or its Business Condition as the Lenders may reasonably request.
Section 3.1.1.12. True copies of, and/or true copies of any
----------------
revisions to, the financial statements described in Section 4.1.5, the
-------------
Projections, the pro forma Closing Date financial statements giving effect to
the Loans, and other information provided pursuant to Section 4.1.5 and
-------------
certification by the Borrower of the Projections.
27
<PAGE>
Section 3.1.1.13. Certificates of fire, business interruption,
----------------
liability and extended coverage insurance policies, each such policy to name the
Agent as mortgagee and loss payee and, on all liability policies, as additional
insured.
Section 3.1.1.14. True descriptions of any pending or threatened
----------------
litigation against or by Borrower or any Subsidiary.
Section 3.1.1.15. Evidence that all necessary material third
----------------
party consents have been obtained and all required filings with any governmental
authority have been duly completed.
Section 3.1.1.16. [Intentionally omitted.]
----------------
Section 3.1.1.17. True copies of the Equity Documents and all
----------------
documents, instruments and agreements relating to the Borrower's capital
structure and the Related Transaction Documents.
Section 3.1.1.18. The fact that the representations and
----------------
warranties of the Borrower contained in Article 4, infra, and in each of the
-----
other Financing Documents are true and correct in all material respects on and
as of the Closing Date except as altered hereafter by actions not prohibited
hereunder. The Borrower's delivery of each Note to the Lenders and of each
Request to the Agent shall be deemed to be a representation and warranty by the
Borrower as of the date thereof to such effect.
Section 3.1.1.19. That there has been no enactment of any law
----------------
by any governmental authority having jurisdiction over the Agent or any Lender
which would make it unlawful in any respect for such Lender to make the Loans
and no Material Adverse Effect has occurred.
Section 3.1.1.20. Evidence that the Borrower has converted from a
----------------
subchapter S corporation to a subchapter C corporation in accordance with the
Code.
Section 3.1.1.21. Evidence that each employee of the borrower
----------------
required by the Related Transaction Documents to enter into an employment,
noncompetition and/or confidentiality and proprietary rights agreement has so
entered into such agreement.
Section 3.1.2. The Commitment and the Loans. The Commitment and the
------------- ----------------------------
obligation of each Lender to make or maintain its Pro Rata Share of any Advance
or Loan after the Closing Date are subject to the satisfaction of the following
conditions precedent:
(a) The fact that, immediately prior to and upon the making of each
Loan, no Event of Default or Default shall have occurred and be continuing;
(b) The fact that the representations and warranties of the Borrower
contained in Article 4, infra and in each of the other Financing Documents, are
-----
true and correct in all material respects on and as of the date of each Advance
or Loan except as altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders and of each
Request to the Agent shall be deemed to be a representation and warranty by the
Borrower as of the date of such Advance or Loan as to the facts specified in
Sections 3.1.2(a) and (b);
- ----------------- ---
28
<PAGE>
(c) Receipt by Agent on or prior to the Business Day specified in the
definition of Interest Rate Election of a written Request stating the amount
requested for the Loan or Advance in question and an Interest Rate Election for
such Loan or Advance, all signed by a duly authorized officer of the Borrower on
behalf of the Borrower;
(d) That there exists no law or regulation by any governmental
authority having jurisdiction over the Agent or any of the Lenders which would
make it unlawful in any respect for such Lender to make its Pro Rata Share of
the Loan or Advance, including, without limitation, Regulations U, T, G and X of
the Board of Governors of the Federal Reserve System and no Material Adverse
Effect has occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The Borrower
----------- ----------------------------------------------
represents and warrants to the Agent and the Lenders that, after giving effect
to the Loans and the application of the proceeds thereof (which representations
and warranties shall survive the making of the Loans) as follows:
Section 4.1.1. Organization and Existence. The Borrower and any
------------- --------------------------
Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and is
duly qualified to do business in all jurisdictions in which such qualification
is required, all as noted on Exhibit 4.1.1, except where failure to so qualify
-------------
would not have a Material Adverse Effect, and has all requisite corporate power
and authority to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under the Financing Documents.
Section 4.1.2. Authorization and Absence of Defaults. Except as
------------- -------------------------------------
described on Exhibit 4.1.2, the execution, delivery to the Agent and/or the
-------------
Lenders and performance by the Borrower and any Subsidiary of the Financing
Documents and Related Transaction Documents have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the shareholders or board of directors of the Borrower or any
Subsidiary which has not been obtained, (ii) violate any provision of any law,
rule, regulation (including, without limitation, Regulations U and X of the
board of governors of the federal reserve system), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower and/or any Subsidiary and/or the certificate of
incorporation or by-laws, as applicable, of the Borrower and/or any Subsidiary,
(iii) result in a material breach of or constitute a material default under any
indenture or loan or credit agreement or any other agreement lease or instrument
to which the Borrower and/or any Subsidiary is or are a party or parties or by
which it or they or its or their properties may be bound or affected; or (iv)
result in, or require, the creation or imposition of any Lien on a material
portion of the Borrower's and/or any Subsidiary's respective properties or
revenues other than Liens granted to the Agent by any of the Financing Documents
securing the Obligations. The Borrower and any Subsidiary are in compliance
with any such applicable law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, other
agreement, lease or instrument, except where the failure to be in compliance
does not have a Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on Exhibit
------------- ----------------------- -------
4.1.3, no authorization, consent, approval, license, exemption of or filing or
- -----
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or
29
<PAGE>
foreign, other than those which have been obtained, is or will be necessary to
the valid execution and delivery to the Agent and/or the Lenders or performance
by the Borrower or any Subsidiary of any Financing Documents and each of the
foregoing which has been obtained is in full force and effect.
Section 4.1.4. Validity and Enforceability. Each of the Financing
------------- ---------------------------
Documents when delivered hereunder will constitute the legal, valid and binding
obligations of each of the Borrower and any Subsidiary which is or are a party
thereto enforceable against the Borrower, and any Subsidiary which is or are a
party thereto in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of general principles of
equity and bankruptcy and similar laws affecting the rights and remedies of
creditors generally.
Section 4.1.5. Financial Information. The following information with
------------- ---------------------
respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the
---------------
Borrower for the periods ended December 31, 1994 and December 31, 1995 and
unaudited internally prepared financial statements of the Borrower for the nine-
month periods ending September 30, 1995 and September 30, 1996;
Section 4.1.5.2. The Projections.
---------------
Section 4.1.5.3. The pro forma financial statements of the Borrower
---------------
as of the Closing Date provided pursuant to Section 3.1.1.12.
----------------
Each of the financial statements referred to above in
Section 4.1.5.1 was prepared in accordance with GAAP (subject, in the case of
- ---------------
interim statements, to the absence of footnotes and normal year-end adjustments)
applied on a consistent basis, except as stated therein or in Exhibit 4.1.5. To
-------------
the best of the Borrower's knowledge, each of the financial statements referred
to above in Sections 4.1.5.1 and 4.1.5.3 fairly presents the financial condition
---------------- -------
or pro forma financial condition, as the case may be, of the Person being
reported on at such dates and is complete and correct in all material respects
and no Material Adverse Effect has occurred since the date thereof. The
Projections were prepared by the Borrower and the New Stockholders in good faith
and in light of the past business of the Borrower and any Subsidiaries based on
certain assumptions, the material ones of which are attached to the Projections.
The Borrower believes that those assumptions are reasonable in all material
respects as of the Closing Date. The Projections were prepared in accordance
with practices usually followed in the preparation of accounting projections in
good faith and the regular course of an ongoing business.
Section 4.1.6. No Litigation. There are no actions, suits or
------------- -------------
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower and/or any Subsidiary or any of their properties before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if determined adversely to the
Borrower and/or any Subsidiary would draw into question the legal existence of
the Borrower and/or any such Subsidiary and/or the validity, authorization
and/or enforceability of any of the Financing Documents and/or any provision
thereof and/or could have a Material Adverse Effect except those matters, if
any, described on Exhibit 4.1.6.
-------------
Section 4.1.7. Regulation U. The Borrower is not engaged in the
------------- ------------
business of extending credit for the purpose of purchasing or carrying "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), does not own and has no present
intention of acquiring any such margin stock or a "margin security"
30
<PAGE>
within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 CFR, Part 207). None of the proceeds of the Loans will be
used directly or indirectly by the Borrower for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry, any such margin security or margin
stock or for any other purpose which might constitute the transaction
contemplated hereby a "purpose credit" within the meaning of said Regulation G
or Regulation U, or cause this Agreement to violate any other regulation of the
Board of Governors of the Federal Reserve System or the Securities and Exchange
Act of 1934, as amended, or any rules or regulations promulgated under either
said statute.
Section 4.1.8. Absence of Adverse Agreements. Neither the Borrower
------------- -----------------------------
nor any Subsidiary is a party to any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any corporate or
partnership restriction which has a Material Adverse Effect.
Section 4.1.9. Taxes. The Borrower and each Subsidiary has filed all
------------- -----
tax returns (federal, state and local) required to be filed and paid all taxes
shown thereon to be due, including interest and penalties, except for those
taxes, if any, which are being contested in good faith and by appropriate
proceedings, and for which proper reserve or other provision has been made in
accordance with GAAP and except where any failure to file or pay would not have
a Material Adverse Effect on the Borrower or any Subsidiary and except as
described in Exhibit 4.1.9.
-------------
Section 4.1.10. ERISA. Neither Borrower nor any Commonly Controlled
-------------- -----
Entity maintain, contributes to, or is required to make or accrue a contribution
or has within any of the six preceding years maintained, contributed to or been
required to make or accrue a contribution to any Plan subject to regulation
under Title IV of ERISA, any Plan that is subject to the minimum funding
requirements of Section 412 of the Code or Section 302 of ERISA, or any
Multiemployer Plan.
Section 4.1.11. Ownership of Properties.
-------------- -----------------------
Section 4.1.11.1. Except for Permitted Encumbrances, Borrower and
----------------
any Subsidiary has good title to all of its properties and assets, including
without limitation, the Database free and clear of all restrictions and Liens of
any kind other than those which could not have a Material Adverse Effect.
Section 4.1.11.2. Exhibit 4.1.11 accurately and completely lists
---------------- --------------
the location of all real property owned or leased by Borrower or any Subsidiary.
Borrower and each Subsidiary enjoys quiet possession under all material leases
of real property to which it is a party as a lessee, and all of such leases are
to Borrower's knowledge valid, subsisting and, in full force and effect.
Section 4.1.11.3. To Borrower's knowledge, except as specified in
----------------
Exhibit 4.1.11, none of the real property occupied by Borrower or any Subsidiary
- --------------
is located within any federal, state or municipal flood plain zone.
Section 4.1.11.4. Except as set forth in Exhibit 4.1.11, all of the
---------------- --------------
material properties used in the conduct of the Borrower's and each Subsidiary's
business (i) are in good repair, working order and condition (reasonable wear
and tear excepted) and reasonably suitable for use in the operation of
Borrower's, and each Subsidiary's business; and (ii) to Borrower's knowledge are
currently operated and maintained, in all material respects, in accordance with
the requirements of applicable governmental authorities.
31
<PAGE>
Section 4.1.12. Accuracy of Representations and Warranties. None of
-------------- ------------------------------------------
Borrower's representations or warranties set forth in this Agreement or in any
document or certificate furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make any statement
of fact contained herein or therein, in light of the circumstances under which
it was made, not misleading; except that unless provided otherwise any such
document or certificate which is dated speaks as of the date stated and not the
present.
Section 4.1.13. No Investment Company. Neither the Borrower nor any
-------------- ---------------------
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, which is required to register thereunder.
Section 4.1.14. Solvency, etc. After giving effect to the
-------------- -------------
consummation of each Loan outstanding and to be made under this Agreement as of
the time this representation and warranty is given, the Borrower (a) will be
able to pay its debts as they become due, (b) will have funds and capital
sufficient to carry on its business and all businesses in which it is about to
engage, and (c) will own property in the aggregate having a value both at fair
valuation and at fair saleable value in the ordinary course of the Borrower's
business greater than the amount required to pay its Indebtedness, including for
this purpose unliquidated and disputed claims. The Borrower will not be
rendered insolvent by the execution and delivery of this Agreement and the
consummation of any transactions contemplated herein.
Section 4.1.15. [Intentionally omitted.]
--------------
Section 4.1.16. Ownership Interests. The schedule of ownership
-------------- -------------------
interests in the Borrower and any Subsidiaries set forth in Exhibit 1.1 is true,
-----------
accurate and complete and the Investments to be made for all ownership interests
disclosed therein have in fact been fully paid in immediately available Dollars
after giving effect to the closing of the Related Transactions.
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc.
-------------- --------------------------------------------------
Exhibit 4.1.17 accurately and completely describes all permits, governmental
- --------------
licenses, registrations and approvals, material to carrying out of Borrower's
and each of the Subsidiaries' businesses as presently conducted and as required
by law or the rules and regulations of any federal, foreign governmental, state,
or governmental agency, body, instrumentality or commission having jurisdiction
over the Borrower or any of the Subsidiaries, including but not limited to the
United States Environmental Protection Agency, the United States Department of
Labor, the United States Occupational Safety and Health Administration, the
United States Equal Employment Opportunity Commission, the United States
Department of Health and Human Services, the Federal Trade Commission and the
United States Department of Justice and analogous and related state and foreign
agencies and the Pharmaceutical Manufacturers' Association and the American
Medical Association. To Borrower's knowledge, all existing authorizations,
licenses and permits are in full force and effect, are duly issued in the name
of, or validly assigned to the Borrower or a Subsidiary and the Borrower or a
Subsidiary has full power and authority to operate thereunder in all material
respects. There is no material violation or material failure of compliance or,
to Borrower's knowledge, allegation of such violation or failure of compliance
on the part of the Borrower or any Subsidiary with any of the foregoing permits,
licenses, registrations, approvals, rules or regulations and there is no action,
proceeding or investigation pending or to the knowledge of the Borrower
threatened nor has the Borrower or any Subsidiary received any notice of such
which might result in the termination or suspension
32
<PAGE>
of any such permit, license, registration or approval which in any case would
have a Material Adverse Effect.
Section 4.1.18. Principal Place of Business; Books and Records. The
-------------- ----------------------------------------------
Borrower's chief executive offices are located at Borrower's addresses set forth
in Section 9.6. All of the Borrower's books and records are kept at one or more
-----------
of its addresses set forth in Section 9.6.
-----------
Section 4.1.19. Subsidiaries. The Borrower has only the Subsidiaries
-------------- ------------
identified on Exhibit 1.1.
-----------
Section 4.1.20. Copyright. Except as set forth in Exhibit 4.1.20 the
-------------- --------- --------------
Borrower has not violated any of the provisions of the Copyright Revision Act of
1976, 17 U.S.C. '101, et seq.
-- ---
Section 4.1.21. Environmental Compliance. Neither the Borrower nor,
-------------- ------------------------
to the knowledge of the Borrower, any other Person:
Section 4.1.21.1. has ever caused, permitted, or suffered to exist
----------------
any Hazardous Material to be spilled, placed, held, located or disposed of on,
under, or about, any of the facilities owned, leased or used by the Borrower
(the "Premises"), or from the Premises into the atmosphere, any body of water,
any wetlands, or on any other real property, nor to Borrower's knowledge does
any Hazardous Material exist on, under or about the Premises other than as
disclosed on Exhibit 4.1.21, or in respect of Hazardous Material used or
--------------
disposed of in compliance with law in all material respects;
Section 4.1.21.2. has any knowledge that any of the Premises has
----------------
ever been used (whether by the Borrower or, to the knowledge of the Borrower, by
any other Person) as a treatment, storage or disposal (whether permanent or
temporary) site for any Hazardous Waste as defined in 42 U.S.C.A. '6901, et seq.
-- ---
(the Resource Recovery and Conservation Act); and
Section 4.1.21.3. has any knowledge of any notice of violation,
----------------
Lien or other notice issued by any governmental agency with respect to the
environmental condition of the Premises or any other property occupied by the
Borrower, or any other property which was included in the property description
of the Premises or such other real property within the preceding three years
except as disclosed to the Agent.
Section 4.1.22. Material Agreements, etc. Exhibit 4.1.22 attached
-------------- ------------------------ --------------
hereto accurately and completely lists all material agreements to which the
Borrower or any of the Subsidiaries are a party including without limitation
all software licenses (other than with respect to "off the shelf" software which
is generally available to the general public at retail), and all material
consulting, employment, management, operating and related agreements, if any,
which are presently in effect. To the Borrower's knowledge all of the material
agreements to which Borrower or any Subsidiary is a party are legally valid,
binding, and in full force and effect and neither the Borrower, any of the
Subsidiaries nor, to Borrower's knowledge, any other parties thereto are in
material default thereunder.
Section 4.1.23. Patents, Trademarks and Other Property Rights.
-------------- ---------------------------------------------
Exhibit 4.1.23 attached hereto contains a complete and accurate schedule of all
- --------------
registered trademarks, registered copyrights and patents of the Borrower and/or
any of the Subsidiaries, and pending applications therefor, and all other
intellectual property in which the Borrower and/or any of the Subsidiaries has
any rights other than "off-the shelf" software which is generally available to
the general public at retail. Except as set forth in Exhibit 4.1.23, the
--------------
Borrower and any Subsidiaries own,
33
<PAGE>
possess, or have licenses to use all the patents, trademarks, service marks,
trade names, copyrights and non-governmental licenses, and all rights with
respect to the foregoing, necessary for the conduct of their respective
businesses as now conducted, without, to the Borrower's knowledge any conflict
with the rights of others with respect thereto.
Section 4.1.24. Related Transaction Documents. The Borrower has, on
-------------- -----------------------------
or prior to the date hereof, delivered to the Lenders true copies of the Related
Transaction Documents, and each and every material amendment or modification
thereto. The representations and warranties of the Borrower and the Old
Stockholders contained in the Related Transaction Documents were true and
correct in all material respects on and as of the date so given.
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants of the Borrower Other than Reporting
----------- ----------------------------------------------------------
Requirements. From the date hereof and thereafter for so long as there is
- ------------
Indebtedness of the Borrower to any Lender and/or the Agent under any of the
Financing Documents or any part of the Commitment is in effect, the Borrower
will, with respect to itself and, unless noted otherwise below, with respect to
each of its Subsidiaries, ensure that each Subsidiary will, unless the Majority
Lenders shall otherwise consent in writing:
Section 5.1.1. Payment of Taxes, etc. Pay and discharge all taxes
------------- ---------------------
and assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided that (unless
and until foreclosure, restraint, sale or any similar proceeding is pending and
is not stayed, discharged or bonded within 30 days after commencement) the
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings and for
which proper reserve or other provision has been made in accordance with GAAP,
unless failure to pay would result in a Material Adverse Effect.
Section 5.1.2. Maintenance of Insurance. Maintain on the collateral
------------- ------------------------
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards, casualties
and contingencies as the Agent may from time to time reasonably require, in an
amount equal to the greater of (i) $1,000,000 or (ii) one hundred percent (100%)
--
of the replacement cost of the collateral under any of the Security Documents
and use commercially reasonable efforts to obtain business interruption
insurance in the amount of at least $1,000,000. All policies of such insurance
and all renewals thereof shall be in form and substance reasonably acceptable to
Agent, shall be made payable in case of loss to the Agent as loss payee and
mortgagee and shall contain an endorsement requiring thirty (30) days prior
written notice to the Agent prior to cancellation or change in the coverage,
scope or amount of any such policies. Borrower shall also keep in full force
and effect a policy of public liability insurance against claims of bodily
injury, death or property damage occurring in any building in which the limits
of liability shall not be less than One Million Dollars ($1,000,000) per person
and One Million Dollars ($1,000,000) per accident, together with an excess
liability policy in the amount of Two Million Dollars ($2,000,000) which shall
be in addition to the limits above set forth. Borrower shall increase the
limits of such liability insurance to such higher amounts as the Agent may from
time to time reasonably require. Certificates of all such insurance shall be
delivered to the Agent concurrently with the execution and delivery of this
Agreement, and thereafter all renewal or replacement certificates shall be
delivered to the Agent not less than thirty (30) days prior to the expiration
date of the policy to be renewed or replaced,
34
<PAGE>
accompanied by evidence satisfactory to the Agent that all premiums payable with
respect to such policies have been paid by Borrower. Borrower shall have the
right of free choice in the selection of the agent or the insurer through or by
which the insurance required hereunder is to be placed; provided, however, said
insurer has at all times a general policyholder's rating of A or A+ in Best's
latest rating guide. Furthermore, the Agent shall have the right after the
occurrence of an Event of Default and is hereby constituted and appointed the
true and lawful attorney irrevocable of Borrower, in the name and stead of
Borrower, but in the uncontrolled discretion of said attorney, (i) to adjust,
sue for, compromise and collect any amounts due under such insurance policies in
the event of loss and (ii) to give releases for any and all amounts received in
settlement of losses under such policies; and the same shall, subject to
Section 2.6.1.3 of this Agreement, at the option of the Agent, be applied,
- ---------------
after first deducting the costs of collection, on account of any Indebtedness
the payment of which is secured by any of the Financing Documents, whether or
not then due, or, notwithstanding the claims of any subsequent lienor, be used
or paid over to Borrower in accordance with reasonable procedures established by
the Agent for use in repairing or replacing any damaged or destroyed collateral
under any of the Security Documents. The Borrower will maintain in full force
and effect all "key person" life insurance required at any time and from time to
time to be maintained by the Related Transaction Documents.
Section 5.1.3. Preservation of Existence, etc. Preserve and maintain
------------- ------------------------------
in full force and effect its legal existence, and all material rights,
franchises and privileges in the jurisdiction of its organization, preserve and
maintain all material licenses, governmental approvals, trademarks, patents,
trade secrets, copyrights and trade names owned or possessed by it and which are
necessary or, in the reasonable business judgment of the Borrower, desirable in
view of its business and operations or the ownership of its properties and
qualify or remain qualified as a foreign corporation in each jurisdiction in
which such qualification is necessary or, in its reasonable business judgment,
desirable in view of its business and operations and ownership of its
properties, except in each such case where the failure to do so will not have a
Material Adverse Effect.
Section 5.1.4. Compliance with Laws, etc. Comply with the
------------- -------------------------
requirements of all present and future applicable laws, rules, regulations and
orders of any governmental authority having jurisdiction over it and/or its
business, except where the failure to comply would not have a Material Adverse
Effect.
Section 5.1.5. Visitation Rights. Permit, during normal business
------------- -----------------
hours and upon the giving of reasonable notice, the Agent, the Lenders and any
agents or representatives thereof, on not more than two occasions in any 12
month period unless a Default or Event of Default has occurred and is continuing
to examine and make copies of (at Borrower's cost and expense) and abstracts
from the records and books of account of, and visit the properties of the
Borrower and any Subsidiary to discuss the affairs, finances and accounts of the
Borrower or any Subsidiary with any of their partners, officers or management
level employees and/or any independent certified public accountant of the
Borrower and/or any Subsidiary.
Section 5.1.6. Keeping of Records and Books of Account. Keep
------------- ---------------------------------------
adequate records and books of account, in which complete entries will be made in
accordance with GAAP and with applicable requirements of any governmental
authority having jurisdiction over the Borrower and/or any Subsidiary in
question, reflecting all financial transactions.
Section 5.1.7. Maintenance of Properties, etc. Maintain and preserve
------------- ------------------------------
all of its properties necessary or useful in the proper conduct of its business,
in good working order and
35
<PAGE>
condition, ordinary wear and tear excepted, and in accordance with each of the
Security Documents.
Section 5.1.8. Post-Closing Items. Complete in a timely fashion all
------------- ------------------
actions required in the Post-Closing Letter.
Section 5.1.9. Other Documents, etc. Except as otherwise required by
------------- --------------------
this Agreement, pay, perform and fulfill all of its obligations and covenants
under each material document, instrument or agreement to which it is a party
including, without limitation, the Related Transaction Documents unless the
failure to do so could not have a Material Adverse Effect; provided that so long
as the Borrower or any Subsidiary is contesting any claimed default by it or
them under any of the foregoing by proper proceedings conducted in good faith
and for which any proper reserve or other provision in accordance with and to
the extent required by GAAP has been made, such default shall not be deemed a
violation of this covenant.
Section 5.1.10. Minimum Interest Coverage Ratio. Maintain at the end
-------------- -------------------------------
of each fiscal quarter of the Borrower in each period set forth below a ratio of
EBITDA to Interest Expense of not less than the ratio set forth opposite such
period, such ratio to be measured (i) at each Borrower fiscal quarter end on or
prior to December 31, 1997 for the period commencing January 1, 1997 and ending
on such fiscal quarter end and (ii) at each Borrower fiscal quarter end
thereafter for the rolling four Borrower fiscal quarter period consisting of the
Borrower fiscal quarter then ending and the three immediately preceding Borrower
fiscal quarters:
<TABLE>
<CAPTION>
Borrower Fiscal Quarter(s) Ending Ratio
--------------------------------- -----
<S> <C>
January, 1997 through September 30, 1997 3.00:1.00
December 31, 1997 through September 30, 1998 3.50:1.00
December 31, 1998 and thereafter 4.00:1.00
</TABLE>
Section 5.1.11. Minimum Debt Service Coverage Ratio. Maintain at the
-------------- -----------------------------------
end of each fiscal quarter of the Borrower in each period set forth below a
ratio of (i) EBITDA less, for the fiscal period in question, the sum of taxes
----
paid or payable and Capital Expenditures to (ii) the sum of Total Debt Service
of not less than the ratio set forth opposite such period, such ratio to be
measured (i) at each Borrower fiscal quarter end on or prior to December 31,
1997 for the period commencing January 1, 1997 and ending on such fiscal quarter
end and (ii) at each Borrower fiscal quarter end thereafter for the rolling four
Borrower fiscal quarter period consisting of the Borrower fiscal quarter then
ending and the three immediately preceding Borrower fiscal quarters:
<TABLE>
<CAPTION>
Borrower Fiscal Quarter(s) Ending Ratio
--------------------------------- -----
<S> <C>
January 1, 1997 through December 31, 1997 1.40:1.00
January 1, 1998 through December 31, 1998 1.30:1.00
January 1, 1999 through December 31, 1999 1.20:1.00
January 1, 2000 and thereafter 1.15:1.00
</TABLE>
Section 5.1.12. Maximum Ratio of Total Indebtedness for Borrowed
-------------- ------------------------------------------------
Money to EBITDA. Maintain at the end of each fiscal quarter of the Borrower in
- ---------------
each period set forth below a ratio of (i) total Indebtedness for Borrowed Money
of the Borrower and its Subsidiaries on a consolidated basis as of the last day
of such fiscal quarter to (ii) EBITDA for the rolling four Borrower fiscal
quarter period consisting of such fiscal quarter and the three immediately
36
<PAGE>
preceding Borrower fiscal quarters of not greater than the ratio set forth below
opposite such period:
<TABLE>
<CAPTION>
Borrower Fiscal Quarter(s) Ending Ratio
--------------------------------- -----
<S> <C>
Closing Date through September 30, 1997 3.00:1.00
December 31, 1997 through September 30, 1998 2.75:1.00
December 31, 1998 through September 30, 1999 2.25:1.00
December 31, 1999 and thereafter 1.75:1.00
</TABLE>
Section 5.1.13. Minimum EBITDA. Maintain the sum of (i) EBITDA and
-------------- --------------
(ii) to the extent not added back in the calculation of EBITDA, 1996
compensation to the Old Stockholders in excess of $1,050,000, all for the fiscal
year ending December 31, 1996 of not less than $6,500,000.
Section 5.1.14. Minimum Quick Ratio. Maintain at the end of each
-------------- -------------------
fiscal quarter a ratio of (i) the sum of (w) cash on hand or on deposit in any
bank or trust company which has not suspended business, (x) Cash Equivalent
Investments (without duplication with (w)) and (y) accounts receivable of the
Borrower to (ii) (x) Current Liabilities plus the outstanding amount of the
Revolving Credit Loan less, the sum of (y) the amount of any deferred revenue
----
and, (z) the amount of the Term Loan included in Current Liabilities of not less
than 1.25:1.00. Each item described in clauses (i) and (ii) of this Section
-------
5.1.14 shall be calculated as of the last day of the Borrower fiscal quarter and
- ------
include only the item(s) in question of the Borrower and its Subsidiaries on a
consolidated basis.
Section 5.1.15. Officer's Certificates and Requests. Provide each
-------------- -----------------------------------
Officer's Certificate required under this Agreement and each Request so that the
statements contained therein are accurate and complete in all material respects.
Section 5.1.16. Depository. Use the
-------------- ----------
Agent as a principal depository of Borrower's funds.
Section 5.1.17. Chief Executive Officer. Maintain Patrick LePore and
-------------- -----------------------
Gregory Boron as senior officers of the Borrower and as the Persons with
principal executive, operating and management responsibility for the Borrower's
business or obtain replacements of comparable experience and training in the
Borrower's industry reasonably satisfactory to the Majority Lenders within 120
days of their ceasing to act in such capacities.
Section 5.1.18. Notice of Purchase of Real Estate and Leases.
-------------- --------------------------------------------
Promptly notify the Agent in the event that the Borrower shall purchase any real
estate or enter into any lease of real estate or of equipment material to the
operation of the Borrower's business which lease provides for rentals in the
amount of $100,000 or more in any calendar year, supply the Agent with a copy of
the related purchase agreement or of such lease, as the case may be, and if
requested by the Agent, execute and deliver, or cause to be executed and
delivered, to the Agent for the benefit of the Lenders a deed of trust,
mortgage, assignment or other document, together with landlord consents, in the
case of leased property, reasonably satisfactory in form and substance to the
Agent, granting a valid first Lien (subject to any Liens permitted under Section
-------
5.2.1 hereof) on such real property or leasehold as security for the Financing
- -----
Documents.
Section 5.1.19. Additional Assurances. From time to time hereafter,
-------------- ---------------------
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of
37
<PAGE>
implementing or effectuating the provisions of the Financing Documents, and upon
the exercise by the Agent of any power, right, privilege or remedy pursuant to
the Financing Documents which requires any consent, approval, registration,
qualification or authorization of any governmental authority or instrumentality,
exercise and deliver all applications, certifications, instruments and other
documents and papers that the Agent may be so required to obtain.
Section 5.1.20. Appraisals. Permit the Agent and its agents, at any
-------------- ----------
time and in the sole discretion of the Agent or at the request of the Majority
Lenders (but not more than once in any period of twelve months unless a Default
or Event of Default shall have occurred and be continuing), to conduct
appraisals of the Borrower's business, the reasonable cost of which shall be
borne by the Borrower.
Section 5.1.21. Environmental Compliance. Comply in all material
-------------- ------------------------
respects with the requirements of all federal, state, and local environmental
laws; notify the Lenders promptly in the event of any spill of Hazardous
Material materially affecting the Premises occupied by the Borrower from time to
time; forward to the Lenders promptly any written notices relating to such
matters received from any governmental agency; and pay promptly when due any
uncontested fine or assessment against the Premises.
Section 5.1.22. Remediation. Immediately contain and remove any
-------------- -----------
Hazardous Material found on the Premises in compliance with applicable laws and
at the Borrower's expense, subject however, to the right of the Agent, at the
Agent's option but at the Borrower's expense, to have an environmental engineer
or other representative review the work being done.
Section 5.1.23. Site Assessments. Promptly upon the request of the
-------------- ----------------
Agent, based upon the Agent's reasonable belief that a material Hazardous Waste
or other environmental problem exists with respect to any Premises, provide the
Agent with a Phase I environmental site assessment report and, if Agent finds a
reasonable basis for further assessment in such Phase I assessment, a Phase II
environmental site assessment report, or an update of any existing report, all
in scope, form and content and performed by such company as may be reasonably
satisfactory to the Agent.
Section 5.1.24. Indemnity. Indemnify, defend, and hold the Agent and
-------------- ---------
the Lenders harmless from and against any claim, cost, damage (including without
limitation consequential damages), expense (including without limitation
reasonable attorneys' fees and expenses), loss, liability, or judgment now or
hereafter arising as a result of any claim for environmental cleanup costs, any
resulting damage to the environment and any other environmental claims against
the Borrower, any Subsidiary, the Lenders and/or the Agent arising out of the
transactions contemplated by this Agreement, or any of the Premises. The
provisions of this Section shall continue in effect and shall survive (among
other events), until the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu transaction, payment
and satisfaction of the Obligations of Borrower, and release of any collateral
for the Loans.
Section 5.1.25. Trademarks, Copyrights, etc. Concurrently with the
-------------- ---------------------------
acquisition of any trademark, tradename, copyright, patent or service mark
collaterally assign and grant a first priority perfected Lien thereon to the
Agent pursuant to documents in form and substance reasonably satisfactory to the
Agent.
Section 5.1.26. Database Protection. Use all means that the Borrower
-------------- -------------------
reasonably believes are reasonably necessary to protect the trade secret,
proprietary nature of the Database.
38
<PAGE>
The Borrower shall provide the Agent with a true and correct copy of the
Database and shall provide the Agent with periodic updates to the Database, not
less frequently than on a quarterly basis, all in accordance with the Security
Documents.
Section 5.1.27. Employee Confidentiality. Maintain in full force and
-------------- ------------------------
effect all employee confidentiality and proprietary rights agreements required
to be maintained by the Related Transaction Documents.
Section 5.2. Negative Covenants of the Borrower. From the date
----------- ----------------------------------
hereof and thereafter for so long as there is Indebtedness of the Borrower to
any Lender and/or the Agent under any of the Financing Documents or any part of
the Commitment is in effect, the Borrower will not, with respect to itself and,
unless noted otherwise below, with respect to each of the Subsidiaries, will
ensure that each such Subsidiary will not, without the prior written consent of
the Majority Lenders:
Section 5.2.1. Liens, etc. Create, incur, assume or suffer to exist
------------- ----------
any Lien of any nature, upon or with respect to any of its properties, now owned
or hereafter acquired, or assign as collateral or otherwise convey as
collateral, any right to receive income, except that the foregoing restrictions
shall not apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges or
---------------
levies on property if the same shall not at the time be delinquent or thereafter
can be paid without penalty or interest, or (if foreclosure, distraint, sale or
other similar proceedings shall not have been commenced or if commenced not
stayed, bonded or discharged within 30 days after commencement) are being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.2. Imposed by law, such as landlords', carriers',
---------------
warehousemen's and mechanics' liens, bankers' set off rights and other similar
Liens arising in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
Section 5.2.1.3. Arising in the ordinary course of business out of
---------------
pledges or deposits under worker's compensation laws, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation;
Section 5.2.1.4. Arising from or upon any judgment or award,
---------------
provided that such judgment or award is being contested in good faith by proper
appeal proceedings and only so long as execution thereon shall be stayed;
Section 5.2.1.5. Those set forth on Exhibit 1.8;
--------------- -----------
Section 5.2.1.6. Those now or hereafter granted pursuant to the
---------------
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing Documents;
Section 5.2.1.7. Deposits to secure the performance of bids, trade
---------------
contracts (other than for Borrowed Money), leases, statutory obligations, surety
bonds,
39
<PAGE>
performance bonds and other obligations of a like nature incurred in the
ordinary course of the Borrower's or any Subsidiary's business;
Section 5.2.1.8. Easements, rights of way, restrictions and other
---------------
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of business by any Borrower or any
Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist
---------------
under Section 5.2.8.3; provided that the Lien securing any such Indebtedness is
---------------
limited to the item of property purchased or leased in each case;
Section 5.2.1.10. UCC-1 financing statements filed solely for
----------------
notice or precautionary purposes by lessors under operating leases which do not
secure Indebtedness and which are limited to the items of equipment leased
pursuant to the lease in question;
Section 5.2.1.11. Liens securing
-----------------
Indebtedness permitted to exist under Section 5.2.8.8; and
---------------
Section 5.2.1.12 Liens on security deposits with respect to leases
----------------
of office space and other liens arising by operation of law or under leases to
secure landlords or lessors, or under leases or rental agreements made in the
ordinary course of business and confined to the premises or property rented and
the tangible property located thereon.
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other
------------- ------------------------------------------------------
Persons. Assume, guarantee, endorse or otherwise become directly or
- -------
contingently liable in connection with any obligation or Indebtedness of any
other Person, except:
Section 5.2.2.1. Guaranties by endorsement of negotiable
---------------
instruments for deposit or collection or similar transactions in the ordinary
course of business;
Section 5.2.2.2. Assumptions, guaranties, endorsements and
---------------
contingent liabilities within the definition of Indebtedness and permitted by
Section 5.2.8; and
- -------
Section 5.2.2.3. Those set forth on Exhibit 5.2.2.
--------------- -------------
Section 5.2.3. Acquisitions, Dissolution, etc. Acquire, in one or a
------------- ------------------------------
series of transactions, all or any substantial portion of the assets or
ownership interests in another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
assets having a fair value in excess of $50,000, whether now owned or hereafter
acquired, or any of the Borrower's or any Subsidiary's interests in real
property having a fair value in excess of $50,000 other than assets which are
replaced within 30 days of any asset sale, assignment, lease or disposition with
assets of like kind, usefulness and value; provided, however, that Borrower
shall be permitted to acquire all or any portion of the assets of or ownership
interests in another Person (by merger, consolidation or otherwise so long as
the Borrower survives) (i) for aggregate (for all such acquisitions since the
Closing Date but excluding the Related Transactions) cash consideration not to
exceed $2,500,000 and (ii) only if such Person's gross revenues calculated in
accordance with GAAP on a consolidated basis for such Person and any of its
Subsidiaries for such Person's most recent (prior to the acquisition) fiscal
quarter and such Person's immediately preceding three fiscal quarters are less
than 10% of the Borrower's gross revenues calculated in
40
<PAGE>
the same manner. At the time of any such acquisition the Borrower shall provide
or grant or cause to be provided or granted to the Agent a first priority
perfected Lien on the assets or ownership interests acquired, including without
limitation the assets owned by any Subsidiary, to the extent that the Agent does
not already have such a Lien. Prior to the consummation of any such permitted
transaction, Borrower shall submit to the Agent a pro-forma Compliance
Certificate on a consolidated basis (including the to-be-acquired assets and any
assumed liabilities or if ownership interests are acquired, the to-be-acquired
Person if such Person is to be a Subsidiary and if not, the to-be-acquired
ownership interests, all measured as set forth below in this Section 5.2.3),
-------------
which such pro-forma Compliance Certificate shall indicate that no Default or
Event of Default exists or would exist following consummation of the permitted
transaction and that the Borrower would be, in compliance with (on a
consolidated basis including the to-be-acquired assets and any assumed
liabilities or if ownership interests are acquired, the to-be-acquired Person if
such Person is to be a Subsidiary and if not, the to-be-acquired ownership
interests), Sections 5.1.10 through 5.1.14 and 5.2.17 following consummation
--------------- ------ ------
of the permitted transaction, including the to-be-acquired assets, Person or
ownership interests and the operating results thereof on the same basis and for
the same periods as the Borrower is measured for each such covenant,
respectively.
Section 5.2.4. Change in Nature of Business. Make any material
------------- ----------------------------
change in the nature of its business. For purposes of this Section 5.2.4, the
-------------
expansion or further development of the telemarketing business of the Borrower
and its Subsidiaries shall not constitute a material change in its business.
Section 5.2.5. Ownership. Cause or
------------- ---------
permit the occurrence of any Change of Control.
Section 5.2.6. Sale and Leaseback. Enter into any sale and leaseback
------------- ------------------
arrangement with any lender or investor, or enter into any leases except in the
normal course of business at reasonable rents comparable to those paid for
similar leasehold interests in the area.
Section 5.2.7. Sale of Accounts, etc. Sell, assign, discount or
------------- ---------------------
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by the Borrower or any Subsidiary, with or without recourse,
except in the ordinary course of the Borrower's or any Subsidiary's business.
Section 5.2.8. Indebtedness. Incur, create, become or be liable
------------- ------------
directly or indirectly in any manner with respect to or permit to exist any
Indebtedness except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
---------------
Section 5.2.8.2. Indebtedness with respect to trade payable
---------------
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such person has set aside on its books adequate reserves
therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized Lease
---------------
Obligations and purchase money Indebtedness with respect to real or personal
property in an aggregate amount outstanding at any time not to exceed
$1,000,000; provided that the amount of any purchase money Indebtedness does not
exceed 90% of the lesser of the cost or fair market value of the asset purchased
with the proceeds of such Indebtedness;
41
<PAGE>
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
---------------
outstanding at any time not to exceed $250,000;
Section 5.2.8.5. Indebtedness listed on Exhibit 3.1.1.8;
--------------- ---------------
Section 5.2.8.6. Indebtedness owing by the Borrower to any
---------------
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary.
Section 5.2.8.7. Indebtedness permitted by Section 5.2.2 or secured
--------------- -------------
by Liens permitted under Section 5.2.1.1 through 5.2.1.4.
--------------- -------
Section 5.2.8.8. Indebtedness outstanding as a refinancing of
---------------
Indebtedness permitted under another clause of this Section 5.2.8 other than
-------------
Sections 5.2.8.2 or 5.2.8.8; provided that such Indebtedness as refinanced
- ---------------- -------
continues to qualify as permitted Indebtedness under the clause of this Section
-------
5.2.8 under which the refinanced Indebtedness was permitted under this Section
- ----- -------
5.2.8.
- -----
Section 5.2.9. Other Agreements. Amend any of the terms or
------------- ----------------
conditions of any of the Related Transaction Documents, its certificate of
incorporation, if any, any subordination agreement or any indenture, agreement,
document, note or other instrument evidencing, securing or relating to any other
Indebtedness permitted under Section 5.2.8, in each case in a manner materially
-------------
adverse to the Agent or any of the Lenders.
Section 5.2.10. Payment or Prepayment of Equity. Make any payment or
-------------- -------------------------------
prepayment of any principal of or interest on or any payment, prepayment,
redemption, defeasance, sinking fund payment, other repayment of principal or
capital or deposit for the purpose of any of the foregoing on or in connection
with the Equity except so long as no Default or Event of Default has occurred
and is continuing or would exist after any such payments (a) payments in respect
of redemptions or repurchases of the Borrower's stock under employee stock plans
and programs approved by the Borrower's Board of Directors not to exceed
$400,000 in the aggregate in any calendar year, and (b) payments by the Borrower
to any of the Old Stockholders required under the Related Transaction Documents.
Section 5.2.11. Dividends, Payments and Distributions. Declare or pay
-------------- -------------------------------------
any dividends, management fees or like fees or make any other distribution of
cash or property or both to any of the Stockholders other than directors' fees
and compensation for services rendered to the Borrower and/or any Subsidiary or
use any of its assets for payment, purchase, conversion, redemption, retention,
acquisition or retirement of any beneficial interest in the Borrower or set
aside or reserve assets for sinking or like funds for any of the foregoing
purposes, make any other distribution by reduction of capital or otherwise in
respect of any beneficial interest in the Borrower or permit any Subsidiary
which is not a wholly-owned Subsidiary so to do except to the extent permitted
under Section 5.2.10 and except, so long as the Borrower is and would be in
--------------
compliance with all provisions of this Agreement immediately before and after
any such payment, commencing in April, 1998 Borrower may pay, in April of each
Borrower fiscal year, 10% cumulative dividends on up to $10,000,000 of
Borrower's Convertible and Redeemable Preferred Stock solely from the amount, if
any, of Borrower's Excess Cash Flow for the immediately preceding Borrower
fiscal year remaining after Borrower's payment to the Agent for the accounts of
the Lenders of all amounts payable under Section 2.6.1.2 and only if at the time
---------------
of and after giving effect to such payment the outstanding principal balance of
the Revolving Credit Loans is $0; provided that any such payment in April, 1998
shall be made only with the Majority Lenders' prior written consent, which
consent shall not be unreasonably withheld or
42
<PAGE>
delayed. Notwithstanding anything to the contrary set forth in this Agreement,
the New Stockholders may at any time convert their shares of the Borrower's
convertible participating preferred stock in accordance with the provisions of
the Borrower's Amended and Restated Certificate of Incorporation.
Section 5.2.12. Investments in or to Other Persons. Make or commit to
-------------- ----------------------------------
make any Investment in or to any other Person (including, without limitation,
any Subsidiary) other than (i) advances to employees for business expenses not
to exceed $25,000 in the aggregate outstanding for any one employee and not to
exceed $100,000 in the aggregate outstanding at any one time to all such
employees, (ii) other employee loans not to exceed $100,000 in the aggregate
outstanding at any one time to all such employees, (iii) Cash Equivalent
Investments, (iv), Investments in accounts, contract rights and chattel paper
(as defined in the Uniform Commercial Code) and notes receivable, arising or
acquired in the ordinary course of business and (v) Investments described on
Exhibit 5.2.2 or permitted under Section 5.2.3 and (vi) other Investments in an
- ------------- -------------
amount not exceeding $100,000 in the aggregate at any time..
Section 5.2.13. Transactions with Affiliates. Except as contemplated
-------------- ----------------------------
by the Equity Documents and Related Transaction Documents and except as set
forth on Exhibit 5.2.13, engage in any transaction or enter into any agreement
--------------
with an Affiliate, or in the case of Affiliates or Subsidiaries, with the
Borrower or another Affiliate or Subsidiary, except in the ordinary course of
business on an arm's length basis or as permitted by any other provision of this
Agreement.
Section 5.2.14. Change of Fiscal Year. Change its fiscal year.
-------------- ---------------------
Section 5.2.15. Subordination of Claims. Subordinate any present or
-------------- -----------------------
future claim against or obligation of another Person, except as ordered in a
bankruptcy or similar creditors' remedy proceeding of such other Person.
Section 5.2.16. Compliance with ERISA. With respect to Borrower and
-------------- ---------------------
any Commonly Controlled Entity (a) withdraw from or cease to have an obligation
to contribute to, any Multiemployer Plan (b) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code) involving any Plan, (c)
except for any deficiency caused by a waiver of the minimum funding requirement
under sections 412 and/or 418 of the Code, as described above, incur or suffer
to exist any material "accumulated funding deficiency" (as defined in section
302 of ERISA and section 412 of the Code) of the Borrower or any Commonly
Controlled Entity, whether or not waived, involving any Single Employer Plan,
(d) incur or suffer to exist any Reportable Event or the appointment of a
trustee or institution of proceedings for appointment of a trustee for any
Single Employer Plan if, in the case of a Reportable Event, such event continues
unremedied for ten (10) days after notice of such Reportable Event pursuant to
sections 4043(a), (c) or (d) of ERISA is given, if in the reasonable opinion of
the Majority Lenders any of the foregoing is likely to result in a material
liability of the Borrower or any Commonly Controlled Entity, (e) permit the
assets held under any Plan to be insufficient to protect all accrued benefits in
any material respect, (f) allow or suffer to exist any event or condition, which
presents a material risk of incurring a material liability of the Borrower or
any Commonly Controlled Entity to PBGC by reason of termination of any such Plan
or (g) cause or permit any Plan maintained by Borrower and/or any Commonly
Controlled Entity to be out of compliance with ERISA in any material respect.
For purposes of this Section 5.2.16 "material liability" shall be deemed to mean
--------------
any liability of Fifty Thousand Dollars ($50,000) or more in the aggregate.
Section 5.2.17. Capital Expenditures. Incur Capital Expenditures (i)
-------------- --------------------
during 1997 in excess of $1,000,000, (ii) during 1998 in excess of $500,000,
(iii) during 1999 in excess of
43
<PAGE>
$600,000, (iv) during 2000 in excess of $700,000 and (v) during 2001 in excess
of $800,000 plus, for each such calendar year commencing with 1998, the excess,
if any, of the immediately preceding calendar year's maximum amount of Capital
Expenditures over the amount of Capital Expenditures actually made in such
immediately preceding calendar year.
Subject to the foregoing, the Borrower shall make its Capital
Expenditures substantially in accordance with and for the purposes outlined in
the Budget for the Borrower fiscal year in question.
Section 5.2.18. Hazardous Waste. Become involved, or permit, to the
-------------- ---------------
extent reasonably possible after the exercise by the Borrower of reasonable due
diligence and preventive efforts, any tenant of its real property, if any, to
become involved, in any operations at such real property generating, storing,
disposing, or handling Hazardous Material or any other activity that could lead
to the imposition on the Borrower or the Agent or any Lender, or any such real
property of any material liability or Lien under any environmental laws.
Section 5.3. Reporting Requirements. From the date hereof and
----------- ----------------------
thereafter for so long as the Borrower is indebted to any Lender and/or the
Agent under any of the Financing Documents, the Borrower will, unless the
Majority Lenders shall otherwise consent in writing, furnish or cause to be
furnished to the Agent for distribution to the Lenders:
Section 5.3.1. As soon as possible and in any event upon acquiring
-------------
knowledge of an Event of Default or Default, continuing on the date of such
statement, the written statement of an Authorized Representative setting forth
details of such Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
Section 5.3.2. As soon as practicable after the end of each Borrower
-------------
fiscal year and in any event within 90 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such statements to be certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to the Majority
Lenders, to be accompanied by a true copy of said auditors' management letter,
if one was provided to the Borrower.
Section 5.3.3. As soon as is practicable after the end of each fiscal
-------------
quarter of each Borrower fiscal year and in any event within 45 days thereafter,
consolidated balance sheets of the Borrower and any Subsidiaries as of the end
of such period and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries, subject to changes
resulting from year-end adjustments, together, subject to Section 5.3.7, with a
-------------
comparison to the Budget for the applicable period, such balance sheets and
statements to be prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with GAAP except for
footnotes and year-end adjustments, and to be in form reasonably satisfactory to
the Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
-------------
year-end consolidated and consolidating financial statements of the Borrower and
any Subsidiaries to be delivered pursuant to Section 5.3.2 and each of the
-------------
consolidated quarterly statements of the Borrower and the Subsidiaries to be
delivered pursuant to Section 5.3.3 an Officer's Certificate of an Authorized
-------------
Representative which shall contain a statement in the form of Exhibit 3.1.1.10
----------------
to the effect that no Event of Default or Default has occurred, without having
been waived in writing, or if there shall have been an Event of Default not
previously waived in writing pursuant
44
<PAGE>
to the provisions hereof, or a Default, such Officer's Certificate shall
disclose the nature thereof and the actions the Borrower has taken and prepare
to take with respect thereto. Each such Officer's Certificate shall also contain
a calculation of and certify to the accuracy of the amounts required to be
calculated in the financial covenants of the Borrower contained in this
Agreement and described in Exhibit 3.1.1.10; Section 5.3.5. Promptly after
---------------- -------------
the commencement thereof, notice of all material actions, suits and proceedings
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, affecting the Borrower and/or any
Subsidiary;
Section 5.3.6. [Intentionally Omitted]
--------------
Section 5.3.7. On or before January 31 of each fiscal year of the
-------------
Borrower, an updated proposed budget, prepared on a quarterly basis, and updated
financial projections for the Borrower and any Subsidiaries on a consolidated
basis (together, the "Budget") for such fiscal year, setting forth in detail
reasonably satisfactory to the Agent the projected results of operations of the
Borrower and any Subsidiaries on a consolidated quarterly basis, detailed
Capital Expenditures plan and stating underlying assumptions and accompanied by
a written statement of an Authorized Representative certifying as to the
approval of such Budget by Borrower's board of directors. In the event of any
revisions or modifications to the Budget, provide the Agent with an updated
proposed Budget within ten (10) days after the submittal of such revisions or
modifications to the Borrower's board of directors or the New Stockholders.
Section 5.3.8. Such other information respecting the Business
-------------
Condition of the Borrower or any Subsidiaries as the Agent or any Lender may
from time to time reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
-------------
sale or transfer of any ownership interest in the Borrower or any Subsidiary
given promptly after the Borrower acquires knowledge thereof; provided, however,
that this clause shall not be deemed to constitute or imply any consent to any
such sale or transfer;
Section 5.3.10. Prompt written notice of loss of any Material Adverse
--------------
Effect and an explanation thereof and of the actions the Borrower and/or such
Subsidiary propose to take with respect thereto; and
Section 5.3.11. Written notice of the following events, as soon as
--------------
possible and in any event within 15 days after the Borrower knows or has reason
to know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, or (ii) the institution of proceedings or the
taking or expected taking of any other action by PBGC or the Borrower or any
Commonly Controlled Entity to terminate, withdraw or partially withdraw from
any Plan and, with respect to any Multiemployer Plan, the Reorganization (as
defined in Section 4241 of ERISA) or Insolvency (as defined in Section 4245 of
ERISA) of such Multiemployer Plan and in addition to such notice, deliver to the
Agent whichever of the following may be applicable: (a) an Officer's
Certificate setting forth details as to such Reportable Event and the action
that the Borrower or Commonly Controlled Entity proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that may be
required to be filed with PBGC, or b) any notice delivered by PBGC evidencing
its intent to institute such proceedings or any notice to PBGC that such Plan is
to be terminated, as the case may be.
45
<PAGE>
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. Events of Default. The Borrower shall be in default under
----------- -----------------
each of the Financing Documents, upon the occurrence of any one or more of the
following events ("Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and punctual
-------------
payment of any principal, fees, interest and/or other amounts payable under this
Agreement as provided in any Note and/or in this Agreement when the same is due
and payable except that it shall not be an Event of Default if any interest,
fees and/or other amounts (excluding principal) is paid within 5 days after it
is due and payable, whether at the due date thereof or at a date fixed for
prepayment or if the Borrower shall fail to make any such payment of fees,
interest, principal and/or any other amount under this Agreement and/or under
any Note on the date when such payment becomes due and payable by acceleration;
Section 6.1.2. If the Borrower or any material Subsidiary shall make
-------------
an assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall admit in writing its inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal, state
or other statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of it or of all or any
substantial part of its properties, or if partnership or corporate action shall
be taken for the purpose of effecting any of the foregoing; or
Section 6.1.3. To the extent not described in Section 6.1.2, (i) if
------------- -------------
the Borrower or any material Subsidiary shall be the subject of a bankruptcy
proceeding, or (ii) if any proceeding against any of them seeking any
reorganization, arrangement, composition, adjustment, liquidation, dissolution,
or similar relief under the present or any future federal bankruptcy law or
other applicable federal, foreign, state or other statute, law or regulation
shall be commenced, or (iii) if any trustee, receiver or liquidator of any of
them or of all or any substantial part of any or all of their properties shall
be appointed without their consent or acquiescence; provided that in any of the
cases described above in this Section 6.1.3, such proceeding or appointment
-------------
shall not be an Event of Default if the Borrower or the Subsidiary in question
shall cause such proceeding or appointment to be discharged, vacated, dismissed
or stayed within sixty (60) days after commencement thereof; or
Section 6.1.4. If final judgment or judgments aggregating more than
-------------
$500,000 (net of insurance proceeds) shall be rendered against the Borrower or
any Subsidiary and shall remain undischarged, unstayed or unpaid for an
aggregate of thirty (30) days (whether or not consecutive) after entry thereof;
or
Section 6.1.5. If the Borrower or any Subsidiary shall default (after
-------------
giving effect to any applicable grace period) in the due and punctual payment of
the principal of or interest on any Indebtedness exceeding in the aggregate
$250,000 (other than the Loans), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage, note or other
agreement evidencing, securing or providing for the creation of such
Indebtedness, which results in the acceleration of such Indebtedness or which
permits, or with the giving of notice would permit, any holder or holders of any
such Indebtedness to accelerate the stated maturity thereof; or
46
<PAGE>
Section 6.1.6. If there shall be a default in the performance of the
-------------
Borrower's obligations under Section 5.1.3 (insofar as such Section requires the
-------------
preservation of the corporate existence of the Borrower or any Subsidiary) or
any of Sections 5.1.2, 5.1.10 through 5.1.13 or Section 5.2 of this Agreement;
-------------- ------ ------ -----------
or
Section 6.1.7. If there shall be any Default in the performance of
-------------
any covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such Default would
have a Material Adverse Effect, by the Borrower under any of the Related
Transaction Documents, other than a covenant or condition referred to in any
other subsection of this Section 6.1 and such Default shall continue unremedied
-----------
or unwaived, (i) in the case of any covenant or condition contained in Section
-------
5.3, for fifteen (15) Business Days, or (ii) in the case of any other covenant
- ---
or condition for which no other grace period is provided, for thirty (30) days,
or (iii) in the case of any other covenant or condition for which another grace
period is provided, for such grace period, or (iv) if any of the representations
and warranties made or deemed made by the Borrower to the Agent and/or any
Lender pursuant to any of the Financing Documents proves to have been false or
misleading in any material respect when made and such falseness or misleading
representation or warranty would be reasonably likely to have a material
adverse effect on the Agent or any Lender or their rights and remedies or a
Material Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits or
-------------
other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding $250,000, which shall not be discharged,
vacated or stayed within thirty (30) days of the date of such attachment; or
Section 6.1.9. Any certification of the financial statements,
-------------
furnished to the Agent pursuant to Section 5.3.2, shall contain any
-------------
qualification; provided, however, that such qualifications will not be deemed an
Event of Default if in each case (i) such certification shall state that the
examination of the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including but not limited
to all such tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements, (ii) such financial statements were prepared in accordance with GAAP
and (iii) such qualification does not involve the "going concern" status of the
entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of
the Events of Default, the Agent, at the request of the Majority Lenders, shall,
by written notice to the Borrower, declare the obligation of the Lenders to make
or maintain the Loans to be terminated, whereupon the same and the Commitment
shall forthwith terminate, and the Agent, at the request of the Majority
Lenders, shall, by written notice to the Borrower, declare the entire unpaid
principal amount of each Note and all fees and interest accrued and unpaid
thereon and/or under this Agreement, and/or any of the other Financing Documents
and any and all other Indebtedness under this Agreement, each Note and/or any
of the other Financing Documents to the Agent and/or any of the Lenders and/or
to any holder of all or any portion of each Note to be forthwith due and
payable, whereupon each Note, and all such accrued fees and interest and other
such
47
<PAGE>
Indebtedness shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of an Event of Default under Sections 6.1.2 or 6.1.3, all of the
-------------- -----
unpaid principal amount of each Note, all fees and interest accrued and unpaid
thereon and/or under this Agreement and/or under any of the other Financing
Documents and any and all other such Indebtedness of the Borrower to any of the
Lenders and/or to any such holder shall thereupon be due and payable in full
without any need for the Agent and/or any Lender to make any such declaration or
take any action and the Lenders' obligations to make the Loans shall
simultaneously terminate. The Agent shall, in accordance with the votes of the
Majority Lenders, exercise all remedies on behalf of and for the account of each
Lender and on behalf of its respective Pro Rata Share of the Loans, its Note and
Indebtedness of the Borrower owing to it or any of the foregoing, including,
without limitation, all remedies available under or as a result of this
Agreement, the Notes or any of the other Financing Documents or any other
document, instrument or agreement now or hereafter securing any Note without any
such exercise being deemed to modify in any way the fact that each Lender shall
be deemed a separate creditor of the Borrower to the extent of its Note and Pro
Rata Share of the Loans and any other amounts payable to such Lender under this
Agreement and/or any of the other Financing Documents and the Agent shall be
deemed a separate creditor of the Borrower to the extent of any amounts owed by
the Borrower to the Agent.
ARTICLE 8.
AGENT
Section 8.1. Appointment. The Agent is hereby appointed as Agent,
----------- -----------
hereunder and each Lender hereby authorizes the Agent to act under the Financing
Documents as its Agent hereunder and thereunder, respectively. The Agent agrees
to act as such upon the express conditions contained in this Article 8. The
provisions of this Article 8 are solely for the benefit of the Agent, and,
except as expressly provided in Section 8.6, neither the Borrower nor any third
-----------
party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Financing Documents to which the Agent is a party, the Agent shall
act solely as Agent of the Lenders and does not assume nor shall the Agent be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrower, any of the Stockholders, any Affiliate or any
Subsidiary.
Section 8.2. Powers; General Immunity.
----------- ------------------------
Section 8.2.1. Duties Specified. Each Lender irrevocably
------------- ----------------
authorizes the Agent to take such action on such Lender's behalf, including,
without limitation, to execute and deliver the Financing Documents to which the
Agent is a party and to exercise such powers hereunder and under the Financing
Documents and other instruments and agreements referred to herein as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. The Agent shall have only
those duties and responsibilities which are expressly specified in this
Agreement or in any of the Financing Documents and may perform such duties by or
through its agents or employees. The duties of the Agent shall be mechanical and
administrative in nature; and the Agent shall not have by reason of this
Agreement or any of the Financing Documents a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any of the Security Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the Financing
Documents or the other instruments and agreements referred to herein except as
expressly set forth herein or therein.
48
<PAGE>
Section 8.2.2. No Responsibility For Certain Matters. The Agent
------------- -------------------------------------
shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Financing Documents or any other document, instrument or agreement now or
hereafter executed in connection herewith or therewith, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith by or on behalf of the Borrower, any of the Stockholders, and/or
any Subsidiary to the Agent or any Lender, or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or of the existence or possible existence of any
Default or Event of Default.
Section 8.2.3. Exculpatory Provisions. Neither the Agent nor any of
------------- ----------------------
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted hereunder or under any of the Financing Documents,
or in connection herewith or therewith unless caused by its or their gross
negligence or willful misconduct. If the Agent shall request instructions from
Lenders with respect to any action (including the failure to take an action) in
connection with any of the Financing Documents, the Agent shall be entitled to
refrain from taking such action unless and until the Agent, shall have received
instructions from the Majority Lenders (or all of the Lenders if the action
requires their consent). Without prejudice to the generality of the foregoing,
(i) the Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower, any
of the Stockholders, and/or any Subsidiary), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing Documents or the
other instruments and agreements referred to herein in accordance with the
instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the Financing
Documents or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of the Majority Lenders (or all of the
Lenders if the action requires their consent).
Section 8.2.4. Agent Entitled to Act as Lender. The agency hereby
------------- - -----------------------------
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Commitment, Fleet shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Lender" or "Lenders" or
any similar term shall, unless the context clearly otherwise indicates, include
Fleet in its individual capacity. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower, any of the Stockholders,
or any Affiliate or Subsidiary as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrower and/or any
of such other Persons for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
Section 8.3. Representations and Warranties; No Responsibility for
----------- -----------------------------------------------------
Appraisal of Creditworthiness. Each Lender represents and warrants that it has
- -----------------------------
made its own independent investigation of the financial condition and affairs of
the Borrower, the Stockholders and any Subsidiaries of any of them in connection
with the making of the Loans hereunder and has made
49
<PAGE>
and shall continue to make its own appraisal of the creditworthiness of the
Borrower, the Stockholders and the Subsidiaries. The Agent shall not have any
duty or responsibility, either initially or on a continuing basis, to make any
such investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether coming
into its possession before the making of any Loan or any time or times
thereafter (except for information received by the Agent under Section 5.3
-----------
hereof which the Agent will promptly forward to the Lenders), and the Agent
shall further not have any responsibility with respect to the accuracy of or the
completeness of the information provided to any of the Lenders.
Section 8.4. Right to Indemnity. Each Lender severally agrees to
----------- ------------------
indemnify the Agent proportionately to its Pro Rata Share of the Loans, to the
extent the Agent shall not have been reimbursed by or on behalf of the Borrower,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or in any way relating to or arising
out of this Agreement and/or any of the other Financing Documents; provided that
--------
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
If any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
Section 8.5. Payee of Note Treated as Owner. The Agent may deem and
----------- ------------------------------
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
Section 8.6. Resignation by Agent.
----------- --------------------
Section 8.6.1. The Agent may resign from the performance of all its
-------------
functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to Sections 8.6.2 and 8.6.3 below or as otherwise provided
-------------- -----
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
-------------
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and in any event shall be an incorporated bank or
trust company with a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so appointed
-------------
within said 30 day period, the resigning Agent, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, shall then
appoint a successor Agent, who shall be a Lender and who shall serve as the
Agent, until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent as provided above.
50
<PAGE>
Section 8.6.4. If no successor Agent has been appointed pursuant to
-------------
Sections 8.6.2 or 8.6.3 by the 40th day after the date such notice of
- -------------- -----
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower or any
Subsidiary until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent, as provided above.
Section 8.7. Successor Agent. Upon the acceptance of any
----------- ---------------
appointment as the Agent hereunder by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent, shall be
discharged from its duties and obligations as the Agent under the Financing
Documents. After any retiring Agent's resignation hereunder as the Agent the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under the Financing
Documents.
ARTICLE 9.
MISCELLANEOUS
Section 9.1. Consent to Jurisdiction and Service of Process.
----------- ----------------------- --------------- -------
Section 9.1.1. Except to the extent prohibited by applicable law,
-------------
the Borrower irrevocably:
Section 9.1.1.1. agrees that any suit, action, or other legal
---------------
proceeding arising out of any of the Financing Documents or any of the Loans may
be brought in the courts of record of The Commonwealth of Massachusetts, the
State of New Jersey, the State of Delaware or any other state(s) in which any of
the Borrower's assets are located or the courts of the United States located in
The Commonwealth of Massachusetts, the State of New Jersey, the State of
Delaware or any other state(s) in which any of the Borrower's assets are
located;
Section 9.1.1.2. consents to the jurisdiction of each such court
---------------
in any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may have to the
---------------
laying of venue of such suit, action or proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Commitment is in
effect, the Borrower irrevocably designates the registered agent or agent for
service of process of the Borrower as reflected in the records of the Secretary
of State of Delaware as its registered agent, and, in the absence thereof, the
Secretary of State of Delaware as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or proceeding
brought in any such court and agrees and consents that any such service of
process upon such agent and written notice of such service to the Borrower by
registered or certified mail shall be taken and held to be valid personal
service upon the Borrower regardless of where the Borrower shall then be doing
business and that any
51
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such service of process shall be of the same force and validity as if service
were made upon it according to the laws governing the validity and requirements
of such service in each such state and waives any claim of lack of personal
service or other error by reason of any such service. Any notice, process,
pleadings or other papers served upon the aforesaid designated agent shall,
within three (3) Business Days after such service, be sent by the method
provided therefor under Section 9.6 to the Borrower at its address set forth
-----------
in this Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE BORROWER AND THE AGENT AND/OR
THE LENDERS WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY.
Section 9.2. Rights and Remedies Cumulative. No right or remedy
----------- ------------------------------
conferred upon or reserved to the Agent and/or the Lenders in any of the
Financing Documents is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. Delay or Omission not Waiver. No delay in exercising or
----------- ----------------------------
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may be exercised
from time to time, and as often as may be deemed expedient, by the Agent and/or
any of the Lenders.
Section 9.4. Waiver of Stay or Extension Laws. The Borrower covenants
----------- --------------------------------
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of any of
the Financing Documents; and the Borrower (to the extent that it may lawfully do
so) hereby expressly waives all benefit and advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Agent and/or any of the Lenders, but will suffer and
permit the execution of every such power as though no such law had been enacted,
except to the extent the Agent or any Lender is guilty of willful misconduct or
gross negligence.
Section 9.5. Amendments, etc. No amendment, modification, termination,
----------- ---------------
or waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the Agent and
consented to in writing by the Majority Lenders (or by the Agent acting alone if
any specific provision of this Agreement provides that the Agent, acting alone,
may grant such amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so consent or
direct the Agent to do so; provided, however, that any such amendment,
modification, termination, waiver or consent shall require a written notice
given to the Borrower by the Agent and consented to in writing by all of the
Lenders if the effect thereof is to (i) change any of the provisions affecting
the interest rate on the Loans, (ii) extend or modify the Commitment, (iii)
discharge or release the Borrower from its obligation to repay all principal due
under the Loans or release any collateral or guaranty for the Loans, (iv) change
any Lender's Pro Rata Share of the Commitment or the Loans, (v) modify this
Section 9.5, (vi) change the definition of Majority Lenders, (vii) extend
- -----------
any scheduled due date for payment of principal, interest or fees or (viii)
permit the Borrower to assign any of its rights
52
<PAGE>
under or interest in this Agreement, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Any amendment or modification of this Agreement must be signed by the
Borrower, the Agent and at least all of the Lenders consenting thereto who shall
then hold the Pro Rata Shares of the Loans required for such amendment or
modification under this Section 9.5 and the Agent shall sign any such
-----------
amendment if such Lenders so consent or direct the Agent to do so provided that
any Lender dissenting therefrom shall be given an opportunity to sign any such
amendment or modification. Any amendment of any of the Security Documents must
be signed by each of the parties thereto. No notice to or demand on the Borrower
and no consent, waiver or departure from the terms of this Agreement granted by
the Agent and/or the Lenders in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances.
Section 9.6. Addresses for Notices, etc. All notices, requests, demands
----------- --------------------------
and other communications provided for hereunder (other than those which,
under the terms of this Agreement, may be given by telephone, which shall be
effective when received verbally) shall be in writing (including telecopied
communication) and mailed (provided that in the case of items referred to in the
next-to-last sentence of Section 9.1 and the items set forth below as requiring
-----------
a copy to legal counsel for the Borrower, the Agent or a Lender, such items
shall be mailed by overnight courier for delivery the next Business Day),
telecopied or delivered to the applicable party at the addresses indicated
below:
If to the Borrower:
Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Attention: Patrick G. LePore
Telecopy: (201) 791-1121
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11):
- ------ ------
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2880
Attention: John R. LeClaire, P.C.
Telecopy: (617) 570-8150
If to Fleet as the Agent and/or a Lender:
Thomas W. Davies, Vice President
Fleet National Bank
75 State Street, Mail Stop MA BO F04M
Boston, Massachusetts 02109
Telecopy No: (617)-346-1633
With a copy to (if given pursuant to any of Sections 5.3.1, 5.3.5, 5.3.9,
-------------- ----- -----
5.3.10 and 5.3.11)
- ------ ------
Hinckley, Allen & Snyder
One Financial Center
Boston, Massachusetts 02903
Attention: Malcolm Farmer III, Esquire
Telecopy No: (617)-345-9020
53
<PAGE>
If to any other Lender, to the address set forth on Exhibit 1.9.
-----------
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to the delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
-----------
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. Costs, Expenses and Taxes. The Borrower agrees to pay on
----------- -------------------------
demand the reasonable fees (not to exceed $50,000 in connection with the
preparation, execution and delivery of the Financing Documents) and out-of-
pocket expenses of Messrs. Hinckley, Allen & Snyder, counsel for the Agent and
the reasonable fees and out-of-pocket expenses of any local counsel retained by
the Agent in connection with the preparation, execution and delivery,
administration (excluding expenses of any Lender's sale of a participation in or
sale or assignment of all or a portion of such Lender's Commitment or Loans
other than any such sale pursuant to Sections 2.2.3 or 2.9.7) of the Financing
-------------- -----
Documents and the reasonable fees and out-of-pocket expenses of counsel and
other than Fleet's initial sale or assignment of a portion of Fleet's Commitment
and Loans, as to which the Borrower shall pay up to $25,000 of legal and other
costs and expenses of Fleet and the Substituted Lender of the Financing
Documents and the Loans. The Borrower agrees to pay on demand all reasonable
costs and expenses (including without limitation reasonable attorneys' fees)
incurred by the Agent and/or any Lender, upon or after the occurrence and during
the continuance of any Default or Event of Default, if any, in connection with
the enforcement of any of the Financing Documents and any amendments, waivers,
or consents with respect thereto. In addition, the Borrower shall pay on demand
any and all stamp and other taxes and fees payable or determined to be payable
in connection with the execution and delivery of the Financing Documents, and
agrees to save the Lenders and the Agent harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes or fees, except those resulting from the Lenders' or Agent's
gross negligence or willful misconduct.
Section 9.8. Participations. Subject to compliance with the proviso in
----------- --------------
the first sentence of Section 9.11, any Lender may sell participations in all or
------------
part of the Loans made by it and/or its Pro Rata Share of the Commitment or any
other interest herein to a financial institution having at least $500,000,000 of
assets, in which event the participant shall not have any rights under any of
the Financing Documents (the participant's rights against such Lender in respect
of that participation to be those set forth in the Agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder or thereunder shall be determined as if such Lender had
not sold such participation. Such Lender may furnish any information concerning
the Borrower and any Subsidiary in the possession of such Lender from time to
time to participants (including prospective participants); provided that such
Lender and any participant comply with the proviso in Section 9.11.7 as if any
--------------
such participant was a Substituted Lender.
Section 9.9. Binding Effect; Assignment. This Agreement shall be binding
----------- --------------------------
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to
54
<PAGE>
the Agent and/or any Lender remains unpaid or the Commitment remains
outstanding; provided, however, that Sections 2.2.3 and 9.7 shall, except to
-------- ----- ---
the extent agreed to in a pay-off letter by the Agent and the Lenders in their
complete discretion, survive and remain in full force and effect for 90 days
following repayment in full of all amounts payable under or in connection with
all of the Financing Documents and any other such Indebtedness.
Section 9.10. Actual Knowledge. For purposes of this Agreement, neither
------------ ----------------
the Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established pursuant to this Agreement at the Agent
or such Lender, shall, in fact, have actual knowledge of such fact or state of
facts or unless written notice of such fact shall have been received by the
Agent or such Lender in accordance with Section 9.6.
-----------
Section 9.11. Substitutions and Assignments. Upon the request of any
------------ -----------------------------
Lender, the Agent and such Lender may assign all or any portion of its Pro Rata
Share of the Commitment and the Loans to a Federal Reserve Bank and may, subject
to the terms and conditions hereinafter set forth, take the actions set forth
below to substitute one or more financial institutions having at least
$500,000,000 in assets (a "Substituted Lender") as a Lender or Lenders hereunder
having an amount of the Loans as specified in the relevant Substitution
Agreement executed in connection therewith; provided that no Lender, Selling
Lender or Substituted Lender shall have a Pro Rata Share of the Commitment and
the Loans in the aggregate of less than 20%, Fleet and/or its Affiliates shall
retain for their own account at least 40% of the Term Loan and 40% of the
Revolving Credit Loan Commitment and, without the Borrower's written consent,
which shall not be unreasonably withheld or delayed, there shall be no more than
3 Lenders and each Lender shall be a financial institution organized under the
laws of the United States or any state located therein.
Section 9.11.1. In connection with any such substitution the
--------------
Substituted Lender and the Agent shall enter into a Substitution Agreement in
the form of Exhibit 9.11.1 hereto (a "Substitution Agreement") pursuant to which
--------------
such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in such Substitution Agreement and this Agreement
shall be amended by execution and delivery of each Substitution Agreement to
include such Substituted Lender as a Lender for all purposes under the Financing
Documents and to substitute for the then existing Exhibit 1.9 to this Agreement
-----------
a new Exhibit 1.9 in the form of Schedule A to such Substitution Agreement
-----------
setting forth the portion of the Loans belonging to each Lender following
execution thereof. Each Lender and the Borrower hereby appoint the Agent as
Agent on its behalf to countersign and accept delivery of each Substitution
Agreement and, to the extent applicable, the provisions of Article 8 hereof
shall apply mutatis mutandis with respect to such appointment and anything done
------- --------
or omitted to be done by the Agent in pursuance thereof.
Section 9.11.2. Without prejudice to any other provision of this
--------------
Agreement, each Substituted Lender shall, by its execution of a Substitution
Agreement, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Stockholders and/or any of the
Subsidiaries or the observance by the Borrower, or any other party of any of its
obligations under this Agreement or any of the other
55
<PAGE>
Financing Documents or (c) the legality, validity, effectiveness, adequacy or
enforceability of any of the Financing Documents.
Section 9.11.3. The Agent shall be entitled to rely on any
--------------
Substitution Agreement delivered to it pursuant to this Section 9.11 which is
------------
complete and regular on its face as to its contents and appears to be signed on
behalf of the Substituted Lender which is a party thereto, and the Agent shall
have no liability or responsibility to any party as a consequence of relying
thereon and acting in accordance with and countersigning any such Substitution
Agreement. The effective date of each Substitution Agreement shall be the date
specified as such therein and each Lender prior to such effective date shall,
for all purposes hereunder, be deemed to have and possess all of their
respective rights and obligations hereunder up to 12:00 o'clock Noon on the
effective date thereof.
Section 9.11.4. Upon delivery to the Agent of any Substitution
--------------
Agreement pursuant to and in accordance with this Section 9.11 and acceptance
------------
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's countersignature thereon pursuant to the terms
hereof without which such Substitution Agreement shall be ineffective): (i)
except as provided hereunder and in Section 9.11.5, the respective rights of
--------------
each Selling Lender and the Borrower against each other under the Financing
Documents with respect to the portion of the Loans being assigned or delegated
shall be terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with respect
thereto (all such rights and obligations to be so terminated or released being
referred to in this Section 9.11 as "Discharged Rights and Obligations"); and
------------
(ii) the Borrower and the Substituted Lender shall each acquire rights against
each other and assume obligations towards each other which differ from the
Discharged Rights and Obligations only in so far as the Borrower and the
Substituted Lender have assumed and/or acquired the same in place of the Selling
Lender in question; and (iii) the Agent, the Substituted Lender and the other
Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such Substituted Lender
been an original party to this Agreement as a Lender possessing the Discharged
Rights and Obligations acquired and/or assumed by it in consequence of the
delivery of such Substitution Agreement to the Agent.
Section 9.11.5. Discharged Rights and Obligations shall not include,
--------------
and there shall be no termination or release pursuant to this Section 9.11 of
------------
(i) any rights or obligations arising pursuant to any of the Financing Documents
in respect of the period or in respect of payments hereunder made during the
period prior to the effective date of the relevant Substitution Agreement or,
(ii) any rights or obligations relating to the payment of any amount which has
fallen due and not been paid hereunder prior to such effective date or rights or
obligations for the payment of interest, damages or other amounts becoming due
hereunder as a result of such nonpayment.
Section 9.11.6. With respect to any substitution of a Substituted
--------------
Lender taking place after the Closing Date, the Borrower shall issue to such
Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender. The Selling
Lender or the Substituted Lender shall pay to the Agent for its own account an
assignment fee in the amount of $3,000 for each assignment hereunder, which
shall be payable at or before the effective date of the assignment.
56
<PAGE>
Section 9.11.7. Each Lender may furnish to any financial institution
--------------
having at least $500,000,000 in assets which such Lender proposes to make a
Substituted Lender or to a Substituted Lender any information concerning such
Lender, the Borrower, Stockholders and any Subsidiary in the possession of that
Lender from time to time; provided that any Lender providing any confidential
information about the Borrower, any of the Stockholders and/or any Subsidiary to
any such financial institution shall first obtain such financial institution's
agreement to keep confidential any such confidential information.
Section 9.12. Payments Pro Rata. The Agent agrees that promptly after its
------------ -----------------
receipt of each payment from or on behalf of the Borrower in respect of any
obligations of the Borrower hereunder it shall distribute such payment to the
Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of the Lenders
agrees that, if it should receive any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
under Section 2.5.2 or otherwise or banker's lien, by counterclaim or cross
-------------
action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum which
with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due to
such Lender bears to the total amount of such Obligation then owed and due to
all of the Lenders immediately prior to such receipt, except for any amounts
received pursuant to Section 2.2.3, then such Lender receiving such excess
-------------
payment shall purchase for cash without recourse or warranty from the other
Lenders an interest in the Obligations of the Borrower to such Lenders in such
amount as shall result in a proportional participation by all the Lenders in
such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13. Indemnification. The Borrower irrevocably agrees to and
------------ ---------------
does hereby indemnify and hold harmless Agent and each of the Lenders, their
agents or employees and each Person, if any, who controls any of the Agent and
the Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages or liabilities
(including any amount paid in settlement of any action, commenced or threatened
and any amount described in Section 8.4) (collectively, the "Damages"), joint or
-----------
several, to which they, or any of them, may become subject under statutory law
or at common law, and to reimburse the Indemnified Parties for any legal or
other out-of-pocket expenses reasonably incurred by it or them in connection
with investigating, preparing for or defending against any of the Indemnified
Parties, insofar as such losses, claims, damages, liabilities or actions arise
out of or are related to any act or omission of the Borrower and/or any
Subsidiary with respect to any of the Related Transactions, this Agreement, any
of the Notes, any of Loans and/or any offering of securities by the Borrower
and/or any Subsidiary after the date hereof and/or in connection with the
Securities and Exchange Act of 1933 and/or failure to comply with any applicable
federal, state or foreign governmental law, rule, regulation, order or decree,
including without limitation, any Damages which arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact with
respect to matters relative to any of the foregoing contained in any document
distributed in connection therewith, or the omission or alleged omission to
state in any of the foregoing a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but excluding any Damages to the extent arising from or due to the
gross negligence or willful misconduct of any of the Indemnified Parties or
resulting from any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact in any written information contained in a
writing signed and provided by any of the Indemnified Parties and stated to be
specifically for use in any
57
<PAGE>
document being filed with the Securities and Exchange Commission or like
authority of any state of the United States in order to comply with the
Securities Act of 1933 or "Blue Sky" laws of any such state in connection with
any registration or qualification of securities thereunder.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from the Borrower
on account of the agreement contained in this Section 9.13, notice shall be
------------
given to the Borrower in writing of the commencement or threatening thereof,
together with a copy of all papers served, but the omission so to notify the
Borrower of any such action shall not release the Borrower from any liability
which it may have to such Indemnified Parties unless, and only to the extent
that, such omission materially prejudiced Borrower's ability to defend against
such action.
In case any such action shall be brought against any of the Indemnified
Parties, the Borrower shall be entitled to participate in (and, to the extent
that it shall wish, to select counsel and to direct) the defense thereof at its
own expense. Any of the Indemnified Parties shall have the right to employ its
or their own counsel in any case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless the employment of such
counsel shall have been authorized in writing by the Borrower in connection with
the defense of such action or the Borrower shall not have employed counsel to
have charge of the defense of such action or such Indemnified Party shall have
received an opinion from an independent counsel that there may be defenses
available to it which are different from or additional to those available to the
Borrower (in which case the Borrower shall not have the right to direct the
defense of such action on behalf of such Indemnified Party), in any of which
events the same shall be borne by the Borrower. If any Indemnified Party
settles any claim or action with respect to which the Borrower has agreed to
indemnify such Indemnified Party pursuant to the terms hereof, the Borrower
shall have no liability pursuant to this Section 9.13 to such Indemnified Party
------------
with respect to such claim or action unless the Borrower shall have consented in
writing to the terms of such settlement.
The provisions of Section 9.13 shall be effective only to the fullest
------------
extent permitted by law.
Section 9.14 Confidentiality The Agent and the Lenders will maintain the
------------ ---------------
confidentiality of the Database or any trade secrets or proprietary information
relating to the Borrower or any Subsidiary which have been identified by an
Authorized Representative in writing as confidential on the information itself
or otherwise in a written notice received by the Agent and each Lender (the
"Confidential Information") and, except as provided below, will exercise the
same degree of care that each of the Agent and the Lenders exercises with
respect to its own proprietary information to prevent the unauthorized
disclosure of the Confidential Information to third parties. Confidential
Information shall not include information that either: (a) is in the public
domain or in the knowledge or possession of the Agent or the Lenders when
disclosed to the Agent or the Lenders, or becomes part of the public domain
after disclosure to the Agent or the Lenders by a third party, provided that
the Agent or the Lenders do not have actual knowledge that such third party is
prohibited from disclosing such information. The terms of this section shall
not apply to disclosure of Confidential Information by the Agent or the Lenders
that is in their good faith opinion, compelled by laws, regulations, rules,
orders or legal process or proceedings or to: (i) any party, including a
prospective participant or assignee, who has signed a confidentiality agreement
containing terms substantially similar to those contained herein; (ii) legal
counsel, examiners, auditors, directors, officers, agents, employees of the
Agent or the Lenders and examiners, auditors and investigators having
regulatory authority over the
58
<PAGE>
Agent or the Lenders; or (iii) any party in connection with the exercise of
remedies by the Agent or the Lenders after the occurrence of an Event of
Default.
Section 9.15 Governing Law. This Agreement and each Note shall be
----------- -------------
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.16. Severability of Provisions. Any provision of this Agreement
------------ --------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.17. Headings. Article and Section headings in this Agreement
------------ --------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.18. Counterparts. This Agreement may be executed and delivered
------------ ------------
in any number of counterparts each of which shall be deemed an original, and
this Agreement shall be effective when at least one counterpart hereof has been
executed by each of the parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
59
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their respective officers thereunto duly
authorized, as of December , 1996.
In the presence of: BORON, LEPORE & ASSOCIATES, INC.
_________________________ By:__________________________
Name:
Title:
In the presence of: FLEET NATIONAL BANK,
as Agent for the Lenders and as a Lender
_________________________ By:__________________________
Name:
Title:
_________________________ By:__________________________
Name:
Title:
60
<PAGE>
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (the "Amendment") is entered into as
of July 31, 1997 by and between Boron, LePore & Associates, Inc., a Delaware
corporation and formerly a New Jersey corporation with a principal place of
business at 17-17 Route 208 North, Fairlawn, NJ 07410 (hereinafter the
"Borrower") and Fleet National Bank, a national banking association organized
under the laws of the United States and having an office at 75 State Street,
Boston, MA 02109 (hereinafter sometimes the "Agent" as Agent for itself and the
other Lenders, sometimes "Fleet" and sometimes a "Lender"), BankBoston, N.A.
formerly known as The First National Bank of Boston, a national banking
association organized under the laws of the United States and having an office
at 100 Federal Street, Boston, Massachusetts 02116 as a Lender and each of the
other Lenders who now are or hereafter become parties to that certain Loan
Agreement by and between the Borrower, the Agent and the Lenders dated December
4, 1996, as amended (the "Agreement"). The Borrower, the Agent and the Lenders
hereby mutually agree as follows:
1. Capitalized terms used herein and not expressly defined herein shall
have the respective meanings assigned thereto in the Agreement.
2. The Agreement is hereby amended, effective as of the date hereof, as
follows:
2.1 The first sentence of Section 2.1.0 of the Agreement shall read as
follows:
"Section 2.10. The Revolving Credit Loans. Each of the Lenders
------------- --------------------------
severally agrees, subject to the terms and conditions of this Agreement, to
make Advances of Revolving Credit Loans to the Borrower from time to time
after receipt by the Agent from time to time before the Revolving Credit
Repayment Date of, and at the times provided for in, a Request and an
Interest Rate Election from the Borrower in accordance with this
Agreement, during the period commencing on the Closing Date and ending on
the Business Day immediately preceding the Revolving Credit Repayment Date,
in an aggregate principal amount at any one time outstanding not to exceed
such Lender's Pro Rata Share of the Loan Formula Amount."
2.2 Section 5.1.11 of the Agreement shall read as follows:
"Section 5.1.11. Minimum Debt Service Coverage Ratio. Maintain at the
-------------- -----------------------------------
end of each fiscal quarter of the Borrower in each period set forth below a
ratio of (i) EBITDA less, for the fiscal period in question, the sum of
----
taxes paid or payable and Capital Expenditures to (ii) the sum of Total
Debt Service (EBITDA, taxes paid or payable and Total Debt Service to be
multiplied by 2 for purposes of calculation of this ratio for the period
ended June 30, 1997 and to be multiplied by 1.33 for purposes of
calculation of this ratio for the period ending September 30, 1997) of not
less than the ratio set forth below opposite such period, such ratio to be
measured (a) at each Borrower fiscal quarter end on or prior to December
31, 1997 for the period commencing January 1, 1997 and ending on such
fiscal quarter end and (b) at each Borrower fiscal quarter end thereafter
for the
<PAGE>
rolling four Borrower fiscal quarter period consisting of the Borrower
fiscal quarter then ending and the three immediately preceding Borrower
fiscal quarters:
<TABLE>
<CAPTION>
Borrower Fiscal Quarter(s) Ending Ratio
--------------------------------- -----
<S> <C>
March 31, 1997 1.40:1.00
June 30, 1997 1.15:1.00
September 30, 1997 1.20:1.00
December 31, 1997 1.40:1.00
January 1, 1998 through December 31, 1998 1.30:1.00
January 1, 1999 through December 31, 1999 1.20:1.00
January 1, 2000 and thereafter 1.15:1.00
</TABLE>
2.3 Section 5.2.17, clause (i) of the Agreement shall read as follows:
"...(i) during 1997 in excess of $2,250,000,..."
2.4 Section 6.1.6 of the Agreement is amended by changing the reference
"...5.1.13..." to "...5.1.14...".
3. The Agreement, amended as set forth above, is hereby ratified,
confirmed and approved.
4. The Borrower hereby represents and warrants that (i) the Borrower has
full power and authority to execute and deliver this Amendment and to perform
its obligations hereunder, (ii) the Borrower has taken all corporate action
necessary for the execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its obligations hereunder and (iii) this
Amendment constitutes the Borrower's valid and binding obligation enforceable
against the Borrower in accordance with its terms except to the extent
enforceability may be subject to bankruptcy, insolvency, moratorium and other
similar laws affecting the rights of creditors generally or the application of
principles of equity, whether in an action at law or proceeding in equity.
5. The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Agreement nor constitute an amendment of any provision of the
Agreement, except as expressly set forth herein. Upon the effectiveness of this
Amendment (i) each reference in the Agreement to "this Agreement", "hereunder",
"hereof", "herein", or words of similar import shall mean and be a reference to
the Agreement as amended by this Amendment and (ii) each reference in any Note,
or in any of the Financing Documents or Related Transaction Documents to the
"Loan Agreement" or the "Agreement" shall mean and be a reference to the
Agreement as amended by this Amendment.
6. This Amendment shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts without regard to its conflict of
laws provisions.
2
<PAGE>
7. This Amendment may be executed and delivered in any number of
counterparts, each of which shall be deemed an original and this Amendment shall
be effective when at least one counterpart hereof has been executed by each of
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment of
Loan Agreement to be executed as a sealed instrument by their respective
officers thereunto duly authorized as of the date first written above.
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Martin J. Veilleux
-------------------------------------
Name: Martin J. Veilleux
-----------------------------------
Title: Controller
----------------------------------
FLEET NATIONAL BANK, as Agent for
the Lenders and as a Lender
By: /s/ Thomas W. Davies
-------------------------------------
Name: Thomas W. Davies
-----------------------------------
Title: Senior Vice President
----------------------------------
BANKBOSTON, N.A. formerly known as
The First National Bank of Boston
By: /s/ Ellen L. Korpi
-------------------------------------
Name: Ellen L. Korpi
-----------------------------------
Title: Director
----------------------------------
#175576vl
3
<PAGE>
Exhibit 10.1
------------
LEASE RENEWAL AGREEMENT
-----------------------
This Agreement made the 8th day of September, 1993 between MBM Associates,
a joint venture, (hereinafter referred to as "Landlord"), having an office at
808 High Mountain Road, Franklin Lakes, New Jersey, and Boron-Lepore Associates,
Inc. located at 17-17 Route 208 North, Fair Lawn, New Jersey, (hereinafter
referred to as "Tenant").
W I T N E S S E T H
Whereas Landlord and Tenant entered into the lease outlined below in
Landlord's building located at 17-17 Route 208 North, Fair Lawn, New Jersey,
(hereinafter referred to as "Premises"), and ...
LEASE
LEASE DATE FLOOR UNIT SIZE EXPIRATION DATE
---------- ----- --------- ---------------
06/22/88 2nd Floor 12,225 SF 07/31/94
Whereas the lease referenced above currently remains in full force and
effect, and ...
Whereas both Landlord and Tenant now wish to modify some terms of that
agreement in accordance with the conditions set forth herein.
Now, therefore, in consideration of the mutual covenants and conditions set
forth herein, Landlord and Tenant do hereby agree as follows:
1. Lease Term - Landlord hereby grants Tenant, and Tenant hereby
----------
accepts from Landlord a lease renewal of five (5) years for the lease referenced
above. Said five (5) year renewal shall commence on August 1, 1994, and expire
on July 31, 1999.
2. Conditions/Rentals - Said five (5) year lease renewal shall be on
------------------
the same terms and conditions as the original lease, including the original base
year and operating cost provisions except that the Basic Rent shall be reduced
to $16.50 per square foot gross plus tenant electric.
3. Landlord and Tenant agree that Landlord shall not be responsible
to complete any tenant improvements to the unit as a result of this renewal
agreement and tenant agrees the space in an "as is" condition.
4. Tenant agrees to provide Landlord with an up-to-date financial
statement on tenant's organization within two weeks of the execution date of
this agreement. Landlord
<PAGE>
reserves the right to void this Lease Renewal Agreement for a period of two
weeks of receipt of said financial statements if they are not satisfactory to
Landlord.
This document shall be attached to the original lease and deemed
a part thereof.
In witness whereof, the undersigned, who have due authority to enter
into this agreement, have set their hands as of the date first above written.
MBM ASSOCIATES BORON, LEPORE & ASSOCIATES INC.
/S/ W. Peter McBride /S/ Gregory F. Boron
- -------------------- --------------------
Authorized Signature Authorized Signature
/S/ Malvern C. Burroughs
- ------------------------
Malvern C. Burroughs
/S/ Stanley H. Marcus
- ---------------------
Stanley H. Marcus
<PAGE>
THIS LEASE, made the 22nd day of June, 1988, by and between MBM ASSOCIATES,
A Joint Venture, having an office at 808 High Mountain Road, Franklin Lakes, New
Jersey (hereinafter called the "Landlord") and THOMAS S. BORON, INC., with
offices at 139 Harristown Road, Glen Rock, New Jersey 07452 (hereinafter called
the "Tenant").
W I T N E S S E T H:
1. PREMISES
--------
The Landlord and Tenant, in consideration of the mutual covenants and
conditions set forth herein do hereby agree as follows:
The Landlord hereby leases to the Tenant and the Tenant hereby hires from
the Landlord, subject to the terms and conditions of this Lease, the following
space: Approximately 12,225 square feet of space in the office building owned by
the Landlord located at 17-17 Route 208 (Lot 2 Block 4801), Fair Lawn, New
Jersey (hereinafter referred to as the "Land") and known as the Fair Lawn
Executive Centre, which space is located on the second floor thereof and more
particularly described and outlined in red upon the plan attached hereto as
Exhibit "A" and made a part hereof (hereinafter called the "Leased Premises" or
"Premises"), together with the right to use in common with other Tenants of the
Building, their invitees, customers and employees, those areas of the common
facilities as hereinafter defined and together with the right to use those
parking spaces as described in paragraph 3(d) herein.
2. TERM
----
The term of this Lease (hereinafter referred to as the "Term") shall
be for six (6) years commencing on August 1, 1988 and ending at 12:00 midnight
on July 31, 1994.
3. USE AND PARKING
---------------
(a) The Leased Premises, or any part thereof, shall not be used by
anyone except the Tenant, its invitees, customers and employees and shall be
used or permitted to be used for no use other than the following: general
offices and uses incidental and related thereto which are in accordance with
local governmental codes and regulations.
(b) Tenant acknowledges and agrees with Landlord that the Building
should be maintained and preserved as a prestigious and first class office
building and that its special character arising from its location should be
specifically protected and preserved. (Landlord represents to Tenant that
Landlord shall not store nor permit any other Tenants in the building to store
any substances or materials which would be considered hazardous to the general
public's health.) Tenant therefore represents that it is not leasing the
Premises, and it will not use such Premises, for any purpose other than that
provided in this Lease. Tenant further
<PAGE>
agrees that Landlord may refuse to consent to the assignment of this Lease or
the subletting of the Premises for any of the following prohibited uses: an
educational facility of any type including correspondence schools; employment
agencies, model agencies; spas; health, physical fitness or exercise salon;
small loan offices; real estate brokers, residential land development offices;
doctors, dentists or other professions or businesses that by their nature tend
to generate excess customer traffic or any other use which Landlord in good
faith determines will or is likely to demean the character of the Building or
its environment, and such refusal shall not be considered unreasonable. An
"educational facility" as referenced above shall not preclude Tenant from using
its demised premises for its regularly scheduled lecture series consisting of
approximately 12 to 15 people on an approximate monthly basis.
Moreover, Tenant specifically agrees that Landlord's leasing of any
portion of the building of which the Premises are a part for any of the
foregoing prohibited uses shall not constitute or be deemed to constitute a
waiver of Landlord's right to prohibit Tenant from assigning or subletting the
Leased Premises or any part thereof for any such prohibited use.
(c) The Tenant will not, without the prior written consent of the
Landlord, permit the preparation, dispensing or serving of any beverages and/or
foods within the Leased Premises, except that this shall not prohibit the
preparation and consumption of hot and hold beverages or the consumption of
sandwiches.
(d) Parking. Landlord assigns to Tenant a number of parking spaces
-------
equal to four (4) spaces for each 1,000 square feet of usable space rented which
number will be rounded to the nearest lower whole number. Tenant shall receive
a portion of its parking spaces within the garage area ("Garage Area"), said
number of spaces being determined by multiplying Tenant's proportionate share
("Tenant's Proportionate Share"), against all of the spaces in the Garage Area.
All Garage Area spaces assigned to the Tenant shall be specifically assigned for
Tenant's exclusive use. Tenant agrees that it will not permit its employees to
park in any other spaces in the Garage Area than those assigned by Landlord to
it and that Tenant shall take such action at the request of Landlord as may be
necessary to insure that Tenant and its employees do not park in spaces assigned
to other tenants or reserved to the Landlord. The remaining spaces that Tenant
is entitled to shall be located in Landlord's outside parking lot, (the "Outside
Parking Area"). These spaces will not be specifically designated for the
Exclusive use of the Tenant, however, but rather shall be available to all
tenants of the Building. The use of parking spaces assigned to Tenant shall be
subject to such rules and regulations as may be established by Landlord,
including all signs and notices posted by Landlord in the Outside Parking Area,
Garage Parking Area or roadways leading thereto. Landlord reserves the right to
utilize a card-operated gate-controlled or similar system as a method of
limiting the use of the Garage Area to those assigned therein. (Total Spaces
Provided 48; Covered Spaces Included 11.
4. OCCUPANCY
---------
2
<PAGE>
(a) The Leased Premises shall be deemed ready for occupancy on the
earliest date on which all of the following conditions have been met:
(i) Landlord's Work, and so much of Tenant's Finish Work as
Landlord shall have undertaken pursuant to the Tenant's Work Letter
described in Paragraph 24 hereof and attached hereto as Exhibit "C" and
made a part hereof in the Leased Premises have been substantially
completed; and they shall be so deemed notwithstanding the fact that minor
or insubstantial details of construction, mechanical adjustment, or
decoration remain to be performed, the non-completion of which does not
interfere with Tenant's use of the Leased Premises; and
(ii) Reasonable means of access and facilities necessary to
Tenant's use and occupancy of the Leased Premises, including corridors,
elevators and stairways and heating, ventilating, air conditioning,
sanitary, water and electrical facilities, have been installed and are in
reasonably good operating order and available to Tenant. Landlord shall
give Tenant a preliminary notice estimating when the conditions listed in
subsections (i) and (ii) above will be met, on a date which shall be at
least 10 days prior to the estimated date set forth in such preliminary
notice. Any variance between the date so estimated and the date such
conditions are met shall be of not consequence, except as herein modified.
(b) If any of the conditions listed in Paragraph 4(a) shall be
delayed due to any act or omission of Tenant or any of its employees, agents or
contractors or of any failure (not due to any act or omission of Landlord or any
of its employees, agents or contractors) to plan or complete Tenant's Finish
Work diligently and expeditiously, which shall continue after Landlord shall
have given Tenant reasonable notice that such act, omission or failure would
result in delay, and such delay shall have been unavoidable by landlord in the
exercise of reasonable diligence and prudence, the Leased Premises shall be
deemed ready for occupancy on the date when they would have been ready but for
such delay.
(c) If and when Tenant shall take actual possession of the Leased
Premises, it shall be conclusively presumed that the same were in satisfactory
condition (except for latent defects) as of the date of such taking of
possession. Tenant shall take actual possession of the Leased Premises on the
date Landlord advises that same have been completed notwithstanding the fact
that minor items remain to be completed to long as the items to be completed
shall not interfere with Tenant's use of the Leased Premises. In such event,
Tenant shall provide Landlord with a punch list of items remaining to be
completed which items shall be completed within thirty (30) business days.
Except to the extent specifically provided in the punch list, Tenant's
occupation of the Leased Premises shall be conclusively presumed to operate to
terminate all of Landlord's obligation under the Work Letter. Tenant shall
provide Landlord with a letter accepting the Leased Premises, in form and
substance satisfactory to comply with any requirements for same contained in any
mortgage constituting a lien on the premises of which the leased Premises are a
part.
3
<PAGE>
(d) In the event that the Leased Premises are not ready for
Tenant's occupancy at the time of the commencement of the term fixed by this
Lease, this Lease shall not be affected thereby, but in such event no rent shall
be due hereunder until Landlord shall have given notice to the Tenant pursuant
to Paragraph 4(a) hereof or Tenant shall have in fact occupied the Leased
Premises unless the reason for the Premises not being ready are due to acts of
Tenant, in which case rent shall be due as called for under the terms of the
Lease, provided, however, that in the event Landlord for any reason shall be
unable to give Tenant notice that the Leased Premises will be ready for Tenant's
occupancy no later than two (2) months after the commencement date set forth in
Paragraph 2 hereof, then Tenant's sole right shall be to notify Landlord of its
election to terminate this agreement.
5. BASIC RENT AND ADDITIONAL RENT
------------------------------
(a) Starting on the first day of the thirteenth month from the
Commencement Date and continuing through the fifth year following said date,
Tenant shall pay as basic rent ("Basic Rent") the annual sum of TWO HUNDRED
SIXTY-TWO THOUSAND EIGHT HUNDRED THIRTY-SEVEN AND 50/100 ($262,837.50) DOLLARS
or $21.50 per square foot of rental space in equal monthly installments of
TWENTY-ONE THOUSAND NINE HUNDRED THREE AND 13/100 DOLLARS ($21,903.13) on or
before the first date of each month, in advance, to Landlord at the address of
the Landlord above designated or such other place as shall be designated by
Landlord. Landlord agrees to waive basic rental payments (with the exception of
tenant electric) for the initial twelve (12) months of the lease term.
(b) As additional consideration to the Tenant for the Tenant's
entry into this lease transaction, and upon the condition that the Tenant is not
in default of this Agreement of Lease, the Landlord shall pay to the Tenant the
sum of $8,000. on August 1, 1988 and a similar sum on September 1, 1988, but
such payment shall not be required at any other times.
(c) Tenant shall also pay as Additional Rent any and all such other
sums of money as shall become due to the Landlord pursuant to the terms and
provisions hereof including but not limited to Tenant improvements authorized by
and to be paid by Tenant, without demand therefor and without any abatement,
counterclaim, deduction or setoff whatsoever except as provided herein. Basic
Rent and Additional Rent is sometimes hereinafter collectively referred to as
"Rent".
(d) If Tenant shall fail to pay the Basic Rent and Additional Rent
within ten (10) business days following the due date of any such payment, and if
Landlord agrees to accept any such late payment, then in the event of such late
payment, the Tenant agrees to pay to Landlord interest on any such sums at the
rate of 5% of any such late installment of Rent or Additional Rent, as
Additional Rent, or if said rate under the circumstances then prevailing shall
not be lawful, then at the maximum lawful rate permitted. The foregoing shall
be in addition to any other right or remedy which may be available to Landlord
in the event of default by Tenant.
4
<PAGE>
(e) The Tenant agrees to deposit with the Landlord upon the
execution date of this Lease the sum of $21,903.13 as security for the payment
of Rent and/or Additional Rent hereunder and the full and faithful performance
by the Tenant of the covenants and conditions on the part of the Tenant to be
performed. Said sum shall be returned to the Tenant, without interest after the
expiration of the term hereof, provided that the Tenant has fully and faithfully
performed all such covenants and conditions and is not in arrears in Basic Rent
and/or Additional Rent. During the term hereof the Landlord may, if the Landlord
so elects, have recourse to such security, to make good any default by the
Tenant, in which event the Tenant shall, on demand, promptly restore said
security to its original amount. Liability to repay said security to the Tenant
shall run with the reversion and title to the Leased Premises, whether any
change in ownership thereof be by voluntary alienation or as the result of
judicial sale, foreclosure or other proceedings, or the exercise of a right of
taking or entry by any mortgages. The Landlord shall assign or transfer said
security, for the benefit of the Tenant, to any subsequent owner or holder of
the reversion of title to the Leased Premises, in which case the assignee shall
become liable for the repayment thereof as herein provided, and the assignor
shall be deemed to be released by the Tenant from all liability to return such
security. This provision shall be applicable to every alienation or change in
title and shall in no wise be deemed to permit the Landlord to retain the
security after termination of the Landlord's ownership of the reversion or
title. The Tenant shall not mortgage, encumber or assign said security without
the written consent of the Landlord.
6. SERVICES TO BE RENDERED BY LANDLORD-LANDLORD IS
EXCULPATION
------------------------------------------------
(a) Landlord, at its expense, shall provide public elevator
service, passenger and service, by elevators serving the floor on which the
Leased Premises are situated during regular hours of business days and shall
have at least one passenger elevator subject to call at all other times.
(b) Landlord will furnish heating, ventilating and air conditioning
to Leased Premises when necessary during regular hours of business days to an
inside temperature of 78 degrees F. dry bulb and 50% relative humidity when
outside temperatures are 95 degrees F. dry bulb and 75 degrees F. wet bulb and
70 degrees F. inside when outside temperatures are 0 degrees F. with a wind
velocity of 15 M.P.H. provided however that Landlord may reduce the temperature
if necessary to comply with any federal, state or municipal law, ordinance rule,
regulation or executive order.
(c) The Landlord agrees to furnish air conditioning and to maintain
the Leased Premises for the comfortable occupancy and use of the Leased Premises
during regular hours of business days. The Tenant agrees to keep all windows in
the Leased Premises closed at all times during which the air-conditioning system
is in operation and otherwise to cooperate with the Landlord and to abide by all
regulations or requirements which the Landlord may reasonably prescribe for the
proper functioning and protection of the air conditioning system.
5
<PAGE>
(d) Landlord, at its expense, shall furnish adequate hot and cold
water to the building for drinking, lavatory and cleaning purposes. If Tenant
uses water for any other purpose Landlord, at Tenant's expense, shall install
meters to measure Tenant's consumption of cold water and/or hot water for such
other purposes as the case may be. Tenant shall pay for the quantities of cold
water and hot water shown on such meters, at Landlord's cost thereof, on the
rendition of Landlord's bills therefor.
(e) Landlord, at its expense, and on Tenant's request, shall
maintain a listing on the building directory of the Tenant's name as set forth
in the recital of this Lease.
(f) While Tenant is not in default under any of the terms of this
Lease, the Landlord will provide office cleaning and maintenance to the Premises
as set forth in Exhibit "D" attached hereto and made a part hereof. Except as
set forth in Exhibit "D", the Tenant shall pay the cost of all other cleaning
services required by the Tenant.
(g) It is understood that no deduction whatsoever shall be made
from the amount of rent payable hereunder, should any heating, lighting,
elevator service, air conditioning, or janitor's services not be used by the
Tenant, nor shall the Landlord be liable to the Tenant for any interruption of
heating, lighting, elevator service, air conditioning or janitor service caused
by strike, break downs, inability to secure fuel or other required power or by
any other cause not due to negligence on the part of the Landlord. The Tenant
shall not be liable, under any circumstances, for loss of or injury to property,
however, occurring, through or in connection with or incidental to the
furnishing of or failure to furnish any of the services required by said Exhibit
"D", or for any interruption to the Tenant's business, however occurring.
(h) As used in this Paragraph 6, the term "regular hours of
business days" shall mean, unless otherwise indicated, the hours of 8:00 a.m. to
6:00 p.m. on weekdays and 8:00 a.m. to 1:00 p.m. on Saturdays, excluding all
Sundays and the following holidays:
(a) New Years Day;
(b) Washington's Birthday;
(c) Memorial Day;
(d) Independence Day;
(e) Labor Day;
(f) Thanksgiving Day;
(g) Christmas Day;
6
<PAGE>
However, the Landlord agrees that Tenant may use the Leased Premises after
6:00 p.m. weekdays and after 1:00 p.m. on Saturdays, and on Sundays and legal
holidays without additional charge for said use, but Landlord shall not be
required to furnish any heat, ventilation or air conditioning beyond that
normally furnished for those hours. In the event Tenant requires heat,
ventilation or air conditioning after the hours of 6:00 p.m. weekdays, after
1:00 p.m. on Saturdays, or on Sundays or legal holidays, Landlord will supply
same at an hourly rate which will be established by Landlord to be paid by
Tenant as billed. Tenant shall give Landlord twenty-four (24) hours notice when
it shall require such after hour, Sunday or other holiday heat, ventilation or
air conditioning.
7. REPAIRS AND MAINTENANCE
-----------------------
(a) The Landlord agrees that the Leased Premises shall be delivered
to the Tenant at the beginning of the term in clean and first class condition
and completed in accordance with the Tenant's Work Letter.
(b) The Tenant shall take good care of the Leased Premises and any
and all fixtures therein, and shall be responsible for any injury, damage, or
breakage done by the Tenant or the Tenant's agents and servants and at the end
of the term or earlier termination of the Lease shall quit and surrender said
premises in as good condition as reasonable use thereof will permit.
(c) The Tenant shall make no alterations, changes, additions or
improvements in the Leased Premises without the written consent of the Landlord,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Tenant shall have no right to make any alterations, changes, additions or
improvements to the electrical and Heating, Ventilating and Air Conditioning
systems in the Leased Premises. Any such required alterations, changes,
additions or improvements to the electrical or HVAC systems shall be made
exclusively by Landlord's contractors based on plans and specifications prepared
by Tenant and approved by Landlord's engineers at Tenants' cost and expense.
(d) All alterations, additions and improvements made by either
party upon the Leased Premises shall become the property of the Landlord and
shall remain upon and be surrendered with the Leased Premises as part thereof,
at the expiration or termination of the Lease; except that at such expiration or
termination, Tenant shall have the right to remove and retain as Tenant's own
property any additions or improvements made by the Tenant or at Tenant's sole
expense, except for carpeting, provided that Tenant shall repair any damage
caused by such removal and shall restore the Leased Premises to the same or as
good condition as existed immediately before such additions or improvements were
made. Tenant shall, if requested by Landlord, remove any such interior changes,
alterations, additions and improvements at the expiration of the term herein
provided and restore the Leased Premises to the condition they were in at the
beginning of the term.
7
<PAGE>
(e) Tenant shall, before making any alterations, additions,
installations, or improvements, at its expense, obtain all permits, approvals
and certificates required by any governmental or quasi-governmental bodies and
(upon completion) certificates of final approval thereof and shall deliver
promptly duplicates of all such permits, approvals and certificates to Landlord,
and Tenant agrees to carry and will cause Tenant's contractors and sub-
contractors to carry such Workmen's Compensation, general liability, personal
and property damage insurance as Landlord may require. Tenant agrees that any
alterations, additions or installations shall be undertaken exclusively by
contractors whose employees are members of appropriate unions. Tenant agrees to
obtain and deliver to Landlord written and unconditional waivers of mechanic's
liens upon the real property in which the Leased Premises are located, for all
work, labor and services to be performed and materials to be furnished in
connection with such work, signed by all contractors, subcontractors,
materialmen and laborers to become involved in such work. Notwithstanding the
foregoing, if any mechanic's lien is filed against the Leased Premises, or the
building of which the same forms a part, for work claimed to have been done for,
or materials furnished to, Tenant, whether or not done pursuant to this
Paragraph the same shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's expense by filing the bond required by law, or in such
other manner satisfactory to Landlord.
8. ELECTRICITY
-----------
(a) Tenant agrees to pay to Landlord, as Additional Rent, the cost
of all tenant electric energy it consumes, it being understood that for this
purpose the charge to Tenant shall be Tenant's proportionate share of the cost
of electric energy for the entire building of which the Leased Premises are a
part (which will vary with the percentage of occupancy of said entire building).
In the event that Tenant installs any computer equipment or other high
electrical usage equipment, Landlord reserves the right to place an electrical
meter on said equipment as well as any other equipment used in conjunction
therewith at Tenant's sole cost and expense. The charges for electrical energy
consumed by such equipment shall be paid by Tenant in addition to all other sums
due under this agreement, the cost thereof to be at the established rate charged
by the utility company supplying electrical service to the Leased Premises. Said
payments shall be made within ten (10) days of the presentment of the bill
therefor which shall be monthly.
(b) Tenant's use of electric energy in the leased Premises shall
not at any time exceed the capacity of any of the electrical conductors and
equipment in or otherwise serving the Leased Premises. In order to insure that
such capacity is not exceeded and to avert possible adverse effect upon the
building electric service, Tenant shall not, without Landlord's prior written
consent in each instance (which shall not be unreasonably withheld), connect any
additional fixtures, appliances or equipment to the building electric
distribution system or make any alteration or addition to the electric system of
the Leased Premises existing on the date of the commencement of this Lease.
Should Landlord grant such consent, all additional risers or
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other equipment required therefor shall be provided by Landlord and the cost
thereof shall be paid by Tenant upon Landlord's demand.
9. TAX AND OPERATING EXPENSES ADJUSTMENT
-------------------------------------
(a) Commencing with the beginning of the second Lease Year and
continuing thereafter throughout the Term of this Lease, Tenant agrees to pay as
Additional Rent, its Proportionate Share, as hereinafter defined, of any
increase in Real Estate Taxes assessed against the Land and Building plus any
increase in Operating Expenses. As used herein:
(i) "Increase" shall mean the difference between the Real
Estate Taxes and/or operating Expenses for any Subsequent Lease Year and
the Base Real Estate Taxes and/or the Base Operating Expenses;
(ii) "Operating Expenses," shall mean the total of the amount
of all normal and customary expenses paid or incurred by Landlord in
operating the Land and Building and shall include, by way of illustration
and not of limitation, management fees (not to exceed that percentage,
which is standard in the industry and which percentage as management fee
shall not be increased once initially established), labor, including all
wages and salaries, social security taxes and other taxes which may be
levied against the Landlord upon such wages and salaries for the Building
personnel not above custodial grade, supplies, repairs and maintenance,
maintenance and service contracts, painting wall and window washing,
laundry and towel service, tools and equipment, fire and other insurance,
trash removal, lawn care, snow removal, common area utilities and all other
items properly constituting direct operating costs according to standard-
accounting practices whether or not the same shall be enumerated as part of
the services or obligations of the Landlord hereunder, but not including
legal and accounting fees, tenant fix-up, brokerage fees, advertising
costs, services not provided on a regular basis to tenants of the Building
or to the extent said services are disproportionate to those normally
provided to all tenants of the Building, depreciation of Building or
equipment, interest income or excess profit taxes, costs of maintaining the
Landlord's business identity, restoration and repair costs covered by
insurance proceeds, capital improvements unless such improvements ate for
the purpose of' reducing operating Expenses within the Building (in which
event the costs thereof shall be included but only to the extent of the
cost saving), or are required under any governmental law, ordinance or
regulation, in which event the costs thereof shall be included. All such
capital items which pursuant to the previous sentence, are authorized to be
included in Operating Expenses shall only be included on an amortized basis
with said item being amortized over its useful life as determined by the
Internal Revenue Code of 1986 and the regulations applicable thereto, or if
no guidelines are available in said code, in accordance with generally
accepted accounting principles and the portion so determined for the
appropriate Lease Year together with interest at two
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(2%) percent over the prime lending rate announced from time to time by
Chase Manhattan Bank, N.A. to its most creditworthy borrowers on the
unamortized amount shall, subject to the cap as to Operating Expenses
reduction, be the maximum included in any Lease Year. Additionally, to the
extent that any item of Operating Expenses in a year subsequent to the Base
Operating Expense Year was not included in the Base Operating Expenses,
then the cost of said item shall be added to the Base Operating Expenses
for purposes of comparison. For example, if Base Operating Expenses are
$1,000.00 but no repairs were included in the Base Operating Expense Year
(i.e. the first Lease Year) then the first Lease Year in which repairs
occur shall result in the cost of said repairs during said Lease Year being
added to the Base Operating Expenses. So, if hypothetically, the first
Lease Year for repairs is the third Lease Year and repairs cost $25.00 and
all Operating Expenses for the Building including repairs for said year
were $1,075.00 the comparison would be as follows:
<TABLE>
<S> <C>
Third Lease Year operating Expenses $1,075.00
Minus Base Operating Expenses
($1,000.00) plus initial repair
of $25.00 $1,025.00
---------
Difference to which Tenant
Proportionate Share is applied $ 50.00
</TABLE>
Base Operating Expenses shall be those expenses subject to, adjustment
as above and pursuant to Subparagraph (C) hereof incurred on an accrual basis
during the first Lease Year which Lease Year shall be the Base Operating Expense
Year.
Notwithstanding anything contained herein to the contrary, Base Operating
Expenses shall not include any costs related to the maintenance and repair of
the roof, the same being assumed by Landlord.
(iii) "Real Estate Taxes" shall in addition to municipal real
property taxes (or any other tax hereafter enacted as a substitute or
replacement therefor or any part thereof) also include sewer rents and any
special, ordinary or extraordinary assessments and governmental levies
against the Land and Building. Landlord shall pay any special assessments
over the longest period allowed by law and only include in Real Estate
Taxes those installments on a pro rata basis attributable to the
corresponding period of the Lease.
(iv) "Lease Year" as used in this Lease shall mean the twelve
(12) month period commencing when possession is delivered, and each twelve
(12) month period thereafter. Once the Base Real Estate Taxes and Base
Operating Expenses are
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<PAGE>
established, in the event any Lease period is less than twelve (12) months,
then said Base Real Estate Taxes and Base Operating Expenses shall be
adjusted to equal the proportion that said period bears to twelve (12)
months (herein the "Adjusted Base"), and Tenant shall pay to Landlord as
Additional Rent for such period, an amount equal to Tenant's Proportionate
Share, as set forth in Section 9(d) below, of the excess for said period
over the Adjusted Base with respect to each of the aforesaid.
(v) "Base Real Estate Taxes" shall mean those Real Estate
Taxes determined by multiplying the tax rate in effect for the calendar
year 1988, times the assessment for the Land and Building as fully
completed and 95% occupied.
(vi) "Real Estate Taxes" shall mean the property taxes and
assessments imposed upon the Land and Building, or upon the rent, as such,
payable to the Landlord, including, but not limited to, real estate,
borough, county, school and transit taxes or taxes, assessments or charges
levied, imposed or assessed against the Land and Building by any other
taxing authority, whether general or specific, ordinary or extraordinary,
foreseen or unforeseen. If, due to a future change in the method of
taxation, any franchise, income or profit tax shall be levied against
Landlord in substitution for, or in lieu of, or in addition to, any tax
which would otherwise constitute a Real Estate Tax, such franchise, income
or profit tax shall be deemed to be a Real Estate Tax for the purposes
hereof; conversely, any additional real estate tax hereafter imposed in
substitution for, or in lieu of, any franchise income or profit tax (which
is not in substitution for, or in lieu of, or in addition to, a Real Estate
Tax hereinbefore provided) shall not be deemed a Real Estate Tax for the
purposes hereof. Real Estate Taxes shall exclude any income or profit taxes
(unless measured by the Building income), in which event same shall be
included as a Real Estate Tax, as if said Building were Landlord's only
asset unless as a result of combining said asset with Landlord's other
assets a reduced tax due to tax bracket reduction results.
(b) Additional Rent, if any, due to Landlord under Paragraph 9(a)
hereof shall be paid within 30 days after submission of a statement to Tenant
showing the computation of the amount due to Landlord, unless the statement
effects a change in the amount of Additional Rent paid during the previous month
by Tenant in which event said payment may be made within sixty (60) days.
Landlord shall make available its records and reasonable detail supporting the
items referred to in such statement for at least twelve (12) months after
submission thereof for examination at reasonable times by Tenant and its
authorized representative.
(c) If, with respect to the establishment of Base Operating
Expense, as established in Subparagraph (a)(ii) hereof, the Building is not
eighty-five (85%) percent occupied during the GLOBAL establishment of the Base
Operating Expenses then the Base operating Expenses shall be adjusted so as to
reflect eighty-five (85%) percent occupancy. The
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<PAGE>
aforesaid adjustment shall only be made with respect to those items that are in
fact affected by variations in occupancy levels.
(d) Tenant's Proportionate Share, wherever that phrase is used,
shall be (8.544 %), which the parties agree reflects and will be continually
adjusted to reflect the ratio of the gross square feet of the area rented to
Tenant as compared with the total number of gross square feet of the entire
Building measured outside wall to outside wall. However, if any service provided
for in Paragraph 9(a)(ii) is separately billed within the Building, then the
square footage so billed shall be subtracted from the denominator (the
Building's total number of gross square feet), and Tenant's Proportionate Share
for such service and/or utility shall be separately computed and the Base
Operating Expenses for such item shall not include any charges attributable to
said square footage.
10. ASSIGNMENT AND SUBLETTING
-------------------------
Tenant may assign or sublet this Lease to any party subject to the
following:
(a) Tenant shall give Landlord written notice of its intention to
assign this Lease or sublet all or any portion of the Leased Premises. Such
notice shall be given to the Landlord by Registered or Certified mail addressed
to the Landlord at its place of business set forth in the recital of this Lease.
Landlord shall have thirty (30) days after receipt of notice from the Tenant of
its intention to sublet or assign all or any portion of the leased Premises to
elect, to release Tenant from this Lease or from such portion of the Tenant's
obligation under this Lease, or so much of the Leased Premises, as the case may
be, affected by the proposed assignment or subletting. In the event that
Landlord exercises its election to release Tenant from this Lease or from such
portion of the Tenant's obligation under this Lease or so much of the Leased
Premises, as the case may be, Tenant shall thereafter be released from any
further obligation under this agreement of lease as to the interest or space so
affected except for the payment of any monies due as of the effective date of
such release.
(b) In the event that the Landlord does not elect to recapture this
Lease or any portion thereof as hereinabove provided, the Tenant may
nevertheless assign this Lease or sublet the whole or any portion of the Leased
Premises, subject to obtaining Landlord's prior written consent, which consent
shall not be unreasonably withheld, on the basis of and subject to the following
terms and conditions:
(i) The Tenant shall provide to the Landlord the name and
address of the assignee or sublessee:
(ii) At the time of such assignment or subletting, this Lease
must be in full force and effect without any breach or default thereunder
on the part of Tenant;
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<PAGE>
(iii) The assignee or sublessee shall assume, by written
instrument, all of the obligations of this Lease, and a copy of such
assumption agreement shall be furnished to the Landlord within ten (10)
days of its execution;
(iv) The Tenant and each assignee or sublessee shall be and
remain liable for the observance of all the covenants, and provisions of
this Lease, including, but not limited, the payment of the Rent and
Additional Rent reserved herein through the entire term of this Lease;
(c) Notwithstanding anything herein contained to the contrary and
notwithstanding any prior consent by Landlord, no assignee or subtenant shall
further assign or sublease the Leased Premises without Landlord's prior consent
in each such instance and without compliance with the provisions of this
Paragraph.
(d) Any and all payments agreed to be made to Tenant by any
assignee or sublessee shall accrue to and be paid over to Landlord, it being
understood and agreed that said assignee or sublessee shall pay the Rent,
Additional Rent and all other monies and charges directly to the Landlord. If
there are any additional monies, however, in excess of the Rent and Additional
Rent and all other charges to be paid to Landlord hereunder for a corresponding
period, Tenant shall be entitled to reimbursement from said monies of any real
estate commissions it has had to pay to assign or sublet the Leased Premises and
other incidental costs relative to the assigning or subletting such as
advertising, legal, etc. Moreover, once the Tenant has been so reimbursed, the
Landlord shall share equally with the Tenant any further monies received for
said corresponding period.
(e) Notwithstanding the foregoing provisions of this Paragraph,
Tenant shall have the right, without the necessity of obtaining Landlord's
consent, but subject to all other provisions of this Paragraph 10 to:
(i) Sublet all or part of the Leased Premises to any parent
or affiliate of Tenant;
(ii) Assign this Lease to any parent or affiliate of Tenant;
or
(iii) Assign this Lease to a corporation which succeeds to all
or substantially all of the assets and business of Tenant or into which
Tenant is merged, if the net worth of such corporation, following such
assignment, equals or exceeds the net worth of Tenant at the date hereof or
immediately prior to such assignment, whichever is greater; provided,
however, that Tenant, at all times shall be and remain primarily, jointly
and severally liable under this Lease despite any such assignment.
(f) For the purposes of Subparagraph (e) above, the term
"affiliate" shall mean any company of which Tenant or Tenant's parent now or
hereafter owns and controls,
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<PAGE>
directly or indirectly, fifty (50%) percent or more of the stock having the
right to vote for directors thereof. For the purpose of this definition, the
stock so owned or controlled shall be deemed to include all stock owned or
controlled directly or indirectly by any other company of which the Tenant or
Tenant's parent owns or controls, directly or indirectly, fifty (50%) percent or
more of the stock having the right to vote for directors thereof.
(g) Subject to the provisions of Paragraph 16, in addition to the
right of the Landlord to declare this Lease to be in default, the failure of the
Tenant or its assignee or sublessee to comply with any of the provisions and
conditions of this Paragraph, shall, at Landlord's option, render such purported
assignment or subletting null and void and of no force and effect.
11. REQUIREMENTS OF PLAN AND FIRE UNDERWRITERS
------------------------------------------
(a) Tenant shall give prompt notice to Landlord of any notice it
receives of the violation of any law or requirement of public authority or from
the Board of Fire Underwriters.
(b) The Tenant, at its own cost and expense, shall promptly execute
and comply with any statutes, ordinances, rules, orders, regulations and
requirements of the Federal, State, or municipal government, and of any of their
departments or bureaus, which may be applicable to the Leased Premises by reason
of any act or conduct on the part of the Tenant, or by reason of the character
of its occupancy of Leased Premises; and the Tenant shall promptly correct and
abate any such violation caused by its acts, at its own cost and expense. The
Tenant shall also promptly comply with and execute all rules, orders, or
regulations of the Board of Fire Underwriters for the prevention of fires or the
risk thereof, on Landlord's building where such rules, orders, or regulations
are made applicable by any act or conduct of the Tenant, or by the character of
its occupancy of the Leased Premises.
(c) In the event that the Tenant shall fail or neglect to do or
perform any of the matters required by this Paragraph, then the Landlord or its
agents after notice to the Tenant as prescribed in Paragraph 16 of this Lease,
and after Tenant's failing to remedy such failure or neglect within the time
periods set forth in Paragraph 16 hereof, may enter the Leased Premises, and
comply with any and all of said statutes, ordinances, rules, orders, regulations
or requirements at the cost and expense of the Tenant, and in case of the
Tenant's failure to pay therefor, the cost and expense thereof shall be added to
the next month's rent and be due and payable as such, or the Landlord may deduct
the same from the balance of any sum remaining in the Landlord's hands, in
addition to any other remedy the Landlord may have hereunder by reason of such
default on the part of the Tenant.
(d) Tenant shall not do or suffer anything to be done on the Leased
Premises which will increase the rate of fire insurance on the Building.
14
<PAGE>
(e) Notwithstanding anything contained herein to the contrary, in the
event capital improvements are required to be made to the Leased Premises
because of a change in any law of a public authority or a change of any
regulation of the Board of Fire Underwriters and not because of Tenant's use of
the Leased Premises, Landlord will complete said required alterations or
improvements and Tenant shall be required to pay toward the costs of same only
to the extent the depreciable useful life corresponds to the Lease Term. In
other words, Tenant will pay its share of the costs of said alteration or
improvement determined by the fraction the numerator of which is the number of
months remaining on the Lease after completion over the denominator which is the
useful life of said alteration or improvement as determined by the Internal
Revenue Code of 1986 and the regulations applicable thereto, or if no guidelines
are available in said code, in accordance with generally accepted accounting
principles, said share payable in equal monthly installments over the life of
the Lease as Additional Rent. Should the Tenant renew the Lease, recalculation
shall occur with respect to the numerator to continue said repayment as
appropriate during the renewal term.
12. NON-LIABILITY AND INDEMNIFICATION
---------------------------------
(a) Neither the Landlord nor its agents shall be liable for any
damage to property of the Tenant entrusted to employees of the Building, nor to
any property, goods, or things contained in the Leased Premises or stored in the
Garage or any other part of the Building, or in the Outside or Garage Parking
Areas. Except to the extent of any proceeds of any insurance policy carried
either by the Landlord or the Tenant, compensates the Tenant, the Landlord shall
not be liable for any injury or damage to Tenant or property on the Land or in
the Building or to the business of the Tenant, or any interruption thereof,
resulting from theft, burglary, explosion, wind or accident, falling plaster,
steam, gas, electricity, water, rain or snow, leakage from any part of the
Building or from pipes, appliances, or plumbing works in the Building or from
the street or sub-surface thereof or from any other source, or from dampness, or
from damage occasioned by workmen engaged in making repairs or alterations in or
upon the Building or the Land, or from damage by other Tenants or persons in the
Building or on the Land, or for interference with the light or other incorporeal
hereditaments, or caused by operations in the construction of any public or
quasi-public work, or for any other cause of whatsoever nature. With respect to
any loss, damage or injury of any nature whatsoever to property or persons for
which Tenant is insured, Tenant shall obtain from its insurance carrier and will
deliver to Landlord, waivers of the subrogation rights under the respective
policies. Landlord agrees to always maintain all risk insurance on the Building
and improvements for full replacement value covering any loss, damage or injury
arising out of fire or other casualty, including but not limited to, insurance
for damage to property arising from intentional acts of the Landlord, and
Landlord agrees to obtain from its insurance carrier and will deliver to Tenant,
waivers of the subrogation rights against the Tenant under any such insurance
policies and Landlord waives all claims against Tenant for any loss resulting
from any act or omission by Tenant, its agents, servants, invitees, contractors
or employees.
15
<PAGE>
Additionally, in the event of any loss or damage to the Building the
Premises and/or any contents each party waives all claims against the other for
any such loss or damage and each party shall look only to any insurance which it
has obtained to protect against such loss and each party shall obtain, for each
policy of such insurance, provisions waiving any claims against the other party
for loss or damage within the scope of such insurance.
(b) Except as otherwise expressly provided in this Lease, this Lease
and the obligations of Tenant hereunder shall be in no way affected, impaired or
excused because Landlord is unable to fulfill, or is delayed in fulfilling, any
of its obligations under this Lease by reason of strike, other labor trouble,
governmental pre-emption or priorities or other controls in connection with a
national or other public emergency or shortages of fuel, supply or labor
resulting therefrom, or other like cause beyond Landlord's control. In no event
shall Tenant be entitled to a claim of constructive eviction from the Leased
Premises unless Tenant shall first have notified Landlord, in writing, of the
condition or conditions giving rise thereto, and, if the complaints be
justified, unless Landlord shall have failed within a reasonable time, after
receipt of such written notice, to remedy, or commence and proceed with due
diligence to remedy, such condition or conditions.
(c) Except to the extent of the proceeds of any fire or other
casualty insurance policy of the Landlord, The Tenant shall indemnify and save
harmless the Landlord from, and shall reimburse the Landlord as Additional Rent
for all expenses damages, or fines incurred or suffered by the Landlord by
reason of any third party claims arising as a result of any breach, violation,
or non-performance by the Tenant, or the Tenant's servants, employees or agents,
of any covenant or provision of this Lease, or by reason of damage or injury to
persons or property other than Landlord's or that under Landlord's care, custody
and control caused by the Tenant's moving property in or out of the Building, or
by the installation or removal of furniture or other property of the Tenant, or
arising out of the occupancy or use by the Tenant of the Leased Premises, or the
Building of which they form a part or the Land, or of the Outside or Garage
Parking Areas, or any part thereof, or from any other cause due to the
carelessness, negligence or improper conduct of the Tenant or the Tenant's
servants or agents.
(d) The Tenant shall give immediate notice to the Landlord in case of
fire or accident occurring on the Leased Premises, and of any defect or
condition of disrepair in the Leased Premises, or in any fixtures or equipment
forming a part thereof.
(e) In support of its obligations hereunder the Tenant, at Tenant's
own cost and expense, shall obtain or provide and keep in full force for the
benefit of the Tenant and the Landlord, during the term hereof, general public
liability insurance, naming Landlord as an additional named insured against any
and all liability or claims of liability arising out of, occasioned by or
resulting from any accident or otherwise in or about the Leased Premises, for
injuries to any person or persons for limits of not less than $1,000,000.00 for
injuries to one person and $3,000,000.00 for injuries to more than one person,
in any one accident or
16
<PAGE>
occurrence, and for loss or damage to the property of any person or persons, for
not less than $1,000,000.00. The policy or policies of insurance shall be of a
company or companies authorized to do business in the State of New Jersey and
Certificates of Insurance showing Landlord's interest shall be delivered to the
Landlord, together with evidence of the payment of the premiums therefor, not
less than fifteen days prior to the commencement of the Term hereof or of the
date when the Tenant shall enter into possession, whichever occurs sooner. At
least fifteen days prior to the expiration or termination date of any policy,
the Tenant shall deliver a renewal or replacement Certificate of Insurance
showing Landlord's interest with proof of the payment of the premium therefor.
13. DAMAGE BY FIRE OR OTHER CASUALTY
--------------------------------
In case of fire or other casualty, Tenant shall give immediate notice to
Landlord. In the event the Building shall be damaged by fire, the elements or
other casualty to such an extent that the cost of restoration will equal or
exceed fifty (50%) percent of the replacement value of the Building (exclusive
of foundations) just prior to the occurrence of the damage, then either the
Landlord or the Tenant may, no later than the sixtieth (60th) day following the
damage, give the other notice of its election to terminate this Lease, in which
event the Tenant shall vacate the Leased Premises within sixty (60) days
thereafter and the Rent shall be paid up to the date of such vacation and
thenceforth this Lease shall come to an end. If the damage is such that the cost
of restoration does not equal or exceed fifty (50%) percent of the replacement
value of the Building (exclusive of foundations) or neither the Landlord nor the
Tenant elect to terminate the Lease, then the Landlord shall repair the same as
speedily as practicable to the scope of Landlord's work in the original
construction of the Building to include that Tenant work Landlord originally
performed and, of any portion of the Building shall be rendered unusable for its
intended purpose, then the Tenant's obligation to pay Rent hereunder shall abate
with respect to the square footage of the portion rendered unusable pursuant to
the applicable rates set forth in Paragraph 5(a) or (b) if during the initial
term of this lease or at rates established pursuant to Paragraph 25 if during an
option period, from the date of casualty until such time as the Landlord shall
have repaired the Building and Leased Premises and Certificate of occupancy
shall have issued. If the Landlord shall not have completed the repairs within
one hundred eighty (180) days after the occurrence of such damage to the
Building and, if at the end of such period the state of the Building or Leased
Premises shall be such as to deny to the Tenant the beneficial use of the Leased
Premises, then, and in such event, Tenant, upon ten (10) days' written notice
delivered to the Landlord at any time on or after the expiration of such one
hundred eighty (180) day period may terminate this lease and vacate the Premises
within ninety (90) days unless, before actual vacation, Tenant determines that
Landlord shall have completed repair of the Building. In the event of such
termination and vacation, Tenant's obligation to pay the Rent herein reserved
shall terminate on the date of vacation of the Leased Premises. Notwithstanding
anything contained in this Paragraph 13 to the contrary, the Landlord shall be
under no obligation to rebuild and may terminate this Lease on ninety (90) days
written notice delivered to the Tenant if the Building shall be damaged during
the last year of the lease Term as extended, if extended. Completion
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<PAGE>
of the repairs and the re-commencement of Tenant's obligations shall require
that the same criteria as in Paragraph 4(a), as for the Premises being deemed
ready for occupancy, shall have been met.
14. QUIET ENJOYMENT
---------------
The Landlord covenants and agrees that the Tenant upon payment of the Basic
Rent and Additional Rent reserved herein and upon observing and keeping the
covenants, agreements and stipulations of this Lease on its part to be kept,
shall lawfully, peaceably and quietly hold, occupy and enjoy the Leased Premises
during the term of this Lease and any extension or extensions thereof, without
hindrance, ejection or molestation by Landlord or any person or persons claiming
under Landlord or claiming by a title superior to that of Landlord.
15. EVENTS OF DEFAULT
-----------------
Each of the following elements shall constitute a default hereunder:
(a) If the Basic Rent or any part thereof or the Additional Rent or
any part thereof due hereunder shall be unpaid when due.
(b) If the Leased Premises shall be vacated, deserted, or abandoned
during the term hereof for a period of three (3) consecutive months.
(c) If the Tenant, contrary to the provisions of this Lease, shall
sell, assign or mortgage this Lease, or let or underlet the Leased Premises or
any part thereof, or use or permit the same to be used for any purpose other
than herein permitted.
(d) If the Tenant shall make an agreement of composition or an
assignment for the benefit of creditors, or if a Receiver is applied for or
appointed for the Tenant, or if there be filed a petition in bankruptcy or
insolvency or for an arrangement or reorganization by or against the Tenant, or
consented to by the Tenant, or if the Tenant is adjudicated a bankrupt or is
adjudged to be insolvent, or if the Tenant is advertised to be sold out by any
dale under process of law, or if the assets or property of the Tenant in the
Leased Premises shall be attached or levied upon, or if this Lease or the estate
of Tenant shall pass to another by virtue of any court proceedings, writ of
execution or operation of law.
(e) If the Tenant fails to comply with any other provision of this
Lease which imposes an obligation upon the Tenant, or if the Tenant otherwise
violates any provision or condition of this Lease.
16. REMEDIES UPON DEFAULT
---------------------
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(a) In the event Tenant shall (i) default in the payment of Basic
Rent or Additional Rent; or (ii) default in the observance of any of the other
terms, covenants and conditions of this Lease, which continues for thirty (30)
days following the delivery of written notice thereof to the Tenant, provided,
however, that this thirty (30) day time period may be reasonably extended if the
default cannot be cured within said period and Tenant has commenced in good
faith to cure such default within said thirty (30) day period and shall continue
the curing thereof diligently thereafter, then the Landlord may, upon ten (10)
days written notice to the Tenant, cancel and terminate this Lease. In such
event, the Landlord, in addition to all other rights and remedies provided by or
permitted by law, or elsewhere conferred in this lease, shall have the remedies
provided in this Paragraph 16.
(b) Upon such default, after the expiration of the applicable notice
period without the default being cured, the Term herein and all rights of the
Tenant hereunder and all rights of the Tenant to the continued occupation of the
Leased Premises shall cease and terminate at the option of the Landlord.
(c) The Landlord may, at its option and upon an additional ten (10)
days written notice beyond that given in Paragraph 16(a) and (b) above to the
Tenant, re-enter the Leased Premises and dispossess the Tenant and any legal
representative or successor of the Tenant, or other occupant of the Leased
Premises either with, or without summary proceedings or appropriate suit, action
or proceedings, and remove the Tenant's property, assets and effects from the
Leased Premises and hold the Leased Premises as if this Lease had not been made.
(d) In any case where Landlord has recovered possession of the
Premises by reason of Tenant's default, as provided herein, Landlord may, at the
Landlord's option, occupy the Leased Premises or cause the Leased Premises to be
redecorated, altered, divided, consolidated with adjoining premises, or
otherwise changed or prepared for reletting, and may relet the Leased Premises,
or any part thereof, as agent of the Tenant or otherwise, for a term or terms to
expire prior to, at the same time as or subsequent to, the original expiration
date of this lease, at the Landlord's option, and receive the rent therefor.
(e) Notwithstanding such re-entry, default, expiration, or
dispossession by summary proceedings or otherwise, Tenant shall continue liable
for the full period which would otherwise have constituted the balance of the
Term hereof and shall pay as liquidated damages at the same time as the Basic
Rent, and Additional Rent, and other charges become payable under the terms
hereof and in lieu thereof, a sum equivalent to the Basic Rent, Additional Rent,
and other charges reserved herein, less only the net avails of reletting of the
leased Premises; and the Landlord without having any obligation to do so may
rent the Leased Premises either in tile name of the Landlord, or otherwise, for
such time and at such rent as it may determine, applying the proceeds thereof
first to the reasonable expense of (i) resuming or obtaining possession, (ii) to
restoring tile Leased Premises to a rentable condition, and (iii) to the payment
of Basic Rent, Additional Rent and other charges including, without limitation,
reasonable brokers' commissions and reasonable attorneys' fees incurred by
Landlord due and
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to become due to the Landlord hereunder, any surplus to be paid to Tenant, which
shall be and remain liable for any deficiencies. Should Landlord occupy the
Leased Premises, Tenant shall be credited with the greater of said Leased
Premises fair rental value or the Basic and Additional Rent reserved hereunder.
(f) Landlord may, in addition to other remedies available to it
hereunder or by law, have the right of injunction against any violation or
continued violation of this Lease.
(g) Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the Leased Premises by reason of the violation by Tenant of any of
the terms, covenants, conditions or agreements of this Lease.
(h) Failure of the Landlord to insist upon the strict performance of
any of the covenants or conditions of this lease, or to exercise any option or
election herein conferred in any one or more instances, or the adoption of any
one or more but less than all of the remedies available to it hereunder or by
law in the event of default by the Tenant, shall not be construed as a waiver or
relinquishment for the future of any such covenants, conditions or options, or
of any remedy available to it, but the same shall be and remain in full force
and effect notwithstanding.
(i) If after any default, or upon the expiration of the Lease, the
Tenant moves out or is dispossessed, and fails to remove any furniture, fixtures
or other property from the Leased Premises, the same shall be deemed abandoned
by the Tenant and shall become the property of the Landlord or at Landlord's
option may be disposed of and the reasonable costs thereof shall be borne by
Tenant.
(j) Notwithstanding anything contained herein to the contrary, if
Tenant breaches any covenant or condition of this Lease, Landlord may, on
reasonable notice to Tenant (except that no notice need be given in case of
emergency), cure such breach at the expense of Tenant and a reasonable amount of
all expenses, including attorneys' fees, incurred by Landlord in so doing
(whether paid by Landlord or not) shall be deemed Additional Rent payable within
sixty (60) days of demand. Failure of Tenant to make such payment to Landlord
shall constitute an event of default.
17. SUBORDINATION
-------------
This Lease shall be subject and subordinate at all times to the lien of any
mortgages now or hereafter placed on the land and buildings of which the Leased
Premises form a part. The Tenant covenants and agrees to execute and deliver
upon demand such further instrument or instruments subordinating this Lease to
the lien of any such mortgage or mortgages as shall be desired by any mortgagee
or proposed mortgagee. Tenant further acknowledges that
20
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Landlord may be required by any mortgagee or proposed mortgagee to assign this
Lease as additional security for any mortgage or proposed mortgages, and Tenant
agrees that it will upon demand join with Landlord in the execution of any such
assignment or agreement, which may be in form for recording, as any such
mortgagee or proposed mortgagee may reasonably require. Tenant's failure to
comply on demand with the provisions hereof shall constitute a default under
this Lease. Notwithstanding anything contained in this Paragraph to the
contrary, Tenant's subordination herein is conditioned upon Tenant being able to
remain as a Tenant under the terms and conditions of this Lease regardless of
any default by the Landlord under any mortgage or foreclosure thereon, provided
the Tenant continues to pay the Basic Rent and Additional Rent due herein and
otherwise conforms to all of the terms and conditions of this Lease.
18. CONDEMNATION
------------
(a) If the whole of the Leased Premises shall be taken under the
exercise of the power of condemnation or eminent domain, then this Lease shall
automatically terminate on the date that title or possession is taken by the
condemnor, whichever occurs first, and the rent shall be apportioned as of said
date. If any part of the Leased Premises be so taken so as to materially
restrict, limit or adversely affect the use, occupancy or enjoyment of Tenant,
then Tenant shall have the option to terminate this Lease by thirty (30) days
written notice to the Landlord, which notice must be given within ninety (90)
days after possession or title on the partial taking is obtained by condemnor,
and the rent shall be apportioned on the effective date of termination of the
Lease by Tenant. Notwithstanding the foregoing, if parking space only is taken,
Tenant may not terminate this Lease if Landlord furnishes to Tenant an
equivalent number of parking spaces situated in reasonable distance of the
property lines of the real property on which the Leased Premises are situated.
(b) If any part of the Leased Premises shall be so taken and this
Lease shall not terminate or be terminated under the provisions of Paragraph
18(a) hereof then the rental shall be equitably apportioned according to the
space so taken, and the Landlord shall, at its own cost and expense, restore the
remaining portion of the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased, shall provide
sufficient parking facilities equivalent to those originally furnished to
Tenant, and shall make all repairs to the building in which the Leased Premises
is located to the extent necessary to constitute the building a complete
architectural unit, provided, however, that if the amount of the award received
by Landlord is not adequate to cover the cost of such restoration or repairing,
Landlord may elect by written notice to Tenant to that effect to terminate this
Lease.
(c) All compensation awarded or paid upon such a total or partial
taking of the Leased Premises shall belong to and be the property of the
Landlord without any participation by the Tenant; provided, however, that
nothing contained herein shall be construed to preclude the Tenant, as permitted
by law, from prosecuting any claim directly against the condemning authority in
such condemnation proceedings for loss of business,
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relocation costs or depreciation to, damage to, or cost of removal of, or for
the value of stock, trade fixtures, furniture, and other personal property
belonging to Tenant.
19. ACCESS
------
The Landlord or Landlord's agent shall have the right, upon request to
enter/or pass through the Leased Premises or any part thereof, at reasonable
times during reasonable working hours, (a) to examine the Leased Premises and to
show them to the owners, lessors of superior leases, holders of superior
mortgages or prospective purchasers, mortgagees or lessees of the building, or
the Leased Premises, and (b) for the purpose of making such repairs or changes
or doing such repainting in or to the Leased Premises or in or to the building
or to facilities as may be provided for by this Lease or as may be mutually
agreed upon by the parties or as Landlord may be required to make by law or in
order to prepare and maintain the building or its fixtures or facilities or in
order to satisfy any obligation imposed on Landlord to any other tenant
occupying or about to occupy part of the Landlord's building. Landlord shall be
allowed to take all material into and from the Leased Premises that may be
required for such repairs, changes, repainting or maintenance, without liability
to Tenant.
20. TENANT'S ESTOPPEL
-----------------
Tenant shall, from time to time, on not less than thirty (30) days prior
written request by Landlord, execute, acknowledge and deliver to Landlord a
written statement certifying that this Lease is unmodified and in full force and
effect, or that the Lease is in full force and effect as modified and listing
the instruments of modification; the dates to which the rents and charges have
been paid; and, whether or not to the best of Tenant's knowledge Landlord is in
default hereunder, and if so, specifying the nature of the default. It is
intended that any such statement delivered pursuant to this Paragraph 20 may be
relied on by a prospective purchaser of Landlord's interest or mortgagee of
Landlord's interest or assignee of any mortgage of Landlord's interest.
21. HOLD OVER TENANCY
-----------------
If Tenant holds possession of the Premises after the term of this Lease,
Tenant shall become a tenant from month to month under the provisions herein
provided, but at a monthly Basic Rent of Two Hundred (200%) percent of the Basic
Rent for the last month of the term or any renewal term, payable in advance on
the first day of each month, and such tenancy shall continue until terminated by
Landlord, or until Tenant shall have given to Landlord a written notice at least
ninety (90) days prior to the intended date of termination, of intent to
terminate such tenancy.
22. WAIVER OF TRIAL BY JURY
-----------------------
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To the extent such waiver is permitted by law, the parties waive trial by
jury in any action or proceeding brought in connection with this Lease or the
Leased Premises.
23. PERSONAL LIABILITY
------------------
Notwithstanding anything to the contrary provided in this Lease, it is
specifically understood and agreed, such agreement being a primary consideration
for the execution of this Lease by Landlord, that there shall be absolutely no
personal liability on the part of Landlord, its successors, assigns or any
mortgagee in possession (for the purposes of this Paragraph, collectively
referred to as "Landlord"), with respect to any of the terms, covenants and
conditions of this Lease, and that Tenant shall look solely to the equity of
Landlord in the building for the satisfaction of each and every remedy of tenant
in the event of any breach by Landlord of any of the terms, covenants and
conditions of this Lease to be performed by Landlord, such exculpation of
liability to be absolute and without any exceptions whatsoever.
24. TENANT WORK LETTER
------------------
The Landlord agrees to perform all the work described in the Tenant's Work
Letter and complete such work so as to make the Lease Premises ready for
occupancy by Tenant August 1, 1988 (subject, however to the provisions of
Paragraph 4 hereof), for which the Tenant agrees to pay to the Landlord the cost
thereof, if any.
25. OPTION TO EXTEND
----------------
(a) Provided that Tenant shall not be in default of any terms,
provisions, conditions or covenants herein at the time of the exercise of the
option set forth in this Paragraph 25 or at the time said option shall take
effect, Tenant shall have the right to extend the term of this Lease for one (1)
additional period of five (5) years, commencing on the date following the
termination of the initial Term. Said option to extend the Term shall be on the
same terms, conditions, provisions and covenants as are set forth herein, with
the following exceptions:
(i) The Basic Rent during the option period shall be at the
rate of $25.00 per square foot of rental space.
(ii) Nothing contained herein shall be construed to permit or
grant any options or extensions of the Term beyond the option period set
forth herein.
(b) The option herein granted to extend the Term shall be exercised
by Tenant by the delivery of written notice thereof to Landlord, not less than
one (1) year's prior to the expiration of the initial Term. In the event that
the Tenant shall fail to deliver said notice within such time, it shall be
conclusively deemed to mean that the Tenant has elected not
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to exercise said option, whereupon said option shall cease and terminate and be
of no further force and effect.
26. REAL ESTATE BROKER
------------------
Landlord and Tenant each represent to the other that it has dealt with no
real estate broker other than McBride Corporate Real Estate in connection with
this Lease. Landlord agrees that if any claims should be made for commissions by
any broker by reason of any acts of Tenant or its representatives, Landlord will
indemnify and save harmless the Tenant from any and all claims, demands, losses,
liabilities, judgments, costs, expenses, attorneys' fees or other damages
resulting from arising out of, or in connection therewith. Landlord agrees to
pay the brokerage commission due in connection with this Lease to the aforesaid
broker in accordance with the terms and conditions of a separate agreement
entered into or to be entered into between the Landlord and said broker.
27. MISCELLANEOUS
-------------
(a) The Tenant shall not erect, make or maintain on or attach or
affix to any part of the Leased Premises or the building in which the same is
located, including the windows and doors of said building, but excluding
interior walls within the Leased Premises except those visible from the
exterior, any sign, fixture, other representation, advertisement, notice of any
kind or any other matter which is visible from any location outside of such
building or the Leased Premises, or visible from the lobby of such building,
without the express written consent of the Landlord obtained in advance. In the
event that such restriction is violated, the Landlord shall have the right to
remove same on 24 hours notice or to proceed against the Tenant by way of
seeking an injunction or such other remedy as may be available to it at law or
in equity, including but not by way of limitation, the right to declare a
default in the Lease.
(b) Any lettering, "logo" or design or artwork placed upon the
entrance doors to Tenant's premises shall be subject to the reasonable approval
of the Landlord.
(c) No loud speaker or any other form of sound or audio transmission
or apparatus shall, be used in or at the Leased Premises by the Tenant, its
agents or employees, for advertising or promotional purposes or any other
purpose if the volume is such as to be audible outside of the Leased Premises.
In the event of a violation of such restriction Landlord shall have the right to
proceed against Tenant by way of seeking injunctive relief, or such other remedy
as may be available to it at law or in equity, including but not by way of
limitation, the right to declare a default in the Lease. This shall not
prohibit the use of tape recorders transcribing machines, telephone voice
amplification, or the use of any business machine or device customarily used in
a business or professional office.
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(d) The Tenant agrees to pay for the cost of all telephone equipment
and installation including telephone outlets throughout the Leased Premises
unless a telephone system communications company agrees to pay for same.
(e) It is understood that at all times the office personnel and
invitees of the Tenant shall have access to and use of the washroom in the
common areas on the floor an which the Leased Premises are situated.
(f) Any reasonable rules and regulations with regard to the use and
occupancy of the Leased Premises and the building of which they are a part by
the Tenant as attached hereto or as adopted at any time during the term of this
Lease and of which the Tenant is notified, shall in all things be observed and
performed by the Tenant, its servants, agents, and invitees, provided that such
rule shall not be inconsistent with the Tenant's rights or the Landlord's
obligations as herein expressed.
(g) All notice required to be given to the Landlord or Tenant may be
given by Registered or Certified mail addressed to the Tenant at the Leased
Premises and to Landlord, at the address first set forth herein (unless and
until notified by either party to send same to a different person or entity) and
such notices shall be considered delivered to the Landlord or Tenant as of the
time they are so mailed.
(h) The headings of the articles and the numbers of the items in this
Lease are inserted as a matter of convenience to the parties and shall not
affect the construction of this Lease.
(i) This Lease contains the entire contract between the parties. No
representative, agent or employee of the Landlord has been authorized to make
any representations or promises with reference to the within letting or to vary,
alter or modify the terms hereof. No additions, changes or modifications,
renewals or extensions hereof, shall be binding unless reduced to writing and
signed by the Landlord and the Tenant.
(j) The terms, conditions, covenants and provisions of this Lease
shall be deemed to be severable. If any clause or provision herein contained
shall be adjudged to be invalid or unenforceable by a court of competent
jurisdiction or by operation of any applicable law, it shall not affect the
validity of any other clause or provision herein, but such other clauses or
provisions shall remain in full force and effect. In addition, the Landlord may
pursue the relief or remedy sought in any invalid clause, by conforming the said
clause with the provisions of the statutes or the regulations of any
governmental agency in such case made and provided as if the particular
provisions of the applicable statutes or regulations were set forth herein at
length.
(k) This Lease shall be interpreted, governed by, and enforced in
accordance with the laws of the State of New Jersey.
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(l) In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or singular number
is intended to include the appropriate gender or number as the text of the
within instrument may require. All the terms, covenants and conditions herein
contained shall be for and shall inure to the benefit of and shall bind the
respective parties hereto, and their heirs, executors, administrators, personal
or legal representatives, successors and assigns.
(m) Common facilities for purposes of this Lease shall mean the non-
assigned parking areas, lobby, elevators,, fire stairs, public hallways, public
lavatories, and all other general building facilities that service all building
tenants; air conditioning room, fan room, janitor's closet, electrical closet,
telephone closet, elevator shafts and machine room, flues, stacks, pipe shafts
and vertical ducts with their enclosing walls.
(n) Force majeure for purposes of this Lease, shall mean and include
those situations beyond Landlord's control including by way of example and not
by way of limitation, acts of God, accidents, strikes, shortages of labor,
supplies or materials, inclement weather, or where applicable, the passage of
time while waiting for an adjustment on insurance proceeds.
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SECOND AMENDMENT TO LEASE
-------------------------
1. PARTIES
-------
1.1 THIS AGREEMENT made the __________ day of _______________, 1996 between
17-17 REALTY ASSOCIATES, L.P. ("Landlord") whose address is c/o Cali
Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016 and
BORON-LEPORE ASSOCIATES, INC. ("Tenant"), whose address is 17-17 Route
208 North, Fair Lawn, New Jersey 07410.
2. STATEMENT OF FACTS
------------------
2.1 MBM Associates, Landlord's predecessor in interest, and Tenant have
previously entered into a Lease dated June 22, 1988 and a Lease Renewal
Agreement dated September 8, 1993 (collectively the "Lease"),
applicable to approximately 12,225 gross rentable square feet of office
space on the second (2nd) floor ("Premises") at 17-17 Route 208 North,
Fair Lawn, New Jersey ("Building"); and
2.2 On March 2, 1995, 17-17 Realty Associates, L.P. succeeded to the
interest of MBM Associates; and
2.3 Tenant desires to expand the Premises and lease approximately 2,295
gross rentable square feet (the "Expansion Premises") on the first
(1st) floor of the Building; and
2.4 The parties desire to amend certain other terms of the Lease.
3. AGREEMENT
---------
NOW, THEREFORE, in consideration of the Premises and the covenants
hereinafter set forth, Landlord and Tenant agree as follows:
3.1 The above recitals are incorporated herein by reference.
3.2 Landlord, at its expense, shall perform the improvement work to the
Expansion Premises in accordance with Exhibit B attached hereto.
3.3 The Effective Date of this Agreement shall be the day Landlord
substantially completes the improvements to the Expansion Premises. The
Effective Date is estimated to be November 1, 1996.
3.4 From and after the Effective Date, the Premises shall be defined as
approximately 14,520 gross rentable square feet on the first (1st) and
second (2nd) floors of the Building and Paragraph 1 of the Lease shall
be deemed amended accordingly.
<PAGE>
3.5 From and after the Effective Date, Landlord hereby leases to Tenant and
Tenant hereby hires from Landlord the Expansion Premises as shown on
Exhibit A attached hereto.
3.6 In addition to the Basic Rent and Additional Rent applicable to the
Original Premises, from and after the Effective Date, Tenant shall pay
Landlord Basic Rent applicable to the Expansion Premises in the amount
of ONE HUNDRED THIRTY-SEVEN THOUSAND TWO HUNDRED SIXTY-NINE AND 77/100
DOLLARS ($137,269.77) accruing at the Yearly Rate of FORTY-NINE
THOUSAND NINE HUNDRED SIXTEEN AND 28/100 DOLLARS ($49,916.28) which
shall be payable in advance on the first day of each calendar month in
Monthly Installments of FOUR THOUSAND ONE HUNDRED FIFTY-NINE AND 69/100
DOLLARS ($4,159.69) and Paragraph 5 of the Lease shall be deemed
amended accordingly. If the Effective Date falls on a day other than
November 1, 1996, the Fixed Basic Rent for the Term shall be adjusted
on a pro rata basis.
3.7 From and after the Effective Date, Tenant's Proportionate Share
applicable to the Expansion Premises shall be 1.60% and Paragraph 9(d)
of the Lease shall be deemed amended accordingly.
3.8 From and after the Effective Date, Tenant shall be entitled to forty-
six (46) unassigned parking spaces and eleven (11) assigned spaces and
Paragraph 11 of the Preamble to the Lease shall be deemed amended
accordingly.
3.9 Paragraph 8 of the Lease shall be deleted in its entirety and replaced
with the following:
BUILDING STANDARD OFFICE ELECTRICAL SERVICE: The cost of electric
-------------------------------------------
current which is supplied by the Landlord for use by the Tenant in the
Premises, other than for heating or air conditioning purposes, shall be
reimbursed to the Landlord at terms, classification and rates normally
charged by the public utilities corporation serving that part of the
municipality where the subject Premises are located.
(a) Tenant agrees that an independent electrical engineering
consultant shall make a survey of electric power demand of the
electric lighting fixtures and the electric equipment of Tenant
used in the Premises to determine the average monthly electric
consumption thereof, and the costs of said survey shall be borne
by Tenant. The findings of said consultant as to the average
monthly electric consumption of Tenant shall, unless objected to
by Tenant within forty-five (45) days, be conclusive and binding
on Landlord and Tenant. After Landlord's consultant has submitted
its report, Tenant shall pay to Landlord, within ten (10) days
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<PAGE>
after demand therefor by Landlord, the amount (based on the
monthly consumption found by such consultant) as owing from the
Effective Date, and the then expired months, to include the then
current month and thereafter, on the first day of every month, in
advance, the amount set forth as the monthly consumption in said
report. Said amounts shall be treated as Additional Rent due
hereunder. Proportionate sums shall be payable for periods of less
than a full month if the Term commences or ends on any other than
the first or last day of the month. If Tenant objects to said
findings, Tenant shall nevertheless pay and continue to pay the
amount determined by Landlord's consultant until the issue is
finally resolved, but Tenant may, at its expense, seek the
services of an independent electrical consultant who shall make a
survey as provided above. If Landlord's and Tenant's consultant
cannot agree as to Tenant's consumption within thirty (30) days of
Tenant's consultant's findings either Landlord or Tenant may
request the American Arbitration Association in Somerset, New
Jersey to appoint an electrical engineering consultant whose
decision shall be final and binding on Landlord and Tenant, and
whose cost shall be shared equally. Upon the issue being finally
resolved, any overpayment made by Tenant shall be promptly
refunded.
(b) In the event that there shall be an increase or decrease in the
rate schedule (including surcharges or demand adjustments), of the
public utility for the supply of Building Standard Office
Electrical Service, or the imposition of any tax with respect to
such service or increase in any such tax following the Lease
Term's commencement, the Additional Rent payable hereunder shall
be adjusted equitably to reflect the increase or decrease in rate
or imposition or increase in the aforesaid tax. All computations
shall be made on the basis of Tenant's surveyed usage as if a
meter exclusively measuring such usage to the Premises was in
place.
(c) Tenant covenants that it shall notify Landlord immediately upon
the introduction of any office equipment or lighting different
from that on the Premises as of Landlord's electrical survey or in
addition to the aforesaid equipment or lighting on the Premises as
of said survey. The introduction of any new or different equipment
or lighting shall be cause for, at Landlord's election, a
resurveying of the Premises at Tenant's expense. Landlord reserves
the right to inspect the Premises to insure compliance with this
provision.
(d) Landlord shall not be liable in any way to Tenant for any loss,
damage or expense which Tenant may sustain or incur as a result of
any failure, defect or change in the quantity or character of
electrical energy available for redistribution to the Premises
pursuant to this paragraph nor
3
<PAGE>
for any interruption in the supply, and Tenant agrees that such
supply may be interrupted for inspection, repairs and replacement
and in emergencies. In any event, the full measure of Landlord's
liability for any interruption in the supply due to Landlord's
acts or omissions shall be an abatement of Basic Rent and
Additional Rent, unless Landlord fails to take such measures as
may be reasonable under the circumstances to restore such service
without undue delay. In no event shall Landlord be liable for any
business interruption suffered by Tenant.
(e) Landlord, at Tenant's expense, shall furnish and install all
replacement lighting tubes, lamps, ballasts and bulbs required in
the Premises. Tenant, however, shall have the right to furnish
and/or install any or all of the items mentioned in this
subparagraph (e).
(f) Tenant's use of electrical service as contemplated herein shall he
during Building Hours, and any use in excess of said Building
Hours shall result in an adjustment as set forth in subparagraph
(a) hereof to reflect such additional consumption.
3.10 Tenant represents that it has dealt with no real estate broker in
connection with this agreement. Tenant agrees to indemnify and hold
Landlord harmless from any and all claims from any real estate broker
arising out of or in connection with the negotiations of or entering
into of this Agreement for the Expansion Premises by Tenant and
Landlord.
EXCEPT AS EXPRESSLY AMENDED HEREIN, the Lease dated June 22, 1988, as
amended, shall remain in full force and effect as if the same had been set forth
in full herein, and Landlord and Tenant hereby ratify and confirm all of the
terms and conditions thereof.
THIS AGREEMENT shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors and permitted
assigns.
EACH PARTY AGREES that it will not raise or assert as a defense to any
obligation under the Lease or this Agreement or make any claim that the Lease or
this Agreement is invalid or unenforceable due to any failure of this document
to comply with ministerial requirements including, but not limited to,
requirements for corporate seals, attestations, witnesses, notarizations, or
other similar requirements, and each party hereby waives the right to assert any
such defense or make any claim of invalidity or unenforceability due to any of
the foregoing.
4
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands the
date and year first above written, and acknowledge one to the other that they
possess the requisite authority to enter into this transaction and to sign this
Agreement.
17-17 REALTY ASSOCIATES, L.P., BORON-LEPORE ASSOCIATES, INC.,
LANDLORD TENANT
By: Cali Sub V, Inc.,
Managing General Partner
By: By: /s/ Gregory F. Boron
------------------------------ -----------------------------
James G. Nugent, Name: Gregory F. Boron
Vice President - Leasing Title: Vice-Chairman
5
<PAGE>
Exhibit 10.2
------------
O F F I C E L E A S E
PARTIES. This LEASE, made this 9th day of April 1997 by and between SPENCO,
Ltd., a Virginia limited partnership (hereinafter called "Landlord") and Boron
LePore & Associates, Inc., a Delaware corporation (hereinafter called "Tenant").
W I T N E S S E T H :
The parties hereto, for themselves, their heirs, personal representatives,
successors and assigns, covenant and agree as follows:
1. Premises, Uses And Rent
-----------------------
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
room(s) numbered Suites 200 & 300; consisting of approximately 20,511 square
feet (hereinafter called "demised premises"), on the 2nd and 3rd floors of
the office building known as the Norfolk Commerce Park Office Building
(hereinafter called "Building") at 5360 Robin Hood Road in Norfolk,
Virginia, 23513 to be used as executive and general offices and for no other
purpose whatsoever, for the term of ten (10) years (unless sooner terminated
as hereinafter provided) beginning on July 15, 1997 and ending on July 14,
2007 at the rental of Fourteen Thousand Five Hundred Twenty-eight and 63/100
Dollars ($14,528.63) per month and increasing as set forth in paragraph 31,
payable in advance without demand and without set-off, on the first day of
each and every month during said term at Landlord's office, unless and until
Tenant is otherwise notified in writing by Landlord.
2. Possession. Tenant shall be granted immediate possession of the premises
----------
upon execution of this Lease for the purpose of making improvements. No rent
will be payable during this improvement period. Rent will commence on July
15, 1997 in accordance with paragraph 32 herein.
3. Payment of Rent, Assignment, Etc. Tenant covenants that (i) it will,
---------------------------------
without demand therefor being made, pay the rent at the time and in the
manner above provided, (ii) it will pay Landlord as a late charge the
greater of One Hundred Dollars ($100.00) or eighteen percent (18%) of the
amount due on all rents and all other sums due under this Lease, if said
sums have not been paid within ten (10) days of the due date without set
off. Landlord expressly reserves all other rights and remedies provided
herein and by law with respect to nonpayment of the rents provided for
herein, (iii) it will not assign, or otherwise transfer this Lease or sublet
the demised premises or suffer or permit the demised premises or any part
thereof (even desk space) to be used by others without Landlord's prior
written consent which will not be unreasonably withheld or delayed, and (iv)
it will not use the demised premises for any purpose except as above
provided. Any transfer by sale, encumbrance or otherwise of a majority of
Tenant's issued and outstanding stock (if Tenant is a corporation), or any
lawful levy or sale on execution or other legal process, or any assignment
or sale in bankruptcy or insolvency or under any compulsory procedure, shall
be deemed an assignment within the meaning of this Lease.
4. Services Landlord will furnish the demised premises, without additional
--------
charge, ordinary janitorial and cleaning service (five [5] days per week,
excluding holidays, including vacuuming of carpeting -- shampoo of same will
be at Tenant's expense), water, electricity for lighting and for business
machines, and heating and air-conditioning at all times with thermostats
within the premises to be controlled by Tenant. In the event of interruption
or suspension of any service, howsoever caused, Landlord shall not be liable
or responsible to Tenant or anyone else in any way, but Landlord shall
restore such service with reasonable dispatch. Tenant agrees to reimburse
Landlord on a quarterly basis in arrears for the cost of such extra
electricity to the extent that such cost for extra electricity exceeds $1.30
per square foot per year. Landlord, at its cost, will install a separate
meter for the Premises to monitor actual usage. Tenant shall not use any
method of heating or cooling the demised premises other than that provided
by Landlord, except supplemental HVAC which Tenant will install to control
the temperature in the computer room.
5. Hours of Operation The Building shall remain open to the public during
------------------
regular business hours daily (8:00 a.m. - 6:00 p.m. Monday through Friday,
8:00 a.m. - 12:00 p.m. Saturday), Sundays and holidays excepted, and
Landlord agrees that it will furnish automatic elevator service during such
hours. Tenant, and its employees, will have access to the Building twenty
four (24) hours daily, seven (7) days a week with all services described in
Paragraph 4 being provided (including elevators) with the exception that
janitorial services will not be provided on Saturday and Sunday unless
Tenant requires and pays separately for such additional service.
6. Tenant Care, Alterations, Etc. Tenant covenants that during the term it
------------------------------
will take care of the demised premises and deliver up the demised premises
in as good order and condition as the same were in at the time possession
thereof was delivered to Tenant, ordinary wear and tear and damage caused by
fire or other unavoidable casualty excepted. Tenant shall make no
alterations, additions, or improvements to the demised premises without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. All alterations, additions and improvements made to the
demised premises whether by Landlord or by Tenant, except movable office
furniture and equipment put in at Tenant's expense, shall be the property of
Landlord and shall remain upon and be surrendered with the demised premises
at the termination of this Lease. All damage and injury to the demised
premises, normal wear and tear excepted, its fixtures, appurtenances and
equipment, and to the Building, its fixtures, appurtenances and equipment,
caused by Tenant, its servants employees, agents, independent contractors or
invitees, shall be repaired, restored or replaced promptly to Landlord's
satisfaction by Tenant at Tenant's sole cost and expense. All installations,
repairs, restorations and replacements shall be equal in quality to the
original work. Landlord hereby approves Tenant's request to expand the
existing restroom and break room facilities on the common areas of the 2nd
and 3rd floors subject to satisfactory review of plans to be submitted by
Tenant.
1
<PAGE>
7. Rules and Regulations Tenant covenants that the following rules and
---------------------
regulations, which may be amended and/or supplemented from time to time by
Landlord, relating to the Building and the demised premises shall be
faithfully observed by Tenant, its employees, servants, agents, and
independent contractors:
(a) The entry, passages, elevators and stairways may be used for
ingress and egress only.
(b) Space for admitting natural light into any public area of the
building shall not be covered or obstructed by Tenant.
(c) Toilets and other like apparatus shall be used only for the
purpose for which they were constructed. Any and all damage from
misuse by Tenant shall be borne by Tenant.
(d) Tenant shall not throw or permit to be thrown anything out of
windows or doors or down passages or elsewhere in the Building,
or bring or keep any pets or other animals therein, or commit or
make any indecent or improper act or noise, or do or permit
anything which will in any way obstruct, injure, annoy or
interfere with other Tenants or those having business with them,
or affect any insurance rate on the Building or violate any
provision of any insurance policy on the building, or conflict
with any rule or ordinance of the Board of Health, Fire
Department, or any governmental authority and Tenant shall comply
with all governmental laws, orders, and regulations with respect
to Tenant's use or occupancy of the demised premises.
(e) Furniture, supplies and equipment of Tenant shall be delivered
only at times designated by Landlord.
(f) Tenant shall not permit cleaning by any person other than
employees of the Building.
(g) Landlord, at its expense, will install standardized venetian
blinds (or similar to existing blinds) on all windows, and said
blinds will remain the property of Landlord.
(h) Landlord will furnish Tenant with ten (10) keys for the demised
premises and one for each appropriate restroom. All additional
keys will be at Tenant's expense. If Landlord furnishes Tenant a
key to the lobby door of the building, Tenant agrees to lock the
lobby door immediately upon entering and leaving the Building
during such hours as the Building is closed and Tenant shall be
responsible for any and all damage and/or injury to person and/or
property resulting from Tenant's neglecting to lock said door as
aforesaid. All such keys in Tenant's possession or known by
Tenant to be in existence shall be delivered to Landlord at the
termination of this Lease. Tenant shall not place any additional
lock on any door in the building without Landlord's prior written
consent, and doors, leading to the corridors or main halls shall
be kept closed at all times except as they may be used for
ingress and egress. Tenant will require and install a card access
or other such system at all tenant entry doors, including
stairwells.
(i) No bicycles or vehicles of any kind shall be brought into or kept
in or about the demised premises or the lobby or halls of the
building, and no cooking (except microwave) shall be done or
permitted by Tenant on the demised premises. Tenant shall not
cause or permit any unusual or objectionable odors to be produced
upon or emanate from the demised premises.
(j) Canvassing, soliciting and peddling in the Building is prohibited
and Tenant shall cooperate to prevent the same.
(k) Tenant shall not place a load on any floor of the demised
premises exceeding 50 lb. per square foot. Landlord reserves the
right to prescribe the weight and position of all safes and heavy
equipment.
8. Damage, Destruction And Restoration If the building shall be damaged by
-----------------------------------
fire, elements, or other casualty to such an extent that more than one
hundred twenty (120) working days of 8 hours each shall be required to
restore the Building, Landlord or Tenant shall have the right to cancel this
Lease by giving the other party written notice of its intention to do
soafter one hundred twenty (120) days if restoration is not complete,
provided, however, that if such damage is the result of any act or omission
to act of Tenant, its servants, employees, agents, or visitors, the rent
shall not be abated and Tenant shall continue to pay the full rent as
hereinbefore set forth. If this Lease is not canceled as aforesaid, Landlord
shall cause the Building and the demised premises to be restored with
reasonable dispatch and the rental due shall be equitably and
proportionately abated, according to the loss of use of the demised
premises, from time of such damage until the Building and the demised
premises shall have been restored to tenantable condition; provided,
however, that if said damage is the result of any act or omission to act of
Tenant, its servants, employees, agents or visitors, the rent shall not be
abated and Tenant shall continue to pay the full rent as hereinbefore set
forth.
2
<PAGE>
9. Condemnation Proceedings If the whole or any part of the building, shall be
------------------------
taken or condemned (or sold pursuant to the threat of such taking) by a
competent authority for any public or quasi-public use or purpose, then the
term of this Lease, at the option of Landlord, shall cease and terminate
from the date when possession is delivered to the condemning authority. In
the event the demised premises are similarly taken, condemned or sold, in
whole or part, then the term of this Lease shall, at the option of either
party hereto, cease and terminate on the date when possession is delivered
to the condemning authority. In no event shall Tenant have any claim, to any
award made as the result of such taking, nor shall Tenant have any claim
against Landlord for the value of any unexpired term of this Lease, but the
rent shall be abated as of the date of such termination. Tenant may seek, in
a separate proceeding, a separate award on the account of any damages or
costs incurred by Tenant as a result of such condemnation or taking, so long
as such separate award does not diminish any award of payment which Landlord
would otherwise receive as a result of such condemnation or taking.
10. Default In the event Tenant defaults for a period of ten (10) days after
-------
written notice thereof from Landlord in paying any installment of rent due
hereunder or in performing any of the terms, covenants, conditions, or
provisions hereof binding upon Tenant, or in observing or performing any of
the rules and regulations set forth in paragraph 7 hereof, as the same may
be amended from time to time, or in the event there shall be filed by or
against Tenant in any court a petition in bankruptcy or insolvency, or for
Tenant's reorganization, or for the appointment of a receiver or trustee for
all or a portion of Tenant's property and Tenant fails to secure a discharge
thereof within thirty (30) days, or if Tenant makes an assignment for the
benefit of creditors, or if Tenant abandons or deserts the demised premises,
Landlord shall have the right, in addition to all other rights and remedies
provided by law, to re-enter the demised premises peaceably or by force,
with or without process of law, and to take possession thereof and to
terminate this Lease. No such termination of this Lease nor recovering
possession of the demised premises, however, shall deprive Landlord of any
action or remedy against Tenant for possession, rent (accrued) or damages,
nor constitute a waiver of any lien of Landlord on the property of Tenant
and Landlord may (but shall not be obligated to) relet the demised premises
in whole or in part for the unexpired portion of the term and Tenant shall
be obligated to reimburse Landlord for all of its expenses in connection
with such retaking and reletting, including any loss of rental which might
result.
11. Landlord's Liability It is agreed that neither Landlord nor Agent shall be
--------------------
liable or responsible in any way for any injury to person or damage to or
loss or theft of property sustained in or about the demised premises or the
Building, however the same be caused, unless due to Landlord's or Agent's
own willful act. Tenant absolves Landlord and Agent from damage to person or
property caused by breakage of glass, or by leaks, breaks or overflow of
roof, pipes, drains or plumbing fixtures, or by falling plaster, imperfect
wiring or construction, unless Landlord has been put on notice of such cause
and fails to remedy the same within a reasonable time. Because Tenant is
contracting directly for its own improvements to the premises, Landlord will
be exempted from responsibility for any defective construction associated
therewith.
12. Zoning. Tenant will operate a telemarketing business on the Premises, with
------
associated equipment and employees numbering approximately 225. Landlord
represents and warrants that to the best of Landlord's actual knowledge,
such activity does not violate any local or state zoning or land use law.
13. Notice of Accident Or Defect Tenant shall give to Landlord immediate
----------------------------
notice of any accident to or occurring in and of any known defects in the
demised premises or the Building, including fire, accident involving a
person, and accident to or defects in the water pipes, electric wires,
elevator and heating and cooling apparatus, which defects shall thereupon be
remedied by Landlord with due diligence unless caused by the acts or
omissions of Tenant, its agents, servants, employees, independent
contractors or visitors, in which case the necessary repairs thereto shall
be made as provided in paragraph 6 hereof.
14. Entry By Landlord Landlord and Landlord's agents, employees and
-----------------
independent contractors shall have the right to enter the demised premises
at all times, during normal business hours upon twenty-four (24) hours
advance written notice to Tenant, absent an emergency, to examine the same
and to show them to prospective purchasers or lessees of the Building, or
any portion thereof, and to make such decorations, repairs, alterations,
improvements or additions as Landlord deems desirable, and Landlord and
Landlord's agents, employees and independent contractors shall be allowed to
take all material into and upon the demised premises that may be required
therefor taking every reasonable action to make repairs, alterations,
improvements, or additions, so as to cause the least possible interference
with Tenant's business, without the same constituting an eviction of Tenant
in whole or in part and the rent reserved shall in no way abate while such
decorations, repairs, alterations, improvements, or additions are being
made, by reason of loss or interruption of the use of the demised premises
by Tenant or otherwise. During the 6 months prior to the expiration of this
Lease, Landlord may exhibit the demised premises to prospective tenants
thereof, and place upon the demised premises the usual notices "TO LET",
which notices Tenant shall permit to remain thereon without molestation.
15. Holding Over Any holding over after the expiration of the term hereof,
------------
with the consent of the Landlord, shall be construed to be a tenancy from
month to month at the rents, additional rents and charges herein specified
(prorated on a monthly basis) and shall otherwise be on the terms and
conditions herein specified, so far as applicable. Any holding over after
the expiration of the term hereof, without the consent of the Landlord,
shall be construed to be tenancy from month to month, at 125% the rents
herein specified (prorated on a monthly basis).
16. Notice Any notice herein provided to be given by Tenant to Landlord shall
------
be deemed to be given when duly posted in United States registered or
certified mail addressed to Agent as aforesaid, and any notice herein
provided from Landlord to Tenant shall be deemed to be given if delivered in
person to Tenant or when duly posted in United States mail addressed to
Tenant at the demised premises. To Landlord: SPENCO, Ltd., c/o Leroy
Spencer, 5360 Robin Hood Road, Norfolk, VA 23513. To Tenant: Boron, LePore &
Associates, Inc., c/o Greg Boron, 17-17 Route 208 North, Fair Lawn, NJ
07410.
3
<PAGE>
17. Nonwaiver Of Conditions No act or thing done by Landlord or Landlord's
-----------------------
agents or employees during the term hereof shall be deemed an acceptance of
a surrender of the demised premises, save and except an agreement to accept
such surrender in writing and signed by Landlord. Tenant agrees that failure
of Landlord to insist upon strict observance of any of the terms or
conditions hereof at any time shall not be deemed a waiver of its right to
insist on strict observance thereafter.
18. Mortgages, Deeds Of Trust This Lease is subject or subordinate to all
-------------------------
ground and underlying Leases and the liens of all mortgages and deeds of
trust which may now or hereafter be placed on the real property of which the
demised premises form a part, and no further instrument in writing shall be
necessary to effectuate such subordination. Tenant agrees that upon the
request of Landlord, it will execute and deliver any and all documents
confirming such subordination.
19. Waiver Of Jury Insofar as permitted by law, Landlord and Tenant waive
--------------
trial by jury in any action or proceeding or counterclaim between the
parties hereto, or their successors, arising out of or in any way connected
with this Lease or any of its provisions, Tenant's use or occupancy of the
demised premises, and/or any claim of injury or damage.
20. Observance Of Covenants If Tenant shall default in the observance or
-----------------------
performance of any provision or covenant on Tenant's part to be observed or
performed under this Lease, Landlord (in addition to all other remedies
herein or by law provided) may, immediately or at any time thereafter and
without notice to Tenant, perform the same for the account of Tenant, and if
Landlord makes any expenditures or incurs any obligations for the payment of
money in connection therewith including, but not limited to, attorney's fees
in instituting, prosecuting or defending any action or proceeding, such sums
paid or obligations incurred, with interest at 10% and costs, shall be
deemed to be additional rent hereunder and shall be paid by Tenant to
Landlord within 5 days of rendition of any bill or statement to Tenant
therefor. The above notwithstanding, Tenant may void the imposition of
interest and costs, and contest any such charges by depositing the total
amount in dispute in an interest bearing escrow account of its Virginia
counsel, and attempting to resolve such dispute within thirty (30) days from
the date of such deposit. In the event such dispute has not been resolved,
then Tenant may continue such contest by instituting litigation to resolve
the dispute in the Norfolk Circuit Court within ten (10) days of the
expiration of such thirty (30) day period, and upon the resolution of such
matter, the monies being held in escrow shall be paid to the prevailing
party.
21. No Parol Representations Tenant recognizes that neither Landlord nor Agent
------------------------
nor anyone acting for Landlord has made any representation or promise with
respect to the Building, the land upon which it is erected or the demised
premises, except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provisions of this Lease. Taking possession of
the demised premises by Tenant shall be conclusive evidence that Tenant
accepts same "as is" and that the demised premises and the Building were in
good and satisfactory condition at the time such possession was so taken.
22. Quiet Enjoyment Landlord covenants and agrees that upon Tenant's paying
---------------
the rent and observing and performing all the covenants, conditions and
provisions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the demised premises, subject, nevertheless, to
any and all underlying Leases and mortgages and deeds of trust now or
hereafter affecting the demised premises.
23. Conveyance Or Assignment The term "Landlord" as used in this Lease means
------------------------
only the owner, or the mortgagee in possession, for the time being of the
land and the Building (or the owner of a lease of the Building or of the
land and Building) so that in the event of any conveyance or conveyances of
said land and Building or an assignment of such lease, or in the event of a
lease of the Building, or of the land and Building, the Landlord
specifically named herein shall be and hereby is entirely freed and relieved
of all covenants and obligations of Landlord hereunder, subsequent to the
date of such transfer, and it shall be deemed and construed without further
agreement between the parties or their successors in interest, or between
the parties and the grantee, or the assignee, or the lessee of the Building
or of the land and Building, that the grantee or the assignee or the lessee
has assumed and agreed to carry out any and all covenants and obligations of
Landlord hereunder, subsequent to the date of such transfer. If the leased
premises are sold during the term of the lease, such sale will be made
subject to Tenant's tenancy.
24. Heirs And Executors Bound The covenants, conditions and agreements
-------------------------
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributees, executors, administrators,
successors, and, except as otherwise provided in this Lease, assigns.
25. Contract Of Landlord With Agents. It is further understood and agreed
---------------------------------
that no sale or other disposition of the demised premises, or any interest
therein, shall be made by Landlord or any party claiming through Landlord,
except subject to Agent's rights hereunder, and any purchaser or transferee
of the demised premises, or of any interest therein, shall be deemed to have
assumed all of Landlord's obligations under this paragraph. The obligations
of Landlord set forth in this paragraph shall be deemed a continuing lien or
charge upon the interest of Landlord (and any transferee of such interest)
in the demised premises and upon any and all funds of Landlord (or any party
claiming through Landlord) held by Agent. Landlord and Tenant hereby
recognize that Robinson Sigma Commercial Real Estate and Goodman Segar Hogan
Hoffler, L.P. (both hereinafter referred to as "Agent") have participated in
this transaction and no other real estate brokers have participated or shall
be due a commission. For the initial and expanded occupancy of Tenant, a
real estate commission shall be paid by Landlord to Agent as per separate
commission agreement.
26. Headings The headings appearing at the beginning of each paragraph of this
--------
Lease are intended only for convenience of reference and are not to be
considered in construing this Lease.
4
<PAGE>
27. Estoppel Certificates
---------------------
(a) Tenant shall, from time to time, upon written request of Landlord,
execute, acknowledge and deliver to Landlord or its designee a written
statement stating: the date this Lease was executed and the date it
expires; the date Tenant entered into occupancy of the Premises; the
amount of minimum monthly rent and the date to which such rent has been
paid; that this Lease is in full force and effect and has not been
assigned, modified, supplemented or amended in any way (or specifying
the date and terms of any agreement so affecting this Lease); that this
Lease represents the entire agreement between the parties as to this
leasing; that all conditions under this Lease to be performed by the
Landlord have been satisfied; that all required contributions by
Landlord to Tenant on account of Tenant's improvements have been
received; that on this date there are no existing defenses or offsets
which the Tenant has against the enforcement of this Lease by the
Landlord; that no rent has been paid more than one (1) month in
advance; that no security has been deposited with Landlord (or, if so,
the amount thereof); and as to any other fact or condition reasonably
requested by the Landlord. In the event any of such provisions have not
been satisfied, then such certificate shall state which conditions are
unsatisfied.
(b) It is intended that any such statement delivered pursuant to this
paragraph may be relied upon by the Landlord or prospective purchaser
of Landlord's interest or a mortgagee of Landlord's interest or
assignee of any mortgage upon Landlord's interest in the Building. If
Tenant shall fail to respond within ten (10) days of receipt by Tenant
of a written request by Landlord as herein provided, Tenant shall be
deemed to have given such certificate as above provided without
modification and shall be deemed to have admitted the accuracy of any
information supplied by Landlord to the Landlord or a prospective
purchaser or mortgagee.
(c) The failure of the Tenant to execute, acknowledge and deliver to the
Landlord a statement in accordance with the provision of this paragraph
will constitute a breach of this Lease by the Tenant.
28. Tenant Liability Insurance.
---------------------------
(a) Tenant agrees that he will hold Landlord, Agent, Landlord's mortgagees
and the Landlord under any ground lease harmless from any and all
injury or damage to person or property in, on or about the demised
premises and the portion of Common Areas adjoining the demised
premises, including, without limitation, all costs, expenses, claims or
suits arising in connection therewith; provided, however, that this
clause shall not apply to injury or damage caused by Landlord's own
willful act or Landlord's failure to make any repair (which Landlord
has herein agreed to make) within a reasonable time after Tenant's
written notice of the need therefor. Tenant will, at all times
commencing on the date of delivery of possession of the demised
premises to Tenant, at his own cost and expense, carry with a company
or companies, satisfactory to Landlord, public liability insurance on
the demised premises and adjoining Common Areas, with limits of not
less than Five Hundred Thousand Dollars ($500,000.00) per occurrence
for injury or death to one person and One Million Dollars
($1,000,000.00) per occurrence for injury or death to more than one
person, and property damage of Fifty Thousand Dollars ($50,000.00) per
occurrence for each accident, which insurance shall be written or
endorsed so as to protect Landlord, Agent and Tenant, as their
respective interests may appear. Said policy or policies shall contain
a provision insuring Tenant against all liability which Tenant might
have under the foregoing indemnity provision. Tenant covenants that
certificates of all such insurance policies shall be delivered to
Landlord promptly without demand. Such policy shall also contain a
provision that it may not be terminated without thirty (30) days paid
written notice to Landlord. If Tenant fails to provide such insurance,
Landlord may, but shall not be required to, obtain such insurance and
collect the cost thereof as a part of the rent herein reserved. The
above notwithstanding, Tenant may obtain such liability insurance
limits through the use of an excess liability or "umbrella" insurance
policy.
(b) Tenant and all those claiming by, through or under Tenant shall store
their property in, and shall occupy and use the demised premises and
any improvements therein and appurtenances thereto and all other
portions of the Building solely at their own risk, and Tenant and all
those claiming by, through or under Tenant hereby release Landlord, to
the full extent permitted by law, from all claims of every kind,
including loss of life, personal or bodily injury, damage to
merchandise, equipment, fixtures or other property, or damage to
businesses or for business interruption, arising, directly or
indirectly, out of or from or on account of such occupancy and use, or
resulting from any present or future condition or state of repair
thereof. Landlord shall not be responsible or liable at any time to
Tenant, or to those claiming by, through or under Tenant, for any loss
of life, bodily or personal injury or damage to property or business,
or for business interruption, that may be occasioned by the acts,
omissions or negligence of any other persons or any other tenants or
occupants of any portion of the Building, other than those hired by
Landlord. Landlord shall not be responsible at any time for any
defects, latent or otherwise, in any buildings or improvements in the
Building or any of the equipment, machinery, utilities, appliances or
apparatus therein, nor shall Landlord be responsible or liable at any
time for loss of life, or injury or damage to any person or to any
property or business to Tenant, or those claiming by, through or under
Tenant, caused by or resulting from the bursting, breaking, leaking,
running, seeping, overflowing or backing of water, steam, gas, sewage,
snow or ice in any part of the demised premises or caused by or
resulting from acts of God or the elements, or resulting from any
defect or negligence in the occupancy, construction, operation or use
of any buildings or improvements in the Building, including the demised
premises and the equipment, fixtures, machinery, appliance of apparatus
therein, absent Landlord's actual knowledge of such defect and failure
to correct the same within a reasonable period of time.
5
<PAGE>
29. Expansion. Effective June 1, 1998, Tenant will occupy on all remaining
---------
space on the second floor (west) of the Building. Said space measures
approximately 8,175 square feet bringing the total square footage occupied
to 28,686 square feet (entire 2nd and 3rd floors). Said space will be taken
in "as-is" condition. Landlord will relocate all Tenants on the West side of
the second floor by June 1, 1998 to provide a forty-five (45) day
construction period for Tenant prior to Rent Commencement. Prior to
executing this Lease, Landlord will provide Tenant with a schedule of lease
expiration dates for all second floor (West) tenants. Any tenants with
expiration dates prior to June 1, 1998 will not be offered any extension
rights beyond June 1, 1998 and will be required to relocate by such date.
Any Tenants with expiration dates after June 1, 1998, will also be required
to relocate by such date, however these tenants will be reimbursed by Tenant
for actual moving expenses in an amount not to exceed $1.00 per square foot.
Reimbursement will only be paid upon submission of invoices for actual
moving expenses incurred.
30. Rent Escalation. Monthly and annual rent will escalate by three percent
---------------
(3%) annually in accordance with the following schedule (includes 2nd floor
expansion area):
<TABLE>
<CAPTION>
Period Monthly Annually
------ ------- --------
<S> <C> <C>
July 15, 1998 through July 14, 1999 $20,928.83 $251,145.96
July 15, 1999 through July 14, 2000 $21,556.69 $258,680.28
July 15, 2000 through July 14, 2001 $22,203.39 $266,440.68
July 15, 2001 through July 14, 2002 $22,869.49 $274,433.88
July 15, 2002 through July 14, 2003 $23,555.58 $282,666.96
July 15, 2003 through July 14, 2004 $24,262.25 $291,147.00
July 15, 2004 through July 14, 2005 $24,990.11 $299,881.32
July 15, 2005 through July 14, 2006 $25,739.82 $308,877.84
July 15, 2006 through July 14, 2007 $26,512.01 $318,144.12
</TABLE>
31. Rent Abatement. All Terms and conditions of this Lease will commence on
--------------
June 15, 1997, however payment of monthly rent will not begin until July 15,
1997.
32. Tenant Improvements. Landlord will deliver the Premises in "as is"
-------------------
condition. While Tenant will be responsible for its own improvement work,
Landlord agrees to diligently review and approve Tenant's construction
drawings so that improvements may commence as soon as possible.
Landlord will allow Tenant to install a card access to its premises or other
such systems, restricting access to its premises, as well as a security
system.
Landlord will allow Tenant to install a UPS systems and a backup diesel-
powered generator on a concrete pad to be located immediately adjacent to
the Building.
Tenant shall hold Landlord and Landlord's Agent harmless for work performed
by other contractors. Tenant shall provide to Landlord's Agent evidence of
full payment of all contractors at completion of project.
All contractors must have evidence of license and insurance. Tenant shall
supply to Landlord all certificates of insurance and licenses before work is
to commence. All contractors will sign lien release forms with respect to
Landlord and Landlord's Agent with sole remedy for payment placed with the
Tenant.
Tenant shall supply to Landlord's Agent evidence of final inspection from
the governing municipality as well as certification from Tenant's architect
of completion of improvements.
33. Landlord Improvements. Landlord, at its cost, will renovate the Common
---------------------
Areas of the Building to include carpeting all corridor areas, replacing all
ceilings and lighting and replacing all wall covering including the main
lobby on the ground floor and second floor. Landlord will consult with
Tenant regarding Common Area renovations for color and finish selections and
submit such selections for approval by Tenant.
Landlord will also pressure wash the exterior of the Building as well as
provide exterior landscaping upgrades. Landlord will consult with Tenant
regarding the scope and content of such landscaping upgrades. Landlord will
also re-stripe the parking lot.
Landlord will install a new sign in the existing monument in front of the
Building, in consultation with Tenant, identifying the Building as the
Market Connections Building (or such other name as Tenant may designate).
Landlord will also install a new directory in the Building lobby identifying
Tenant and the Building as well as other Building occupants.
34. Exterior Signage. Tenant, at its cost, will have the right to place a
----------------
tenant identification sign on the top face of the Building subject to city
and park codes and covenants. Landlord will not permit any exterior signage
to any existing or future Tenant without the prior approval of Tenant.
35. Parking. Parking will be provided in the lot surrounding the Building to
-------
accommodate up to 225 vehicles including twenty five (25) reserved spaces.
Parking will be at no charge to Tenant. Landlord, at its cost and expense,
will maintain, repair, and if necessary, resurface and/or repave the parking
lot as the same shall be required.
6
<PAGE>
36. Operating Hours. Tenant requires extended operating hours with a partial
---------------
staff occupying the Premises twenty four (24) hours a day, seven (7) days a
week. Landlord will provide and maintain all services as outlined in
Paragraph 4 herein.
37. Extension Option. So long as this Lease is in full force and effect and
----------------
Tenant is not in default hereunder, Tenant shall have the option (the
"Extension Option") to extend the Term for the entire Premises for two (2)
additional periods of five (5) years each (collectively, the "Extension
Periods") subject to the following terms and conditions:
a. Tenant shall have give Landlord written notice of its exercise of the
Extension Option on or before one hundred eighty (180) days prior to the
expiration of the Term or the expiration of the current Extension
Period, as applicable.
b. The terms and conditions of this Lease, as it may have been amended from
time to time, shall remain in full force and effect during any Extension
Period except that the rent for the first option period will be $11.00
per square foot (year 11) continuing to escalate at three percent (3%)
annually. Rent for the second option period (year 16) will be $12.50 per
square foot continuing to escalate at three percent (3%) annually.
d. At least thirty (30) days before the commencement of an Extension
Period, Landlord and Tenant agree to enter into an amendment to this
Lease to evidence the exercise of the Extension Option.
e. In conjunction with Tenant's exercise of the first extension option,
Landlord will provide a refurbishment allowance not to exceed three
dollars ($3.00) per square foot for Tenant's use in replacing the carpet
throughout the Premises, repainting, etc.
38. Tenant's First Refusal Right. Landlord grants to Tenant a pre-emptive
----------------------------
right (the "First Refusal Right") to lease the First Refusal Space, as
hereinafter defined, at any time during the Term as such space becomes
available, on and subject to the following terms and conditions. The First
Refusal Right is not effective or exercisable by Tenant during the existence
of a default by Tenant under this Lease.
a. The "First Refusal Space" shall mean the entire ground floor of the
building more particularly shown on EXHIBIT "A", attached hereto.
However, in the event that Landlord adds an expansion onto the Building
in the future, then said First Refusal Right shall not apply to said
expansion.
b. Should Landlord receive from a prospective third-party tenant, or the
existing Tenant in the space, an offer to lease the First Refusal Space
which Landlord is willing to accept (the "Third-party Offer"), Landlord
agrees promptly to so notify Tenant in writing of the Third-party Offer.
Tenant shall have a period of seven (7) days after the date of the
notice of Tenant within which to exercise the First Refusal Right (the
"Acceptance Period") by delivery to Landlord of written notice of its
exercise on or before the last day of the Acceptance Period. If Tenant
fails to duly and timely exercise the First Refusal Right, or elects not
to exercise the First Refusal Right, the same shall lapse and Landlord
shall be free to lease the First Refusal Space to the third party or the
existing Tenant submitting the Third-Party Offer.
c. Within fifteen (15) days after the effective date of Tenant's exercise
of the First Refusal Right, Landlord and Tenant shall enter into an
amendment to this Lease adding the First Refusal Space to the Premises
which amendment shall subject the First Refusal Space to the terms and
provisions of the Lease, including the rental rate in effect at the time
the First Refusal Right is exercised, or the rental rate being paid by
the tenant currently occupying, whichever is lower.
d. If Tenant fails to or elects not to exercise the First Refusal Right and
the third party submitting the Third-Party Offer or existing Tenant does
not lease the First Refusal Space, the First Refusal Space shall again
become subject to the First Refusal Right herein contained as to any
subsequent Third-party Offer submitted to Landlord.
e. In no event shall Tenant exercise its First Refusal Right and then
sublet to a third party at a higher rent unless Landlord approves, and
Landlord gets the benefit of the higher rent.
39. Building Expansion. In the event that Landlord desires to expand the
------------------
Building, then Landlord shall first submit all plans and specifications to
Tenant for Tenant's review of the architectural design, building materials,
and site plan, and subsequent approval or disapproval, which shall not be
unreasonably withheld. Landlord , if said expansion takes place, plans to
use the same materials, architectural design of the existing Building, and
conform to the codes of Norfolk and the Norfolk Commerce Park. In the event
of expansion, Landlord shall continue to maintain parking spaces equal to
the sum of (i) 225 required spaces for Tenant hereunder, plus (ii) the
number of parking spaces required under the then current zoning ordinance of
the City of Norfolk, Virginia for the same square footage of such expansion
plus the square footage of the Building which is not to be occupied by
Tenant.
7
<PAGE>
IN WITNESS WHEREOF any individual parties hereto have hereunto set their hands
and seals and any corporate parties have caused this Lease to be executed in
their respective names and behalves by their respective Presidents or Vice
Presidents and their respective corporate seals to be affixed and attested by
their respective Secretaries or Assistant Secretaries, all as of the day and
year first above written.
LANDLORD: SPENCO, LTD.
ATTEST: By: [SIGNATURE APPEARS HERE]
-------------------------------
Its: GENERAL PARTNER
------------------------------
Date: 4-15-97
[SIGNATURE APPEARS HERE] -----------------------------
- --------------------------------
Secretary or Assistant Secretary
Date: 4/15/97 TENANT: BORON, LEPORE & ASSOC., INC.
---------------------------
ATTEST: By: [SIGNATURE APPEARS HERE]
-------------------------------
Its: PRESIDENT
------------------------------
Date: 4-16-97
-----------------------------
[SIGNATURE APPEARS HERE]
- --------------------------------
Secretary or Assistant Secretary
Date: 4/16/97
---------------------------
8
<PAGE>
Exhibit 10.3
DEED OF LEASE AGREEMENT
THIS DEED OF LEASE AGREEMENT (hereinafter referred to as "Lease"), made
this __________ day of April, 1997, by and between Norfolk Commerce Center
Limited Partnership, a limited partnership organized and existing under the laws
of The Commonwealth of Virginia, having an address c/o Cambridge Asset
Advisors, 560 Herndon Parkway, Suite 210, Herndon, Virginia 20170, (hereinafter
referred to as the "Landlord"), and Boron, LePore & Associates, Inc., a
corporation organized and existing under the laws of The State of Delaware,
having an address at 5365 Robin Hood Road, Suite (hereinafter referred to as the
"Tenant").
WITNESSETH, THAT FOR AND IN CONSIDERATION of the mutual entry into this
Lease by the parties hereto, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged by each party hereto, the
Landlord hereby leases to the Tenant and the Tenant hereby leases from the
Landlord all of that real property, situated and lying in the City of Norfolk,
Virginia, which consists of the space (Suite F containing 4,660 square feet of
floor area) outlined and attached hereto as Exhibit A (hereinafter referred to
as the "Premises") and located in a building (hereinafter referred to as the
"Building") at 5365 Robin Hood Road, Norfolk, Virginia 23513, (the Premises, the
remainder of the Building, such tract of land, other buildings thereon, and any
other buildings or improvements to be constructed thereon being hereinafter
referred to collectively as the "Property").
SUBJECT TO THE OPERATION AND EFFECT of any and all instruments and matters
of record or in fact.
UPON THE TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set
forth:
SECTION 1. TERM.
1.1. Length. This Lease shall be for a term of approximately One Hundred
Twenty Three (123) months (hereinafter referred to as the "Term") commencing on
/1/ (hereinafter referred to as the "Commencement Date", except that if the date
of such commencement is hereafter advanced or postponed by written agreement of
the parties hereto, the date to which it is advanced or postponed shall
thereafter be the "Commencement Date" for all purposes of the provisions of this
Lease), and expiring on the 30th day of June, 2007 (hereinafter referred to as
the "Termination Date"), except that if the date of such termination is
hereafter advanced or postponed by written agreement of the parties hereto, the
date to which it is advanced or postponed shall thereafter be the Termination
Date.
1.2. New Construction.
- ----------------------
/1/ the date first written above
-1-
<PAGE>
Taking of possession by Tenant shall be deemed conclusively to establish
that said buildings and other improvements have been completed in accordance
with the plans and specifications and that the Premises are in good and
satisfactory condition, as of when possession was so taken. Tenant acknowledges
that no representations as to the repair of the Premises have been made by
Landlord, unless such are expressly set forth in this Lease. After such
"Commencement Date" Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the Premises. In the event of any dispute as
to substantial completion or work performed or required to be performed by
Landlord, the certificate of Landlord's architect or general contractor shall be
conclusive.
1.3. Surrender. The Tenant shall at its expense, at the expiration of the
Term or upon any earlier termination of this Lease, (a) promptly surrender to
the Landlord possession of the Premises (including any fixtures or other
improvements which, under the provisions of Section 5, are owned by the
Landlord) in good order and repair (ordinary wear and tear excepted) and broom
clean, (b) remove therefrom the Tenant's signs, goods and effects and any
machinery, trade fixtures and equipment used in conducting the Tenant's trade or
business and not owned by the Landlord, and (c) repair any damage to the
Premises or the Building caused by such removal.
1.4. Holding Over.
1.4.1. If the Tenant continues to occupy the Premises after the
expiration of the Term or any earlier termination of this Lease after obtaining
the Landlord's express, written consent thereto,
(a) such occupancy shall (unless the parties hereto otherwise
agree in writing) be deemed to be under a month-to-month tenancy, which shall
continue until either party hereto notifies the other in writing, by at least
thirty (30) days before the end of any calendar month, that the notifying party
elects to terminate such tenancy at the end of such calendar month, in which
event such tenancy shall so terminate;
(b) anything contained in the foregoing provisions of this
Section to the contrary notwithstanding, the rental payable for each such
monthly period shall equal one-twelfth (1/12) of the Base Rent and the
Additional Rent payable under the provisions of subsection 2.2 (calculated in
accordance with such provisions of subsection 2.2 as if this Lease had been
renewed for a period of twelve (12) full calendar months after such expiration
or earlier termination of the Term or such renewal); and
(c) such month-to-month tenancy shall be upon the same terms
and subject to the same conditions as those set forth in the provisions of this
Lease; provided, that if the Landlord gives the Tenant, by at least thirty (30)
days before the end of any calendar month during such month-to-month tenancy,
written notice that such terms and conditions (including any thereof relating to
the amount or payment of Rent) shall, after such month, be modified in any
manner specified in such notice, then such tenancy shall, after such month, be
upon the said terms and subject to the said conditions, as so modified.
1.4.2. If the Tenant continues to occupy the Premises after the
expiration of the Term or any earlier termination of this Lease without
obtaining the Landlord's express, written consent thereto, such occupancy shall
be on the same terms and subject to the same conditions as those set forth in
the provisions of paragraph 1.4.1., except that, anything contained in the
provisions of this Lease to the contrary notwithstanding, (a) the rental payable
during the period of such occupancy shall equal /2/ of the rental
which would be payable during such period under the provisions of subparagraph
1.4.1.(b), had the Tenant obtained the Landlord's express, written consent to
such occupancy, as aforesaid, and (b) nothing in the provisions of paragraph
1.4.1. or any other provision of this Lease shall be deemed in any way to alter
or impair the Landlord's right immediately to evict the Tenant or exercise its
other rights and remedies under the provisions
- -----------------------
/2/ one hundred seventy five percent (175%)
-2-
<PAGE>
of this Lease or applicable law on account of the Tenant's occupancy of the
Premises without having obtained such consent.
SECTION 2. RENT
2.1. Amount. As rent for the Premises (all of which is hereinafter
referred to collectively as "Rent"), the Tenant shall pay to the Landlord in
advance, without demand, deduction or set off, for the entire Term hereof, all
of the following:
2.1.1. Base Rent. In consideration of the Premises, Tenant covenants
and agrees to pay to Landlord a Base Rent each Lease Year in the amount set
forth in Exhibit D attached hereto and made a part hereof. This Base Rent shall
be paid in equal monthly installments on the first (1st) day of each month, in
advance, without demand, notice, offset or deduction, at such place as shall be
designated by Landlord, beginning on the Commencement Date. If the Commencement
Date is on a date other than the first (1st) day of the month, then the first
rent payment shall include a pro rata portion of such Base Rent and all other
payments provided for under this Lease for any part of the month prior to the
first (1st) full month of the lease term.
2.1.2. Lease Year. As used in the provisions of this Lease, the term
"Lease Year" means (a) the period commencing on the Commencement Date and
terminating on the first (1st) anniversary of the last day of the calendar month
containing the Commencement Date, and (b) each successive period of twelve (12)
calendar months thereafter during the Term.
2.1.3. Additional Rent. Additional rent (hereinafter referred to as
"Additional Rent") in the amount of any payment referred to as such in any
provision of this Lease which accrues while this Lease is in effect. Any
Additional Rent shall be payable to Landlord within thirty(30) days of demand
except as otherwise provided for herein.
2.2. Annual Operating Costs.
2.2.1. Definitions. As used herein, the term "Annual Operating
Costs" means the actual costs incurred by the Landlord in operating and
maintaining the Property during each calendar year of the Term. Such costs shall
include, by way of example rather than of limitation, (i) real property, front-
foot benefit, metropolitan district and other similar taxes or public or private
assessments (whether regular or special) levied against any or all of the
Property as applicable; (ii) charges or fees for, and taxes on, the furnishing
of water, sewer service, gas, fuel, electricity or other utility services to the
Property; (iii) costs of maintaining grounds, common areas and mechanical
systems of Buildings; (iv) all other costs of maintaining, repairing or
replacing any or all of the Building or the rest of the Property including a
reserve for asphalt, roof repairs and repainting; (v) charges or fees for any
necessary governmental permits; (vi) management fees, overhead and expenses
equal to five percent (5%) of the Rent for each Lease Year; (vii) premiums for
hazard, liability, workmens' compensation or similar insurance upon any or all
of the Property and any deductibles applicable therefor; (viii) costs arising
under service contracts with independent contractors; (ix) costs of any services
not provided by the Landlord to the Property on the date hereof but hereafter
provided by the Landlord in its prudent management of the Property; and (x) the
costs of any other items which, under generally accepted accounting principles
consistently applied from year to year with respect to the Property, constitute
operating or maintenance costs attributable to any or all of the Property and
(xi) the cost of tax appeals to the extent that such cost does not exceed the
amount of savings realized in each calendar year. Such costs shall not include
(i) the expense of principal and interest payments made by the Landlord pursuant
to the provisions of any mortgage or deed of trust covering the Property; (ii)
any deduction for depreciation of the Property taken on the Landlord's income
tax returns; or (iii) the cost of capital improvements made to the Property
.
2.2.2. Operating Costs Escalation. Tenant agrees to pay to Landlord,
as Additional Rent, Tenant's Pro-Rata Share (as hereinafter defined) of any
increase in Annual Operating Costs for any calendar year above Two and 20/100
Dollars ($2.20) per square foot (Tenant's "Operating
-3-
<PAGE>
Costs Escalation"). Tenant's "Pro-Rata Share" shall be equal to a fraction, the
numerator of which shall be the square feet of the Premises, and, except as
otherwise provided hereunder, the denominator of which shall be the total
leasable square feet in the Building and or the Property. As of the date of
execution of this Lease, Tenant's Pro-Rata s hare is 6.22% of the Building and
6.22% of the Property.
2.2.3. Landlord's right to estimate. Anything contained in the
foregoing provisions of this subsection to the contrary notwithstanding, the
Landlord may, at its discretion, (a) make from time to time during the Term a
reasonable estimate of the Tenant's Operating Costs Escalation which may become
due under such provisions for any calendar year, (b) require the Tenant to pay
to the Landlord for each calendar month during such year one twelfth (1/12) of
such estimate as Additional Rent, at the time and in the manner that the Tenant
is required hereunder to pay the monthly installment of the Base Rent for such
month, and (c) at the Landlord's reasonable discretion, increase or decrease
from time to time during such calendar year the amount initially so estimated
for such calendar year, all by giving the Tenant written notice thereof,
accompanied by a schedule setting forth in reasonable detail the expenses
comprising the Annual Operating Costs, as so estimated.
2.2.4. Computation. After the end of each calendar year during the
Term, the Landlord shall compute the total of the Annual Operating Costs
incurred during such calendar year, and shall allocate them in accordance with
each tenant's Pro-Rata share of the Property; provided, that anything contained
in the foregoing provisions of this subsection 2.2 to the contrary
notwithstanding, wherever the Tenant and/or any other tenant of space within the
Property has agreed in its lease or otherwise to provide any item of such
services partially or entirely at its own expense, or wherever in the Landlord's
judgment any such significant item of expense is not incurred with respect to or
for the benefit of all of the net rentable space within the Property, in
allocating the Annual Operating Costs pursuant to the foregoing provisions of
this subsection, the Landlord shall make an appropriate adjustment, using
generally accepted accounting principles, as aforesaid, so as to avoid
allocating to the Tenant or to such other tenant (as the case may be) those
Annual Operating Costs covering such services already being provided by the
Tenant or by such other tenant at its own expense, or to avoid allocating to all
of the net rentable space within the Property those Annual Operating Costs
incurred only with respect to a portion thereof, as aforesaid.
2.2.5. Payment of Operating Costs Escalation. Within one hundred
twenty (120) days after the expiration of each calendar year, Landlord shall
submit to Tenant a statement showing the actual Annual Operating Costs for such
preceding calendar year and Tenant's Pro-Rata share thereof. If such statement
shows that Tenant's Pro-Rata share of the actual Annual Operating Costs for such
preceding year exceeded Tenant's monthly payments of Operating Costs Escalation
for the preceding Calendar Year, then Tenant shall pay the total amount of such
deficiency to Landlord with the next payment of Base Rent due hereunder after
receipt of such statement. /3/
2.2.6. Proration. If only part of any calendar year falls within the
Term, the amount computed as Additional Rent for such calendar year under the
foregoing provisions of this subsection shall be prorated in proportion to the
portion of such calendar year falling within the Term (but the expiration of the
Term before the end of a calendar year shall not impair the Tenant's obligation
hereunder to pay such prorated portion of such Additional Rent for that portion
of such calendar year falling within the Term, which shall be paid on demand, as
aforesaid).
- ---------------------
/3/ Notwithstanding anything contained herein to the contrary, If such
statement reflects Tenant has made an overpayment, then Landlord shall
credit such overpayment against the next month's Rent.
-4-
<PAGE>
2.3. When due and payable.
2.3.1. The Base Rent for any Lease Year shall be due and payable in
twelve (12) consecutive, equal monthly installments, in advance, on the first
(1st) day of each calendar month during such Lease Year; provided, that the
first monthly installment of the Base Rent will be due and payable upon lease
execution.
2.3.2. Any Additional Rent accruing to the Landlord under any
provision of this Lease shall, except as is otherwise set forth herein, be due
and payable when the installment of the Base Rent next falling due after such
Additional Rent accrues and becomes due and payable, unless the Landlord makes
written demand upon the Tenant for payment thereof at any earlier time, in which
event such Additional Rent shall be due and payable at such time.
2.3.3. Each such payment shall be made promptly when due, without
any deduction or set off whatsoever, and without demand, failing which the
Tenant shall pay to the Landlord as Additional Rent, a late charge equaling
twenty percent (20%) of such payment. /4/
2.4. Where payable. The Tenant shall pay the Rent, in lawful currency of
the United States of America, to the Landlord by delivering or mailing it
(postage prepaid) to the Landlord's address which is set forth in Section 16, or
to such other address or in such other manner as the Landlord from time to time
specifies by written notice to the Tenant. Any payment made by the Tenant to
the Landlord on account of Rent may be credited by the Landlord to the payment
of any Rent then past due before being credited to Rent currently falling due.
Any such payment which is less than the amount of Rent then due shall constitute
a payment made on account thereof, the parties hereto hereby agreeing that the
Landlord's acceptance of such payment (whether or not with or accompanied by an
endorsement or statement that such lesser amount or the Landlord's acceptance
thereof constitutes payment in full of the amount of Rent then due) shall not
alter or impair the Landlord's rights hereunder to be paid all of such amount
then due, or in any other respect.
2.5. Tax on Lease. If federal, state or local law now or hereafter
imposes any tax, assessment, levy or other charge (other than any income,
inheritance or estate tax) directly or indirectly upon (a) the Landlord with
respect to this Lease or the value thereof, (b) the Tenant's use or occupancy of
the Premises, (c) the Base Rent, Additional Rent or any other sum payable under
this Lease, or (d) this transaction, then (except if and to the extent that such
tax, assessment, levy or other charge is included in the Annual Operating Costs)
the Tenant shall pay the amount thereof as Additional Rent to the Landlord upon
demand, unless the Tenant is prohibited by law from doing so, in which event the
Landlord may, at its election, terminate this Lease by giving written notice
thereof to the Tenant.
2.6. Security deposit.
2.6.1. Simultaneously with the entry into this Lease by the parties
hereto, the Tenant shall deposit with the Landlord the sum of Three Thousand One
Hundred Six and 67/100 Dollars ($3,106.67), which shall be retained by the
Landlord as security for the Tenant's payment of the Rent and performance of all
of its other obligations under the provisions of this Lease.
2.6.2. On the occurrence of an Event of Default, the Landlord shall
be entitled, at its sole discretion,
(a) to apply any or all of such sum in payment of (i) any
Rent then due and unpaid, (ii) any expense incurred by the Landlord in curing
any such Event of Default, and/or (iii) any damages incurred by the Landlord by
reason of such Event of Default (including, by way of example rather than of
limitation, that of reasonable attorneys' fees); and/or
- -------------------
/4/ Notwithstanding anything contained herein to the contrary, Tenant shall
not incur any late fees until the rent has not been paid for five (5)
days past its due date.
-5-
<PAGE>
(b) to retain any or all of such sum to reimburse for any or all
damages suffered by the Landlord by reason of such Event of Default. If at any
time Landlord draws upon the security deposit in accordance with this section
Tenant upon demand agrees to immediately pay to Landlord an amount sufficient to
return the security deposit to the amount stated above.
2.6.3. On the termination of this Lease, any of such sum which is not so
applied or retained shall be returned to the Tenant within forty-five (45) days
of the Lease termination date.
2.6.4. Such sum shall not bear interest while being held by the Landlord
hereunder.
2.6.5. No Mortgagee (as that term is defined by the provisions of Section
12) or purchaser of any or all of the Property at any foreclosure proceeding
brought under the provisions of any Mortgage (as that term is defined by the
provisions of Section 12) shall (regardless of whether the Lease is at the time
in question subordinate to the lien of any Mortgage under the provisions of
Section 12 or otherwise) be liable to the Tenant or any other person for any
or all of such sum (or any other or additional security deposit or other payment
made by the Tenant under the provisions of this Lease), unless both (a) the
Landlord has actually delivered it in cash to such Mortgagee or purchaser, as
the case may be, and (b) it has been specifically identified, and accepted by
the Lender or such purchaser, as the case may be, as such and for such purpose.
SECTION 3. USE OF PREMISES.
3.1. The Tenant shall, continuously throughout the Term occupy and use the
Premises for and only for general office purposes.
3.2. In its use of the Premises and the remainder of the Property, the
Tenant shall not violate any applicable law, ordinance or regulation.
3.3. License.
3.3.1 The Landlord hereby grants to the Tenant a non-exclusive license
to use (and to permit its officers, directors, agents, employees and invitees to
use in the course of conducting business at the Premises),
(a) any and all elevators, common stairways, lobbies, common
hallways and other portions of the Building which, by their nature, are
manifestly designed and intended for common use by the occupants of the
Building, for pedestrian ingress and egress to and from the Premises and for any
other such manifest purposes; and
(b) any and all portions of the said tract of land on which the
Building is located (excluding that portion thereof which is improved by any
other building) which, by their nature, are manifestly designed and intended for
common use by the occupants of the Building and of any other improvements on
such tract, for pedestrian ingress and egress to and from the Premises and for
any other such manifest purposes; and
(c) any and all portions of such tract of land as from time to
time are designated (by striping or otherwise) by the Landlord for such purpose,
for the parking of automobiles.
3.3.2. Such license shall be exercised in common with the exercise
thereof by the Landlord, any tenant or owner of the building or any other
building located on such tract, and their respective officers, directors,
agents, employees and invitees, and in accordance with the Rules and Regulations
promulgated from time to time pursuant to the provisions of Section 11.
3.4. Signs. The Tenant shall have the right to erect from time to time
within the Premises such signs as it desires, in accordance with applicable law,
except that the Tenant shall not erect any sign within the Premises in any place
where such sign is visible primarily from the exterior of the Premises, unless
the Landlord has given its express, written consent thereto.
-6-
<PAGE>
3.5. Relocation of Tenant. The Landlord shall have the right from time to
time during the Term, at the Landlord's expense, to relocate the Premises from
their present location within the Building to another location within the
Building having at least the same floor area as that of the Premises as shown on
Exhibit A, provided that the Landlord gives the Tenant written notice of the
Landlord's intention to do so at least thirty (30) days before undertaking such
relocation. The Landlord shall, in such event, at the Landlord's expense,
install within the Premises as so relocated improvements of the same quality and
quantity as those theretofore made by the Tenant or the Landlord to the Premises
before such relocation, and on the completion of such installation shall cause
the Tenant's machinery, furniture, fixtures and equipment within the Premises
to be moved to the Premises as so relocated /5/. Upon the completion of such
relocation, this Lease shall automatically cease to cover the space constituting
the Premises immediately before such relocation, and shall automatically
thereafter cover the space to which the Premises have been relocated, as
aforesaid, all on the same terms and subject to the same conditions as those set
forth in the provisions of this Lease as in effect immediately before such
relocation, and all without the necessity of further action by either party
hereto; provided, that each party hereto shall, promptly upon its receipt of a
written request therefor from the other, enter into such amendment of this Lease
as the requesting party considers reasonably necessary to confirm such
relocation.
SECTION 4. INSURANCE AND INDEMNIFICATION.
4.1. Increase in risk.
4.1.1. The Tenant shall not do or permit to be done any act or thing
as a result of which either (a) any policy of insurance of any kind covering (i)
any or all of the Property or (ii) any liability of the Landlord in connection
therewith may become void or suspended, or (b) the insurance risk under any such
policy would (in the opinion of the insurer thereunder) be made greater; and
4.1.2. shall pay as Additional Rent the amount of any increase in
any premium for such insurance resulting from any breach of such covenant.
4.2. Insurance to be maintained by Tenant.
4.2.1. The Tenant shall maintain at its expense, throughout the
Term, insurance against loss or liability in connection with bodily injury,
death, property damage or destruction, occurring within the Premises or arising
out of the use thereof by the Tenant or its agents, employees, officers or
invitees, visitors and guests, under one or more policies of general public
liability insurance having such limits as to each as are reasonably required by
the Landlord from time to time, but in any event of not less than a total of Two
Million Dollars ($2,000,000.00) for bodily injury to or death of all persons or
property damage or destruction in any one occurrence, and (b) Fifty Thousand
Dollars ($50,000.00) Fire Legal Liability. Each such policy shall (a) name as
the insured thereunder the Tenant and the Landlord and Landlord's Agent (and, at
the Landlord's request, any Mortgagee) as additional insureds, (b) by its terms,
not be cancelable without at least thirty (30) days' prior written notice to the
Landlord (and, at the Landlord's request, any such Mortgagee), and (c) be issued
by any insurer of recognized responsibility licensed to issue such policy in the
Commonwealth of Virginia.
4.2.2. (a) At least five (5) days before the Commencement Date, the
Tenant shall deliver to the Landlord a certificate of each such policy, and (b)
at least thirty (30) days before any such policy expires, the Tenant shall
deliver to the Landlord an original or a signed duplicate copy of a replacement
policy therefor; provided, that so long as such insurance is otherwise in
accordance with the provisions of this Section, the Tenant may carry any such
insurance under a blanket policy covering the Premises for the risks and in the
minimum amounts specified in paragraph 4.2.1, in which event the Tenant shall
deliver to the Landlord two (2) insurer's certificates therefor in lieu of an
original or a copy thereof, as aforesaid.
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/5/ during non-ordinary business hours (normal business hours being deemed
Monday through Friday from 8:30 a.m. to 5:30 p.m.)
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<PAGE>
4.3. Insurance to be maintained by Landlord. The Landlord shall maintain
throughout the Term all-risk insurance upon the Building, including as needed
but not limited to Personal Property, Loss of Rents, Glass, Boiler and
Machinery, General Liability and Umbrella Liability in at least such amounts and
having at least such forms of coverage as are required from time to time by the
Landlord's lender. The cost of the premiums for such insurance and of each
endorsement thereto and of any applicable deductibles therefor shall be deemed,
for purposes of the provisions of Section 2, to be a cost of operating and
maintaining the Property.
4.4. Waiver of subrogation. If either party hereto is paid any proceeds
under any policy of insurance naming such party as an insured, on account of any
loss, damage or liability, then such party hereby releases the other party
hereto, to and only to the extent of the amount of such proceeds, from any and
all liability for such loss, damage or liability, notwithstanding that such
loss, damage or liability may arise out of the negligent or intentionally
tortious act or omission of the other party, its agents or employees; provided,
that such release shall be effective only as to a loss, damage or liability
occurring while the appropriate policy of insurance of the releasing party
provides that such release shall not impair the effectiveness of such policy or
the insured's ability to recover thereunder. Each party hereto shall use
reasonable efforts to have a clause to such effect included in its said
policies, and shall promptly notify the other in writing if such clause cannot
be included in any such policy.
4.5. Liability of parties. Except if and to the extent that such party is
released from liability to the other party hereto pursuant to the provision of
subsection 4.4.
4.5.1. the Landlord (a) shall be responsible for, and shall
indemnify and hold harmless the Tenant against and from any and all liability
arising out of, any injury to or death of any person or damage to any property,
occurring anywhere upon the Property, if, only if and to the extent that such
injury, death or damage is proximately caused by the grossly negligent or
intentionally tortious act or omission of the Landlord or its agents, officers
or employees, but (b) shall not be responsible for or be obligated to indemnify
or hold harmless the Tenant against or from any liability for any such injury,
death or damage occurring anywhere upon the Property (including the Premises),
(i) by reason of the Tenant's occupancy or use of the Premises or any other
portion of the Property, or (ii) because of fire, windstorm, act of God or other
cause unless solely caused by such gross negligence or intentionally tortious
act or omission of the Landlord, as aforesaid; and
4.5.2. subject to the operation and effect of the foregoing
provisions of this subsection, the Tenant shall be responsible for, and shall
defend, indemnify and hold harmless the Landlord against and from, any and all
liability or claim of liability (including without limitation reasonable
attorney's fees) arising out of any injury to or death of any person or damage
to any property, occurring within the Premises, or if caused by Tenant, its
employees, agents or invitees, on the Property.
SECTION 5. IMPROVEMENTS TO PREMISES.
5.1. By Landlord.
5.1.1. Landlord shall provide Tenant with an allowance of up to
$7,000.00 ("Improvement Allowance") for tenant improvements to be constructed in
accordance with Exhibit B attached hereto and incorporated herein by reference.
All costs in excess of the Improvement Allowance shall be at Tenant's cost. In
the event there is a default in the payment of Base Rent or any additional rent
hereunder, Tenant shall pay to Landlord, as additional rent hereunder, the full
amount of the unamortized cost of the Improvement Allowance amortized at a rate
of ten percent (10%) per annum over the Lease term.
5.1.2.
5.1.3. the Landlord shall use its reasonable efforts to complete
such improvements by the date on which the Tenant is entitled to occupy the
Premises pursuant to this Lease, but shall
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<PAGE>
have no liability to the Tenant hereunder if prevented from doing so by reason
of any (a) strike, lock-out or other labor troubles, (b) governmental
restrictions or limitations, (c) failure or shortage of electrical power, gas,
water, fuel oil, or other utility or service, (d) riot, war, insurrection or
other national or local emergency (e) accident, flood, fire or other casualty,
(f) adverse weather condition, (g) other act of God, (h) inability to obtain a
building permit or a certificate of occupancy, or (i) shortage of materials or
labor, or (j) other cause similar or dissimilar to any of the foregoing and
beyond the Landlord's reasonable control. In such event, (a) the Commencement
Date shall be postponed for a period equaling the length of such delay, (b) the
Termination Date shall be determined pursuant to the provisions of subsection
1.1 by reference to the Commencement Date as so postponed, and (c) the Tenant
shall accept possession of the Premises within three (3) days after such
completion.
5.2. By Tenant. The Tenant shall not make any alteration, addition or
improvement to the Premises without first obtaining the Landlord's written
consent thereto. If the Landlord consents to any such proposed alteration,
addition or improvement, it shall be made at the Tenant's sole expense (and
the Tenant shall hold the Landlord harmless from any cost incurred on account
thereof), and at such time and in such manner as not unreasonably to interfere
with the use and enjoyment of the remainder of the Property by any tenant
thereof or other person.
5.3. Mechanics' lien. The Tenant shall (a) immediately after it is filed
or claimed, bond or have released any mechanics', materialman's or other lien
filed or claimed against any or all of the Premises, the Property, or any other
property owned or leased by the Landlord, by reason of labor or materials
provided for the Tenant or any of its contractors or subcontractors (other than
labor or materials provided by the Landlord pursuant to the provisions of
subsection 5.1), or otherwise arising out of the Tenant's use or occupancy of
the Premises or any other portion of the Property, and (b) defend, indemnify and
hold harmless the Landlord against and from any and all liability, claim of
liability or expense (including, by way of example rather than of limitation,
that of reasonable attorneys' fees) incurred by the Landlord on account of any
such lien or claim.
5.4. Fixtures. Any and all improvements, repairs, alterations and all
other property attached to, used in connection with or otherwise installed
within the Premises by the Landlord or the Tenant shall, immediately on the
completion of their installation, become the Landlord's property without
payment therefor by the Landlord, except that any machinery, equipment or
fixtures installed by the Tenant and used in the conduct of the Tenant's trade
or business (rather than to service the Premises or any of the remainder of the
Building or the Property generally) shall remain the Tenant's property.
SECTION 6. MAINTENANCE AND SERVICES.
6.1. Ordinary services.
6.1.1.
(a)
(b)
6.1.2.
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<PAGE>
6.2. Extraordinary services.
6.2.1.
6.2.2.
6.3. Interruption. The Landlord shall have no liability to the
Tenant for any compensation or reduction of Rent on account of any failure,
modification or interruption of any such service which either (a) arises out of
any of the causes enumerated in the provisions of subsection 5.1, or (b) is
required by applicable law (including, by way of example rather than of
limitation, any federal law or regulation relating to the furnishing or
consumption of energy or the temperature of buildings).
6.4. Maintenance by Tenant. The Tenant shall maintain the
nonstructural parts of the interior of the Premises in good repair and
condition, ordinary wear and tear excepted.
6.5. Maintenance by Landlord. The Landlord shall furnish, supply and
maintain in good order and repair (a) the roof, structure and remainder of the
exterior of the Building, (b) any and all hallways, stairways, lobbies,
elevators, heating and air-conditioning facilities, electrical, sanitary sewer
and water lines and facilities, restroom facilities, grounds, sidewalks and
parking areas (including the removal of snow from such sidewalks and parking
areas), and other common areas, all if located within the Building or the rest
of the Property but not within the Premises, all at the Landlord's expense
except as is set forth in the provisions of Section 2 or any other provision of
this Lease.
SECTION 7. LANDLORD'S RIGHT OF ENTRY.
The Landlord and its agents shall be entitled to enter the Premises at any
reasonable time (a) to inspect the Premises, (b) to exhibit the Premises to any
existing or prospective purchaser, tenant or Mortgagee thereof, (c) to make any
alteration, improvement or repair to the Building or the Premises, or (d) for
any other purpose relating to the operation or maintenance of the Property;
provided, that the Landlord shall (a) (unless doing so is impractical or
unreasonable because of emergency) give the Tenant at least twenty-four (24)
hours' prior notice of its intention to enter the
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<PAGE>
Premises, and (b) use reasonable efforts to avoid thereby interfering more than
is reasonably necessary with the Tenant's use and enjoyment thereof.
SECTION 8. FIRE AND OTHER CASUALTIES.
8.1. General. Subject to Section 8.2 if the Premises are damaged by fire
or other casualty during the term,
8.1.1. the Landlord shall, with reasonable promptness (taking into
account the time required by the Landlord to effect a settlement with, and to
procure any insurance proceeds from, any insurer against such casualty, but in
any event within /6/ days after the date of such casualty), substantially
restore Premises to their condition immediately before such casualty, and may
temporarily enter and possess any or all of the Premises for such purpose
(provided, that the Landlord shall not be obligated to repair, restore or
replace any fixture, improvement, alteration, furniture or other property owned,
installed or made by the Tenant), but
8.1.2. the times for commencement and completion of any such
restoration shall be extended for the period of any delay occasioned by the
Landlord in doing so arising out of any of the causes enumerated in the
provisions of subsection 5.1. If the Landlord undertakes to restore the Premises
and such restoration is not accomplished within the said period of /7/ days plus
the period of any extension thereof, as aforesaid, the Tenant may terminate this
Lease by giving written notice thereof to the Landlord within thirty (30) days
after the expiration of such period, as so extended; and
8.1.3. so long as the Tenant is deprived of the use of any or all of
the Premises on account of such casualty, the Base Rent and any Additional Rent
payable under the provisions of subsection 2.2 shall be abated in proportion to
the number of square feet of the Premises rendered substantially unfit for
occupancy by such casualty, unless, because of any such damage, the undamaged
portion of the Premises is made materially unsuitable for use by the Tenant for
the purposes set forth in the provisions of Section 3, in which event the Base
Rent and any such Additional Rent shall be abated entirely during such period of
deprivation.
8.2. Substantial destruction. Anything contained in the foregoing
provisions of this Section to the contrary notwithstanding,
8.2.1. if during the Term the Building is so damaged by fire or
other casualty that (a) either the Premises or (whether or not the Premises are
damaged) the Building is rendered substantially unfit for occupancy, as
reasonably determined by the Landlord, or (b) the Building is damaged to the
extent that the Landlord reasonably elects to demolish the Building, or if any
Mortgagee requires that any or all of such insurance proceeds be used to retire
any or all of the debt secured by its Mortgage, then in any such case the
Landlord may elect to terminate this Lease as of the date of such casualty by
giving written notice thereof to the Tenant within thirty (30) days after the
date of such casualty; and
8.2.2. in such event, (a) the Tenant shall pay to the Landlord the
Base Rent and any Additional Rent payable by the Tenant hereunder and accrued
through the date of such /8/ , (b) the Landlord shall repay to the Tenant any
and all prepaid Rent for periods beyond such /9/ , and (c) the Landlord may
enter upon and repossess the Premises without further notice.
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/6/ one hundred eighty (180)
/7/ one hundred eighty (180)
/8/ casualty
/9/ casualty
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<PAGE>
8.3. Tenant's negligence. Anything contained in any provision of this
Lease to the contrary notwithstanding, if any such damage to the Premises, the
Building or both are caused by or result from the negligent or intentionally
tortious act or omission of the Tenant, those claiming under the Tenant or any
of their respective officers, employees, agents or invitees,
8.3.1. the Rent shall not be suspended or apportioned as aforesaid,
and
8.3.2. except if and to the extent that the Tenant is released from
liability therefor pursuant to the provisions of subsection 4.4, the Tenant
shall pay to the Landlord upon demand, as Additional Rent, the cost of (a) any
repairs and restoration made or to be made as a result of such damage, or (b)
(if the Landlord elects not to restore the Building) any damage or loss which
the Landlord incurs as a result of such damage.
SECTION 9. CONDEMNATION.
9.1. Right to award.
9.1.1. If any or all of the Premises are taken by the exercise of
any power of eminent domain or are conveyed to or at the direction of any
governmental entity under a threat of any such taking (each of which is
hereinafter referred to as a "Condemnation"), the Landlord shall be entitled to
collect from the condemning authority thereunder the entire amount of any award
made in any such proceeding or as consideration for such conveyance, without
deduction therefrom for any leasehold or other estate held by the Tenant under
this Lease.
9.1.2. The Tenant hereby (a) assigns to the Landlord all of the
Tenant's right, title and interest, if any, in and to any such award; (b) waives
any right which it may otherwise have in connection with such Condemnation,
against the Landlord or such condemning authority, to any payment for (i) the
value of the then-unexpired portion of the Term, (ii) leasehold damages, and
(iii) any damage to or diminution of the value of the Tenant's leasehold
interest hereunder or any portion of the Premises not covered by such
Condemnation; and (c) agrees to execute any and all further documents which may
be required to facilitate the Landlord's collection of any and all such awards.
9.1.3. /10/ , the Tenant may seek, in a separate proceeding, a
separate award on account of any damages or costs incurred by the Tenant as a
result of such Condemnation, so long as such separate award in no way diminishes
any award or payment which the Landlord would otherwise receive as a result of
such Condemnation.
9.2. Effect of Condemnation.
9.2.1. If (a) all of the Premises are covered by a Condemnation, or
(b) any part of the Premises is covered by a Condemnation and the remainder
thereof is insufficient for the reasonable operation therein of the Tenant's
business, or (c) any of the Building is covered by a Condemnation and, in the
Landlord's reasonable opinion, it would be impractical to restore the remainder
thereof, or (d) any of the rest of the Property is covered by a Condemnation
and, in the Landlord's reasonable opinion, it would be impractical to continue
to operate the remainder of the Property thereafter, then, in any such event,
the Term shall terminate on the date on which possession of so much of the
Premises, the Building or the rest of the Property, as the case may be, as is
covered by such Condemnation is taken by the condemning authority thereunder,
and all Rent (including, by way of example rather than of limitation, any
Additional Rent payable under the provision of subsection 2.2), taxes and other
charges payable hereunder shall be apportioned and paid to such date.
9.2.2. If there is a Condemnation and the Term does not terminate
pursuant to the foregoing provision of this subsection, the operation and effect
of this Lease shall be unaffected by
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/10/ Notwithstanding the foregoing,
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<PAGE>
such Condemnation, except that the Base Rent shall be reduced in proportion to
the square footage of floor area, if any, of the Premises covered by such
Condemnation.
9.3. If there is a Condemnation, the Landlord shall have no liability to
the Tenant on account of any (a) interruption of the Tenant's business upon the
Premises, (b) diminution in the Tenant's ability to use the Premises, or (c)
other injury or damage sustained by the Tenant as a result of such Condemnation.
9.4. Except for any separate proceeding brought by the Tenant under the
provisions of paragraph 9.1.3., the Landlord shall be entitled to conduct any
such condemnation proceeding and any settlement thereof free of interference
from the Tenant, and the Tenant hereby waives any right which it otherwise has
to participate therein.
SECTION 10. ASSIGNMENT AND SUBLETTING.
10.1. The Tenant hereby acknowledges that the Landlord has entered into
this Lease because of the Tenant's financial strength, goodwill, ability and
expertise and that, accordingly, this Lease is one which is personal to the
Tenant, and agrees for itself and its successors and assigns in interest
hereunder that it will not (a) assign any of its rights under this Lease, or (b)
make or permit any total or partial sale, lease, sublease, assignment,
conveyance, license, mortgage, pledge, encumbrance or other transfer of any or
all of the Premises or the occupancy or use thereof (each of which is
hereinafter referred to as a "Transfer"), without first obtaining the
Landlord's written consent thereto (which consent may be given or withheld in
the Landlord's sole discretion and, if given, shall not constitute a consent to
any subsequent such Transfer, whether by the person hereinabove named as the
"Tenant" or by any such transferee). The Landlord shall be entitled, at its
sole discretion, to condition any such consent upon the entry by such person
into an agreement with (and in form and substance satisfactory to) the Landlord,
by which it assumes all of the Tenant's obligations hereunder. Any person to
whom any Transfer is attempted without such consent shall have no claim, right
or remedy whatsoever hereunder against the Landlord, and the Landlord shall
have no duty to recognize any person claiming under or through the same. No
such action taken with or without the Landlord's consent shall in any way
relieve or release the Tenant from liability for the timely performance of all
of the Tenant's obligations hereunder. The Tenant hereby acknowledges that any
merger, consolidation or other restructuring of ownership interests in Tenant
constitutes a Transfer hereunder. As additional rent, Tenant shall reimburse
Landlord promptly for reasonable legal and other expenses incurred by Landlord
in connection with any request by Tenant for consent to assignment or
subletting; no assignment or subletting shall affect the continuing primary
liability of Tenant (which, following assignment, shall be joint and several
with the assignee); no consent to any of the foregoing in a specific instance
shall operate as a waiver in any subsequent instance. In the event that any
assignee or subtenant pays to tenant any amounts in excess of the Annual Rent
and Additional Rent then payable hereunder, or pro rata portion thereof on a
square footage basis for any portion of the Premises, Tenant shall promptly pay
/11/ said excess to Landlord as and when received by Tenant. /12/
10.2. Anything contained in the foregoing provisions of this Section to
the contrary notwithstanding, neither the Tenant nor any other person having an
interest in the possession, use or occupancy of the Premises or any other
portion of the Property shall enter into any lease, sublease, license,
concession or other agreement for the possession, use or occupancy of space in
the Premises or any other portion of the Property which provides for any rental
or other payment for such use, occupancy or utilization based in whole or in
part upon the net income or profits derived by any
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/11/ fifty percent (50%) of
/12/ For the purposes of this Lease, "Transfer" shall not be deemed to include
the transfer of shares of stock of Tenant by any of its principal
shareholders to members of their family or to legal entities formed for
the purpose of carrying out such principals' estate or succession
planning.
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<PAGE>
person from the space in the Premises or other portion of the Property so
leased, used or occupied (other than any amount based on a fixed percentages of
receipts or sales).
10.3. In the event of any Transfer with or without Landlord's consent,
Landlord may, at its sole option, have the right at any time or from time to
time after such Transfer to terminate this Lease as to all or any portion of the
Premises and enter into a direct lease agreement with the proposed sublessee.
Neither Tenant nor any party claiming an interest under or through Tenant shall
interfere with Landlord's exercise of its rights hereunder. Tenant hereby
indemnifies and holds Landlord harmless from and against any and all
liabilities, costs, losses or damages, including reasonable attorneys fees and
court costs, arising from any breach of the provisions of this section by
Tenant.
SECTION 11. RULES AND REGULATIONS.
The Landlord shall have the right to prescribe, at its sole discretion,
reasonable rules and regulations (hereinafter referred to as the "Rules and
Regulations") having uniform applicability to all tenants of the Building
(subject to the provisions of their respective leases) and governing their use
and enjoyment of the Building and the remainder of the Property; provided, that
the Rules and Regulations shall not materially interfere with the Tenant's use
and enjoyment of the Premises, in accordance with the provisions of this Lease,
for the purposes enumerated in the provisions of Section 3. The Tenant shall
adhere to the Rules and Regulations and shall cause its agents, employees,
invitees, visitors and guests to do so. A copy of the Rules and Regulations in
effect on the date hereof is attached hereto as Exhibit C.
SECTION 12. SUBORDINATION; ATTORNMENT AND NON-DISTURBANCE.
12.1. Subordination. This Lease shall be subject and subordinate to the
lien, operation and effect of each mortgage, deed of trust, ground lease and/or
other, similar instrument of encumbrance heretofore or hereafter covering any or
all of the Premises or the remainder of the Property (and each renewal,
modification, consolidation, replacement or extension thereof), (each of which
is herein referred to as a "Mortgage"), all automatically and without the
necessity of any action by either party hereto.
12.2. Attornment and non-disturbance. The Tenant shall, promptly at the
request of the Landlord or the holder of any Mortgage (herein referred to as a
"Mortgagee"), execute, enseal, acknowledge and deliver such further instrument
or instruments
12.2.1. Evidencing such subordination as the Landlord or such
Mortgagee deems necessary or desirable, and
12.2.2. (at such Mortgagee's request) attorning to such Mortgagee.
Landlord will use its reasonable efforts to obtain an agreement from the
Mortgagee (in such Mortgagee's usual form) that such Mortgagee will, in the
event of a foreclosure of any such mortgage or deed of trust (or termination of
any such ground lease) take no action to interfere with the Tenant's rights
hereunder, except on the occurrence of an Event of Default.
12.3. Anything contained in the provisions of this Section to the contrary
notwithstanding, any Mortgagee may at any time subordinate the lien of its
Mortgage to the operation and effect of this Lease without obtaining the
Tenant's consent thereto, by giving the Tenant written notice thereof, in which
event this Lease shall be deemed to be senior to such Mortgage without regard to
their respective dates of execution, delivery and/or recordation among the Land
Records of the said County, and thereafter such Mortgagee shall have the same
rights as to this Lease as it would have had, were this Lease executed and
delivered before the execution of such Mortgage.
SECTION 13. DEFAULT.
13.1. Definition: As used in the provisions of this Lease, each of the
following events shall constitute, and is hereinafter referred to as, an "Event
of Default":
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<PAGE>
13.1.1. If the Tenant fails to (a) pay any Rent or any other sum
which it is obligated to pay by any provision of this Lease, when and as due and
payable hereunder and without demand therefor, or (b) perform any of its other
obligations under the provisions of this Lease; or
13.1.2. If the Tenant (a) applies for or consents to the
appointment of a receiver, trustee or liquidator of the Tenant or of all or a
substantial part of its assets, (b) files a voluntary petition in bankruptcy or
admits in writing its inability to pay its debts as they come due, (c) makes an
assignment for the benefit of its creditors, (d) files a petition or an answer
seeking a reorganization or an arrangement with creditors, or seeks to take
advantage of any insolvency law, (e) performs any other act of bankruptcy, or
(f) files an answer admitting the material allegations of a petition filed
against the Tenant in any bankruptcy, reorganization or insolvency proceeding;
or
13.1.3. if (a) an order, judgment or decree is entered by any court
of competent jurisdiction adjudicating the Tenant a bankrupt or an insolvent,
approving a petition seeking such a reorganization, or appointing a receiver,
trustee or liquidator of the Tenant or of all or a substantial part of its
assets, or (b) there otherwise commences as to the Tenant or any of its assets
any proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment, receivership or similar law, and if such order, judgment, decree
or proceeding continues unstayed for more than sixty (60) consecutive days after
any stay thereof expires;
13.1.4. If the Tenant fails to occupy and assume possession of the
Premises within fifteen (15) days after the Commencement Date;
13.1.5. If the Tenant generally fails to pay its debts as they
become due; or
13.1.6. If the Tenant vacates or abandons the Premises, whether or
not Rent or other sums are due and unpaid hereunder.
13.2. Notice to Tenant; grace period. Anything contained in the provisions
of this Section to the contrary notwithstanding, on the occurrence of an Event
of Default the Landlord shall not exercise any right or remedy which it holds
under any provision of this Lease or applicable law unless and until
13.2.1. The Landlord has given written notice thereof to the
Tenant, if written notice is required by this Section for the Event of Default
which has occurred, and
13.2.2. The Tenant has failed, (a) if such Event of Default
consists of a failure to pay money, within five (5) days of the due date, or (b)
if such Event of Default consists of something other than a failure to pay
money, within thirty (30) days thereafter actively, diligently and in good faith
to begin to cure such Event of Default and to continue thereafter to do so until
it is fully cured; provided, that
13.2.3. No such notice shall be required, and the Tenant shall be
entitled to no such grace period, (a) in an emergency situation in which the
Landlord acts to cure such Event of Default pursuant to the provisions of
paragraph 13.3.5; or (b) the Tenant commits an Event of Default more than /13/
during any twelve (12) month period, or (c) if the Tenant has substantially
terminated or is in the process of substantially terminating its continuous
occupancy and use of the Premises for the purpose set forth in the provisions of
Section 3, or (d) in the case of any Event of Default enumerated in the
provisions of paragraphs 13.1.2., 13.1.3., 13.1.4. and 13.1.6.
13.3. Landlord's rights on Event of Default. On the occurrence of any
Event of Default, the Landlord may (subject to the operation and effect of the
provisions of subsection 13.2) take any or all of the following actions:
- --------------------------
/13/ three (3) times
-15-
<PAGE>
13.3.1. re-enter and repossess the Premises and any and all
improvements thereon and additions thereto;
13.3.2. declare the entire balance of the Rent for the remainder of
the Term to be due and payable, and collect such balance in any manner not
inconsistent with applicable law;
13.3.3. terminate this Lease;
13.3.4. relet any or all of the Premises for the Tenant's account
for any or all of the remainder of the Term as hereinabove defined, or for a
period exceeding such remainder, in which event the Tenant shall pay to the
Landlord, at the times and in the manner specified by the provisions of Section
2, the Base Rent and any Additional Rent accruing during such remainder, less
any monies received by the Landlord, with respect to such remainder, from such
reletting, as well as the cost to the Landlord of any attorneys' fees or of any
repairs or other action (including those taken in exercising the Landlord's
rights under any provision of this Lease) taken by the Landlord on account of
such Event of Default;
13.3.5. cure such Event of Default in any other manner (after
giving the Tenant written notice of the Landlord's intention to do so except as
provided in paragraph 13.2.3), in which event the Tenant shall reimburse the
Landlord for all expenses incurred by the Landlord in doing so, plus interest
thereon at the lesser of the rate of /14/ per annum or the highest rate then
permitted on account thereof by applicable law, which expenses and interest
shall be Additional Rent and shall be payable by the Tenant immediately on
demand therefor by the Landlord; and/or
13.3.6. pursue any combination of such remedies and/or any other
remedy available to the Landlord on account of such Event of Default under
applicable law.
13.4. No waiver. No action taken by the Landlord under the provisions of
this Section shall operate as a waiver of any right which the Landlord would
otherwise have against the Tenant for the Rent hereby reserved or otherwise, and
the Tenant shall remain responsible to the Landlord for any loss and/or damage
suffered by the Landlord by reason of any Event of Default.
13.5. Default by Landlord. In the event of any default by Landlord,
Tenant's exclusive remedy shall be an action for actual direct damages (Tenant
hereby waiving the benefit of any laws granting it a lien upon the property of
Landlord and/or upon rent due Landlord), but prior to any such action Tenant
will give Landlord written notice specifying such default with particularity,
and Landlord shall thereupon have thirty (30) days in which to cure any such
default. Unless and until Landlord fails to so cure any default after such
notice, Tenant shall not have any remedy or cause of action by reason thereof.
All obligations of Landlord hereunder will be construed as covenants, not
conditions, and all such obligations will be binding upon Landlord only during
the period of its ownership of the Building and the Property and not thereafter.
The term "Landlord" shall mean only the owner, for the time being of the
Premises, and in the event of the transfer by such owner of its interest in the
Premises, such owner shall thereupon be released and discharged from all
covenants and obligations of the Landlord thereafter accruing, but such
covenants and obligations shall be binding during the lease term upon each new
owner for the duration of such owner's ownership. Notwithstanding any other
provision hereof, Landlord shall not have any personal liability hereunder. In
the event of any breach or default by Landlord in any term or provision of this
Lease, Tenant agrees to look solely to the equity or interest then owned by
Landlord in the Property, however, in no event, shall any deficiency judgment or
any money judgment of any kind be sought or obtained against any Landlord.
- -----------------------
/14/ twelve percent (12%)
-16-
<PAGE>
SECTION 14. ESTOPPEL CERTIFICATE.
The Tenant shall from time to time, within five (5) days after being
requested to do so by the Landlord or any Mortgagee, execute, enseal,
acknowledge and deliver to the Landlord (or, at the Landlord's request, to any
existing or prospective purchaser, transferee, assignee or Mortgagee of any or
all of the Premises, the Property, any interest therein or any of the Landlord's
rights under this Lease) an instrument in recordable form,
14.1. certifying (a) that this Lease is unmodified and in full force and
effect (or, if there has been any modification thereof, that it is in full force
and effect as so modified, stating therein the nature of such modification); (b)
as to the dates to which the Base Rent and any Additional Rent and other charges
arising hereunder have been paid; (c) as to the amount of any prepaid Rent or
any credit due to the Tenant hereunder; (d) that the Tenant has accepted
possession of the Premises, and the date on which the Term commenced; (e) as to
whether, to the best knowledge, information and belief of the signer of such
certificate, the Landlord or the Tenant is then in default in performing any of
its obligations hereunder (and, if so, specifying the nature of each such
default); and (f) as to any other fact or condition reasonably requested by the
Landlord or such other addressee; and
14.2. acknowledging and agreeing that any statement contained in such
certificate may be relied upon by the Landlord and any such other addressee.
14.3. In the event that Tenant fails to deliver in a timely manner the
estoppel certificate described in Section 14, Landlord may complete such a
certificate on behalf of Tenant, which certificate shall be binding against
Tenant as if Tenant itself signed such certificate. For such purpose, Tenant
hereby irrevocably constitutes and appoints Landlord as Tenant's attorney-in-
fact (which appointment shall be deemed coupled with an interest) for an in its
name to prepare and sign on Tenant's behalf such an estoppel certificate, Tenant
hereby ratifying and confirming all the said attorney shall lawfully do or
choose to do or be done by virtue hereof, it being understood and agreed that
the aforesaid provisions impose no burden or obligation on the Landlord to do or
perform any act whatsoever. After said estoppel certificate has been prepared
by Landlord, Landlord shall provide Tenant a copy thereof. Unless Tenant
modifies such certificate as may be appropriate to make the certificate fully
accurate, and signs and returns to Landlord the certificate within three (3)
days after receipt from Landlord, Landlord shall be entitled and authorized to
sign such estoppel certificate and deliver to any Mortgagee or other person such
estoppel certificate in the name and on behalf of Tenant.
SECTION 15. QUIET ENJOYMENT.
The Landlord hereby covenants that the Tenant, on paying the Rent and
performing the covenants set forth herein, shall peaceably and quietly hold and
enjoy, throughout the Term, (a) the Premises, and (b) such rights as the Tenant
may hold hereunder with respect to the remainder of the Property.
SECTION 16. NOTICES.
Any notice, demand, consent, approval, request or other communication or
document to be provided hereunder to a party hereto shall be (a) given in
writing, and (b) deemed to have been given (i) forty-eight (48) hours after
being sent as certified or registered mail in the United States mails, postage
prepaid, return receipt requested, upon its hand delivery to such party, as
addressed as follows:
If to the Landlord: Norfolk Commerce Center Limited Partnership
c/o Cambridge Asset Advisors
Attention: Property Manager
560 Herndon Parkway, Suite 210
Herndon, Virginia 20170
-17-
<PAGE>
If to Tenant: Boron, LePore & Associates, Inc.
c/o Greg Boron
17-17 Route 208 North
Fairlawn, New Jersey 07410
Each party may change its notice address by giving written notice of such
change to the other party in accordance with the terms of this Section 16.
SECTION 17. LANDLORD'S LIEN.
/15/
SECTION 18. GENERAL.
18.1. Effectiveness. This Lease shall become effective upon and only upon
its execution by each party hereto.
18.2. Complete understanding. This Lease represents the complete
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior written or oral negotiations, representations, warranties,
statements or agreements between the parties hereto as to the same.
18.3. Amendment. This Lease may be amended by and only by an instrument
executed and delivered by each party hereto.
18.4. Applicable law. This Lease shall be given effect and construed by
application of the laws of the Commonwealth of Virginia, and any action or
proceeding arising hereunder shall be brought in the Circuit Court for County of
the Commonwealth of Virginia; provided, that if such action or proceeding arises
under the Constitution, laws or treaties of the United States of America, or if
there is a diversity of citizenship between the parties thereto so that it is to
be brought in a United States District Court, it shall be brought in the United
States District court for the Eastern District of the Commonwealth of Virginia.
- --------------------
/15/ Notwithstanding anything contained herein to the contrary, Landlord
agrees to delete Section 17 (Landlord's Lien), but reserves any
statutory lien for the Rent in Landlord's favor as well as all rights
and remedies granted under the Uniform Commercial Code.
-18-
<PAGE>
18.5. Waiver. The Landlord shall not be deemed to have waived the
exercise of any right which it holds hereunder unless such waiver is made
expressly and in writing (and no delay or omission by the Landlord in exercising
any such right shall be deemed to be a waiver of its future exercise). No such
waiver as to any instance involving the exercise of any such right shall be
deemed a waiver as to any other such instance, or any other such right.
18.6. Time of essence. Time shall be of the essence of this Lease.
18.7. Headings. The headings of the Sections, subsections, paragraphs
and subparagraphs hereof are provided herein for and only for convenience of
reference, and shall not be considered in construing their contents.
18.8. Construction. As used herein,
18.8.1. the term "person" means a natural person, a trustee, a
corporation, a partnership and any other form of legal entity; and
18.8.2. all references made (a) in the neuter, masculine or
feminine gender shall be deemed to have been made in all such genders, (b) in
the singular or plural number shall be deemed to have been made, respectively,
in the plural or singular number as well, and (c) to any Section, subsection,
paragraph or subparagraph shall, unless therein expressly indicated to the
contrary, be deemed to have been made to such Section, subsection, paragraph or
subparagraph of this Lease.
18.9. Exhibits. Each writing referred to herein as being attached hereto
as an exhibit or otherwise designated herein as an exhibit hereto is hereby made
a part hereof.
18.10. Severability. No determination by any court, governmental body or
otherwise that any provision of this Lease or any amendment hereof is invalid or
unenforceable in any instance shall affect the validity or enforceability of (a)
any other such provision, or (b) such provision in any circumstance not
controlled by such determination. Each such provision shall be valid and
enforceable to the fullest extent allowed by, and shall be construed wherever
possible as being consistent with, applicable law.
18.11. Definition of the "Landlord".
18.11.1. As used herein, the term the "Landlord" means the person
hereinabove named as such, and its heirs, personal representatives, successors
and assigns (each of whom shall have the same rights, remedies, powers,
authorities and privileges as it would have had, had it originally signed this
lease as the Landlord).
18.11.2. No person holding the Landlord's interest hereunder
(whether or not such person is named as the "Landlord" herein) shall have any
liability hereunder after such person ceases to hold such interest, except for
any such liability accruing while such person holds such interest.
18.11.3. Neither the Landlord nor any principal of the Landlord,
whether disclosed or undisclosed, shall have any personal liability under any
provision of this Lease.
18.12. Definition of the "Tenant". As used herein, the term the "Tenant"
means each person hereinabove named as such and such person's heirs, personal
representatives, successors and assigns, each of whom shall have the same
obligations, liabilities, rights and privileges as it would have possessed had
it originally executed this Lease as the Tenant; provided, that no such right or
privilege shall inure to the benefit of any assignee of the Tenant, immediate or
remote, unless the assignment to such assignee is made in accordance with the
provisions of Section 10. Whenever two or more persons constitute the Tenant,
all such persons shall be jointly and severally liable for performing the
Tenant's obligations hereunder.
18.13. Commissions. Each party hereto hereby represents and warrants to
the other that, in connection with the leasing of the Premises hereunder, the
party so representing and warranting
-19-
<PAGE>
has not dealt with any real estate broker, agent or finder, other than Cambridge
Property Group Limited Partnership and Robinson Sigma Commercial Real Estate,
Inc. (representing Landlord) and Goodman Segar Hogan Hoffler (representing
Tenant) and there is no other commission, charge or other compensation due on
account thereof. Each party hereto shall indemnify and hold harmless the other
against and from any inaccuracy in such party's representation.
18.14. Recordation. This Lease may not be recorded among the Land Records
of the said County or among any other public records, without the Landlord's
prior express, written consent thereto, and any attempt by the Tenant to do so
without having obtained the Landlord's consent thereto shall constitute an Event
of Default hereunder. If this Lease is recorded by either party hereto, such
party shall bear the full expense of any transfer, documentary stamp or other
tax, and any recording fee, assessed in connection with such recordation;
provided, that if under applicable law the recordation of this Lease hereafter
becomes necessary in order for this Lease to be or remain effective, the Tenant
shall bear the full expense of any and all such taxes and fees incurred in
connection therewith.
18.15. Tenant's Declaration. Tenant is not the subject of (i) any
petition under any Chapter of the Bankruptcy Code, Title 11, United States Code
(the "Bankruptcy Code"), and has no intent to seek relief, protection,
reorganization, liquidation, dissolution or similar relief from debtors under
any local, state, federal or other insolvency laws or laws providing for relief
of debtors, or in equity, or directly or indirectly to cause any of them to file
any such petition or to seek any such relief, either at the present time or at
any time hereafter; or (ii) any actions, suits or proceedings pending or
threatened against Tenant or involving Tenant's business that could have a
material adverse effect on Tenant's ability to perform its obligations pursuant
to this Lease.
18.16. Waiver of Trial by Jury. The Tenant hereby waives trial by jury in
any action or proceeding to which the Tenant and the Landlord may be parties,
arising out of or in any way pertaining to (a) this Lease, or (b) the Property.
It is agreed and understood that this waiver constitutes a waiver of trial by
jury of all claims against all parties to such actions or proceedings, including
claims against parties who are not parties to this Lease.
This waiver is knowingly, willingly and voluntarily made by the Tenant, and
the Tenant hereby represents that no representations of fact or opinion have
been made by any individual to induce this waiver of trial by jury or to in any
way modify or nullify its effect. The Tenant hereby represents that it has been
represented in the signing of this Lease and in the making of this waiver by
independent legal counsel, selected of its own free will, and that it has had
the opportunity to discuss this waiver with counsel.
18.17. Approval by Mortgagees. Anything contained in the provisions of
this Lease to the contrary notwithstanding, the Landlord shall be entitled at
any time hereafter but before the Landlord delivers possession of the Premises
to the Tenant hereunder, to terminate this Lease by giving written notice
thereof to the Tenant, if any Mortgagee fails to approve this Lease for purposes
of the provisions of its Mortgage, and in the manner set forth therein.
18.18. Required Changes in Lease by Lenders. In the event that any lender
providing construction or permanent financing or any refinancing for the
Building requires, as a condition of such financing, that modifications to this
Lease be obtained; and provided that such modifications (i) are reasonable; (ii)
do not adversely affect Tenant's use of the Leased Premises as herein permitted
or the leasehold interest hereby created; (iii) do not increase the base rent,
operating rent and other sums to be paid by Tenant hereunder; and (iv) do not
affect the Term, the location of or access to the Leased Premises, signage,
parking or sublease and assignment provisions, then Landlord may submit to
Tenant a written amendment to this Lease incorporating such required written
changes, and Tenant hereby covenants and agrees to execute, acknowledge and
deliver such amendment to Landlord within five (5) days of Tenant's receipt
thereof.
18.19. Financial Information. At Landlord's request, Tenant shall deliver
certified copies of Tenant's most recent and historical financial statements.
Such statements shall include Balance
-20-
<PAGE>
Sheets, Income and Expense Statements as well as any other supporting documents
required by Landlord or any person or institution providing financing to the
Property or relating to the Property.
18.20. Authority. The person executing and delivering this Lease on
behalf of Landlord represents and warrants that he has full power, authority and
right to do so pursuant to the ownership and of Landlord. The person executing
and delivering this Lease on behalf of Tenant represents and warrants that he
has full power, authority and right to do so on behalf of Tenant.
IN WITNESS WHEREOF, each party hereto has executed and ensealed this Lease
or caused it to be executed and ensealed on its behalf by its duly authorized
representatives, the day and year first above written.
WITNESS: The Landlord:
NORFOLK COMMERCE PARK LIMITED
PARTNERSHIP, a Virginia limited
partnership
[SIGNATURE APPEARS HERE] By: Commerce Park, Inc., a
- ----------------------------- Virginia corporation
Its: General Partner
By: [SIGNATURE APPEARS HERE]
-----------------------------
Its: Vice Pres.
----------------------------
WITNESS: The Tenant:
BORON, LePORE & ASSOCIATES, INC.,
a Delaware corporation
[SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
- ----------------------------- -----------------------------
Its: President
-----------------------------
-21-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT A
PREMISES
The Premises, known as Suite F consists of approximately 4,660 rentable square
feet of office and warehouse space in Norfolk Commerce Center IV, a 74,925
square foot office project located at 5365 Robin Hood Road, Norfolk, Virginia
23513; (and the Premises) to be located in the approximate location shown on the
plan attached hereto as Exhibit A-1.
-22-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT A-1
SITE PLAN
[DIAGRAM OF NORFOLK COMMERCE CENTER IV APPEARS HERE]
-23-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT B
TENANT IMPROVEMENTS
Tenant accepts the Premises in its absolute "as is" condition. Listed
below are the quality of items to be used in any further improvement of the
Premises. Landlord shall provide up to $7,000.00 for the further improvement of
the Premises. Tenant agrees to comply with Exhibit B-2 when it intends to
further improvements.
A. DEMISING PARTITIONS
-------------------
1. Sound insulated separation between tenants as required.
2. Walls to be drywall (to conform with local code) painted with latex
flat paint and 2 1/2" vinyl cove base (office areas only).
3. Walls to be built to underside of roof deck or ceiling as required by
code.
B. INTERIOR OFFICE PARTITIONS
--------------------------
1. Walls to be 1/2" drywall painted with latex flat paint and 2 1/2" vinyl
cove base.
2. Walls to be built to underside of finished ceiling.
C. DOORS, HARDWARE AND FRAMES
--------------------------
1. Doors will be 3'0" x 7'0" hollow core finished with latex semi-gloss
paint.
2. Finished hardware will include 1 1/2 pair of butts per door, passage
set on all doors.
3. Door frames to be punched for silencers, furnished with finish hardware
and painted with latex semi-gloss paint.
D. PERIMETER WALLS
---------------
1. Walls to be 1/2" drywall painted with latex flat paint and 2 1/2" vinyl
cove base insulated as per construction drawings.
E. VINYL TILE FLOORS
-----------------
1. Vinyl tile floors to be 12" x 12" x 1/8" Armstrong Excellon or equal.
F. CARPET
------
1. Carpet will be 26 oz. level loop carpet.
-24-
<PAGE>
EXHIBIT B - TENANT IMPROVEMENTS
PAGE TWO
G. ACOUSTICAL CEILINGS
-------------------
1. Ceilings to be 2' x 4' white lay in 5/8" mineral fiberboard tiles with
exposed suspended white grid system.
H. BLINDS
------
1. Blinds to be 1" Levelor Series or equal (by tenant).
I. PLUMBING
--------
1. Each tenant area shall be serviced by a toilet room(s) equipped to
conform to all local handicapped requirements and all miscellaneous
accessories.
2. Plumbing fixtures shall be as follows:
a. Water Closet - Porcelain elongated bowl/tank type/white in color.
b. Lavatory.
c. Hot Water Heater - "Rheem" or equal, glass lined unit 6-20 gallon
capacity as required.
J. MECHANICAL
----------
1. Office Areas - Electric/Gas roof top unit HVAC system.
a. Cooling - Outside temperature 95 degrees dry bulb. Interior
temperature 78 degrees dry bulb with approximately 50% R.H.
b. Heating - Outside temperature 0 degree/interior temperature 65
degrees.
2. Warehouse Areas - Unit heaters.
a. Heating - Outside temperature 0 degree/interior temperature 50
degrees.
3. All sheet metal to conform to S.M.A.C.N.A. standards.
4. Supply Air Ducts to be insulated with 1/2" foil-faced fiberglass
blankets if required.
K. ELECTRICAL
----------
1. Electrical service shall be 100 AMP - standard.
2. Office light fixtures to be 2' x 4' four tube fluorescent lay-in, in
sufficient quantity to maintain 70 foot candles at desk height (one per
85 square feet typical).
3. Warehouse light fixtures to be 8' two tube fluorescent surface mount in
sufficient quantity to maintain 25 foot candles.
4. One duplex electrical outlet per 150 square feet (office area).
5. One electrical switch per 250 square feet (office area).
-25-
<PAGE>
EXHIBIT B - TENANT IMPROVEMENTS
PAGE THREE
6. All areas will receive emergency lighting systems as required by local
codes.
7. Each toilet room to receive one (1) exhaust fan.
L. SPRINKLER
---------
1. Sprinkler heads will be dropped into each office area as required by
local codes.
-26-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT B-1
SPACE PLAN
SEE 1/8" SPACE PLAN ATTACHED TO THE END OF THIS LEASE
-27-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT B-2
REQUIREMENTS OF TENANT
1. Indemnification Letter:
----------------------
Tenant shall hold Landlord and Landlord's Agent, CAMCON Limited
Partnership, harmless for work performed by other contractors. Tenant shall
provide to Landlord's Agent evidence of full payment of all contractors at
completion of project.
2. Drawings/Permits/Budget:
-----------------------
Tenant shall submit to Landlord's Agent for approval, before any work has
commenced, a budget. /16/ The Tenant shall be required to secure any/all
permits at its sole cost and expense. The Landlord expects the Tenant to
use materials of the same standards and specification as outlined in
Exhibit B.
3. Contractors:
-----------
All contractors must have evidence of license and insurance. Tenant shall
supply to Landlord's Agent all certificates of insurance and licenses
before work is to commence. All contractors will sign lien release forms
with respect to Landlord and Landlord's Agent with sole remedy for payment
placed with the Tenant. Contractors will conform proposed improvements to
Exhibit B.
4. Landlord's Discretion:
---------------------
Landlord's Agent shall approve or disapprove all proposed improvements
within ten (10) business days, of receipt of drawings, budgets,
Construction Management fee and evidence contractor license and insurance.
5. Evidence of Final Inspection/Certification from Architect:
---------------------------------------------------------
Tenant shall supply to Landlord's Agent evidence of final inspection from
the governing municipality as well as certification from Tenant's architect
of completion of improvements.
6. Construction Management Fee:
---------------------------
- -----------------------
/16/ Landlord hereby approves of the improvements outlined in Exhibit
B-1 attached hereto.
-28-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT C
CURRENT RULES AND REGULATIONS
1. The sidewalks, lobbies, passages, elevators and stairways shall not be
obstructed by the Tenant and used by the Tenant for any purposes other than
ingress and egress from and to the Tenant's offices. The Landlord shall in
all cases retain the right to control or prevent access thereto by any
person whose presence, in the Landlord's judgment, would be prejudicial to
the safety, peace, character or reputation of the Building or of any tenant
of the Property.
2. The toilet rooms, water closets, sinks, faucets, plumbing and other service
apparatus of any kind shall not be used by the Tenant for any purpose other
than those for which they were installed, and no sweepings, rubbish, rags,
ashes, chemicals or other refuse or injurious substances shall be placed
therein or used in connection therewith by the Tenant, or left by the
Tenant in the lobbies, passages, elevators or stairways of the Building.
3. No skylight, window, door or transom of the Building shall be covered or
obstructed by the Tenant, and no window shade, blind, curtain, screen,
storm window, awning or other material shall be installed or placed on any
window or in any window space, except as approved in writing by the
Landlord. If the Landlord has installed or hereafter installs any shade,
blind or curtain in the Premises, the Tenant shall not remove it without
first obtaining the Landlord's written consent thereto.
4. No sign, lettering, insignia, advertisement, notice or other thing shall be
inscribed, painted, installed, erected or placed in any portion of the
Premises which may be seen from outside the Building, or on any window,
window space or other part of the exterior or interior of the Building,
unless first approved in writing by the Landlord. Names on suite entrances
shall be provided by and only by the Landlord and at the Tenant's expense,
using in each instance lettering of a design and in a form consistent with
the other lettering in the Building, and first approved in writing by the
Landlord. The Tenant shall/will not erect any stand, booth or showcase or
other article or matter in or upon the Premises and/or the Building without
first obtaining the Landlord's written consent thereto.
5. The Tenant shall not place any additional lock upon any door within the
Premises or elsewhere upon the Property, and shall surrender all keys for
all such locks at the end of the Term. The Landlord shall provide the
Tenant with one set of keys to the Premises when the Tenant assumes
possession thereof.
6.
7. The Tenant shall not do or permit to be done anything which obstructs or
interferes with the rights of any other tenant of the Property. The Tenant
shall not keep anywhere within the Property any matter having an offensive
odor, or any kerosene, gasoline, benzine, camphene, fuel or other explosive
or highly flammable material. No bird, fish or other animal shall be
brought into or kept in or about the Premises.
-29-
<PAGE>
EXHIBIT C - CURRENT RULES AND REGULATIONS
PAGE TWO (2)
8. So that the Premises may be kept in a good state of preservation and
cleanliness, the Tenant shall, while in possession of the Premises, permit
only the Landlord's employees and contractors to clean the Premises unless
prior thereto the Landlord otherwise consents in writing /17/. /18/ the
Landlord shall not be responsible to the Tenant for any damage done to any
furniture or other property of the Tenant or any other person caused by any
of the Landlord's employees or any other person, for any loss sustained by
any of the Tenant's employees, or for any loss of property of any kind in
or from the Premises, however occurring. The Tenant shall see each day that
the windows are closed and the doors securely locked before leaving the
Premises, and that all lights and standard office equipment within the
Premises are turned off.
9. If the Tenant desires to install signaling, telegraphic, telephonic,
protective alarm or other wires, apparatus or devices within the Premises,
the Landlord shall direct where and how they are to be installed and,
except as so directed, no installation, boring or cutting shall be
permitted. The Landlord shall have the right (a) to prevent or interrupt
the transmission of excessive, dangerous or annoying current of electricity
or otherwise into or through the Building or the Premises, (b) to require
the changing of wiring connections or layout at the Tenant's expense, to
the extent that the Landlord may deem necessary, (c) to require compliance
with such reasonable rules as the Landlord may establish relating thereto,
and (d) in the event of noncompliance with such requirements or rules,
immediately to cut wiring or do whatever else it considers necessary to
remove the danger, annoyance or electrical interference with apparatus in
any part of the Building. Each wire installed by the Tenant must be clearly
tagged at each distributing board and junction box and elsewhere where
required by Landlord, with the number of the office to which such wire
leads and the purpose for which it is used, together with the name of the
tenant or other concern, if any, operating or using it.
10. A directory will be provided by the Landlord on the ground floor of the
Building, on which the Tenant's name may be placed.
11. No furniture, package, equipment, supplies or merchandise may be received
in the Building, or carried up or down in the elevators or stairways,
except during such hours as are designated for such purpose by the
Landlord, and only after Tenant gives notice thereof to the Landlord. The
Landlord shall have the exclusive right to prescribe the method and manner
in which any of the same is brought into or taken out of the Building, and
the right to exclude from the Building any heavy furniture, safe or other
article which may create a hazard and to require it to be located at a
designated place in the Premises. The Tenant shall not place any weight
anywhere beyond the safe carrying capacity of the Building. The cost of
repairing any damage to the Building or any other part of the Property
caused by taking any of the same in or out of the Premises, or any damage
caused while it is in the Premises or the rest of the Building, shall be
borne by the Tenant.
12. Without the Landlord's prior written consent, (a) nothing shall be fastened
to (and no hole shall be drilled, or nail or screw driven into) any wall or
partition, (b) no wall, or partition shall be painted, papered or otherwise
covered or moved in any way or marked or broken, (c) no connection shall be
made to any electrical wire for running any fan, motor or other
- ---------------------
/17/ which consent shall not be unreasonably withheld.
/18/ Unless Landlord, or its employees, contractors or agents has been
proven to have caused such damage,
-30-
<PAGE>
apparatus, device or equipment, (d) no machinery of any kind other than
customary small business machinery shall be allowed in the Premises, (e) no
switchboard or telephone wiring or equipment shall be placed anywhere other
than where designated by the Landlord, and (f) no mechanic shall be allowed
to work in or about the Building other than one employed by the Landlord,
unless approved in writing by Landlord.
EXHIBIT C - CURRENT RULES AND REGULATIONS
PAGE THREE (3)
13. The Tenant shall have access to the Premises at all reasonable times. The
Landlord shall in no event be responsible for admitting or excluding any
person from the Premises. In case of invasion, hostile attack,
insurrection, mob violence, riot, public excitement or other commotion,
explosion, fire or any casualty, the Landlord shall have the right to bar
or limit access to the Building to protect the safety of occupants of the
Property, or any property within the Property.
14. The Landlord shall have the right to rescind, suspend or modify the Rules
and Regulations and to promulgate such other Rules or Regulations as, in
the Landlord's reasonable judgment, are from time to time needed for the
safety, care, maintenance, operation and cleanliness of the Building, or
for the preservation of good order therein. Upon the Tenant's having been
given notice of the taking of any such action, the Rules and Regulations as
so rescinded, suspended, modified or promulgated shall have the same force
and effect as if in effect at the time at which the Tenant's lease was
entered into (except that nothing in the Rules and Regulations shall be
deemed in any way to alter or impair any provision of such lease).
15. The use of any room within the Building as sleeping quarters is strictly
prohibited at all times.
16. The Tenant shall keep the windows and doors of the Premises (including
those opening on corridors and all doors between rooms entitled to receive
heating or air conditioning service and rooms not entitled to receive such
service), closed while the heating or air conditioning system is operating,
in order to minimize the energy used by, and to conserve the effectiveness
of, such systems. The Tenant shall comply with all reasonable Rules and
Regulations from time to time promulgated by the Landlord with respect to
such systems or their use.
17. Nothing in these Rules and Regulations shall give any Tenant any right or
claim against the Landlord or any other person if the Landlord does not
enforce any of them against any other tenant or person (whether or not the
Landlord has the right to enforce them against such tenant or person), and
no such nonenforcement with respect to any tenant shall constitute a waiver
of the right to enforce them as to the Tenant or any other tenant or
person.
-31-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT D
BASE RENT
<TABLE>
<CAPTION>
===========================================================================
LEASE SQUARE ANNUAL MONTHLY
YEAR FEET BASE RENT BASE RENT
===========================================================================
<S> <C> <C> <C>
date first written above - June 14, 1997 4,660 $0.00 $0.00
- ---------------------------------------------------------------------------
June 15, 1997 - June 30, 1997 4,660 n/a $1,634.19
- ---------------------------------------------------------------------------
July 01, 1997 - June 30, 1998 4,660 $37,280.00 $3,106.67
- ---------------------------------------------------------------------------
July 01, 1998 - June 30, 1999 4,660 $38,398.40 $3,199.87
- ---------------------------------------------------------------------------
July 01, 1999 - June 30, 2000 4,660 $39,550.35 $3,295.86
- ---------------------------------------------------------------------------
July 01, 2000 - June 30, 2001 4,660 $40,736.86 $3,394.74
- ---------------------------------------------------------------------------
July 01, 2001 - June 30, 2002 4,660 $41,958.97 $3,496.58
- ---------------------------------------------------------------------------
July 01, 2002 - June 30, 2003 4,660 $43,217.74 $3,601.48
- ---------------------------------------------------------------------------
July 01, 2003 - June 30, 2004 4,660 $44,514.27 $3,709.52
- ---------------------------------------------------------------------------
July 01, 2004 - June 30, 2005 4,660 $45,849.70 $3,820.81
- ---------------------------------------------------------------------------
July 01, 2005 - June 30, 2006 4,660 $47,225.19 $3,935.43
- ---------------------------------------------------------------------------
July 01, 2006 - June 30, 2007 4,660 $48,641.94 $4,053.50
===========================================================================
</TABLE>
-32-
<PAGE>
AGREEMENT OF LEASE
by and between
NORFOLK COMMERCE CENTER LIMITED PARTNERSHIP
and
BORON, LePORE & ASSOCIATES, INC.
EXHIBIT E
ADDITIONAL PROVISIONS
Addendum to the Lease dated April _____, 1997 between Norfolk Commerce Center
Limited Partnership, as "Landlord", and, Boron, LePore & Associates, Inc. as
"Tenant". Landlord and Tenant hereby agree as follows:
SECTION 19. RENT ABATEMENT.
Provided this Lease is in full force and effect and no Event of Default by
Tenant has occurred hereunder, the Base Rent shall be abated from the date first
written above until June 14, 1997 (the "Abatement Period"). All other provisions
of the Lease shall be in effect during the Abatement Period. The entire Base
Rent otherwise due and payable for the Abatement Period shall become immediately
due and payable upon the occurrence of an Event of Default under the Lease.
SECTION 20. RENEWAL OPTION.
Provided this Lease is in full force and effect and no Event of Default by
Tenant has occurred hereunder, Tenant shall have the right to renew this Lease
for one (1) five (5) year term upon providing Landlord with written notice six
(6) months prior to the current expiration. The renewal term shall be subject to
the terms and conditions set forth in this Lease and the Base Rent shall be at
the then current market rates at the time of the renewal. Tenant's rights as to
this option are personal to the original Tenant executing the Lease and may not
be exercised or be assigned, voluntarily, by or to any person or entity other
than the original Tenant.
SECTION 21. JANITORIAL SERVICES AND UTILITIES.
Notwithstanding anything contained in the Lease to the contrary, Tenant
shall contract and pay directly for janitorial service and utilities, which are
separately metered, servicing the Premises upon Tenant's occupancy including
during the Abatement Period as described in Section 19 above.
SECTION 22. ASSIGNMENT AND SUBLETTING.
Notwithstanding the provisions of Section 10, Tenant shall have the right
to assign its Lease or sublease all or any part of the Premises with Landlord's
prior written approval, which approval shall not be unreasonably withheld or
delayed.
SECTION 23. SIGNAGE
Tenant shall have the right, subject to Landlord's reasonable approval, to
install standard building signage, at its sole cost, above the suite entrance,
as long as it complies with local sign ordinances and the rules of Norfolk
Commerce Park.
-33-
<PAGE>
Exhibit 10.4
------------
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 4th day of December, 1996 by and between
Patrick G. LePore (the "Employee") and Boron, LePore & Associates, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee is a senior officer of the Company; and
WHEREAS, reference is made to that certain Preferred Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of December 4, 1996 pursuant
to which the Company will issue shares of Convertible Participating Preferred
Stock in consideration of capital contributions aggregating $12.5 million, and
that certain Stock Redemption Agreement dated as of December 4, 1996 (the
"Redemption Agreement") pursuant to which the Company will redeem certain of its
shares of its Common Stock held by the Employee and agree to make certain
deferred compensation payments to the Employee; and
WHEREAS, the parties hereto desire to assure that the Employee's knowledge
and experience will continue to be available after the above-described
transactions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. Subject to the provisions of Section 6, the Company hereby
----------
employs the Employee and the Employee accepts such employment upon the terms and
conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6, the term
------------------
of the Employee's employment pursuant to this Agreement shall commence on and as
of the date hereof (the "Effective Date") and shall terminate on the third
anniversary of the Effective Date; provided, however, that this Agreement shall
be extended automatically for successive one-year periods ending on the relevant
anniversary of Effective Date unless either party gives the other notice not
less than 180 days prior to the scheduled termination date (i.e., the third
anniversary of the Effective Date or any later anniversary) of his or its
determination not to extend this Agreement, whereupon it shall terminate as of
such anniversary date. The period during which the Employee serves as an
employee of the Company in accordance with and subject to the provisions of this
Agreement is referred to in this Agreement as the "Term of Employment."
<PAGE>
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title and position of Chairman, President and
Chief Executive Officer, reporting to the Board of Directors of the Company, (b)
shall have general supervisory responsibility in such capacity over all aspects
of the business of the Company, as well as such other responsibilities as may be
specified from time to time by the Board of Directors of the Company, consistent
with the Employee's position and general area of experience and skills, provided
that, in all cases the Employee shall be subject to the oversight and
supervision of the Board of Directors of the Company in the performance of his
duties, (c) upon the request of the Board of Directors of the Company, shall
serve as an officer and/or director of any of the Company's subsidiaries, and
(d) shall render all services reasonably incident to the foregoing. The Employee
hereby accepts such employment, agrees to serve the Company in the capacities
indicated, and agrees to use his best efforts in, and shall devote his full
working time, attention, skill and energies to, the advancement of the interests
of the Company and its subsidiaries and the performance of his duties and
responsibilities hereunder.
4. Salary and Bonus.
----------------
(a) During the Term of Employment, the Company shall pay the Employee
a salary at the annual rate of $315,000 per annum (the "Base Salary"). Such Base
Salary shall be subject to withholding under applicable law, shall be pro rated
for partial years and shall be payable in periodic installments not less
frequently than monthly in accordance with the Company's usual practice for
executive officers of the Company as in effect from time to time.
(b) The Employee shall not receive a bonus in respect of the year
ending December 31, 1996, except as contemplated by the Redemption Agreement.
For each calendar year or portion thereof thereafter during the Term of
Employment (including any extensions thereof) and prior to an initial public
offering, the Employee shall be eligible to participate in the Company's
Incentive Bonus Plan - 1997 (the "Incentive Plan") in the form attached hereto
as Exhibit A, subject to the terms and conditions thereof.
5. Benefits.
--------
(a) During the Term of Employment, the Employee shall be entitled to
participate in any and all medical, pension, profit sharing, dental and life
insurance plans and disability income plans, retirement arrangements and other
employment benefits as in effect from time to time for executive officers of the
Company generally. Such participation shall be subject to (i) the terms of the
applicable plan documents (including, as applicable, provisions granting
discretion to the Board of Directors of the Company or any administrative or
other committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company.
2
<PAGE>
(b) Notwithstanding the foregoing, during the Term of Employment the
Company shall provide the Employee with or reimburse the Employee for a Company
automobile, tax and financial planning and club dues on a basis that is
consistent with and not less favorable in the aggregate than the Company's
practice at the date hereof.
(c) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with the Company's practices for executive officers of
the Company with a similar level of responsibility, as in effect from time to
time.
(d) During the Term of Employment, the Employee shall receive paid
vacation annually in accordance with the Company's practices for executive
officers, as in effect from time to time, but in any event not less than four
(4) weeks per calendar year.
(e) Compliance with the provisions of this Section 5 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Company or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof, except as contemplated by Sections 5(b), 5(c) and 5(d) and except
as provided under the terms of the Incentive Plan.
6. Termination of Employment of the Employee. Prior to the expiration of
-----------------------------------------
the Term of Employment as provided in Section 2 hereof, this Agreement may or
shall (as applicable) be terminated as follows:
(a) At any time by the mutual consent of the Employee and the Company.
(b) At any time for "cause" by the Company upon written notice to the
Employee. For purposes of this Agreement, a termination shall be for
"cause" if:
(i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or any
of its subsidiaries, or shall be convicted by a court of competent
jurisdiction of, or shall plead guilty or nolo contendere to, any
felony or any crime involving moral turpitude; or
(ii) the Employee shall commit a breach of any of the covenants,
terms or provisions hereof, which breach has not been remedied within
thirty (30) days after delivery to the Employee by the Board of
Directors of the Company of written notice of the facts constituting
the breach; or
(iii) the Employee shall commit a breach of any of the covenants,
3
<PAGE>
terms or provisions of that certain Non-Competition Agreement of even date
herewith executed by the Employee and the Company, which breach has not
been remedied within thirty (30) days after delivery to the Employee by the
Company of written notice of the facts constituting the breach; or
(iv) the Employee shall have failed to comply with written
instructions from the Company's Board of Directors, which are reasonable
and consistent with Section 3, or shall have substantially failed to
perform the Employee's duties hereunder for a period of thirty (30) days
after written notice from the Company.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company under this Agreement shall thereupon immediately
terminate other than any obligation of the Company with respect to earned but
unpaid Base Salary and benefits contemplated hereby to the extent then accrued
or vested, it being understood that upon any such termination (1) the Employee
shall not be entitled to receive any bonus or portion thereof from the Company
or any of its affiliates to the extent granted in the discretion of the Company
but not then paid with respect to any period during or after the Term of
Employment or (2) any continuation of benefits except as may be required by law,
and (B) the Company shall have any and all rights and remedies under this
Agreement and applicable law.
(c) Upon the death or upon the permanent disability (as defined below) of
the Employee continuing for a period in excess of one hundred eighty (180)
consecutive days. Upon any such termination of the Employee's employment as
provided in this Section 6(c), all obligations of the Company under this
Agreement shall thereupon immediately terminate other than any obligation of the
Company with respect to earned but unpaid Base Salary and benefits contemplated
hereby to the extent accrued or vested through the date of termination. As used
herein, the terms "permanent disability" or "permanently disabled" shall mean
the inability of the Employee, by reason of injury, illness or other similar
cause, to perform a major part of his duties and responsibilities in connection
with the conduct of the business and affairs of the Company, as determined
reasonably and in good faith by the Company.
(d) At any time by the Employee upon forty-five (45) days' prior written
notice to the Company. Upon termination by the Employee as provided in this
Section 6(d), all obligations of the Company under this Agreement thereupon
immediately shall terminate other than any obligation of the Company with
respect to earned but unpaid Base Salary and benefits contemplated hereby to the
extent accrued or vested through the date of termination, it being understood
that in the event of such a termination the Employee shall not be entitled to
receive any bonus not then paid from the Company or any of its affiliates with
respect to any period during or after the Term of Employment or any continuation
of benefits except to the extent required by law.
4
<PAGE>
(e) At any time without "cause" (as defined in Section 6(b)) by the
Company upon written notice to the Employee. In the event of termination of
the Employee by the Company pursuant to this Section 6(e), the Company
shall (i) continue to make Base Salary payments to the Employee from the
date of termination through (a) the later of the third anniversary of the
Effective Date or the first anniversary of the date on which such a
termination occurs, if such termination occurs prior to the third
anniversary of the Executive Date, or (b) the first anniversary of the date
on which such termination occurs, if such termination occurs on or after
during any extension year of the Term of Employment hereunder, in any such
case in the manner contemplated by Section 4(a), and (ii) continue the
benefit arrangements applicable to the Employee for as long as Base Salary
payments continue, with such amounts agreed by the parties hereto to be in
full satisfaction, compromise and release of any claims arising out of any
termination of the Employee's employment pursuant to this Section 6(e) or
Section 6(f), and in either case with such amounts to be contingent upon
the Employee's delivery of a general release of any and all claims (other
than those arising under this Agreement) upon termination of employment in
a form reasonably satisfactory to the Company, it being understood that no
severance benefits shall be provided unless and until the Employee
determines to execute and deliver such release.
(f) The Employee shall have the right to terminate his employment
hereunder in the event of a material default by the Company in the
performance of its obligations hereunder, after the Employee has given
written notice to the Company specifying such default by the Company and
giving the Company a reasonable time, not less than 30 days, to conform its
performance to its obligations hereunder. The rights and obligations of the
parties shall be as set forth in Section 6(e) in the event of any such
termination.
(g) In the event either party gives a notice of non-renewal to be
effective as of the third anniversary of the Effective Date or any
subsequent anniversary thereof, then all obligations of the parties
hereunder shall terminate as of the end of the Term of Employment except as
contemplated by Sections 6(h) and 7 hereof.
(h) Notwithstanding termination of this Agreement as provided in this
Section 6 or any other termination of the Employee's employment with the
Company, the Employee's obligations under Section 7 hereof and in the
Employee's Non-Competition Agreement of even date herewith shall survive
any termination of the Employee's employment with the Company at any time
and for any reason.
7. Confidentiality; Proprietary Rights.
-----------------------------------
(a) In the course of performing services hereunder, on behalf of the
Company (for purposes of this Section 7 including all predecessors of the
Company) and its affiliates, the Employee has had and from time to time will
have access to confidential records,
5
<PAGE>
data, customer lists, trade secrets and other confidential information owned or
used in the course of business by the Company and its affiliates (the
"Confidential Information"). The Employee agrees (a) to hold the Confidential
Information in strict confidence, (b) not to disclose the Confidential
Information to any person (other than in the regular business of the Company or
its affiliates), and (c) not to use, directly or indirectly, any of the
Confidential Information for any competitive or commercial purpose other than on
behalf of the Company and its affiliates; provided, however, that the
-------- -------
limitations set forth above shall not apply to any Confidential Information
which (i) is then generally known to the public; (ii) became or becomes
generally known to the public through no fault of the Employee; or (iii) is
disclosed in accordance with an order of a court of competent jurisdiction or
applicable law. Upon the termination of the Employee's employment with the
Company for any reason, all Confidential Information (including, without
limitation, all data, memoranda, customer lists, notes, programs and other
papers and items, and reproductions thereof relating to the foregoing matters)
in the Employee's possession or control, shall be immediately returned to the
Company or the applicable affiliate and remain in its or their possession.
(b) The Employee recognizes that the Company and its affiliates possess a
proprietary interest in all of the information described in Section 7(a) and
have the exclusive right and privilege to use, protect by copyright, patent or
trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee or his
agents or affiliates in the course of the Employee's employment, including any
of the foregoing which is based on or arises out of the information described in
Section 7(a), shall be the property of and inure to the exclusive benefit of the
Company. The Employee further agrees that any and all products, inventions,
discoveries or improvements developed by the Employee (whether or not able to be
protected by copyright, patent or trademark) during the course of his
employment, or involving the use of the time, materials or other resources of
the Company or any of its affiliates, shall be promptly disclosed to the Company
and shall become the exclusive property of the Company, and the Employee shall
execute and deliver any and all documents necessary or appropriate to implement
the foregoing.
(c) The Employee agrees, while he is employed by the Company, to offer or
otherwise make known or available to it, as directed by the Board of Directors
of the Company and without additional compensation or consideration, any
business prospects, contracts or other business opportunities that he may
discover, find, develop or otherwise have available to him in the business of
providing marketing services to and performing related activities for
pharmaceutical companies and healthcare telemarketing, and further agrees that
any such prospects, contacts or other business opportunities shall be the
property of the Company.
(d) The Employee acknowledges that the Non-Competition Agreement executed
and delivered concurrently herewith is an integral part of his employment
6
<PAGE>
arrangements with the Company.
8. Specific Performance; Severability. It is specifically understood and
----------------------------------
agreed that any breach of the provisions of Section 7 hereof by the Employee is
likely to result in irreparable injury to the Company and/or its affiliates,
that the remedy at law alone will be an inadequate remedy for such breach and
that, in addition to any other remedy it may have, the Company shall be entitled
to enforce the specific performance of this Agreement by the Employee and to
seek both temporary and permanent injunctive relief (to the extent permitted by
law), without the necessity of posting a bond or proving actual damages. In
case any of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, any such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
9. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
faxed (with transmission acknowledgment received), delivered personally or
mailed by certified or registered mail (return receipt requested) as follows:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
To the Employee: Patrick G. LePore
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
10. Miscellaneous. This Agreement shall be governed by and construed
-------------
under the laws of the State of New Jersey, and shall not be amended, modified or
discharged in whole or in part except by an agreement in writing signed by both
of the parties hereto. The failure of either of the parties to require the
performance of a term or obligation or to exercise any right under this
Agreement or the waiver of any breach hereunder shall not prevent subsequent
enforcement of such term or obligation or exercise of such right or the
enforcement at any time of any other right hereunder or be deemed a waiver of
any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of,
7
<PAGE>
and be binding upon and assignable to, successors of the Company by way of
merger, consolidation or sale and may not be assigned by the Employee. This
Agreement, together with the concurrently executed Non-Competition Agreement
supersedes and terminates all prior understandings and agreements between the
parties (or their predecessors) relating to the subject matter hereof. For
purposes of this Agreement, the term "person" means an individual, corporation,
partnership, association, trust or any unincorporated organization; a
"subsidiary" of a person means any corporation more than 50 percent of whose
outstanding voting securities, or any partnership, joint venture or other entity
more than 50 percent of whose total equity interest, is directly or indirectly
owned by such person; and an "affiliate" of a person shall mean, with respect to
a person or entity, any person or entity which directly or indirectly controls,
is controlled by, or is under common control with such person or entity.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LEPORE & ASSOCIATES, INC.
By:/s/ Gregory Boron
------------------------------------
Name: Gregory Boron
Title: Chief Operating Officer
/s/ Patrick G. LePore
---------------------------------------
Patrick G. LePore
9
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 4th day of December, 1996 by and between
Gregory Boron (the "Employee") and Boron, LePore & Associates, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
-------------------
WHEREAS, the Employee is a senior officer of the Company; and
WHEREAS, reference is made to that certain Preferred Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of December 4, 1996 pursuant
to which the Company will issue shares of Convertible Participating Preferred
Stock in consideration of capital contributions aggregating $12.5 million, and
that certain Stock Redemption Agreement dated as of December 4, 1996 (the
"Redemption Agreement") pursuant to which the Company will redeem certain of its
shares of its Common Stock held by the Employee and agree to make certain
deferred compensation payments to the Employee; and
WHEREAS, the parties hereto desire to assure that the Employee's knowledge
and experience will continue to be available after the above-described
transactions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. Subject to the provisions of Section 6, the Company hereby
----------
employs the Employee and the Employee accepts such employment upon the terms and
conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6, the term
------------------
of the Employee's employment pursuant to this Agreement shall commence on and as
of the date hereof (the "Effective Date") and shall terminate on the third
anniversary of the Effective Date; provided, however, that this Agreement shall
be extended automatically for successive one-year periods ending on the relevant
anniversary of Effective Date unless either party gives the other notice not
less than 180 days prior to the scheduled termination date (i.e., the third
anniversary of the Effective Date or any later anniversary) of his or its
determination not to extend this Agreement, whereupon it shall terminate as of
such anniversary date. The period during which the Employee serves as an
employee of the Company in accordance with and subject to the provisions of this
Agreement is referred to in this Agreement as the "Term of Employment."
<PAGE>
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title and position of Executive Vice
President-Administration and Chief Operating Officer, reporting to the Chief
Executive Officer of the Company, (b) shall perform such duties and
responsibilities on behalf of the Company and its subsidiaries (as defined in
Section 10) as may be reasonably determined by the Chief Executive Officer of
the Company, consistent with the general area of the Employee's experience and
skills, (c) upon the request of the Board of Directors of the Company, shall
serve as an officer and/or director of any of the Company's subsidiaries, and
(d) shall render all services reasonably incident to the foregoing. The Employee
hereby accepts such employment, agrees to serve the Company in the capacities
indicated, and agrees to use his best efforts in, and shall devote his full
working time, attention, skill and energies to, the advancement of the interests
of the Company and its subsidiaries and the performance of his duties and
responsibilities hereunder.
4. Salary and Bonus.
----------------
(a) During the Term of Employment, the Company shall pay the Employee a
salary at the annual rate of $285,000 per annum (the "Base Salary"). Such Base
Salary shall be subject to withholding under applicable law, shall be pro rated
for partial years and shall be payable in periodic installments not less
frequently than monthly in accordance with the Company's usual practice for
executive officers of the Company as in effect from time to time.
(b) The Employee shall not receive a bonus in respect of the year
ending December 31, 1996, except as contemplated by the Redemption Agreement.
For each calendar year or portion thereof thereafter during the Term of
Employment (including any extensions thereof) and prior to an initial public
offering, the Employee shall be eligible to participate in the Company's
Incentive Bonus Plan- 1997 (the "Incentive Plan") in the form attached hereto as
Exhibit A, subject to the terms and conditions thereof.
5. Benefits.
--------
(a) During the Term of Employment, the Employee shall be entitled to
participate in any and all medical, pension, profit sharing, dental and life
insurance plans and disability income plans, retirement arrangements and other
employment benefits as in effect from time to time for executive officers of the
Company generally. Such participation shall be subject to (i) the terms of the
applicable plan documents (including, as applicable, provisions granting
discretion to the Board of Directors of the Company or any administrative or
other committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company.
(b) Notwithstanding the foregoing, during the Term of Employment the
Company shall provide the Employee with or reimburse the Employee for a Company
2
<PAGE>
automobile, tax and financial planning and club dues on a basis that is
consistent with and not less favorable in the aggregate than the Company's
practice at the date hereof.
(c) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with the Company's practices for executive officers of
the Company with a similar level of responsibility, as in effect from time to
time.
(d) During the Term of Employment, the Employee shall receive paid
vacation annually in accordance with the Company's practices for executive
officers, as in effect from time to time, but in any event not less than four
(4) weeks per calendar year.
(e) Compliance with the provisions of this Section 5 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Company or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof, except as contemplated by Sections 5(b), 5(c) and 5(d) and except
as provided under the terms of the Incentive Plan.
6. Termination of Employment of the Employee. Prior to the expiration of
-----------------------------------------
the Term of Employment as provided in Section 2 hereof, this Agreement may or
shall (as applicable) be terminated as follows:
(a) At any time by the mutual consent of the Employee and the Company.
(b) At any time for "cause" by the Company upon written notice to the
Employee. For purposes of this Agreement, a termination shall be for
"cause" if:
(i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or any
of its subsidiaries, or shall be convicted by a court of competent
jurisdiction of, or shall plead guilty or nolo contendere to, any
felony or any crime involving moral turpitude; or
(ii) the Employee shall commit a breach of any of the covenants,
terms or provisions hereof, which breach has not been remedied within
thirty (30) days after delivery to the Employee by the Board of
Directors of the Company of written notice of the facts constituting
the breach; or
(iii) the Employee shall commit a breach of any of the covenants,
terms or provisions of that certain Non-Competition Agreement of even
date herewith executed by the Employee and the Company, which breach
has not
3
<PAGE>
been remedied within thirty (30) days after delivery to the Employee by
the Company of written notice of the facts constituting the breach; or
(iv) the Employee shall have failed to comply with written
instructions from the Company's Chief Executive Officer, which are
reasonable and consistent with Section 3, or shall have substantially
failed to perform the Employee's duties hereunder for a period of
thirty (30) days after written notice from the Company.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company under this Agreement shall thereupon immediately
terminate other than any obligation of the Company with respect to earned
but unpaid Base Salary and benefits contemplated hereby to the extent then
accrued or vested, it being understood that upon any such termination (1)
the Employee shall not be entitled to receive any bonus or portion thereof
from the Company or any of its affiliates to the extent granted in the
discretion of the Company but not then paid with respect to any period
during or after the Term of Employment or (2) any continuation of benefits
except as may be required by law, and (B) the Company shall have any and
all rights and remedies under this Agreement and applicable law.
(c) Upon the death or upon the permanent disability (as defined below)
of the Employee continuing for a period in excess of one hundred eighty
(180) consecutive days. Upon any such termination of the Employee's
employment as provided in this Section 6(c), all obligations of the Company
under this Agreement shall thereupon immediately terminate other than any
obligation of the Company with respect to earned but unpaid Base Salary and
benefits contemplated hereby to the extent accrued or vested through the
date of termination. As used herein, the terms "permanent disability" or
"permanently disabled" shall mean the inability of the Employee, by reason
of injury, illness or other similar cause, to perform a major part of his
duties and responsibilities in connection with the conduct of the business
and affairs of the Company, as determined reasonably and in good faith by
the Company.
(d) At any time by the Employee upon forty-five (45) days' prior
written notice to the Company. Upon termination by the Employee as provided
in this Section 6(d), all obligations of the Company under this Agreement
thereupon immediately shall terminate other than any obligation of the
Company with respect to earned but unpaid Base Salary and benefits
contemplated hereby to the extent accrued or vested through the date of
termination, it being understood that in the event of such a termination
the Employee shall not be entitled to receive any bonus not then paid from
the Company or any of its affiliates with respect to any period during or
after the Term of Employment or any continuation of benefits except to the
extent required by law.
(e) At any time without "cause" (as defined in Section 6(b)) by the
Company
4
<PAGE>
upon written notice to the Employee. In the event of termination of the
Employee by the Company pursuant to this Section 6(e), the Company shall
(i) continue to make Base Salary payments to the Employee from the date of
termination through (a) the later of the third anniversary of the Effective
Date or the first anniversary of the date on which such a termination
occurs, if such termination occurs prior to the third anniversary of the
Executive Date, or (b) the first anniversary of the date on which such
termination occurs, if such termination occurs on or after during any
extension year of the Term of Employment hereunder, in any such case in the
manner contemplated by Section 4(a), and (ii) continue the benefit
arrangements applicable to the Employee for as long as Base Salary payments
continue, with such amounts agreed by the parties hereto to be in full
satisfaction, compromise and release of any claims arising out of any
termination of the Employee's employment pursuant to this Section 6(e) or
Section 6(f), and in either case with such amounts to be contingent upon
the Employee's delivery of a general release of any and all claims (other
than those arising under this Agreement) upon termination of employment in
a form reasonably satisfactory to the Company, it being understood that no
severance benefits shall be provided unless and until the Employee
determines to execute and deliver such release.
(f) The Employee shall have the right to terminate his employment
hereunder in the event of a material default by the Company in the
performance of its obligations hereunder, after the Employee has given
written notice to the Company specifying such default by the Company and
giving the Company a reasonable time, not less than 30 days, to conform its
performance to its obligations hereunder. The rights and obligations of the
parties shall be as set forth in Section 6(e) in the event of any such
termination.
(g) In the event either party gives a notice of non-renewal to be
effective as of the third anniversary of the Effective Date or any
subsequent anniversary thereof, then all obligations of the parties
hereunder shall terminate as of the end of the Term of Employment except as
contemplated by Sections 6(h) and 7 hereof.
(h) Notwithstanding termination of this Agreement as provided in this
Section 6 or any other termination of the Employee's employment with the
Company, the Employee's obligations under Section 7 hereof and in the
Employee's Non-Competition Agreement of even date herewith shall survive
any termination of the Employee's employment with the Company at any time
and for any reason.
7. Confidentiality; Proprietary Rights.
-----------------------------------
(a) In the course of performing services hereunder, on behalf of the
Company (for purposes of this Section 7 including all predecessors of the
Company) and its affiliates, the Employee has had and from time to time will
have access to confidential records, data, customer lists, trade secrets and
other confidential information owned or used in the
5
<PAGE>
course of business by the Company and its affiliates (the "Confidential
Information"). The Employee agrees (a) to hold the Confidential Information in
strict confidence, (b) not to disclose the Confidential Information to any
person (other than in the regular business of the Company or its affiliates),
and (c) not to use, directly or indirectly, any of the Confidential Information
for any competitive or commercial purpose other than on behalf of the Company
and its affiliates; provided, however, that the limitations set forth above
-------- -------
shall not apply to any Confidential Information which (i) is then generally
known to the public; (ii) became or becomes generally known to the public
through no fault of the Employee; or (iii) is disclosed in accordance with an
order of a court of competent jurisdiction or applicable law. Upon the
termination of the Employee's employment with the Company for any reason, all
Confidential Information (including, without limitation, all data, memoranda,
customer lists, notes, programs and other papers and items, and reproductions
thereof relating to the foregoing matters) in the Employee's possession or
control, shall be immediately returned to the Company or the applicable
affiliate and remain in its or their possession.
(b) The Employee recognizes that the Company and its affiliates possess
a proprietary interest in all of the information described in Section 7(a) and
have the exclusive right and privilege to use, protect by copyright, patent or
trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Company and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee or his
agents or affiliates in the course of the Employee's employment, including any
of the foregoing which is based on or arises out of the information described in
Section 7(a), shall be the property of and inure to the exclusive benefit of the
Company. The Employee further agrees that any and all products, inventions,
discoveries or improvements developed by the Employee (whether or not able to be
protected by copyright, patent or trademark) during the course of his
employment, or involving the use of the time, materials or other resources of
the Company or any of its affiliates, shall be promptly disclosed to the Company
and shall become the exclusive property of the Company, and the Employee shall
execute and deliver any and all documents necessary or appropriate to implement
the foregoing.
(c) The Employee agrees, while he is employed by the Company, to offer
or otherwise make known or available to it, as directed by the Board of
Directors of the Company and without additional compensation or consideration,
any business prospects, contracts or other business opportunities that he may
discover, find, develop or otherwise have available to him in the business of
providing marketing services to and performing related activities for
pharmaceutical companies and healthcare telemarketing, and further agrees that
any such prospects, contacts or other business opportunities shall be the
property of the Company.
(d) The Employee acknowledges that the Non-Competition Agreement
executed and delivered concurrently herewith is an integral part of his
employment arrangements with the Company.
6
<PAGE>
8. Specific Performance; Severability. It is specifically understood and
----------------------------------
agreed that any breach of the provisions of Section 7 hereof by the Employee is
likely to result in irreparable injury to the Company and/or its affiliates,
that the remedy at law alone will be an inadequate remedy for such breach and
that, in addition to any other remedy it may have, the Company shall be entitled
to enforce the specific performance of this Agreement by the Employee and to
seek both temporary and permanent injunctive relief (to the extent permitted by
law), without the necessity of posting a bond or proving actual damages. In
case any of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, any such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
9. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
faxed (with transmission acknowledgment received), delivered personally or
mailed by certified or registered mail (return receipt requested) as follows:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
To the Employee: Gregory Boron
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
10. Miscellaneous. This Agreement shall be governed by and construed
-------------
under the laws of the State of New Jersey, and shall not be amended, modified or
discharged in whole or in part except by an agreement in writing signed by both
of the parties hereto. The failure of either of the parties to require the
performance of a term or obligation or to exercise any right under this
Agreement or the waiver of any breach hereunder shall not prevent subsequent
enforcement of such term or obligation or exercise of such right or the
enforcement at any time of any other right hereunder or be deemed a waiver of
any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of, and be binding upon
and assignable to, successors of the Company by way of merger, consolidation or
sale and may not be assigned by the Employee. This Agreement, together
7
<PAGE>
with the concurrently executed Non-Competition Agreement supersedes and
terminates all prior understandings and agreements between the parties (or their
predecessors) relating to the subject matter hereof. For purposes of this
Agreement, the term "person" means an individual, corporation, partnership,
association, trust or any unincorporated organization; a "subsidiary" of a
person means any corporation more than 50 percent of whose outstanding voting
securities, or any partnership, joint venture or other entity more than 50
percent of whose total equity interest, is directly or indirectly owned by such
person; and an "affiliate" of a person shall mean, with respect to a person or
entity, any person or entity which directly or indirectly controls, is
controlled by, or is under common control with such person or entity.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LEPORE & ASSOCIATES, INC.
By:/s/ Patrick G. LePore
-----------------------------
Name: Patrick G. LePore
Title: President
/s/ Gregory Boron
--------------------------------
Gregory Boron
9
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 4th day of December, 1996 by and between
Christopher Sweeney (the "Employee") and Boron, LePore & Associates, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee is a senior officer of the Company; and
WHEREAS, reference is made to that certain Preferred Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of December 4, 1996 pursuant
to which the Company will issue shares of Convertible Participating Preferred
Stock in consideration of capital contributions aggregating $12.5 million, and
that certain Stock Redemption Agreement dated as of December 4, 1996 (the
"Redemption Agreement") pursuant to which the Company will agree to make certain
deferred compensation payments to the Employee; and
WHEREAS, the parties hereto desire to assure that the Employee's knowledge
and experience will continue to be available after the above-described
transactions.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. Subject to the provisions of Section 6, the Company
----------
hereby employs the Employee and the Employee accepts such employment upon the
terms and conditions hereinafter set forth.
2. Term of Employment. Subject to the provisions of Section 6, the term
------------------
of the Employee's employment pursuant to this Agreement shall commence on and as
of the date hereof (the "Effective Date") and shall terminate on the third
anniversary of the Effective Date; provided, however, that this Agreement shall
be extended automatically for successive one-year periods ending on the relevant
anniversary of Effective Date unless either party gives the other notice not
less than 180 days prior to the scheduled termination date (i.e., the third
anniversary of the Effective Date or any later anniversary) of his or its
determination not to extend this Agreement, whereupon it shall terminate as of
such anniversary date. The period during which the Employee serves as an
employee of the Company in accordance with and subject to the provisions of this
Agreement is referred to in this Agreement as the "Term of Employment."
<PAGE>
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title and position of Executive Vice
President - Sales and Operations, reporting to the Chief Executive Officer of
the Company, (b)shall perform such duties and responsibilities on behalf of the
Company and its subsidiaries (as defined in Section 10) as may be reasonably
determined by the Chief Executive Officer of the Company, consistent with the
general area of the Employee's experience and skills, (c) upon the request of
the Board of Directors of the Company, shall serve as an officer and/or director
of any of the Company's subsidiaries, and (d) shall render all services
reasonably incident to the foregoing. The Employee hereby accepts such
employment, agrees to serve the Company in the capacities indicated, and agrees
to use his best efforts in, and shall devote his full working time, attention,
skill and energies to, the advancement of the interests of the Company and its
subsidiaries and the performance of his duties and responsibilities hereunder.
4. Salary and Bonus.
----------------
(a) During the Term of Employment, the Company shall pay the Employee
a salary at the annual rate of $265,000 per annum (the "Base Salary"). Such Base
Salary shall be subject to withholding under applicable law, shall be pro rated
for partial years and shall be payable in periodic installments not less
frequently than monthly in accordance with the Company's usual practice for
executive officers of the Company as in effect from time to time.
(b) The Employee shall not receive a bonus in respect of the year
ending December 31, 1996, except as contemplated by the Redemption Agreement.
For each calendar year or portion thereof thereafter during the Term of
Employment (including any extensions thereof) and prior to an initial public
offering, the Employee shall be eligible to participate in the Company's
Incentive Bonus Plan- 1997 (the "Incentive Plan") in the form attached hereto as
Exhibit A, subject to the terms and conditions thereof, for so long as the same
remains in effect.
5. Benefits.
--------
(a) During the Term of Employment, the Employee shall be entitled to
participate in any and all medical, pension, profit sharing, dental and life
insurance plans and disability income plans, retirement arrangements and other
employment benefits as in effect from time to time for executive officers of the
Company generally. Such participation shall be subject to (i) the terms of the
applicable plan documents (including, as applicable, provisions granting
discretion to the Board of Directors of the Company or any administrative or
other committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company.
2
<PAGE>
(b) Notwithstanding the foregoing, during the Term of Employment the
Company shall provide the Employee with or reimburse the Employee for a Company
automobile, tax and financial planning and club dues on a basis that is
consistent with and not less favorable in the aggregate than the Company's
practice at the date hereof.
(c) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with the Company's practices for executive officers of
the Company with a similar level of responsibility, as in effect from time to
time.
(d) During the Term of Employment, the Employee shall receive paid
vacation annually in accordance with the Company's practices for executive
officers, as in effect from time to time, but in any event not less than four
(4) weeks per calendar year.
(e) Compliance with the provisions of this Section 5 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Company or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof, except as contemplated by Sections 5(b), 5(c) and 5(d).
6. Termination of Employment of the Employee. Prior to the expiration of
-----------------------------------------
the Term of Employment as provided in Section 2 hereof, this Agreement may or
shall (as applicable) be terminated as follows:
(a) At any time by the mutual consent of the Employee and the
Company.
(b) At any time for "cause" by the Company upon written notice to the
Employee. For purposes of this Agreement, a termination shall be for
"cause" if:
(i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or
any of its subsidiaries, or shall be convicted by a court of competent
jurisdiction of, or shall plead guilty or nolo contendere to, any
felony or any crime involving moral turpitude; or
(ii) the Employee shall commit a breach of any of the
covenants, terms or provisions hereof, which breach has not been
remedied within thirty (30) days after delivery to the Employee by the
Board of Directors of the Company of written notice of the facts
constituting the breach; or
(iii) the Employee shall commit a breach of any of the
covenants, terms or provisions of that certain Non-Competition
Agreement of even date
3
<PAGE>
herewith executed by the Employee and the Company, which breach has
not been remedied within thirty (30) days after delivery to the
Employee by the Company of written notice of the facts constituting
the breach; or
(iv) the Employee shall have failed to comply with written
instructions from the Company's Chief Executive Officer, which are
reasonable and consistent with Section 3, or shall have substantially
failed to perform the Employee's duties hereunder for a period of
thirty (30) days after written notice from the Company.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company under this Agreement shall thereupon immediately
terminate other than any obligation of the Company with respect to earned
but unpaid Base Salary and benefits contemplated hereby to the extent then
accrued or vested, it being understood that upon any such termination (1)
the Employee shall not be entitled to receive any bonus or portion thereof
from the Company or any of its affiliates to the extent granted in the
discretion of the Company but not then paid with respect to any period
during or after the Term of Employment or (2) any continuation of benefits
except as may be required by law, and (B) the Company shall have any and
all rights and remedies under this Agreement and applicable law.
(c) Upon the death or upon the permanent disability (as defined
below) of the Employee continuing for a period in excess of one hundred
eighty (180) consecutive days. Upon any such termination of the Employee's
employment as provided in this Section 6(c), all obligations of the Company
under this Agreement shall thereupon immediately terminate other than any
obligation of the Company with respect to earned but unpaid Base Salary and
benefits contemplated hereby to the extent accrued or vested through the
date of termination. As used herein, the terms "permanent disability" or
"permanently disabled" shall mean the inability of the Employee, by reason
of injury, illness or other similar cause, to perform a major part of his
duties and responsibilities in connection with the conduct of the business
and affairs of the Company, as determined reasonably and in good faith by
the Company.
(d) At any time by the Employee upon forty-five (45) days' prior
written notice to the Company. Upon termination by the Employee as provided
in this Section 6(d), all obligations of the Company under this Agreement
thereupon immediately shall terminate other than any obligation of the
Company with respect to earned but unpaid Base Salary and benefits
contemplated hereby to the extent accrued or vested through the date of
termination, it being understood that in the event of such a termination
the Employee shall not be entitled to receive any bonus not then paid from
the Company or any of its affiliates with respect to any period during or
after the Term of Employment or any continuation of benefits except to the
extent required by law.
4
<PAGE>
(e) At any time without "cause" (as defined in Section 6(b)) by the
Company upon written notice to the Employee. In the event of termination of
the Employee by the Company pursuant to this Section 6(e), the Company
shall (i) continue to make Base Salary payments to the Employee from the
date of termination through (a) the later of the third anniversary of the
Effective Date or the first anniversary of the date on which such a
termination occurs, if such termination occurs prior to the third
anniversary of the Executive Date, or (b) the first anniversary of the date
on which such termination occurs, if such termination occurs on or after
during any extension year of the Term of Employment hereunder, in any such
case in the manner contemplated by Section 4(a), and (ii) continue the
benefit arrangements applicable to the Employee for as long as Base Salary
payments continue, with such amounts agreed by the parties hereto to be in
full satisfaction, compromise and release of any claims arising out of any
termination of the Employee's employment pursuant to this Section 6(e) or
Section 6(f), and in either case with such amounts to be contingent upon
the Employee's delivery of a general release of any and all claims (other
than those arising under this Agreement) upon termination of employment in
a form reasonably satisfactory to the Company, it being understood that no
severance benefits shall be provided unless and until the Employee
determines to execute and deliver such release.
(f) The Employee shall have the right to terminate his employment
hereunder in the event of a material default by the Company in the
performance of its obligations hereunder, after the Employee has given
written notice to the Company specifying such default by the Company and
giving the Company a reasonable time, not less than 30 days, to conform its
performance to its obligations hereunder. The rights and obligations of the
parties shall be as set forth in Section 6(e) in the event of any such
termination.
(g) In the event either party gives a notice of non-renewal to be
effective as of the third anniversary of the Effective Date or any
subsequent anniversary thereof, then all obligations of the parties
hereunder shall terminate as of the end of the Term of Employment except as
contemplated by Sections 6(h) and 7 hereof.
(h) Notwithstanding termination of this Agreement as provided in this
Section 6 or any other termination of the Employee's employment with the
Company, the Employee's obligations under Section 7 hereof and in the
Employee's Non-Competition Agreement of even date herewith shall survive
any termination of the Employee's employment with the Company at any time
and for any reason.
7. Confidentiality; Proprietary Rights.
-----------------------------------
(a) In the course of performing services hereunder, on behalf of the
Company (for purposes of this Section 7 including all predecessors of the
Company) and its affiliates, the Employee has had and from time to time will
have access to confidential records,
5
<PAGE>
data, customer lists, trade secrets and other confidential information owned or
used in the course of business by the Company and its affiliates (the
"Confidential Information"). The Employee agrees (a) to hold the Confidential
Information in strict confidence, (b) not to disclose the Confidential
Information to any person (other than in the regular business of the Company or
its affiliates), and (c) not to use, directly or indirectly, any of the
Confidential Information for any competitive or commercial purpose other than on
behalf of the Company and its affiliates; provided, however, that the
-------- -------
limitations set forth above shall not apply to any Confidential Information
which (i) is then generally known to the public; (ii) became or becomes
generally known to the public through no fault of the Employee; or (iii) is
disclosed in accordance with an order of a court of competent jurisdiction or
applicable law. Upon the termination of the Employee's employment with the
Company for any reason, all Confidential Information (including, without
limitation, all data, memoranda, customer lists, notes, programs and other
papers and items, and reproductions thereof relating to the foregoing matters)
in the Employee's possession or control, shall be immediately returned to the
Company or the applicable affiliate and remain in its or their possession.
(b) The Employee recognizes that the Company and its affiliates
possess a proprietary interest in all of the information described in Section
7(a) and have the exclusive right and privilege to use, protect by copyright,
patent or trademark, or otherwise exploit the processes, ideas and concepts
described therein to the exclusion of the Employee, except as otherwise agreed
between the Company and the Employee in writing. The Employee expressly agrees
that any products, inventions, discoveries or improvements made by the Employee
or his agents or affiliates in the course of the Employee's employment,
including any of the foregoing which is based on or arises out of the
information described in Section 7(a), shall be the property of and inure to the
exclusive benefit of the Company. The Employee further agrees that any and all
products, inventions, discoveries or improvements developed by the Employee
(whether or not able to be protected by copyright, patent or trademark) during
the course of his employment, or involving the use of the time, materials or
other resources of the Company or any of its affiliates, shall be promptly
disclosed to the Company and shall become the exclusive property of the Company,
and the Employee shall execute and deliver any and all documents necessary or
appropriate to implement the foregoing.
(c) The Employee agrees, while he is employed by the Company, to
offer or otherwise make known or available to it, as directed by the Board of
Directors of the Company and without additional compensation or consideration,
any business prospects, contracts or other business opportunities that he may
discover, find, develop or otherwise have available to him in business of
providing marketing services to and providing related activities for
pharmaceutical companies and healthcare telemarketing, and further agrees that
any such prospects, contacts or other business opportunities shall be the
property of the Company.
6
<PAGE>
(d) The Employee acknowledges that the Non-Competition Agreement
executed and delivered concurrently herewith is an integral part of his
employment arrangements with the Company.
8. Specific Performance; Severability. It is specifically understood and
----------------------------------
agreed that any breach of the provisions of Section 7 hereof by the Employee is
likely to result in irreparable injury to the Company and/or its affiliates,
that the remedy at law alone will be an inadequate remedy for such breach and
that, in addition to any other remedy it may have, the Company shall be entitled
to enforce the specific performance of this Agreement by the Employee and to
seek both temporary and permanent injunctive relief (to the extent permitted by
law), without the necessity of posting a bond or proving actual damages. In
case any of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, any such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been limited or modified (consistent with
its general intent) to the extent necessary to make it valid, legal and
enforceable, or if it shall not be possible to so limit or modify such invalid,
illegal or unenforceable provision or part of a provision, this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
9. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
faxed (with transmission acknowledgment received), delivered personally or
mailed by certified or registered mail (return receipt requested) as follows:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
To the Employee: Christopher Sweeney
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
10. Miscellaneous. This Agreement shall be governed by and construed
-------------
under the laws of the State of New Jersey, and shall not be amended, modified or
discharged in whole or in part except by an agreement in writing signed by both
of the parties hereto. The failure of either of the parties to require the
performance of a term or obligation or to exercise any right under this
Agreement or the waiver of any breach hereunder shall not prevent subsequent
enforcement of such term or obligation or exercise of such right or the
enforcement at any time
7
<PAGE>
of any other right hereunder or be deemed a waiver of any subsequent breach of
the provision so breached, or of any other breach hereunder. This Agreement
shall inure to the benefit of, and be binding upon and assignable to, successors
of the Company by way of merger, consolidation or sale and may not be assigned
by the Employee. This Agreement, together with the concurrently executed Non-
Competition Agreement supersedes and terminates all prior understandings and
agreements between the parties (or their predecessors) relating to the subject
matter hereof. For purposes of this Agreement, the term "person" means an
individual, corporation, partnership, association, trust or any unincorporated
organization; a "subsidiary" of a person means any corporation more than 50
percent of whose outstanding voting securities, or any partnership, joint
venture or other entity more than 50 percent of whose total equity interest, is
directly or indirectly owned by such person; and an "affiliate" of a person
shall mean, with respect to a person or entity, any person or entity which
directly or indirectly controls, is controlled by, or is under common control
with such person or entity.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LEPORE & ASSOCIATES, INC.
By:/s/ Patrick G. LePore
--------------------------------
Name: Patrick G. LePore
Title: President
/s/ Christopher Sweeney
-----------------------------------
Christopher Sweeney
9
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 9th day of June, 1997 by and between
Timothy J. McIntyre (the "Employee") and Boron, LePore & Associates, Inc., a
Delaware corporation (the "Company"). In consideration of the mutual promises
and covenants herein contained, the parties hereto agree as follows:
1. Employment.
----------
Subject to the provisions of Section 6, the Company hereby employs the
Employee and the Employee accepts such employment upon the terms and conditions
hereinafter set forth.
2. Terms of Employment.
-------------------
Subject to the provisions of Section 6, the term of the Employee's
employment pursuant to this Agreement shall commence on and as of the date
hereof (the "Effective Date") and shall terminate on the second anniversary of
the Effective Date; provided, however, that this Agreement shall be extended
automatically for successive one-year periods ending on the relevant anniversary
of Effective Date unless either party gives the other notice no later than 270
days prior to the scheduled termination date (i.e., the second anniversary of
the Effective Date or any later anniversary) of his or its determination not to
extend this Agreement, whereupon it shall terminate as of such anniversary date.
The period during which the Employee serves as an employee of the Company in
accordance with and subject to the provisions of this Agreement is referred to
in this Agreement as the "Term of Employment." Notwithstanding the foregoing,
this Agreement is contingent on the permanent relocation of the Employee to the
greater New York Metropolitan area no later than October 1, 1997. If the
relocation does not occur by such date, this Agreement shall be null and void.
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the titles of Senior Vice President - BLP Group
Companies, and President -BLA, reporting to the Chief Executive Officer of the
Company, and shall perform such duties and have such responsibilities and shall
have such additional or alternative duties as may be reasonably determined by
the Chief Executive Officer of the Company, consistent with the general area of
the Employee's experience and skills, (b) upon the request of the Board of
Directors of the Company, shall serve as an officer and/or director of the
Company's subsidiaries, and (c) shall render all services reasonably incident to
the foregoing. The Employee hereby accepts such employment, agrees to serve the
Company in the capacities indicated, and agrees to use his best efforts in, and
shall devote his full working time, attention, skill and energies to, the
advancement of the interests of the Company and its subsidiaries and the
performance of his duties and responsibilities hereunder.
<PAGE>
4. Salary and Bonus.
----------------
(a) During the Term of Employment, the Company shall pay the
Employee a salary at the annual rate of $200,000 per annum (the "Base Salary").
Such Base Salary shall be subject to withholding under applicable law, shall be
pro rated for partial years and shall be payable in periodic installments not
less frequently than monthly in accordance with the Company's usual practice for
executives of the Company as in effect from time to time. The Board of Directors
or Compensation Committee of the Company shall review the Base Salary of the
Employee at least annually, but such salary shall not be set at a rate lower
than $200,000 per annum.
(b) Bonus. During the Term of Employment, the Employee shall be
-----
entitled to participate in such executive bonus program as may be established by
the Company and then in effect, subject to and in accordance with the terms
thereof. Notwithstanding the foregoing, the Employee shall be entitled to a
bonus of an amount not less than $100,000 in respect of the 1997 calendar year,
payable not later than January 15, 1998 and subject to Section 6 hereof.
(c) Relocation Bonus. The Company shall provide the Employee,
----------------
upon his relocation to the greater New York Metropolitan area, a one-time bonus
of $75,000 to cover his relocation expenses, payable upon relocation.
5. Benefits.
--------
(a) During the Term of Employment, the Employee shall be entitled
to participate in any and all medical, pension, dental and life insurance plans
and disability income plans, stock incentive plans, retirement arrangements and
other employment benefits as in effect from time to time for executive officers
of the Company generally. Such participation shall be subject to (i) the terms
of the applicable plan documents (including, as applicable, provisions granting
discretion to the Board of Directors of the Company or any administrative or
other committee provided for therein or contemplated thereby) and (ii) generally
applicable policies of the Company.
(b) The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by the Employee during the Term of
Employment in accordance with the Company's practices for executive officers of
the Company with a similar level of responsibility, as in effect from time to
time; provided, however, that expenses for the New York apartment and the
Employee's present executive assistant shall no longer be paid by the Company
after October 1, 1997.
(c) During the term of Employment, the Employee shall receive
paid vacation annually in accordance with the Company's practices for executive
officers, as in effect from time to time, but in any event not less than four
(4) weeks per calendar year.
2
<PAGE>
(d) Compliance with the provisions of this Section 5 shall in no
way create or be deemed to create any obligation, express or implied, on the
part of the Company or any of its affiliates with respect to the continuation of
any particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof.
6. Termination of Employment of the Employee.
-----------------------------------------
Prior to the expiration of the Term of Employment as provided in
Section 2 hereof, this Agreement may or shall (as applicable) be terminated as
follows:
(a) At any time by the mutual consent of the Employee and the
Company.
(b) At any time for "cause" by the Company upon written notice to
the Employee. For purposes of this Agreement, a termination shall be
for "cause" if:
(i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or
any of its subsidiaries, or shall be convicted by a court of
competent jurisdiction of, or shall plead guilty or nolo contendere
to, any felony or any crime involving moral turpitude; or
(ii) the Employee shall commit a breach of any of the
covenants, terms or provisions hereof, which breach has not been
remedied within thirty (30) days after delivery to the Employee by
the Company of written notice of the facts constituting the breach;
or
(iii) the Employee shall have failed to comply with written
instructions from the Company's Chief Executive Officer, which are
reasonable and consistent with Section 3, or shall have substantially
failed to perform the Employee's duties hereunder for a period of
thirty (30) days after written notice from the Company.
Upon termination for cause as provided in this Section 6(b), (A) all
obligations of the Company under this Agreement shall thereupon immediately
terminate other than any obligation of the Company with respect to earned but
unpaid Base Salary and benefits contemplated hereby to the extent then accrued
or vested, it being understood that upon any such termination (1) the Employee
shall not be entitled to receive any bonus or portion thereof from the Company
or any of its affiliates not then paid whether pursuant to Section 4 or
otherwise or (2) any continuation of benefits except as may be required by law,
(B) the Company shall have any and all rights and remedies under this Agreement
and applicable law.
3
<PAGE>
(c) Upon the death of the Employee or upon the permanent disability (as
defined below) of the Employee continuing for a period in excess of one hundred
eighty (180) consecutive days. Upon any such termination of the Employee's
employment as provided in this Section 6(c), all obligations of the Company
under this Agreement shall thereupon immediately terminate other than (i) any
obligation of the Company with respect to earned but unpaid Base Salary and
benefits contemplated hereby to the extent accrued or vested through the date of
termination and (ii) the obligation of the Company to pay the Employee or his
estate cash bonuses earned pursuant to Section 4(b) and, if earned as of the
date of termination, Section 4(c). As used herein, the terms "permanent
disability" or "permanently disabled" shall mean the inability of the Employee,
by reason of injury, illness or other similar cause, to perform a major part of
his duties and responsibilities in connection with the conduct of the business
and affairs of the Company, as determined reasonably and in good faith by the
Company.
(d) By the Employee on such at least 60 day prior written notice to the
Company. Upon termination by the Employee as provided in this Section 6(d), all
obligations of the Company under this Agreement thereupon immediately shall
terminate other than any obligation of the Company with respect to earned but
unpaid Base Salary and benefits contemplated hereby to the extent accrued or
vested through the date of termination, it being understood that in the event of
such a termination the Employee shall not be entitled to receive any bonus from
the Company or any of its affiliates not then paid whether pursuant to Section 4
or otherwise with respect to any period during or after the Term of Employment
or any continuation of benefits except to the extent required by law.
(e) At any time without "cause" (as defined in Section 6(b)) by
the Company upon written notice to the Employee. In the event of termination of
the Employee by the Company pursuant to this Section 6(e) the Company shall
continue to make Base Salary payments and benefits to the Employee in the manner
contemplated by Section 4(a) from the date of termination through (i) the later
of the second anniversary of the Effective Date hereof or the first anniversary
of the date on which such termination occurs, if such termination occurs on or
before the second anniversary of the Effective Date, or (ii) the first
anniversary of the date on which such termination occurs, if such termination
occurs after the second anniversary of the Effective Date, the Company shall
remain obligated to pay the bonuses contemplated by Section 4(b) and, if earned
as of the date of termination, 4(c), when and as it otherwise would have paid
such bonuses, with such amounts agreed by the parties hereto to be in full
satisfaction, compromise and release of any claims arising out of any
termination of the Employee's employee arising out of any termination of the
Employee's employment pursuant to this Section 6(e) or Section 6(f), and in
either case with such amounts to be contingent upon the Employee's delivery of a
general release upon termination of employment in a form reasonably satisfactory
to the Company, it being understood that no severance benefits shall be provided
unless and until the Employee determines to execute and deliver such release and
that, in the case of a termination pursuant to
4
<PAGE>
Section 6(f), such release shall not cover the matter which is the subject of
the material default giving rise to such termination.
(f) The Employee shall have the right to terminate his employment
hereunder in the event of a material default by the Company in the performance
of its obligations hereunder, after the Employee has given written notice to the
Company specifying such default by the Company and giving the Company a
reasonable time, not less than 30 days, to conform its performance to its
obligations hereunder. The rights and obligations of the parties shall be as set
forth in Section 6(e) in the event of any such termination.
(g) In the event either party gives a notice of non-renewal to be
effective as of any anniversary hereof as contemplated by Section 2, then all
obligations of the parties hereunder shall terminate as of the end of the Term
of Employment except as contemplated by Sections 7 and 8 hereof.
7. Confidentiality; Proprietary Rights.
-----------------------------------
(a) In the course of performing services hereunder, on behalf of
the Company (for purposes of this Section 7 including all predecessors of the
Company) and its affiliates, the Employee has had and from time to time will
have access to confidential records, data, customer lists, trade secrets and
other confidential information owned or used in the course of business by the
Company and its affiliates (the 'Confidential Information"). The Employee agrees
(a) to hold the Confidential Information in strict confidence, (b) not to
disclose the Confidential Information to any person (other than in the regular
business of the Company or its affiliates), and (c) not to use, directly or
indirectly, any of the Confidential Information for any competitive or
commercial purpose other than-on behalf of the Company and its affiliates;
provided, however, that the limitations set forth above shall not apply to any
Confidential Information which (i) is then generally known to the public; (ii)
became or becomes generally known to the public through no fault of the
Employee; or (iii) is disclosed in accordance with an order of a court of
competent jurisdiction or applicable law. Upon the termination of the Employee's
employment with the Company for any reason, all Confidential Information
(including, without limitation, all data, memoranda, customer lists, notes,
programs and other papers and items, and reproductions thereof relating to the
foregoing matters) in the Employee's possession or control, shall be immediately
returned to the Company or the applicable affiliate and remain in its or their
possession.
(b) The Employee recognizes that the Company and its affiliates
possess a proprietary interest in all of the information described in Section
7(a), subject to the provisions and limitations thereof, and have the exclusive
right and privilege to use, protect by copyright, patent or trademark, or
otherwise exploit the processes, ideas and concepts described therein to the
exclusion of the Employee, except as otherwise agreed between the Company and
the Employee in writing. The Employee expressly agrees that any products,
inventions, discoveries or improvements made by the Employee or his agents or
affiliates in the course of
5
<PAGE>
the Employee's employment, including any of the foregoing which is based on or
arises out of the information described in Section 7 (a), shall be the property
of and inure to the exclusive benefit of the Company. The Employee further
agrees that any and all products, inventions, discoveries or improvements
developed by the Employee (whether or not able to be protected by copyright,
patent or trademark) during the course of his employment, or involving the use
of the time, materials or other resources of the Company or any of its
affiliates, shall be promptly disclosed to the Company and shall become the
exclusive property of the Company, and the Employee shall execute and deliver
any and all documents necessary or appropriate to implement the foregoing.
(c) The Employee agrees, while he is employed by the Company, to
offer or otherwise make known or available to it, as directed by the Chief
Executive Officer of the Company and without additional compensation or
consideration, any business prospects, contracts or other business opportunities
that he may discover, find, develop or otherwise have available to him in any
field in which the Company or its affiliates are engaged, and further agrees
that any such prospects, contacts or other business opportunities shall be the
property of the Company.
8. Non-Competition.
---------------
In view of the fact that any activity of the Employee in violation of
the terms hereof would deprive the Company and its subsidiaries), if any, of the
benefits of their bargain under this Agreement, as a material inducement to and
a condition precedent of the Company's payment obligations hereunder and the
other covenants set forth herein, and to preserve the goodwill associated with
the Boron, LePore business, the Employee hereby agrees that during the Term of
Employment and thereafter (a) for a period of one year following the termination
of the Employee's employment with the Company in the event such termination
occurs by or under the circumstances contemplated by Section 6(e) or 6(f) or (b)
for a period ending on the later of the second anniversary of the Effective Date
or the date which is one year following the termination of the Employee's
employment with the Company for any other reason, regardless of the
circumstances of termination, he will not, without the express written consent
of the Company, directly or indirectly, anywhere in the United States, engage in
any activity which is, or participate or invest in, or provide or facilitate the
provision of financing to, or assist (whether as owner, part-owner, shareholder,
partner, director, officer, trustee, employee, agent or consultant, or in any
other capacity), any business, organization or person other than the Company (or
any affiliate of the Company), whose business, activities, products or services
are competitive with any of the business, activities, products or services
conducted or offered by the Company and its subsidiaries at the time of the
termination of Employee's employment with the Company, which business,
activities, products and services shall include in any event peer influence
meetings, telemarketing activities, contract sales and outsource marketing
involving pharmaceutical and healthcare companies. Without implied limitation,
the forgoing covenant shall include hiring or engaging or attempting to hire or
engage for or on behalf of himself or any such competitor, any officer or
employee of the Company or any of its direct and/or indirect subsidiaries,
encouraging for or on behalf of himself or any such
6
<PAGE>
competitor, any such officer or employee to terminate his or her relationship or
employment with the Company or any of its direct or indirect subsidiaries,
soliciting for or on behalf of himself or any such competitor any client of the
Company or any of its direct or indirect subsidiaries and diverting to any
person (as defined in Section 11) any client or business opportunity of the
Company or any of any of its direct or indirect subsidiaries.
Notwithstanding anything herein to the contrary, the Employee may make
passive investments in any enterprise the shares of which are publicly traded if
such investment constitutes less than five (5%) percent of the equity of such
enterprise.
The Employee acknowledges that neither the Employee nor any business entity
controlled by him is a party to any contract, commitment, arrangement or
agreement which could, following the date hereof, restrain or restrict the
Company or any subsidiary or affiliate of the Company from carrying on its
business or restrain or restrict the Employee from performing his obligations
under this Agreement and as of the date of this Agreement the Employee has no
business interests in or relating to the pharmaceutical industry whatsoever
other than his interest in the Company, other than interests in public companies
of less than five (5%) percent.
9. Specific Performance; Severability.
----------------------------------
It is specifically understood and agreed that any breach of the
provisions of Section 7 or 8 hereof by the Employee is likely to result in
irreparable injury to the Company and/or its affiliates, that the remedy at law
alone will be an inadequate remedy for such breach and that, in addition to any
other remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Employee and to seek both temporary and
permanent injunctive relief (to the extent permitted by law), without the
necessity of posting a bond or proving actual damages. In case any of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, any such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to make it valid, legal and enforceable,
or if its shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision or part of a provision, this Agreement shall be
construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
10. Notices.
-------
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deem to have been duly given if faxed (with
transmission acknowledgment received), delivered personally or mailed by
certified or registered mail (return receipt requested) as follows:
7
<PAGE>
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, New Jersey 07410
Attention: Patrick G. LePore, President and CEO
To the Employee: Timothy J. McIntyre
7313 Parliament Drive
Knoxville, Tennessee 37919
or to such other address or fax number of which any party may notify the other
parties as provided above. Notices shall be effective as of the date of such
delivery, mailing or fax.
11. Miscellaneous.
-------------
This Agreement shall be governed by and construed under the laws of
the State of New Jersey, and shall not be amended, modified or discharged in
whole or in part except by an agreement in writing signed by both of the parties
hereto. The failure of either of the parties to require the performance of a
term or obligation or to exercise any right under this Agreement or the waiver
of any breach hereunder shall not prevent subsequent enforcement of such term or
obligation or exercise of such right or the enforcement at any time of any other
right hereunder or be deemed a waiver of any subsequent breach of the provision
so breached, or of any other breach hereunder. This Agreement shall inure to the
benefit of, and be binding upon and assignable to, successors of the Company by
way of merger, consolidation or sale and may not be assigned by the Employee.
This Agreement together with concurrently executed restricted stock and option
agreements supersede, terminate and in all respects replace all prior
understandings and agreements, written or oral between the parties relating to
the subject matter hereof. For purposes of this Agreement, the term "person"
means an individual, corporation, partnership, association, trust or any
unincorporated organization; a "subsidiary" of a person means any corporation
more than 50 percent of whose outstanding voting securities, or any partnership,
joint venture or other entity more than 50 percent of whose total equity
interest, is directly or indirectly owned by such person; and an "affiliate" of
a person shall mean, with respect to a person or entity, any person or entity
which directly or indirectly controls, is controlled by, or is under common
control with such person or entity.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LePORE & ASSOCIATES, INC.
By:
------------------------------------------
Patrick G. LePore, President
---------------------------------------------
TIMOTHY J. McINTYRE
9
<PAGE>
Exhibit 10.8
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT dated this 4th day of December, 1996 by and
between Boron LePore & Associates, Inc., a Delaware corporation (the "Company"),
and Patrick G. LePore (the "Owner"). Reference is made to that certain Stock
Redemption Agreement (the "Redemption Agreement") dated as of December 4, 1996
pursuant to which the Company has agreed to redeem stock held by the Owner in
consideration of a substantial cash payment and to make a substantial deferred
compensation payment, subject to the terms and conditions set forth in the
Redemption Agreement, and that certain Preferred Stock Purchase Agreement dated
as of December 4, 1996 (the "Purchase Agreement"), which contemplates an
investment in the Company by the Investors named therein, the proceeds of which
will be used partially to fund payments to the Owner. Capitalized terms used in
this Agreement and not defined herein shall have the meanings ascribed to them
in the Redemption Agreement.
WITNESSETH
----------
WHEREAS, the Owner has heretofore held a controlling interest in the
Company, will hold an equity interest in the Company and is a senior officer
thereof;
WHEREAS, as a material inducement to the Company to enter into the
Redemption Agreement and the Purchase Agreement and in consideration of the
Company's covenants and agreements contained therein, and of the payment made
pursuant to Section 1(b) hereof, and in further consideration of the covenants
and agreements set forth herein, and in reflection of the fact that investors
are making substantial investments in the Company concurrently herewith in
partial reliance on this Agreement, the Owner has agreed to execute and deliver
this Agreement; and
WHEREAS, the execution and delivery by the Owner of this Agreement is a
condition to the Company's willingness to consummate the transactions described
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Non-Competition. In view of the fact that any activity of the
--------- ---------------
Owner in violation of the terms hereof would deprive the Company and its
subsidiaries (as defined below), if any, and the investors under the Purchase
Agreement of the benefit of their bargains under the Redemption Agreement and
the Purchase Agreement, as a material inducement to and a condition precedent of
the Company's payment obligations hereunder, in consideration of the payment of
the consideration to be paid by the Company pursuant to Section 1(b) below and
the other covenants set forth herein, and to preserve the goodwill associated
with the
<PAGE>
Boron, LePore business, the Owner hereby agrees to the following restrictions on
his activities:
(a) Non-Competition Agreement. The Owner hereby agrees that during
-------------------------
the period commencing on the date hereof and ending on the date which is the
later of (i) the fourth anniversary of the date hereof or (ii) the first
anniversary of the date on which the Owner's employment with the Company and its
subsidiaries terminates for any reason, he will not, without the express written
consent of the Company, directly or indirectly, anywhere in the United States,
engage in any activity which is, or participate or invest in, or provide or
facilitate the provision of financing to, or assist (whether as owner, part-
owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity), any business, organization or person
other than the Company (or any affiliate of the Company), and including
particularly National Medical Discussions, Inc. and affiliates (other than the
wind-up of its affairs) or any such business, organization or person involving,
or which is, a family member of the Owner, whose business, activities, products
or services are competitive with any of the business, activities, products or
services conducted or offered by the Company and its subsidiaries during any
period in which the Owner serves as an officer or employee of the Company or any
of its subsidiaries, which business, activities, products and services shall
include in any event the provision of marketing services to and related
marketing activities involving pharmaceutical companies, as well as healthcare
telemarketing. Without implied limitation, the forgoing covenant shall include
hiring or engaging or attempting to hire or engage for or on behalf of himself
or any such competitor any officer or employee of the Company or any of its
direct and/or indirect subsidiaries, encouraging for or on behalf of himself or
any such competitor any such officer or employee to terminate his or her
relationship or employment with the Company or any of its direct or indirect
subsidiaries, soliciting for or on behalf of himself or any such competitor any
client of the Company or any of its direct or indirect subsidiaries and
diverting to any person (as hereinafter defined) any client or business
opportunity of the Company or any of any of its direct or indirect subsidiaries.
Notwithstanding anything herein to the contrary, the Owner may make passive
investments in any enterprise the shares of which are publicly traded if such
investment constitutes less than five (5) percent of the equity of such
enterprise.
Neither the Owner nor any business entity controlled by him is a party to
any contract, commitment, arrangement or agreement which could, following the
date hereof, restrain or restrict the Company or any subsidiary or affiliate of
the Company from carrying on its business or restrain or restrict the Owner from
performing his obligations under his Employment Agreement with the Company and a
subsidiary of the Company of even date, and as of the date of this Agreement the
Owner has no business interests in or relating to the pharmaceutical industry
whatsoever other than his interest in the Company, other than interests in
public companies of less than five (5) percent.
2
<PAGE>
For purposes of this Agreement, any reference to the subsidiaries of the
Company shall be deemed to include all entities directly or indirectly
controlled by it through an ownership of more than fifty percent (50%) of the
voting interests, and the term "person" shall mean an individual, a corporation,
an association, a partnership, an estate, a trust, and any other entity or
organization.
(b) Non-Competition Payment. In consideration of the execution and
-----------------------
delivery by the Owner of this Agreement, on the date hereof the Company shall
make a cash payment to the Owner in the amount of $10,000.
Section 2. Scope of Agreement. The parties acknowledge that the time,
--------- ------------------
scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that (a)
all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, (b) are given as an integral and essential part of the
transactions contemplated and (c) but for the covenants of the Owner contained
in this Agreement, the Company and investors in the Company would not have
entered into or consummated the transactions contemplated hereby. The Owner has
independently consulted with his counsel and has been advised in all respects
concerning the reasonableness and proprietary of the covenants contained herein,
with specific regard to the business to be conducted by Company and its
subsidiaries.
Section 3. Certain Remedies; Severability. It is specifically understood
--------- ------------------------------
and agreed that any breach of the provisions of this Agreement by the Owner or
any of his affiliates will result in irreparable injury to the Company and its
subsidiaries, that the remedy at law alone will be an inadequate remedy for such
breach and that, in addition to any other remedy it may have, the Company and
its subsidiaries shall be entitled to enforce the specific performance of this
Agreement by the Owner through both temporary and permanent injunctive relief
without the necessity of proving actual damages, but without limitation of their
right to damages and any and all other remedies available to them, it being
understood that injunctive relief is in addition to, and not in lieu of, such
other remedies. In the event that any covenant contained in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to which it
may be enforceable and/or to the maximum extent in all other respects as to
which it may be enforceable, all as determined by such court in such action.
The existence of any claim or cause of action which the Owner may have against
the Company or any of its subsidiaries or affiliates shall not constitute a
defense or bar to the enforcement of any of the provisions of this Agreement.
Section 4. Jurisdiction. The parties hereby irrevocably submit to the
--------- ------------
non-exclusive jurisdiction of the courts of the State of New Jersey to construe
and enforce the covenants contained in this Agreement. In the event that the
courts of any state shall hold such covenants
3
<PAGE>
unenforceable (in whole or in part) by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination
shall not bar or in any way affect the right of the Company or any its
subsidiaries to the relief provided for herein in the courts of any other state
within the geographic scope of such covenants, as to breaches of such covenants
in such other respective states, the above covenants as they relate to each
state being, for this purpose, severable into diverse and independent covenants.
Section 5. Notices. All notices, requests, demands and other
--------- -------
communications hereunder shall be deemed to have been duly given if delivered,
telecopied or mailed by certified or registered mail:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Attn: President
To the Owner: Patrick G. LePore
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
Section 6. Miscellaneous. This Agreement shall be governed by and
--------- --------------
construed under the laws of the State of New Jersey, and shall not be modified
or discharged in whole or in part except by an agreement in writing signed by
the Company and the Owner. The prevailing party in any controversy hereunder
shall be entitled to reasonable attorneys' fees and expenses. The failure of
any of the parties to require the performance of a term or obligation or to
exercise any right under this Agreement or the waiver of any breach hereunder
shall not prevent subsequent enforcement of such term or obligation or exercise
of such right or the enforcement at any time of any other right hereunder or be
deemed a waiver of any subsequent breach of the provision so breached, or of any
other breach hereunder. This Agreement shall inure to the benefit of, and be
binding upon, successors of the Company by way of merger, consolidation or
transfer of substantially all the assets of the Company, and may not be assigned
by the Owner. This Agreement supersedes all prior understandings and agreements
between the parties relating to the subject matter hereof, including without
limitation the Covenant Not to Compete included as part of that certain
Stockholders' Agreement between Gregory Boron and Patrick LePore and Boron,
LePore & Associates, Inc., dated July 1, 1996.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LePORE & ASSOCIATES, INC.
By:/s/ Gregory Boron
-------------------------------------
Name: Gregory Boron
Title: Chief Operating Officer
/s/ Patrick G. LePore
----------------------------------------
Patrick G. LePore
5
<PAGE>
Exhibit 10.9
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT dated this 4th day of December, 1996 by and
between Boron LePore & Associates, Inc., a Delaware corporation (the "Company"),
and Gregory Boron (the "Owner"). Reference is made to that certain Stock
Redemption Agreement (the "Redemption Agreement") dated as of December 4, 1996
pursuant to which the Company has agreed to redeem stock held by the Owner in
consideration of a substantial cash payment and to make a substantial deferred
compensation payment, subject to the terms and conditions set forth in the
Redemption Agreement, and that certain Preferred Stock Purchase Agreement dated
as of December 4, 1996 (the "Purchase Agreement"), which contemplates an
investment in the Company by the Investors named therein, the proceeds of which
will be used partially to fund payments to the Owner. Capitalized terms used in
this Agreement and not defined herein shall have the meanings ascribed to them
in the Redemption Agreement.
WITNESSETH
----------
WHEREAS, the Owner has heretofore held a controlling interest in the
Company, will hold an equity interest in the Company and is a senior officer
thereof;
WHEREAS, as a material inducement to the Company to enter into the
Redemption Agreement and the Purchase Agreement and in consideration of the
Company's covenants and agreements contained therein, and of the payment made
pursuant to Section 1(b) hereof, and in further consideration of the covenants
and agreements set forth herein, and in reflection of the fact that investors
are making substantial investments in the Company concurrently herewith in
partial reliance on this Agreement, the Owner has agreed to execute and deliver
this Agreement; and
WHEREAS, the execution and delivery by the Owner of this Agreement is a
condition to the Company's willingness to consummate the transactions described
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Non-Competition. In view of the fact that any activity of the
--------- ---------------
Owner in violation of the terms hereof would deprive the Company and its
subsidiaries (as defined below), if any, and the investors under the Purchase
Agreement of the benefit of their bargains under the Redemption Agreement and
the Purchase Agreement, as a material inducement to and a condition precedent of
the Company's payment obligations hereunder, in consideration of the payment of
the consideration to be paid by the Company pursuant to Section 1(b) below and
the other covenants set forth herein, and to preserve the goodwill associated
with the
<PAGE>
Boron, LePore business, the Owner hereby agrees to the following restrictions on
his activities:
(a) Non-Competition Agreement. The Owner hereby agrees that during
-------------------------
the period commencing on the date hereof and ending on the date which is the
later of (i) the fourth anniversary of the date hereof or (ii) the first
anniversary of the date on which the Owner's employment with the Company and its
subsidiaries terminates for any reason, he will not, without the express written
consent of the Company, directly or indirectly, anywhere in the United States,
engage in any activity which is, or participate or invest in, or provide or
facilitate the provision of financing to, or assist (whether as owner, part-
owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity), any business, organization or person
other than the Company (or any affiliate of the Company), and including
particularly National Medical Discussions, Inc. and affiliates (other than the
wind-up of its affairs) or any such business, organization or person involving,
or which is, a family member of the Owner, whose business, activities, products
or services are competitive with any of the business, activities, products or
services conducted or offered by the Company and its subsidiaries during any
period in which the Owner serves as an officer or employee of the Company or any
of its subsidiaries, which business, activities, products and services shall
include in any event the provision of marketing services to and related
marketing activities involving pharmaceutical companies, as well as healthcare
telemarketing. Without implied limitation, the forgoing covenant shall include
hiring or engaging or attempting to hire or engage for or on behalf of himself
or any such competitor any officer or employee of the Company or any of its
direct and/or indirect subsidiaries, encouraging for or on behalf of himself or
any such competitor any such officer or employee to terminate his or her
relationship or employment with the Company or any of its direct or indirect
subsidiaries, soliciting for or on behalf of himself or any such competitor any
client of the Company or any of its direct or indirect subsidiaries and
diverting to any person (as hereinafter defined) any client or business
opportunity of the Company or any of any of its direct or indirect subsidiaries.
Notwithstanding anything herein to the contrary, the Owner may make passive
investments in any enterprise the shares of which are publicly traded if such
investment constitutes less than five (5) percent of the equity of such
enterprise.
Neither the Owner nor any business entity controlled by him is a party to
any contract, commitment, arrangement or agreement which could, following the
date hereof, restrain or restrict the Company or any subsidiary or affiliate of
the Company from carrying on its business or restrain or restrict the Owner from
performing his obligations under his Employment Agreement with the Company and a
subsidiary of the Company of even date, and as of the date of this Agreement the
Owner has no business interests in or relating to the pharmaceutical industry
whatsoever other than his interest in the Company, other than interests in
public companies of less than five (5) percent.
<PAGE>
For purposes of this Agreement, any reference to the subsidiaries of the
Company shall be deemed to include all entities directly or indirectly
controlled by it through an ownership of more than fifty percent (50%) of the
voting interests, and the term "person" shall mean an individual, a corporation,
an association, a partnership, an estate, a trust, and any other entity or
organization.
(b) Non-Competition Payment. In consideration of the execution and
-----------------------
delivery by the Owner of this Agreement, on the date hereof the Company shall
make a cash payment to the Owner in the amount of $10,000.
Section 2. Scope of Agreement. The parties acknowledge that the time,
--------- ------------------
scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that (a)
all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, (b) are given as an integral and essential part of the
transactions contemplated and (c) but for the covenants of the Owner contained
in this Agreement, the Company and investors in the Company would not have
entered into or consummated the transactions contemplated hereby. The Owner has
independently consulted with his counsel and has been advised in all respects
concerning the reasonableness and proprietary of the covenants contained herein,
with specific regard to the business to be conducted by Company and its
subsidiaries.
Section 3. Certain Remedies; Severability. It is specifically understood
--------- ------------------------------
and agreed that any breach of the provisions of this Agreement by the Owner or
any of his affiliates will result in irreparable injury to the Company and its
subsidiaries, that the remedy at law alone will be an inadequate remedy for such
breach and that, in addition to any other remedy it may have, the Company and
its subsidiaries shall be entitled to enforce the specific performance of this
Agreement by the Owner through both temporary and permanent injunctive relief
without the necessity of proving actual damages, but without limitation of their
right to damages and any and all other remedies available to them, it being
understood that injunctive relief is in addition to, and not in lieu of, such
other remedies. In the event that any covenant contained in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to which it
may be enforceable and/or to the maximum extent in all other respects as to
which it may be enforceable, all as determined by such court in such action.
The existence of any claim or cause of action which the Owner may have against
the Company or any of its subsidiaries or affiliates shall not constitute a
defense or bar to the enforcement of any of the provisions of this Agreement.
Section 4. Jurisdiction. The parties hereby irrevocably submit to the
--------- ------------
non-exclusive jurisdiction of the courts of the State of New Jersey to construe
and enforce the covenants contained in this Agreement. In the event that the
courts of any state shall hold such covenants
<PAGE>
unenforceable (in whole or in part) by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination
shall not bar or in any way affect the right of the Company or any its
subsidiaries to the relief provided for herein in the courts of any other state
within the geographic scope of such covenants, as to breaches of such covenants
in such other respective states, the above covenants as they relate to each
state being, for this purpose, severable into diverse and independent covenants.
Section 5. Notices. All notices, requests, demands and other
--------- -------
communications hereunder shall be deemed to have been duly given if delivered,
telecopied or mailed by certified or registered mail:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Attn: President
To the Owner: Gregory Boron
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
Section 6. Miscellaneous. This Agreement shall be governed by and
--------- --------------
construed under the laws of the State of New Jersey, and shall not be modified
or discharged in whole or in part except by an agreement in writing signed by
the Company and the Owner. The prevailing party in any controversy hereunder
shall be entitled to reasonable attorneys' fees and expenses. The failure of
any of the parties to require the performance of a term or obligation or to
exercise any right under this Agreement or the waiver of any breach hereunder
shall not prevent subsequent enforcement of such term or obligation or exercise
of such right or the enforcement at any time of any other right hereunder or be
deemed a waiver of any subsequent breach of the provision so breached, or of any
other breach hereunder. This Agreement shall inure to the benefit of, and be
binding upon, successors of the Company by way of merger, consolidation or
transfer of substantially all the assets of the Company, and may not be assigned
by the Owner. This Agreement supersedes all prior understandings and agreements
between the parties relating to the subject matter hereof, including without
limitation the Covenant Not to Compete included as part of that certain
Stockholders' Agreement between Gregory Boron and Patrick LePore and Boron,
LePore & Associates, Inc., dated July 1, 1996.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
-------------------------
Name: Patrick G. LePore
Title: President
/s/ Gregory Boron
-----------------------------
Gregory Boron
<PAGE>
Exhibit 10.10
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT dated this 4th day of December, 1996 by and
between Boron LePore & Associates, Inc., a Delaware corporation (the "Company"),
and Christopher Sweeney (the "Owner"). Reference is made to that certain Stock
Redemption Agreement (the "Redemption Agreement") dated as of December 4, 1996
and that certain Stock Purchase Agreement dated as of December 4, 1996 (the
"Stock Purchase Agreement") pursuant to which the Company has agreed to make a
substantial deferred compensation payment and sell shares of its Common Stock to
the Owner, subject to the terms and conditions set forth in the Redemption
Agreement, and that certain Preferred Stock Purchase Agreement dated as of
December 4, 1996 (the "Purchase Agreement"), which contemplates an investment in
the Company by the Investors named therein, the proceeds of which will be used
partially to fund payments to the Owner. Capitalized terms used in this
Agreement and not defined herein shall have the meanings ascribed to them in the
Redemption Agreement.
WITNESSETH
----------
WHEREAS, the Owner will hold an equity interest in the Company and is a
senior officer thereof;
WHEREAS, as a material inducement to the Company to enter into the
Redemption Agreement, the Stock Purchase Agreement and the Purchase Agreement
and in consideration of the Company's covenants and agreements contained
therein, and of the payment made pursuant to Section 1(b) hereof, and in further
consideration of the covenants and agreements set forth herein, and in
reflection of the fact that investors are making substantial investments in the
Company concurrently herewith in partial reliance on this Agreement, the Owner
has agreed to execute and deliver this Agreement; and
WHEREAS, the execution and delivery by the Owner of this Agreement is a
condition to the Company's willingness to consummate the transactions described
herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Non-Competition. In view of the fact that any activity of the
--------- ---------------
Owner in violation of the terms hereof would deprive the Company and its
subsidiaries (as defined below), if any, and the investors under the Purchase
Agreement of the benefit of their bargains under the Redemption Agreement, and
the Stock Purchase Agreement and the Purchase Agreement, as a material
inducement to and a condition precedent of the Company's payment obligations
hereunder, in consideration of the payment of the consideration to be paid by
the Company pursuant to Section 1(b) below and the other covenants set forth
herein, and to
<PAGE>
preserve the goodwill associated with the Boron, LePore business, the Owner
hereby agrees to the following restrictions on his activities:
(a) Non-Competition Agreement. The Owner hereby agrees that during the
-------------------------
period commencing on the date hereof and ending on the date which is the later
of (i) the fourth anniversary of the date hereof or (ii) the first anniversary
of the date on which the Owner's employment with the Company and its
subsidiaries terminates for any reason, he will not, without the express written
consent of the Company, directly or indirectly, anywhere in the United States,
engage in any activity which is, or participate or invest in, or provide or
facilitate the provision of financing to, or assist (whether as owner, part-
owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity), any business, organization or person
other than the Company (or any affiliate of the Company), and including
particularly National Medical Discussions, Inc. and affiliates (other than the
wind-up of its affairs) or any such business, organization or person involving,
or which is, a family member of the Owner, whose business, activities, products
or services are competitive with any of the business, activities, products or
services conducted or offered by the Company and its subsidiaries during any
period in which the Owner serves as an officer or employee of the Company or any
of its subsidiaries, which business, activities, products and services shall
include in any event the provision of marketing services to and related
marketing activities involving pharmaceutical companies, as well as healthcare
telemarketing. Without implied limitation, the forgoing covenant shall include
hiring or engaging or attempting to hire or engage for or on behalf of himself
or any such competitor any officer or employee of the Company or any of its
direct and/or indirect subsidiaries, encouraging for or on behalf of himself or
any such competitor any such officer or employee to terminate his or her
relationship or employment with the Company or any of its direct or indirect
subsidiaries, soliciting for or on behalf of himself or any such competitor any
client of the Company or any of its direct or indirect subsidiaries and
diverting to any person (as hereinafter defined) any client or business
opportunity of the Company or any of any of its direct or indirect subsidiaries.
Notwithstanding anything herein to the contrary, the Owner may make passive
investments in any enterprise the shares of which are publicly traded if such
investment constitutes less than five (5) percent of the equity of such
enterprise.
Neither the Owner nor any business entity controlled by him is a party to
any contract, commitment, arrangement or agreement which could, following the
date hereof, restrain or restrict the Company or any subsidiary or affiliate of
the Company from carrying on its business or restrain or restrict the Owner from
performing his obligations under his Employment Agreement with the Company and a
subsidiary of the Company of even date, and as of the date of this Agreement the
Owner has no business interests in or relating to the pharmaceutical industry
whatsoever other than his interest in the Company, other than interests in
public companies of less than five (5) percent.
2
<PAGE>
For purposes of this Agreement, any reference to the subsidiaries of the
Company shall be deemed to include all entities directly or indirectly
controlled by it through an ownership of more than fifty percent (50%) of the
voting interests, and the term "person" shall mean an individual, a corporation,
an association, a partnership, an estate, a trust, and any other entity or
organization.
(b) Non-Competition Payment. In consideration of the execution and
-----------------------
delivery by the Owner of this Agreement, on the date hereof the Company shall
make a cash payment to the Owner in the amount of $10,000.
Section 2. Scope of Agreement. The parties acknowledge that the time,
--------- ------------------
scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that (a)
all such provisions are reasonable under the circumstances of the transactions
contemplated hereby, (b) are given as an integral and essential part of the
transactions contemplated and (c) but for the covenants of the Owner contained
in this Agreement, the Company and investors in the Company would not have
entered into or consummated the transactions contemplated hereby. The Owner has
independently consulted with his counsel and has been advised in all respects
concerning the reasonableness and proprietary of the covenants contained herein,
with specific regard to the business to be conducted by Company and its
subsidiaries.
Section 3. Certain Remedies; Severability. It is specifically understood
--------- ------------------------------
and agreed that any breach of the provisions of this Agreement by the Owner or
any of his affiliates will result in irreparable injury to the Company and its
subsidiaries, that the remedy at law alone will be an inadequate remedy for such
breach and that, in addition to any other remedy it may have, the Company and
its subsidiaries shall be entitled to enforce the specific performance of this
Agreement by the Owner through both temporary and permanent injunctive relief
without the necessity of proving actual damages, but without limitation of their
right to damages and any and all other remedies available to them, it being
understood that injunctive relief is in addition to, and not in lieu of, such
other remedies. In the event that any covenant contained in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to which it
may be enforceable and/or to the maximum extent in all other respects as to
which it may be enforceable, all as determined by such court in such action.
The existence of any claim or cause of action which the Owner may have against
the Company or any of its subsidiaries or affiliates shall not constitute a
defense or bar to the enforcement of any of the provisions of this Agreement.
Section 4. Jurisdiction. The parties hereby irrevocably submit to the
--------- ------------
non-exclusive jurisdiction of the courts of the State of New Jersey to construe
and enforce the covenants contained in this Agreement. In the event that the
courts of any state shall hold such covenants
3
<PAGE>
unenforceable (in whole or in part) by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination
shall not bar or in any way affect the right of the Company or any its
subsidiaries to the relief provided for herein in the courts of any other state
within the geographic scope of such covenants, as to breaches of such covenants
in such other respective states, the above covenants as they relate to each
state being, for this purpose, severable into diverse and independent covenants.
Section 5. Notices. All notices, requests, demands and other
--------- -------
communications hereunder shall be deemed to have been duly given if delivered,
telecopied or mailed by certified or registered mail:
To the Company: Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Attn: President
To the Owner: Christopher Sweeney
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
Section 6. Miscellaneous. This Agreement shall be governed by and
--------- --------------
construed under the laws of the State of New Jersey, and shall not be modified
or discharged in whole or in part except by an agreement in writing signed by
the Company and the Owner. The prevailing party in any controversy hereunder
shall be entitled to reasonable attorneys' fees and expenses. The failure of
any of the parties to require the performance of a term or obligation or to
exercise any right under this Agreement or the waiver of any breach hereunder
shall not prevent subsequent enforcement of such term or obligation or exercise
of such right or the enforcement at any time of any other right hereunder or be
deemed a waiver of any subsequent breach of the provision so breached, or of any
other breach hereunder. This Agreement shall inure to the benefit of, and be
binding upon, successors of the Company by way of merger, consolidation or
transfer of substantially all the assets of the Company, and may not be assigned
by the Owner. This Agreement supersedes all prior understandings and agreements
between the parties relating to the subject matter hereof.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
BORON, LePORE & ASSOCIATES, INC.
By:/s/ Patrick G. LePore
-----------------------------------
Name: Patrick G. LePore
Title: President
/s/ Christopher Sweeney
--------------------------------------
Christopher Sweeney
5
<PAGE>
Exhibit 10.12
BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
----------------------------------------
The name of the plan is the Boron, LePore & Associates, Inc. 1996 Stock
Option and Grant Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, directors, consultants, advisors and other key
persons of Boron, LePore & Associates, Inc. (the "Company") and its Subsidiaries
(as defined below) upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" has the meaning specified in Section 2.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 16.
"Fair Market Value" of the Stock on any given date means (i) if the Stock
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the Fair Market Value on any given date
shall not be less than the average of the highest bid and lowest asked prices of
the Stock reported for such date or, if no bid and asked prices were reported
for such date, for the last day preceding such date for which such prices were
reported; or (ii) if the Stock is admitted to trading on a national securities
exchange or the NASDAQ National Market System, the Fair Market Value on any date
shall not be less than the closing price reported for the Stock on such exchange
or system for such date or, if no sales were reported for such date, for the
last date preceding such date for which a sale was
<PAGE>
reported; or (iii) if the Stock is not publicly traded on a securities exchange
or traded in the over-the-counter market or, if traded or quoted, there are no
transactions or quotations within the last ten trading days or trading has been
halted for extraordinary reasons, the Fair Market Value on any given date shall
be determined in good faith by the Committee with reference to the rules and
principles of valuation set forth in Section 20.2031-2 of the Treasury
Regulations.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is neither an
employee or officer of the Company or any Subsidiary.
"Initial Public Offering" means the first underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Stock to the public.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means any Award granted pursuant to Section 9.
"Restricted Stock Award" means any Award granted pursuant to Section 7.
"Stock" means the Common Stock, par value $.01 per share, of the Company or
(nonvoting) Class A Common stock, par value $.01 per share, of the Company as
determined by the Committee in connection with each grant hereunder, subject to
adjustments pursuant to Section 3.
"Stock Appreciation Rights" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 8.
2
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SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
------------------------------------------------------------------
AND DETERMINE AWARDS
--------------------
(a) Committee. The Plan shall be administered by the Board of Directors
---------
of the Company, or at the discretion of the Board, by a committee of the Board
consisting of not less than two Independent Directors. On and after the date the
Company becomes subject to the Act, each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3(a)(3). On and after the
date the Plan becomes subject to Section 162(m) of the Code, each member of the
Committee shall be an "Outside Director" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder. All references herein to
the Committee shall be deemed to refer to the entity then responsible for
administration of the Plan at the relevant time (i.e., either the Board of
Directors or a committee of the Board, as applicable).
(b) Powers of Committee. The Committee shall have the power and authority
-------------------
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, employees, Independent Directors,
consultants, advisers and key persons of the Company and its Subsidiaries
to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Unrestricted Stock Awards,
Performance Share Awards and Dividend Equivalent Rights, or any combination
of the foregoing, granted to any one or more participants;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all
or any portion of any Award and/or to include provisions in Awards
providing for such acceleration;
(vi) to impose any limitations on Awards granted under the Plan,
including limitations on transfers, repurchase provisions and the like and
to exercise repurchase rights or obligations;
(vii) subject to the provisions of Section 5(a)(iii), to extend at
any time the period in which Stock Options may be exercised;
3
<PAGE>
(viii) to determine at any time whether, to what extent, and under
what circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and
(ix) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Awards. The Committee, in its
---------------------------------------
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Committee's authority and duties with respect to Awards, including
the granting thereof, to individuals who are not subject to the reporting and
other provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. The Committee may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent with the
terms of the Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
----------------------------------------------------
(a) Stock Issuable. The maximum number of shares of Stock reserved and
--------------
available for issuance under the Plan shall be 600,000 shares of Common Stock
and 2,000,000 shares of Class A Common Stock (or following any conversion of
Class A Common Stock into Common Stock under the terms of the Company's charter,
2,600,000 shares of Common Stock). For purposes of the foregoing limitations,
the shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall limitation,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award. The shares available for issuance under the Plan may be
authorized but unissued shares of Stock or shares of Stock reacquired by the
Company. Upon the exercise of a Stock Appreciation Right settled in shares of
Stock, the right to purchase an equal number of shares of Stock covered by a
related Stock Option, if any, shall be deemed to have been surrendered and will
no longer be exercisable, and said number of shares of Stock shall no longer be
available under the Plan.
(b) Recapitalizations. If, through or as a result of any merger,
-----------------
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization,
4
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reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, the outstanding shares of Stock are increased or decreased
or are exchanged for a different number or kind of shares or other securities of
the Company or any successor company, or additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options, Stock Appreciation Rights or other Awards that can be granted
to any one individual participant, (iii) the number and kind of shares or other
securities subject to any then outstanding Awards under the Plan, and (iv) the
price for each share subject to any then outstanding Stock Options, Stock
Appreciation Rights or other Awards under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
shares) as to which such Stock Options and Stock Appreciation Rights remain
exercisable and the repurchase price for shares subject to repurchase. The
adjustment by the Committee shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Committee in its discretion may make a cash payment in
lieu of fractional shares.
(c) Mergers and Other Transactions. In the case of (i) the dissolution or
------------------------------
liquidation of the Company, (ii) a merger, reorganization or consolidation in
which the Company is acquired by another person or entity (other than a holding
company formed by the Company), (iii) the sale of all or substantially all of
the assets of the Company to an unrelated person or entity, or (iv) the sale of
all of the Stock of the Company to an unrelated person or entity (in each case,
a "Transaction"), all outstanding Options and Stock Appreciation Rights held by
participants, to the extent not fully vested and exercisable, shall not become
fully vested and exercisable, except as the Committee otherwise determines.
Upon the effectiveness of the Transaction, the Plan and all Stock Appreciation
Rights, Dividend Equivalent Rights and Performance Share Awards ("Contractual
Awards") granted hereunder shall terminate, unless provision is made in
connection with the Transaction for the assumption of Contractual Awards
heretofore granted, or the substitution of such Contractual Awards of new
Contractual Awards of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate, the per
share exercise prices, as provided in Section 3(b) above. In the event of such
termination, each optionee shall be permitted to exercise for a period of at
least 15 days prior to the date of such termination all outstanding Options and
Stock Appreciation Rights held by such optionee which are then exercisable. The
treatment of Restricted Stock Awards and Unrestricted Stock Awards in connection
with any such transaction shall be as specified in the relevant agreement
relating to such Award.
(d) Substitute Awards. The Committee may grant Awards under the Plan in
-----------------
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee
5
<PAGE>
may direct that the substitute awards be granted on such terms and conditions as
the Committee considers appropriate in the circumstances.
SECTION 4. ELIGIBILITY
-----------
Participants in the Plan will be such officers and other employees,
Independent Directors, consultants, advisors and other key persons of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries as are
selected from time to time by the Committee, in its sole discretion.
SECTION 5. STOCK OPTIONS
-------------
Any Stock Option granted under the Plan shall be pursuant to a stock option
agreement which shall be in such form as the Committee may from time to time
approve. Option agreements need not be identical.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. Non-Qualified Stock Options
may be granted to officers, employees, Independent Directors, advisors,
consultants and other key persons of the Company and its Subsidiaries. To the
extent that any Option does not qualify as an Incentive Stock Option, it shall
be deemed a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after December 3,
2006.
(a) Terms of Stock Options. Stock Options granted under the Plan shall be
----------------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock
--------------
covered by a Stock Option shall be determined by the Committee at the time of
grant but shall not be less than 100% of the Fair Market Value [on the date of
grant] in the case of Incentive Stock Options. If an employee owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive Stock
Option shall be not less than 110% of the Fair Market Value on the grant date.
(ii) Grant of Discount Options in Lieu of Cash Compensation. Upon
------------------------------------------------------
the request of a participant and with the consent of the Committee, such
participant may elect each calendar year to receive a Non-Qualified Stock Option
in lieu of any cash
6
<PAGE>
bonus or other compensation to which he may become entitled during the following
calendar year, but only if such participant makes an irrevocable election to
waive receipt of all or a portion of such cash compensation. Such election
shall be made on or before the date set by the Committee which date shall be no
later than 15 days (or such shorter period permitted by the Committee) preceding
January 1 of the calendar year for which the cash compensation would otherwise
be paid. A Non-Qualified Stock Option shall be granted to each participant who
made such an irrevocable election on the date the waived cash compensation would
otherwise be paid. The exercise price per share shall be determined by the
Committee. The number of shares of Stock subject to the Stock Option shall be
determined by dividing the amount of the waived cash compensation by the
difference between the Fair Market Value of the Stock on the date the Stock
Option is granted and the exercise price per share of the Stock Option. The
Stock Option shall be granted for a whole number of shares so determined; the
value of any fractional share shall be paid in cash.
(iii) Option Term. The term of each Stock Option shall be fixed by the
-----------
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(iv) Exercisability; Rights of a Stockholder. Stock Options shall become
---------------------------------------
vested and exercisable at such time or times, whether or not in installments, as
shall be determined by the Committee at or after the grant date; provided,
however, that Stock Options granted in lieu of cash compensation shall be
exercisable in full as of the grant date. The Committee may at any time
accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.
(v) Method of Exercise. Stock Options may be exercised in whole or in
------------------
part, by giving written notice of exercise to the Company, specifying the number
of shares to be purchased. Payment of the purchase price may be made by one or
more of the following methods; provided, however, that the methods set forth in
subsections (B) and (C) below shall become available only after the closing of
the Initial Public Offering:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the optionee
7
<PAGE>
free of such restrictions for at least six months, if permitted by the
Committee in its discretion. Such surrendered shares shall be valued
at Fair Market Value on the exercise date;
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and
acceptable to the Company to pay the purchase price; provided that in
the event the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure; or
(D) By the optionee delivering to the Company a promissory note
if the Board has authorized the loan of funds to the optionee for the
purpose of enabling or assisting the optionee to effect the exercise
of his Stock Option; provided that at least so much of the exercise
price as represents the par value of the Stock shall be paid other
than with a promissory note.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(vi) Termination. Unless otherwise provided in the option agreement
-----------
or determined by the Committee, upon the optionee's termination of
employment (or other business relationship) with the Company and its
Subsidiaries, the optionee's rights in his Stock Options shall
automatically terminate.
(vii) Annual Limit on Incentive Stock Options. To the extent
---------------------------------------
required for "incentive stock option" treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the time of grant)
of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its parent and
subsidiary corporations become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. To the extent
that any Stock Option exceeds this limit, it shall constitute a Non-
Qualified Stock Option.
(b) Reload Options. At the discretion of the Committee, Options granted
--------------
under the Plan may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(v)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
8
<PAGE>
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.
(c) Non-transferability of Options. No Stock Option shall be transferable
------------------------------
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee
may provide in an option agreement that the optionee may transfer, without
consideration for the transfer, his Non-Qualified Stock Options to members of
his immediate family, to trusts for the benefit of such family members, to
partnerships in which such family members are the only partners; or to
charitable organizations; provided, however, that the transferee agrees in
writing to be bound by the terms and conditions of this Plan and the applicable
Option Agreement.
SECTION 6. STOCK APPRECIATION RIGHTS.
-------------------------
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
-----------------------------------
Award entitling the recipient to receive an amount in cash or shares of Stock or
a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price per Stock
Appreciation Right set by the Committee at the time of grant, which price shall
determined by the Committee in its sole discretion (or over the option exercise
price per share, if the Stock Appreciation Right was granted in tandem with a
Stock Option) multiplied by the number of shares of Stock with respect to which
the Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
-----------------------------------------------
Rights may be granted by the Committee in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem
with an Incentive Stock Option, such Stock Appreciation Right may be granted
only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
-------------------------------------------------
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
9
<PAGE>
(i) Stock Appreciation Rights granted in tandem with Options shall
be exercisable at such time or times and to the extent that the related
Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.
SECTION 7. RESTRICTED STOCK AWARDS
-----------------------
(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an
---------------------------------
Award entitling the recipient to acquire, at par value or such other purchase
price determined by the Committee, shares of Stock subject to such restrictions
and conditions as the Committee may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives.
(b) Rights as a Stockholder. Upon execution of a written instrument
-----------------------
setting forth the Restricted Stock Award and paying any applicable purchase
price, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the Committee
shall otherwise determine, certificates evidencing the Restricted Stock shall
remain in the possession of the Company until such Restricted Stock is vested as
provided in Section 7(d) below.
(c) Restrictions. Restricted Stock may not be sold, assigned,
------------
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award. If a participant's employment (or other business
relationship) with the Company and its Subsidiaries terminates under the
conditions specified in the relevant instrument relating to the Award, or upon
such other event or events as may be stated in the instrument evidencing the
Award, the Company or its assigns shall have the right or shall agree, as may be
specified in the relevant instrument, to repurchase some or all of the shares of
Stock subject to the Award at such purchase price as is set forth in such
instrument.
(d) Vesting of Restricted Stock. The Committee at the time of grant shall
---------------------------
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which Restricted Stock shall become
vested, subject to such further rights of the Company or its assigns as may be
specified in the instrument evidencing the Restricted Stock Award.
(e) Waiver, Deferral and Reinvestment of Dividends. The written
----------------------------------------------
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
10
<PAGE>
SECTION 8. UNRESTRICTED STOCK AWARDS
-------------------------
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
-----------------------------------
discretion, grant (or sell at a purchase price determined by the Committee) an
Unrestricted Stock Award to any participant, pursuant to which such participant
may receive shares of Stock free of any vesting restrictions ("Unrestricted
Stock") under the Plan. Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past services or other valid
consideration, or in lieu of any cash compensation due to such individual.
(b) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon
---------------------------------------------------------------
the request of a participant and with the consent of the Committee, each such
participant may, pursuant to an advance written election delivered to the
Company no later than the date specified by the Committee, receive a portion of
the cash compensation otherwise due to such participant in the form of shares of
Unrestricted Stock either currently or on a deferred basis.
(c) Restrictions on Transfers. The right to receive shares of
-------------------------
Unrestricted Stock on a deferred basis may not be sold, assigned, transferred,
pledged or otherwise encumbered, other than by will or the laws of descent and
distribution.
SECTION 9. PERFORMANCE SHARE AWARDS
------------------------
(a) Nature of Performance Share Awards. A Performance Share Award is an
----------------------------------
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Committee in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Committee may rely on the performance goals and
other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights
------------------------
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance Share
-----------------------
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).
11
<PAGE>
(d) Termination. Except as may otherwise be provided by the Committee at
-----------
any time, a participant's rights in all Performance Share Awards shall
automatically terminate upon the participant's termination of employment (or
business relationship) with the Company and its Subsidiaries for any reason.
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
-------------------------
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 13, amend any or all of the goals, restrictions or conditions
imposed under any Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
--------------------------
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
--------------------------
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A
Dividend Equivalent Right may be granted as a component of another Award or as a
freestanding award. The terms and conditions of Dividend Equivalent Rights
shall be specified in the grant. Dividend equivalents credited to the holder of
a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in
--------------------
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
SECTION 11. TAX WITHHOLDING
---------------
(a) Payment by Participant. Each participant shall, no later than the
----------------------
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
12
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(b) Payment in Stock. Subject to approval by the Committee, a participant
----------------
may elect to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to any Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of Stock
owned by the participant with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
--------------------------------
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to re-
employment is guaranteed either by a statute or by contract or under the policy
pursuant to which the leave of absence was granted or if the Committee otherwise
so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
--------------------------
The Board may, at any time, amend or discontinue the Plan and the Committee
may, at any time, amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan), but
such price, if any, must satisfy the requirements which would apply to the
substitute or amended Award if it were then initially granted under this Plan
for the purpose of satisfying changes in law or for any other lawful purpose,
but no such action shall adversely affect rights under any outstanding Award
without the holder's consent. If and to the extent determined by the Committee
to be required by the Act to ensure that Incentive Stock Options granted under
the Plan are qualified under Section 422 of the Code, Plan amendments shall be
subject to approval by the Company stockholders who are eligible to vote at a
meeting of stockholders.
SECTION 14. STATUS OF PLAN
--------------
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards
13
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hereunder, provided that the existence of such trusts or other arrangements is
consistent with the foregoing sentence.
SECTION 15. GENERAL PROVISIONS
------------------
(a) No Distribution; Compliance with Legal Requirements. The Committee
---------------------------------------------------
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.
(b) Other Compensation Arrangements; No Employment Rights. Nothing
-----------------------------------------------------
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 16. EFFECTIVE DATE OF PLAN
----------------------
This Plan shall become effective upon approval by the holders of a majority
of the shares of Stock of the Company present or represented and entitled to
vote at a meeting of stockholders. Subject to such approval by the stockholders
and to the requirement that no Stock may be issued hereunder prior to such
approval, Stock Options and other Awards may be granted hereunder on and after
adoption of this Plan by the Board.
SECTION 17. GOVERNING LAW
-------------
This Plan shall be governed by Delaware law except to the extent such law
is preempted by federal law.
Adopted and Effective: December 4, 1996
14
<PAGE>
Exhibit 10.14
INDEMNIFICATION AGREEMENT
This Indemnification Agreement made and entered into this 4th day of
December, 1996 ("Agreement"), by and between Boron, LePore & Associates, Inc., a
Delaware corporation (together with any successor or successors thereto, the
"Company") and Jacqueline C. Morby ("Indemnitee"):
WHEREAS, it is essential to the Company that it be able to retain and
attract as directors the most capable persons available;
WHEREAS, increased corporate litigation has subjected directors to
litigation risks and expenses and the limitations on the availability of
directors and officers liability insurance have made it increasingly difficult
for the Company to attract and retain such persons;
WHEREAS, its by-laws permit the Company to enter into indemnification
arrangements and agreements;
WHEREAS, the Company desires to provide Indemnitee with specific
contractual assurance of Indemnitee's rights to full indemnification against
litigation risks and expenses (regardless, among other things, of any amendment
to or revocation of the Company's by-laws or any change in the ownership of the
Company or the composition of its Board of Directors), which indemnification is
intended to be greater than that which is afforded by the Company's certificate
of incorporation, by-laws and, to the extent insurance is available, the
coverage of Indemnitee under the Company's directors and officers liability
insurance policies; and
WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing in Indemnitee's position as a director of the Company:
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
(a) "Corporate Status" describes the status of a person who is
serving or has served (i) as a director of the Company, (ii)
in any capacity with respect to any employee benefit plan of
the Company, or (iii) as a director, partner, trustee,
officer, employee, or agent of any other Entity at the request
of the Company.
(b) "Entity" shall mean any corporation, partnership, joint
venture, trust, foundation, association, organization or other
legal entity and any group or division of the Company or any
of its subsidiaries.
(c) "Expenses" shall mean all reasonable fees, costs and expenses
incurred in connection with any Proceeding (as defined below),
including, without limitation, attorneys' fees, disbursements and
(including, without
1
<PAGE>
limitation, any such fees, disbursements and retainers incurred by
Indemnitee pursuant to Section 10 of this Agreement), fees and
disbursements of expert witnesses, private investigators and
professional advisors (including, without limitation, accountants and
investment bankers), court costs, transcript costs, fees of experts,
travel expenses, duplicating, printing and binding costs, telephone
and fax transmission charges, postage, delivery services, secretarial
services, and other disbursements and expenses.
(d) "Indemnifiable Expenses," "Indemnifiable Liabilities" and
"Indemnifiable Amounts" shall have the meanings ascribed to those
terms in Section 3(a) below.
(e) "Liabilities" shall mean judgments, damages, liabilities,
losses, penalties, excise taxes, fines and amounts paid in settlement.
(f) "Proceeding" shall mean any threatened, pending or completed
claim, action, suit, arbitration, alternate dispute resolution
process, investigation, administrative hearing, appeal, or any other
proceeding, whether civil, criminal, administrative or investigative,
whether formal or informal, including a proceeding initiated by
Indemnitee pursuant to Section 10 of this Agreement to enforce
Indemnitee's rights hereunder.
2. SERVICES OF INDEMNITEE. In consideration of the Company's covenants
and commitments hereunder, Indemnitee agrees to serve or continue to serve as a
director of the Company. However, this Agreement shall not impose any
obligation on Indemnitee or the Company to continue Indemnitee's service to the
Company beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.
3. AGREEMENT TO INDEMNIFY. The Company agrees to indemnify Indemnitee as
follows:
(a) Subject to the exceptions contained in Section 4(a) below, if
Indemnitee was or is a party or is threatened to be made a party to
any Proceeding (other than an action by or in the right of the
Company) by reason of Indemnitee's Corporate Status, Indemnitee shall
be indemnified by the Company against all Expenses and Liabilities
incurred or paid by Indemnitee in connection with such Proceeding
(referredto herein as "Indemnifiable Expenses" and "Indemnifiable
Liabilities," respectively, and collectively as "Indemnifiable
Amounts").
(b) Subject to the exceptions contained in Section 4(b) below, if
Indemnitee was or is a party or is threatened to be made a party to
any Proceeding by or in the right of the Company to procure a judgment
in its favor by reason of Indemnitee's Corporate Status, Indemnitee
shall be indemnified by the Company against all Indemnifiable
Expenses.
2
<PAGE>
4. EXCEPTIONS TO INDEMNIFICATION. Indemnitee shall be entitled to
indemnification under Sections 3(a) and 3(b) above in all circumstances other
than the following:
(a) If indemnification is requested under Section 3(a) and it has
been adjudicated finally by a court of competent jurisdiction that, in
connection with the subject of the Proceeding out of which the claim
for indemnification has arisen, Indemnitee failed to act in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company or, with respect to any criminal
action or proceeding, Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful, Indemnitee shall not be entitled to
payment of Indemnifiable Amounts hereunder.
(b) If indemnification is requested under Section 3(b) and
(i) it has been adjudicated finally by a court of
competent jurisdiction that, in connection with the
subject of the Proceeding out of which the claim for
indemnification has arisen, Indemnitee failed to act
in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best
interests of the Company, Indemnitee shall not be
entitled to payment of Indemnifiable Expenses
hereunder; or
(ii) it has been adjudicated finally by a court of
competent jurisdiction that Indemnitee is liable to
the Company with respect to any claim, issue or
matter involved in the Proceeding out of which the
claim for indemnification has arisen, including,
without limitation, a claim that Indemnitee received
an improper personal benefit, no Indemnifiable
Expenses shall be paid with respect to such claim,
issue or matter unless the Court of Chancery or
another court in which such Proceeding was brought
shall determine upon application that, despite the
adjudication of liability, but in view of all the
circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such
Indemnifiable Expenses which such court shall deem
proper.
5. PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Amounts for
which Indemnitee seeks payment under Section 3 of this Agreement and the basis
for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee
within twenty (20) calendar days of receipt of the request. At the request of
the Company, Indemnitee shall furnish such documentation and information as are
reasonably available to Indemnitee and necessary to establish that Indemnitee is
entitled to indemnification hereunder.
3
<PAGE>
6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection with each successfully resolved claim, issue
or matter. For purposes of this Agreement, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.
7. EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement or termination
of any Proceeding nor the failure of the Company to award indemnification or to
determine that indemnification is payable shall create an adverse presumption
that Indemnitee is not entitled to indemnification hereunder. In addition, the
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, had reasonable cause to
believe that Indemnitee's action was unlawful.
8. AGREEMENT TO ADVANCE INTERIM EXPENSES; CONDITIONS. The Company shall
pay to Indemnitee all Indemnifiable Expenses incurred by Indemnitee in
connection with any Proceeding, including a Proceeding by or in the right of the
Company, in advance of the final disposition of such Proceeding, if Indemnitee
furnishes the Company with a written undertaking to repay the amount of such
Indemnifiable Expenses advanced to Indemnitee if it is finally determined by a
court of competent jurisdiction that Indemnitee is not entitled under this
Agreement to indemnification with respect to such Expenses. Such undertaking
shall be an unlimited general obligation of Indemnitee, shall be accepted by the
Company without regard to the financial ability of Indemnitee to make repayment,
and in no event shall be required to be secured.
9. PROCEDURE FOR PAYMENT OF INTERIM EXPENSES. Indemnitee shall submit to
the Company a written request specifying the Indemnifiable Expenses for which
Indemnitee seeks an advancement under Section 8 of this Agreement, together with
documentation evidencing that Indemnitee has incurred such Indemnifiable
Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no
later than twenty (20) calendar days after the Company's receipt of such request
and the undertaking required by Section 8.
4
<PAGE>
10. REMEDIES OF INDEMNITEE.
(a) Right to Petition Court. In the event that Indemnitee makes a
----------------------
request for payment of Indemnifiable Amounts under Sections 3 and 5
above or a request for an advancement of Indemnifiable Expenses under
Sections 8 and 9 above and the Company fails to make such payment or
advancement in a timely manner pursuant to the terms of this
Agreement, Indemnitee may petition the appropriate judicial authority
to enforce the Company's obligations under this Agreement.
(b) Burden of Proof. In any judicial proceeding brought under
---------------
Section 10(a) above, the Company shall have the burden of proving
that Indemnitee is not entitled to payment of Indemnifiable Amounts
hereunder.
(c) Expenses. The Company agrees to reimburse Indemnitee in
--------
Expenses incurred by Indemnitee in connection with investigating,
preparing for, litigating, defending or settling any action
brought by Indemnitee under Section 10(a) above, or in connection
with any claim or counterclaim brought by the Company in
connection therewith.
(d) Validity of Agreement. The Company shall be precluded from
----------------------
asserting in any Proceeding, including, without limitation, an action
under Section 10(a) above, that the provisions of this Agreement are
not valid, binding and enforceable or that there is insufficient
consideration for this Agreement and shall stipulate in court that
the Company is bound by all the provisions of this Agreement.
(e) Failure to Act Not a Defense.
-----------------------------
The failure of the Company (including its Board of Directors or any
committee thereof, independent legal counsel, or stockholders) to
make a determination concerning the permissibility of the payment of
Indemnifiable Amounts or the advancement of Indemnifiable Expenses
under this Agreement shall not be a defense in any action brought
under Section 10(a) above, and shall not create a presumption that
such payment or advancement is not permissible.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Indemnitee as follows:
(a) Authority. The Company has all necessary power and authority
---------
to enter into, and be bound by the terms of, this Agreement, and
the execution, delivery and performance of the undertakings
contemplated by this Agreement have been duly authorized by the
Company.
5
<PAGE>
(b) Enforceability. This Agreement, when executed and delivered by the
--------------
Company in accordance with the provisions hereof, shall be a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the enforcement of creditors'
rights generally.
12. INSURANCE. The Company will use its commercially reasonable efforts
to obtain and maintain a policy or policies of insurance with reputable
insurance companies providing the Indemnitee with coverage for losses from
wrongful acts, and to ensure the Company's performance of its indemnification
obligations under this Agreement. In all policies of director and officer
liability insurance, Indemnitee shall be named as an insured in such a manner as
to provide Indemnitee at least the same rights and benefits as are accorded to
the most favorably insured of the Company's officers and directors.
Notwithstanding the foregoing, if the Company, after employing commercially
reasonable efforts as provided in this section, determines in good faith that
such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, or if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit the Company shall use its commercially reasonable efforts
to obtain and maintain a policy or policies of insurance with coverage having
features as similar as practicable to those described above.
13. CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of Indemnifiable
Amounts and advancement of Indemnifiable Expenses provided by this Agreement
shall be in addition to, but not exclusive of, any other rights which Indemnitee
may have at any time under applicable law, the Company's by-laws or certificate
of incorporation, or any other agreement, vote of stockholders or directors, or
otherwise, both as to action in Indemnitee's official capacity and as to action
in any other capacity as a result of Indemnitee's serving as a director of the
Company.
14. SUCCESSORS. This Agreement shall be (a) binding upon all successors
and assigns of the Company (including any transferee of all or a substantial
portion of the business, stock and/or assets of the Company and any direct or
indirect successor by merger or consolidation or otherwise by operation of law)
and (b) binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of Indemnitee. This Agreement
shall continue for the benefit of Indemnitee and such heirs, personal
representatives, executors and administrators after Indemnitee has ceased to
have Corporate Status.
15. SUBROGATION. In the event of any payment of Indemnifiable Amounts
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of contribution or recovery of Indemnitee against
other persons, and Indemnitee shall take, at the request of the Company, all
reasonable action necessary to secure such rights, including the
6
<PAGE>
execution of such documents as are necessary to enable the Company to bring suit
to enforce such rights.
16. CHANGE IN LAW. To the extent that a change in applicable law (whether
by statute or judicial decision) shall permit broader indemnification than is
provided under the terms of the by-laws of the Company and this Agreement,
Indemnitee shall be entitled to such broader indemnification and this Agreement
shall be deemed to be amended to such extent.
17. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or any clause thereof,
shall be determined by a court of competent jurisdiction to be illegal, invalid
or unenforceable, in whole or in part, such provision or clause shall be limited
or modified in its application to the minimum extent necessary to make such
provision or clause valid, legal and enforceable, and the remaining provisions
and clauses of this Agreement shall remain fully enforceable and binding on the
parties.
18. INDEMNITEE AS PLAINTIFF. Except as provided in Section 10(c) of this
Agreement and in the next sentence, Indemnitee shall not be entitled to payment
of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect
to any Proceeding brought by Indemnitee against the Company, any Entity which it
controls, any director or officer thereof, or any third party, unless the
Company has consented to the initiation of such Proceeding. This Section shall
not apply to counterclaims or affirmative defenses asserted by Indemnitee in an
action brought against Indemnitee.
19. MODIFICATIONS AND WAIVER. Except as provided in Section 16 above with
respect to changes in applicable law which broaden the right of Indemnitee to be
indemnified by the Company, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement (whether or
not similar), nor shall such waiver constitute a continuing waiver.
20. GENERAL NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand, (b) when transmitted by facsimile and
receipt is acknowledged, or (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed:
7
<PAGE>
(i) If to Indemnitee, to:
Jacqueline C. Morby
c/o TA Associates, Inc.
High Street Tower
Suite 2500
125 High Street
Boston, MA 02110
(ii) If to the Company, to:
Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
Attn: President
or to such other address as may have been furnished in the same manner by any
party to the others.
21. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced under the laws of the State of Delaware without giving effect to the
provisions thereof relating to conflicts of law.
22. CONSENT TO JURISDICTION. The Company hereby irrevocably and
unconditionally consents to the jurisdiction of the courts of Delaware and the
United States District Court in Delaware. The Company hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Proceeding
arising out of or relating to this Agreement in the courts of Delaware or the
United States District Court in Delaware, and hereby irrevocably and
unconditionally waives and agrees not to plead or claim that any such Proceeding
brought in any such court has been brought in an inconvenient forum.
23. AGREEMENT GOVERNS. This Agreement is to be deemed consistent wherever
possible with relevant provisions of the Company's by-laws and certificate of
incorporation; however, in the event of a conflict between this Agreement and
such provisions, the provisions of this Agreement shall control.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
---------------------
Name: Patrick G. LePore
Title: President
INDEMNITEE
/s/ Jacqueline C. Morby
-----------------------
Jacqueline C. Morby
328729.c5
9
<PAGE>
Exhibit 10.15
STOCK PURCHASE AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
NAME OF GRANTEE: Christopher Sweeney
CLASS OF SHARES: Common Stock
NO. OF SHARES: 450,000 GRANT DATE: December 4, 1996
PER SHARE PURCHASE PRICE: $0.285
Section 1. Grant and Sale of Shares. The Company has heretofore completed
--------- ------------------------
a recapitalization and refinancing transaction. Pursuant to the Boron, LePore &
Associates, Inc. 1996 Stock Option and Grant Plan (the "Plan"), Boron, LePore &
Associates, Inc., a Delaware corporation (the "Company"), hereby grants, sells
and issues to the person named above (the "Grantee"), who is an officer or full-
time employee of the Company or any of the Subsidiaries (as defined below) of
the Company, the number of shares of Common Stock, par value $0.01 per share
("Common Stock"), of the Company indicated above (subject to the provisions
below, the "Shares"), for the per share purchase price specified above, subject
to the terms and conditions set forth herein. The Company hereby acknowledges
receipt of $128,250 in full payment for the Shares.
Section 2. Investment Representations. In connection with the purchase
--------- --------------------------
and sale of the Shares, the Grantee hereby represents and warrants to the
Company as follows:
Section 3. Certain Agreements. The Grantee has entered into a Stock
--------- ------------------
Redemption Agreement dated as of December 4, 1996 and a Stockholders' Agreement
dated as of December 4, 1996, setting forth certain rights and obligations with
respect to the Company including with respect to his ownership of the Shares.
Any certificate(s) representing the Shares shall carry the legend specified in
Section 7.2 of the Stockholders' Agreement.
Section 4. Withholding Taxes. The Grantee acknowledges and agrees that
--------- -----------------
the Company or any of its Subsidiaries have the right to deduct from payments of
any kind otherwise due to the Grantee any federal, state or local taxes of any
kind required by law to be withheld with respect to the purchase of the Shares
by the Grantee.
Section 5. Miscellaneous Provisions.
--------- ------------------------
5.1. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware.
<PAGE>
5.2 The Company is subscribing for the Managing Interest for its own
account for investment only, and not for resale or with a view to the
distribution thereof.
5.3 The Company has had such an opportunity as he has deemed adequate
to obtain from the LLC such information as is necessary to permit it to evaluate
the merits and risks of its investment in the LLC and has consulted with its own
advisers with respect to his investment in the LLC.
5.4 The Company has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the subscription
of the Managing Interest and to make an informed investment decision with
respect to such purchase.
5.5 The Company is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (the "Securities Act").
5.6 Headings. The headings are intended only for convenience in
--------
finding the subject matter and do not constitute part of the text of this
Agreement and shall not be considered in the interpretation of this Agreement.
5.7 Notices. All notices, requests, consents and other
-------
communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by
first class registered or certified mail, postage prepaid. Notices to the
Company or the Grantee shall be addressed as set forth underneath their
signatures below, or to such other address or addresses as may have been
furnished by such party in writing to the other. Notices to any holder of the
Shares other than the Grantee shall be addressed to the address furnished by
such holder to the Company.
5.8 Benefit and Binding Effect. This Subscription Agreement shall be
--------------------------
binding upon and shall inure to the benefit of the parties hereto, their
respective successors, assigns, and legal representatives.
5.9 Counterparts. For the convenience of the parties and to
------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
2
<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
---------------------
Name: Patrick G. LePore
Title: President
GRANTEE
/s/ Christopher Sweeney
-----------------------
Christopher Sweeney
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
3
<PAGE>
Exhibit 10.16
Confidential Treatment Requested
RESTRICTED STOCK AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
NAME OF GRANTEE: Patrick G. LePore
CLASS OF SHARES: Class A Common Stock
NO. OF SHARES: 300,000 GRANT DATE: December 4, 1996
PER SHARE PURCHASE PRICE: $.285
The Company has heretofore completed a recapitalization and refinancing
transaction. Pursuant to the Boron, LePore & Associates, Inc. 1996 Stock Option
and Grant Plan (the "Plan"), Boron, LePore & Associates, Inc., a Delaware
corporation (together with its successors, the "Company"), hereby grants, sells
and issues to the person named above (the "Grantee"), who is an officer or full-
time employee of the Company or any of the Subsidiaries (as defined below) of
the Company, the number of shares of Class A Common Stock, par value $0.01 per
share ("Common Stock"), of the Company indicated above (subject to the
provisions below, the "Shares"), for the per share purchase price specified
above, subject to the terms and conditions set forth herein and in the Plan.
The Grantee agrees to the provisions set forth herein and acknowledges that each
such provision is a material condition of the Company's agreement to issue and
sell the Shares to him. The Company hereby acknowledges receipt of $85,500 in
full payment for the Shares. All references to share prices and amounts herein
shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations, mergers, reorganizations and similar changes affecting the
capital stock of the Company, and any shares of capital stock of the Company
received on or in respect of Shares in connection with any such event (including
any shares of capital stock or any right, option or warrant to receive the same
or any security convertible into or exchangeable for any such shares or received
upon conversion of any such shares) shall be subject to this Agreement on the
same basis and extent at the relevant time as the Shares in respect of which
they were issued, and shall be deemed Shares as if and to the same extent they
were issued at the date hereof.
Section 1. Definitions. For the purposes of this Agreement, the following
--------- -----------
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
---
regulations thereunder.
<PAGE>
"Bankruptcy" means (i) the filing of a voluntary petition under any
----------
bankruptcy or insolvency law, or a petition for the appointment of a receiver or
the making of an assignment for the benefit of creditors, with respect to the
Grantee or any Permitted Transferee, or (ii) the Grantee or any Permitted
Transferee being subjected involuntarily to such a petition or assignment or to
an attachment or other legal or equitable interest with respect to his assets,
which involuntary petition or assignment or attachment is not discharged within
60 days after its date, and (iii) the Grantee or any Permitted Transferee being
subject to a transfer of Restricted Shares by operation of law, except by reason
of death.
"Common Stock" shall mean the Company's Class A Common Stock, par value
------------
$0.01 per share, together with any shares into which such stock may be converted
or exchanged.
"Initial Public Offering" shall mean the consummation of the first fully
-----------------------
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4, S-8, S-14 or S-15
or their then equivalents, covering the offer and sale by the Company of its
equity securities, or such other event as a result of or following which the
Common Stock shall be publicly held.
"Permitted Transferees" shall mean any of the following to whom the Grantee
---------------------
may transfer Restricted Shares hereunder: the Grantee's spouse, parents,
children (natural or adopted), stepchildren or grandchildren or a trust for
their principal benefit of which the Grantor is the settlor; provided, however,
-------- -------
that any such trust does not require or permit distribution of any Shares during
the term of this Agreement unless subject to its terms.
"Restricted Shares" shall mean all of the Shares that are not Vested
-----------------
Shares.
"Sale Event" shall mean any of the following transactions: (a) the
----------
dissolution or liquidation of the Company; (b) the sale of all or substantially
all of the assets of the Company and its Subsidiaries to another person or
entity; (c) a merger, reorganization or consolidation in which the holders of
the Company's outstanding voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction; (d) the sale of the
outstanding stock of the Company to an unrelated person or entity; or (e) any
other transaction or series of transactions where the owners of the Company's
outstanding voting power prior to such transaction do not own at least a
majority of the outstanding voting power of the relevant entity after the
transaction, in each case in which the Investors (as such term is defined in the
certain Stockholders' Agreement dated as of December 4, 1996, to which the
Grantee is a party) receive cash or other assets having a value upon Closing or
effectiveness thereof in excess of $37.5 million plus all accumulated and unpaid
dividends in respect of the shares acquired by them from the Company on December
4, 1996.
"Shares" shall mean the number of shares of Common Stock being purchased by
------
2
<PAGE>
the Grantee on the date hereof and any additional shares of Common Stock or
other securities received as a dividend on, or otherwise on account of, the
Shares, as contemplated by the first paragraph of this Agreement.
"Subsidiary" shall mean any corporation or partnership of which stock or
----------
other equity interests possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock or other equity interests is owned
directly or indirectly by the Company.
"Termination Event" shall mean the termination of the Grantee's employment
-----------------
with the Company and its subsidiaries as a result of his resignation or other
voluntary retirement at any time or termination at any time for cause (as such
term is defined in Section 7(b) of the Employment Agreement dated as of
December 4, 1996 between the Company and the Grantee).
"Vested Shares" shall mean all of the Shares that have vested in
---------------
accordance with the vesting schedule attached as Exhibit A hereto.
Section 2. Purchase and Sale of Shares; Investment Representations.
--------- -------------------------------------------------------
2.1. Purchase and Sale. On the date hereof, the Company hereby sells to
-----------------
the Grantee, and the Grantee hereby purchases from the Company, the number of
Shares set forth above for the purchase price per share set forth above.
2.2. Investment Representations. In connection with the purchase and sale
--------------------------
of the Shares contemplated by Section 2.1 above, the Grantee hereby represents
and warrants to the Company as follows:
(a) The Grantee is purchasing the Shares for his own account for
investment only, and not for resale or with a view to the distribution thereof.
(b) The Grantee has had such an opportunity as he has deemed adequate
to obtain from the Company such information as is necessary to permit him to
evaluate the merits and risks of his investment in the Company and has consulted
with his own advisers with respect to his investment in the Company.
(c) The Grantee has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the purchase of
the Shares and to make an informed investment decision with respect to such
purchase.
(d) The Grantee is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Act.
(e) The Grantee can afford a complete loss of the value of the Shares
and is
3
<PAGE>
able to bear the economic risk of holding such Shares for an indefinite period.
(f) The Grantee understands that the Shares are not registered under
the Act (it being understood that the Shares are being issued and sold in
reliance on the exemption provided in Rule 701 thereunder) or any applicable
state securities or "blue sky" laws and may not be sold or otherwise transferred
or disposed of in the absence of an effective registration statement under the
Act and under any applicable state securities or "blue sky" laws (or exemptions
from the registration requirements thereof). The Grantee further acknowledges
that certificates representing the Shares will bear restrictive legends
reflecting the foregoing.
Section 3. Repurchase of Restricted Shares.
--------- -------------------------------
3.1. Repurchase. Upon the occurrence of a Termination Event or the
----------
Bankruptcy of the Grantee, the Company or its assigns shall repurchase and the
Grantee and each Permitted Transferee shall sell to it or them all of the
Restricted Shares held by the Grantee or any Permitted Transferee as of the date
of such Termination Event or Bankruptcy at the per share purchase price set
forth above, subject to adjustment as provided above. In addition, upon the
Bankruptcy of any of the Grantee's Permitted Transferees, the Company or its
assigns shall purchase and each such Permitted Transferee shall sell to it or
them all of the Restricted Shares held by such Permitted Transferee as of the
date of such Bankruptcy at a price equal to the per share purchase price set
forth above, also subject to such adjustment. The purchase and sale
arrangements contemplated by the preceding sentences of this Section 3.1 are
referred to herein as the "Repurchase."
3.2. Closing Procedure. The Company or its assigns shall effect the
-----------------
Repurchase by delivering or mailing to the Grantee (and/or, if applicable, his
Permitted Transferees) written notice within six (6) months after the
Termination Event or Bankruptcy, specifying a date within such six-month period
in which the Repurchase shall be effected. Upon such notification, the Grantee
and his Permitted Transferees shall promptly surrender to the Company any
certificates representing the Restricted Shares being purchased, together with a
duly executed stock power for the transfer of such Restricted Shares to the
Company or the Company's assignee or assignees (as contemplated by Section 6, if
applicable). Upon the Company's or its assignee's receipt of the certificates
from the Grantee or his Permitted Transferees, the Company or its assignee or
assignees shall deliver to him, her or them a check for the purchase price of
the Restricted Shares being purchased, provided, however, that the Company may
pay the purchase price for such shares by offsetting and canceling any
indebtedness then owed by the Grantee to the Company. At such time, the Grantee
and/or any holder of the Restricted Shares shall deliver to the Company the
certificate or certificates representing the Restricted Shares so repurchased,
duly endorsed for transfer, free and clear of any liens or encumbrances. The
Repurchase obligation specified herein shall survive and remain in effect as to
Restricted Shares following and notwithstanding any public offering by or merger
or other transaction involving the Company and certificates representing such
Restricted Shares shall bear legends to such effect.
4
<PAGE>
3.3. Remedy. Without limitation of any other provision of this Agreement
------
or other rights, in the event that the Grantee, his or her Permitted Transferees
or any other person or entity is required to sell his or her Restricted Shares
pursuant to the provisions of this Section 3 and in the further event that he or
she refuses or for any reason fails to deliver to the designated purchaser of
such Restricted Shares the certificate or certificates evidencing such
Restricted Shares together with a related stock power, such designated purchaser
may deposit the purchase price for such Restricted Shares with any bank doing
business within fifty (50) miles of the Company's principal office, or with the
Company's independent public accounting firm, as agent or trustee, or in escrow,
for the Grantee, his or her Permitted Transferees or other person or entity, to
be held by such bank or accounting firm for the benefit of and for delivery to
him, them or it, and/or, in its discretion, pay such purchase price by
offsetting any indebtedness then owed by the Grantee as provided above. Upon
any such deposit and/or offset by the designated purchaser of such amount and
upon notice to the person or entity who was required to sell the Restricted
Shares to be sold pursuant to the provisions of this Section 3, such Restricted
Shares shall at such time be deemed to have been sold, assigned, transferred and
conveyed to such purchaser, the holder thereof shall have no further rights
thereto (other than the right to withdraw the payment thereof held in escrow, if
applicable), and the Company shall record such transfer in its stock transfer
book or in any appropriate manner.
Section 4. Restrictions on Transfer of Shares.
--------- ----------------------------------
(a) General. None of the Shares now owned or hereafter acquired shall be
-------
sold, assigned, transferred, pledged, hypothecated, given away or in any other
manner disposed of or encumbered, whether voluntarily or by operation of law,
unless such transfer is in compliance with all applicable securities laws
(including, without limitation, the Act), and such disposition is in accordance
with the terms and conditions of this Section 4. In connection with any
transfer of Shares, the Company may require the transferor to provide at his or
her own expense an opinion of counsel to the transferor, satisfactory to the
Company, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Shares not in accordance with the terms and conditions of this
Section 4 shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Shares. Subject to
the foregoing general provisions, Shares may be transferred pursuant to the
following specific terms and conditions:
(b) Transfers to Permitted Transferees. The Grantee may sell, assign,
----------------------------------
transfer or give away any or all of the Shares to Permitted Transferees;
provided, however, that such Permitted Transferee(s) shall, as a condition to
- -------- -------
any such transfer, agree to be subject to the provisions of this Agreement
(including, without limitation, the provisions of Section 3 and this Section 4)
and shall have delivered a written acknowledgment to that effect to the Company.
5
<PAGE>
(c) Transfers Upon Death. Upon the death of the Grantee or any Permitted
--------------------
Transferee the Shares may be transferred by operation of law to the estate,
legal representatives, executors and administrators of the Grantee or any such
Permitted Transferee. Any Shares which are Restricted Shares at the time at such
death shall be subject to the Repurchase and all other Shares shall be and
remain subject to Section 4(d), if applicable, and the Grantee's and any
Permitted Transferee's estate, executors, administrators, personal
representatives, heirs, legatees and distributees shall be obligated to convey
such Shares to the Company or its assigns if and to the extent contemplated
hereby.
(d) Other Transfers; Notice; Right of First Refusal. In the event that the
-----------------------------------------------
Grantee (or any transferee holding Shares subject to this Section 4(d)) desires
to sell or otherwise transfer all or any part of the Vested Shares (but in no
event Restricted Shares, which shall not be sold or transferred except as
contemplated by Section 3.1, Section 4(b) or (c) or Exhibit A), the Grantee
shall first comply with the provisions of the Stockholders' Agreement dated as
of December 4, 1996 to which the Grantee is a party and thereafter shall give
written notice to the Company of his intention to make such transfer. Such
notice shall state the number of Vested Shares which the Grantee proposes to
sell (the "Offered Shares"), the price and the terms at which the proposed sale
is to be made and the name and address of the proposed transferee. At any time
within 10 days after the receipt of such notice by the Company, the Company or
its assigns may elect to purchase all or any portion of the Offered Shares at
the price and on the terms offered by the proposed transferee and specified in
the notice. The Company or its assigns shall exercise this right by mailing or
delivering written notice to the Grantee within the foregoing 10-day period. If
the Company or its assigns elect to exercise its purchase rights of this Section
4(d), the closing for such purchase shall, in any event, take place within 30
days after the receipt by the Company of the initial notice from the Grantee.
In the event that the Company or its assigns do not elect to exercise such
purchase right, or in the event that the Company or its assigns do not pay the
full purchase price within such 30-day period, the Grantee may, within 60 days
thereafter, sell the Offered Shares to the proposed transferee and at the same
price and on the same terms as specified in his notice. Any Shares purchased by
such proposed transferee shall no longer be subject to the terms of this
Agreement. The provisions of this Section 4(d) shall terminate upon the closing
of an Initial Public Offering.
Section 5. Legend. Any certificate(s) representing the Shares shall carry
------
substantially the following legends:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against transfers)
contained in a certain Restricted Stock Agreement dated December 4,
1996 between the Company and the holder of this certificate (a copy of
which is available at the offices of the Company for examination)."
6
<PAGE>
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state. The shares may not be sold or transferred in the absence of
such registration or an exemption from registration."
Section 6. Escrow. In order to carry out the provisions of Sections 3 and
--------- ------
4 of this Agreement more effectively, the Company shall hold the Shares in
escrow together with separate stock powers executed by the Grantee in blank for
transfer, and any Permitted Transferee shall, as an additional condition to any
transfer of Shares, execute a like stock power as to such Shares. The Company
shall not dispose of the Shares except as otherwise provided in this Agreement.
In the event of any Repurchase, the Company is hereby authorized by the Grantee
and each Permitted Transferee, as the Grantee's and each such Permitted
Transferee's attorney-in-fact, to date and complete the stock powers necessary
for the transfer of the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no longer
Restricted Shares, the Company shall, at the written request of the Grantee,
deliver to the Grantee (or the relevant Permitted Transferee) a certificate
representing such Shares with the balance of the Shares to be held in escrow
pursuant to this Section 6.
Section 7. Assignment. At the discretion of the Board of Directors of the
--------- ----------
Company, the Company shall have the right to assign the right to exercise its
obligation and rights with respect to the Repurchase or pursuant to Section 4(d)
to any person or persons, in whole or in part in any particular instance, upon
the same terms and conditions applicable to the exercise thereof by the Company,
and such assignee or assignees of the Company shall then take and hold any
Shares so acquired subject to such terms as may be specified by the Company in
connection with any such assignment.
Section 8. Miscellaneous Provisions.
--------- ------------------------
8.1. Termination. The restrictions on transfer of Vested Shares under
-----------
Section 4(d) shall terminate on the closing of an Initial Public Offering;
provided, however, that all other provisions shall remain in effect following
the same until all of the Shares have become Vested Shares.
8.2. Record Owner; Dividends. The Grantee and any Permitted Transferees,
-----------------------
during the duration of this Agreement, shall be considered the record owners of
and shall be entitled to vote the Shares. The Grantee and any Permitted
Transferees shall be entitled to receive all dividends and any other
distributions declared on the Shares; provided, however, that the Company is
under no duty to declare any such dividends or to make any such distribution.
8.3. Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies are inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this
7
<PAGE>
Agreement.
8.4. Change and Modifications. This Agreement may not be orally changed,
------------------------
modified or terminated, nor shall any oral waiver of any of its terms be
effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Grantee.
8.5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
8.6. Headings. The headings are intended only for convenience in finding
--------
the subject matter and do not constitute part of the text of this Agreement and
shall not be considered in the interpretation of this Agreement.
8.7. Saving Clause. If any provision(s) of this Agreement shall be
-------------
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
8.8. Notices. All notices, requests, consents and other communications
-------
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage prepaid. Notices to the Company or the Grantee shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other. Notices to any holder of the Shares other than the Grantee shall be
addressed to the address furnished by such holder to the Company.
8.9. Benefit and Binding Effect. This Agreement shall be binding upon and
--------------------------
shall inure to the benefit of the parties hereto, their respective successors,
assigns, and legal representatives. The Company has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of the
Company hereunder to the extent of such assignment.
8.10. Counterparts. For the convenience of the parties and to facilitate
------------
execution, this Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
8
<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Gregory Boron
-----------------------------
Name: Gregory Boron
Title: Chief Operating Officer
GRANTEE
/s/ Patrick G. LePore
----------------------------------
Patrick G. LePore
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
9
<PAGE>
EXHIBIT A
Vesting Schedule
----------------
1. Time-Based Vesting. The Shares shall vest and become Vested Shares
------------------
to the extent not previously vested or repurchased, on December 4, 2003.
2. Vesting Events. Notwithstanding the foregoing, Shares shall
--------------
vest and become Vested Shares upon attainment of one or more specified
Performance Objectives as set forth below.
For purposes of vesting the Shares shall be deemed divided into five
equal tranches of 60,000 shares each (subject to adjustment for stock splits and
the like as provided in the attached Restricted Stock Agreement). An
incremental tranche of Shares will vest each time an incremental Performance
Objective set forth below is achieved (i.e., if only two Performance Objectives
are achieved only two tranches (or 40%) of shares will vest whereas all five
tranches will vest if five Performance Objectives are achieved). Vesting shall
be deemed effective as of the closing of the transaction (in the case of the
first Performance Objective) or as of the last day of the calendar year to which
the Performance Objective relates (in the case of Performance Objectives 2
through 6). Determination of whether a Performance Objective has been met will
be based (in the case of Performance Objectives 2 through 6) conclusively on the
Company's audited financial statements for the relevant year following
preparation thereof.
The "Performance Objectives" are:
1. Redemption prior to December 3, 1998 of the Company's Redeemable
Preferred Stock (or Convertible Preferred Stock) for a cash
payment in the amount of not less than $10 million plus all
accumulated and unpaid dividends.
2. Achievement of both revenues of $ * or more and earnings before
interest, taxes and depreciation but after giving effect to
amortization, and provided that EBITD shall not reflect the
transactions described in Schedule 4.1 to that certain Preferred
Stock Purchase Agreement dated as of December 4, 1996 ("EBITD") of
$ * or more in any calendar year.
3. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
- -----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
10
<PAGE>
4. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
5. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
6. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
For purposes of the foregoing:
- A maximum of five performance objectives may be achieved.
Thus, Performance Objective number 6 can be relevant only if
Performance Objective number 1 is not attained by December
3, 1998; if Performance Objective number 1 is attained by
then, attainment of Performance Objective number 6 cannot
result in additional vesting.
- More than one Performance Objective may be achieved (and
accordingly more than one tranche of Shares may become
Vested Shares) in any year. For example, if in 1997 revenues
were $ * EBITD was $ * and the Redeemable Preferred Stock
was redeemed in full, three tranches of shares (60%) would
vest, with one tranche vesting as of the redemption date and
two tranches vesting as of December 31, 1997.
- Vesting may be "caught up." For example, if revenues were $
* and EBITD was $ * in 1997, and revenues were $ * and EBITD
was $ * million in 1998, no tranches would vest in 1997 but
two would vest as of December 31, 1998.
- The revenues and EBITD tests are conjunctive (i.e., if a
revenues objective is met in a given year but the related
EBITD test is not met, vesting of a tranche will not occur;
vesting could occur if both tests were met in a subsequent
year).
- Once a Performance Objective has been achieved, resulting in
the vesting of a tranche, an additional tranche can vest
only if the revenues and EBITD move to the next level of
Performance Objective (or upon redemption the preferred
stock within two years). For example, if
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
11
<PAGE>
revenues were $ * and EBITD was $ * for 1997 one tranche
would vest, and if revenues and EBITD were the same in the
following year no additional tranches would vest. The next
tranche would only vest when revenues and EBITD for a
succeeding year reached the levels specified for Performance
Objectives 3, 4, 5 or 6.
- Revenues and EBITD will reflect revenues and expenses of or
relating to acquired companies (including amortization), as
well as the effect of divestitures, if any.
- Should the Grantee's employment terminate due to death,
disability or termination without cause, all Vested and
Restricted Shares then held by him will continue to be held
by him or his estate, heirs, etc. subject to the terms of the
attached Restricted Stock Agreement, including inability to
sell Restricted Shares before they vest due to the Company's
performance or passage of time.
3. Sale Events. In the event of a Sale Event, as defined in the
-----------
attached Restricted Stock Agreement, any unvested tranches of Shares will be
deemed Vested Shares as of the closing of such transaction (and the Repurchase
and Section 4 of the attached Agreement shall no longer apply to such Shares).
However, the vesting provisions set forth herein will not change upon an Initial
Public Offering (as defined in the attached Restricted Stock Agreement) and the
Repurchase under Section 3 of the attached Restricted Stock Agreement will
remain in effect following any such event.
4. Termination of Vesting. Notwithstanding the foregoing
----------------------
paragraphs of this Exhibit A or any provision of the Restricted Stock Agreement,
no Restricted Shares shall vest after a Termination Event or Bankruptcy and all
Restricted Shares as of the date of any Termination Event or Bankruptcy shall
remain subject to the Repurchase.
5. Adjustment of Target Prices in Certain Events. The numbers of
---------------------------------------------
Shares set forth above will be subject to adjustment in the case of a merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, in which case appropriate and proportionate
adjustments shall be made as provided in the attached Restricted Stock
Agreement, subject to Section 3 of this Exhibit A.
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
12
<PAGE>
Exhibit 10.17
Confidential Treatment Requested
RESTRICTED STOCK AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
NAME OF GRANTEE: Gregory Boron
CLASS OF SHARES: Class A Common Stock
NO. OF SHARES: 300,000 GRANT DATE: December 4, 1996
PER SHARE PURCHASE PRICE: $.285
The Company has heretofore completed a recapitalization and refinancing
transaction. Pursuant to the Boron, LePore & Associates, Inc. 1996 Stock Option
and Grant Plan (the "Plan"), Boron, LePore & Associates, Inc., a Delaware
corporation (together with its successors, the "Company"), hereby grants, sells
and issues to the person named above (the "Grantee"), who is an officer or full-
time employee of the Company or any of the Subsidiaries (as defined below) of
the Company, the number of shares of Class A Common Stock, par value $0.01 per
share ("Common Stock"), of the Company indicated above (subject to the
provisions below, the "Shares"), for the per share purchase price specified
above, subject to the terms and conditions set forth herein and in the Plan.
The Grantee agrees to the provisions set forth herein and acknowledges that each
such provision is a material condition of the Company's agreement to issue and
sell the Shares to him. The Company hereby acknowledges receipt of $85,500 in
full payment for the Shares. All references to share prices and amounts herein
shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations, mergers, reorganizations and similar changes affecting the
capital stock of the Company, and any shares of capital stock of the Company
received on or in respect of Shares in connection with any such event (including
any shares of capital stock or any right, option or warrant to receive the same
or any security convertible into or exchangeable for any such shares or received
upon conversion of any such shares) shall be subject to this Agreement on the
same basis and extent at the relevant time as the Shares in respect of which
they were issued, and shall be deemed Shares as if and to the same extent they
were issued at the date hereof.
Section 1. Definitions. For the purposes of this Agreement, the following
--------- -----------
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
---
regulations thereunder.
<PAGE>
"Bankruptcy" means (i) the filing of a voluntary petition under any
----------
bankruptcy or insolvency law, or a petition for the appointment of a receiver or
the making of an assignment for the benefit of creditors, with respect to the
Grantee or any Permitted Transferee, or (ii) the Grantee or any Permitted
Transferee being subjected involuntarily to such a petition or assignment or to
an attachment or other legal or equitable interest with respect to his assets,
which involuntary petition or assignment or attachment is not discharged within
60 days after its date, and (iii) the Grantee or any Permitted Transferee being
subject to a transfer of Restricted Shares by operation of law, except by reason
of death.
"Common Stock" shall mean the Company's Class A Common Stock, par value
------------
$0.01 per share, together with any shares into which such stock may be converted
or exchanged.
"Initial Public Offering" shall mean the consummation of the first fully
-----------------------
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4, S-8, S-14 or S-15
or their then equivalents, covering the offer and sale by the Company of its
equity securities, or such other event as a result of or following which the
Common Stock shall be publicly held.
"Permitted Transferees" shall mean any of the following to whom the Grantee
---------------------
may transfer Restricted Shares hereunder: the Grantee's spouse, parents,
children (natural or adopted), stepchildren or grandchildren or a trust for
their principal benefit of which the Grantor is the settlor; provided, however,
-------- -------
that any such trust does not require or permit distribution of any Shares during
the term of this Agreement unless subject to its terms.
"Restricted Shares" shall mean all of the Shares that are not Vested
-----------------
Shares.
"Sale Event" shall mean any of the following transactions: (a) the
----------
dissolution or liquidation of the Company; (b) the sale of all or substantially
all of the assets of the Company and its Subsidiaries to another person or
entity; (c) a merger, reorganization or consolidation in which the holders of
the Company's outstanding voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction; (d) the sale of the
outstanding stock of the Company to an unrelated person or entity; or (e) any
other transaction or series of transactions where the owners of the Company's
outstanding voting power prior to such transaction do not own at least a
majority of the outstanding voting power of the relevant entity after the
transaction, in each case in which the Investors (as such term is defined in the
certain Stockholders' Agreement dated as of December 4, 1996, to which the
Grantee is a party) receive cash or other assets having a value upon Closing or
effectiveness thereof in excess of $37.5 million plus all accumulated and unpaid
dividends in respect of the shares acquired by them from the Company on December
4, 1996.
"Shares" shall mean the number of shares of Common Stock being purchased by
------
2
<PAGE>
the Grantee on the date hereof and any additional shares of Common Stock or
other securities received as a dividend on, or otherwise on account of, the
Shares, as contemplated by the first paragraph of this Agreement.
"Subsidiary" shall mean any corporation or partnership of which stock or
----------
other equity interests possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock or other equity interests is owned
directly or indirectly by the Company.
"Termination Event" shall mean the termination of the Grantee's employment
-----------------
with the Company and its subsidiaries as a result of his resignation or other
voluntary retirement at any time or termination at any time for cause (as such
term is defined in Section 7(b) of the Employment Agreement dated as of
December 4, 1996 between the Company and the Grantee).
"Vested Shares" shall mean all of the Shares that have vested in
--------------
accordance with the vesting schedule attached as Exhibit A hereto.
Section 2. Purchase and Sale of Shares; Investment Representations.
--------- -------------------------------------------------------
2.1. Purchase and Sale. On the date hereof, the Company hereby sells to
-----------------
the Grantee, and the Grantee hereby purchases from the Company, the number of
Shares set forth above for the purchase price per share set forth above.
2.2. Investment Representations. In connection with the purchase and sale
--------------------------
of the Shares contemplated by Section 2.1 above, the Grantee hereby represents
and warrants to the Company as follows:
(a) The Grantee is purchasing the Shares for his own account for
investment only, and not for resale or with a view to the distribution thereof.
(b) The Grantee has had such an opportunity as he has deemed
adequate to obtain from the Company such information as is necessary to permit
him to evaluate the merits and risks of his investment in the Company and has
consulted with his own advisers with respect to his investment in the Company.
(c) The Grantee has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such
purchase.
(d) The Grantee is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Act.
(e) The Grantee can afford a complete loss of the value of the
Shares and is
3
<PAGE>
able to bear the economic risk of holding such Shares for an indefinite period.
(f) The Grantee understands that the Shares are not registered
under the Act (it being understood that the Shares are being issued and sold in
reliance on the exemption provided in Rule 701 thereunder) or any applicable
state securities or "blue sky" laws and may not be sold or otherwise transferred
or disposed of in the absence of an effective registration statement under the
Act and under any applicable state securities or "blue sky" laws (or exemptions
from the registration requirements thereof). The Grantee further acknowledges
that certificates representing the Shares will bear restrictive legends
reflecting the foregoing.
Section 3. Repurchase of Restricted Shares.
--------- -------------------------------
3.1. Repurchase. Upon the occurrence of a Termination Event or the
----------
Bankruptcy of the Grantee, the Company or its assigns shall repurchase and the
Grantee and each Permitted Transferee shall sell to it or them all of the
Restricted Shares held by the Grantee or any Permitted Transferee as of the date
of such Termination Event or Bankruptcy at the per share purchase price set
forth above, subject to adjustment as provided above. In addition, upon the
Bankruptcy of any of the Grantee's Permitted Transferees, the Company or its
assigns shall purchase and each such Permitted Transferee shall sell to it or
them all of the Restricted Shares held by such Permitted Transferee as of the
date of such Bankruptcy at a price equal to the per share purchase price set
forth above, also subject to such adjustment. The purchase and sale
arrangements contemplated by the preceding sentences of this Section 3.1 are
referred to herein as the "Repurchase."
3.2. Closing Procedure. The Company or its assigns shall effect the
-----------------
Repurchase by delivering or mailing to the Grantee (and/or, if applicable, his
Permitted Transferees) written notice within six (6) months after the
Termination Event or Bankruptcy, specifying a date within such six-month period
in which the Repurchase shall be effected. Upon such notification, the Grantee
and his Permitted Transferees shall promptly surrender to the Company any
certificates representing the Restricted Shares being purchased, together with a
duly executed stock power for the transfer of such Restricted Shares to the
Company or the Company's assignee or assignees (as contemplated by Section 6, if
applicable). Upon the Company's or its assignee's receipt of the certificates
from the Grantee or his Permitted Transferees, the Company or its assignee or
assignees shall deliver to him, her or them a check for the purchase price of
the Restricted Shares being purchased, provided, however, that the Company may
pay the purchase price for such shares by offsetting and canceling any
indebtedness then owed by the Grantee to the Company. At such time, the Grantee
and/or any holder of the Restricted Shares shall deliver to the Company the
certificate or certificates representing the Restricted Shares so repurchased,
duly endorsed for transfer, free and clear of any liens or encumbrances. The
Repurchase obligation specified herein shall survive and remain in effect as to
Restricted Shares following and notwithstanding any public offering by or merger
or other transaction involving the Company and certificates representing such
Restricted Shares shall bear legends to such effect.
4
<PAGE>
3.3. Remedy. Without limitation of any other provision of this Agreement
------
or other rights, in the event that the Grantee, his or her Permitted Transferees
or any other person or entity is required to sell his or her Restricted Shares
pursuant to the provisions of this Section 3 and in the further event that he or
she refuses or for any reason fails to deliver to the designated purchaser of
such Restricted Shares the certificate or certificates evidencing such
Restricted Shares together with a related stock power, such designated purchaser
may deposit the purchase price for such Restricted Shares with any bank doing
business within fifty (50) miles of the Company's principal office, or with the
Company's independent public accounting firm, as agent or trustee, or in escrow,
for the Grantee, his or her Permitted Transferees or other person or entity, to
be held by such bank or accounting firm for the benefit of and for delivery to
him, them or it, and/or, in its discretion, pay such purchase price by
offsetting any indebtedness then owed by the Grantee as provided above. Upon
any such deposit and/or offset by the designated purchaser of such amount and
upon notice to the person or entity who was required to sell the Restricted
Shares to be sold pursuant to the provisions of this Section 3, such Restricted
Shares shall at such time be deemed to have been sold, assigned, transferred and
conveyed to such purchaser, the holder thereof shall have no further rights
thereto (other than the right to withdraw the payment thereof held in escrow, if
applicable), and the Company shall record such transfer in its stock transfer
book or in any appropriate manner.
Section 4. Restrictions on Transfer of Shares.
--------- ----------------------------------
(a) General. None of the Shares now owned or hereafter acquired
-------
shall be sold, assigned, transferred, pledged, hypothecated, given away or in
any other manner disposed of or encumbered, whether voluntarily or by operation
of law, unless such transfer is in compliance with all applicable securities
laws (including, without limitation, the Act), and such disposition is in
accordance with the terms and conditions of this Section 4. In connection with
any transfer of Shares, the Company may require the transferor to provide at his
or her own expense an opinion of counsel to the transferor, satisfactory to the
Company, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Shares not in accordance with the terms and conditions of this
Section 4 shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Shares. Subject to the
foregoing general provisions, Shares may be transferred pursuant to the
following specific terms and conditions:
(b) Transfers to Permitted Transferees. The Grantee may
----------------------------------
sell, assign, transfer or give away any or all of the Shares to Permitted
Transferees; provided, however, that such Permitted Transferee(s) shall,
-------- -------
as a condition to any such transfer, agree to be subject to the provisions of
this Agreement (including, without limitation, the provisions of Section 3 and
this Section 4) and shall have delivered a written acknowledgment to that effect
to the Company.
5
<PAGE>
(c) Transfers Upon Death. Upon the death of the Grantee or any
--------------------
Permitted Transferee the Shares may be transferred by operation of law to the
estate, legal representatives, executors and administrators of the Grantee or
any such Permitted Transferee. Any Shares which are Restricted Shares at the
time at such death shall be subject to the Repurchase and all other Shares shall
be and remain subject to Section 4(d), if applicable, and the Grantee's and any
Permitted Transferee's estate, executors, administrators, personal
representatives, heirs, legatees and distributees shall be obligated to convey
such Shares to the Company or its assigns if and to the extent contemplated
hereby.
(d) Other Transfers; Notice; Right of First Refusal. In the
-----------------------------------------------
event that the Grantee (or any transferee holding Shares subject to this Section
4(d)) desires to sell or otherwise transfer all or any part of the Vested Shares
(but in no event Restricted Shares, which shall not be sold or transferred
except as contemplated by Section 3.1, Section 4(b) or (c) or Exhibit A), the
Grantee shall first comply with the provisions of the Stockholders' Agreement
dated as of December 4, 1996 to which the Grantee is a party and thereafter
shall give written notice to the Company of his intention to make such transfer.
Such notice shall state the number of Vested Shares which the Grantee proposes
to sell (the "Offered Shares"), the price and the terms at which the proposed
sale is to be made and the name and address of the proposed transferee. At any
time within 10 days after the receipt of such notice by the Company, the Company
or its assigns may elect to purchase all or any portion of the Offered Shares at
the price and on the terms offered by the proposed transferee and specified in
the notice. The Company or its assigns shall exercise this right by mailing or
delivering written notice to the Grantee within the foregoing 10-day period. If
the Company or its assigns elect to exercise its purchase rights of this Section
4(d), the closing for such purchase shall, in any event, take place within 30
days after the receipt by the Company of the initial notice from the Grantee. In
the event that the Company or its assigns do not elect to exercise such purchase
right, or in the event that the Company or its assigns do not pay the full
purchase price within such 30-day period, the Grantee may, within 60 days
thereafter, sell the Offered Shares to the proposed transferee and at the same
price and on the same terms as specified in his notice. Any Shares purchased by
such proposed transferee shall no longer be subject to the terms of this
Agreement. The provisions of this Section 4(d) shall terminate upon the closing
of an Initial Public Offering.
Section 5. Legend. Any certificate(s) representing the Shares shall carry
------
substantially the following legends:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against transfers)
contained in a certain Restricted Stock Agreement dated December 4,
1996 between the Company and the holder of this certificate (a copy
of which is available at the offices of the Company for
examination)."
6
<PAGE>
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state. The shares may not be sold or transferred in the absence
of such registration or an exemption from registration."
Section 6. Escrow. In order to carry out the provisions of Sections 3 and
--------- ------
4 of this Agreement more effectively, the Company shall hold the Shares in
escrow together with separate stock powers executed by the Grantee in blank for
transfer, and any Permitted Transferee shall, as an additional condition to any
transfer of Shares, execute a like stock power as to such Shares. The Company
shall not dispose of the Shares except as otherwise provided in this Agreement.
In the event of any Repurchase, the Company is hereby authorized by the Grantee
and each Permitted Transferee, as the Grantee's and each such Permitted
Transferee's attorney-in-fact, to date and complete the stock powers necessary
for the transfer of the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no longer
Restricted Shares, the Company shall, at the written request of the Grantee,
deliver to the Grantee (or the relevant Permitted Transferee) a certificate
representing such Shares with the balance of the Shares to be held in escrow
pursuant to this Section 6.
Section 7. Assignment. At the discretion of the Board of Directors of the
--------- ----------
Company, the Company shall have the right to assign the right to exercise its
obligation and rights with respect to the Repurchase or pursuant to Section 4(d)
to any person or persons, in whole or in part in any particular instance, upon
the same terms and conditions applicable to the exercise thereof by the Company,
and such assignee or assignees of the Company shall then take and hold any
Shares so acquired subject to such terms as may be specified by the Company in
connection with any such assignment.
Section 8. Miscellaneous Provisions.
--------- ------------------------
8.1. Termination. The restrictions on transfer of Vested Shares under
-----------
Section 4(d) shall terminate on the closing of an Initial Public Offering;
provided, however, that all other provisions shall remain in effect following
the same until all of the Shares have become Vested Shares.
8.2. Record Owner; Dividends. The Grantee and any Permitted Transferees,
-----------------------
during the duration of this Agreement, shall be considered the record owners of
and shall be entitled to vote the Shares. The Grantee and any Permitted
Transferees shall be entitled to receive all dividends and any other
distributions declared on the Shares; provided, however, that the Company is
under no duty to declare any such dividends or to make any such distribution.
8.3. Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies are inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this
7
<PAGE>
Agreement.
8.4. Change and Modifications. This Agreement may not be orally changed,
------------------------
modified or terminated, nor shall any oral waiver of any of its terms be
effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Grantee.
8.5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
8.6. Headings. The headings are intended only for convenience in finding
--------
the subject matter and do not constitute part of the text of this Agreement and
shall not be considered in the interpretation of this Agreement.
8.7. Saving Clause. If any provision(s) of this Agreement shall be
-------------
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
8.8. Notices. All notices, requests, consents and other communications
-------
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage prepaid. Notices to the Company or the Grantee shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other. Notices to any holder of the Shares other than the Grantee shall be
addressed to the address furnished by such holder to the Company.
8.9. Benefit and Binding Effect. This Agreement shall be binding upon and
--------------------------
shall inure to the benefit of the parties hereto, their respective successors,
assigns, and legal representatives. The Company has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of the
Company hereunder to the extent of such assignment.
8.10. Counterparts. For the convenience of the parties and to facilitate
------------
execution, this Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
8
<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
-----------------------------
Name: Patrick G. LePore
Title: President
GRANTEE
/s/ Gregory Boron
----------------------------------
Gregory Boron
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
9
<PAGE>
EXHIBIT A
Vesting Schedule
----------------
1. Time-Based Vesting. The Shares shall vest and become Vested
------------------
Shares, to the extent not previously vested or repurchased, on December 4, 2003.
2. Vesting Events. Notwithstanding the foregoing, Shares shall vest
--------------
and become Vested Shares upon attainment of one or more specified Performance
Objectives as set forth below.
For purposes of vesting the Shares shall be deemed divided into five
equal tranches of 60,000 shares each (subject to adjustment for stock splits and
the like as provided in the attached Restricted Stock Agreement). An
incremental tranche of Shares will vest each time an incremental Performance
Objective set forth below is achieved (i.e., if only two Performance Objectives
are achieved only two tranches (or 40%) of shares will vest whereas all five
tranches will vest if five Performance Objectives are achieved). Vesting shall
be deemed effective as of the closing of the transaction (in the case of the
first Performance Objective) or as of the last day of the calendar year to which
the Performance Objective relates (in the case of Performance Objectives 2
through 6). Determination of whether a Performance Objective has been met will
be based (in the case of Performance Objectives 2 through 6) conclusively on the
Company's audited financial statements for the relevant year following
preparation thereof.
The "Performance Objectives" are:
1. Redemption prior to December 3, 1998 of the Company's Redeemable
Preferred Stock (or Convertible Preferred Stock) for a cash
payment in the amount of not less than $10 million plus all
accumulated and unpaid dividends.
2. Achievement of both revenues of $ * or more and earnings before
interest, taxes and depreciation but after giving effect to
amortization, and provided that EBITD shall not reflect the
transactions described in Schedule 4.1 to that certain Preferred
Stock Purchase Agreement dated as of December 4, 1996 ("EBITD")
of $ * or more in any calendar year.
3. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
- -----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
10
<PAGE>
4. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
5. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
6. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
For purposes of the foregoing:
- A maximum of five performance objectives may be achieved.
Thus, Performance Objective number 6 can be relevant only if
Performance Objective number 1 is not attained by December
3, 1998; if Performance Objective number 1 is attained by
then, attainment of Performance Objective number 6 cannot
result in additional vesting.
- More than one Performance Objective may be achieved (and
accordingly more than one tranche of Shares may become
Vested Shares) in any year. For example, if in 1997 revenues
were $ * EBITD was $ * and the Redeemable Preferred Stock
was redeemed in full, three tranches of shares (60%) would
vest, with one tranche vesting as of the redemption date and
two tranches vesting as of December 31, 1997.
- Vesting may be "caught up." For example, if revenues were $
* and EBITD was $ * in 1997, and revenues were $ * and EBITD
was $ * million in 1998, no tranches would vest in 1997 but
two would vest as of December 31, 1998.
- The revenues and EBITD tests are conjunctive (i.e., if a
revenues objective is met in a given year but the related
EBITD test is not met, vesting of a tranche will not occur;
vesting could occur if both tests were met in a subsequent
year).
- Once a Performance Objective has been achieved, resulting in
the vesting of a tranche, an additional tranche can vest
only if the revenues and
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
11
<PAGE>
EBITD move to the next level of Performance Objective (or
upon redemption the preferred stock within two years). For
example, if revenues were $ * and EBITD was $ * for 1997 one
tranche would vest, and if revenues and EBITD were the same
in the following year no additional tranches would vest. The
next tranche would only vest when revenues and EBITD for a
succeeding year reached the levels specified for Performance
Objectives 3, 4, 5 or 6.
- Revenues and EBITD will reflect revenues and expenses of or
relating to acquired companies (including amortization), as
well as the effect of divestitures, if any.
- Should the Grantee's employment terminate due to death,
disability or termination without cause, all Vested and
Restricted Shares then held by him will continue to be held
by him or his estate, heirs, etc. subject to the terms of
the attached Restricted Stock Agreement, including inability
to sell Restricted Shares before they vest due to the
Company's performance or passage of time.
3. Sale Events. In the event of a Sale Event, as defined in the
-----------
attached Restricted Stock Agreement, any unvested tranches of Shares will be
deemed Vested Shares as of the closing of such transaction (and the Repurchase
and Section 4 of the attached Agreement shall no longer apply to such Shares).
However, the vesting provisions set forth herein will not change upon an Initial
Public Offering (as defined in the attached Restricted Stock Agreement) and the
Repurchase under Section 3 of the attached Restricted Stock Agreement will
remain in effect following any such event.
4. Termination of Vesting. Notwithstanding the foregoing paragraphs
----------------------
of this Exhibit A or any provision of the Restricted Stock Agreement, no
Restricted Shares shall vest after a Termination Event or Bankruptcy and all
Restricted Shares as of the date of any Termination Event or Bankruptcy shall
remain subject to the Repurchase.
5. Adjustment of Target Prices in Certain Events. The numbers of
---------------------------------------------
Shares set forth above will be subject to adjustment in the case of a merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, in which case appropriate and proportionate
adjustments shall be made as provided in the attached Restricted Stock
Agreement, subject to Section 3 of this Exhibit A.
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
12
<PAGE>
Exhibit 10.18
Confidential Treatment Requested
RESTRICTED STOCK AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
NAME OF GRANTEE: Christopher Sweeney
CLASS OF SHARES: Class A Common Stock
NO. OF SHARES: 250,000 GRANT DATE: December 4, 1996
PER SHARE PURCHASE PRICE: $.285
The Company has heretofore completed a recapitalization and refinancing
transaction. Pursuant to the Boron, LePore & Associates, Inc. 1996 Stock Option
and Grant Plan (the "Plan"), Boron, LePore & Associates, Inc., a Delaware
corporation (together with its successors, the "Company"), hereby grants, sells
and issues to the person named above (the "Grantee"), who is an officer or full-
time employee of the Company or any of the Subsidiaries (as defined below) of
the Company, the number of shares of Class A Common Stock, par value $0.01 per
share ("Common Stock"), of the Company indicated above (subject to the
provisions below, the "Shares"), for the per share purchase price specified
above, subject to the terms and conditions set forth herein and in the Plan.
The Grantee agrees to the provisions set forth herein and acknowledges that each
such provision is a material condition of the Company's agreement to issue and
sell the Shares to him. The Company hereby acknowledges receipt of $71,250 in
full payment for the Shares. All references to share prices and amounts herein
shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations, mergers, reorganizations and similar changes affecting the
capital stock of the Company, and any shares of capital stock of the Company
received on or in respect of Shares in connection with any such event (including
any shares of capital stock or any right, option or warrant to receive the same
or any security convertible into or exchangeable for any such shares or received
upon conversion of any such shares) shall be subject to this Agreement on the
same basis and extent at the relevant time as the Shares in respect of which
they were issued, and shall be deemed Shares as if and to the same extent they
were issued at the date hereof.
Section 1. Definitions. For the purposes of this Agreement, the following
--------- -----------
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the
---
rules and regulations thereunder.
<PAGE>
"Bankruptcy" means (i) the filing of a voluntary petition under any
----------
bankruptcy or insolvency law, or a petition for the appointment of a receiver or
the making of an assignment for the benefit of creditors, with respect to the
Grantee or any Permitted Transferee, or (ii) the Grantee or any Permitted
Transferee being subjected involuntarily to such a petition or assignment or to
an attachment or other legal or equitable interest with respect to his assets,
which involuntary petition or assignment or attachment is not discharged within
60 days after its date, and (iii) the Grantee or any Permitted Transferee being
subject to a transfer of Restricted Shares by operation of law, except by reason
of death.
"Common Stock" shall mean the Company's Class A Common Stock,
------------
par value $0.01 per share, together with any shares into which such stock may be
converted or exchanged.
"Initial Public Offering" shall mean the consummation of the
-----------------------
underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4, S-8, S-14 or S-15
or their then equivalents, covering the offer and sale by the Company of its
equity securities, or such other event as a result of or following which the
Common Stock shall be publicly held.
"Permitted Transferees" shall mean any of the following to whom
---------------------
the Grantee may transfer Restricted Shares hereunder: the Grantee's spouse,
parents, children (natural or adopted), stepchildren or grandchildren or a trust
for their principal benefit of which the Grantor is the settlor; provided,
--------
however, that any such trust does not require or permit distribution of any
- -------
Shares during the term of this Agreement unless subject to its terms.
"Restricted Shares" shall mean all of the Shares that are not
-----------------
Vested Shares.
"Sale Event" shall mean any of the following transactions: (a) the
----------
dissolution or liquidation of the Company; (b) the sale of all or substantially
all of the assets of the Company and its Subsidiaries to another person or
entity; (c) a merger, reorganization or consolidation in which the holders of
the Company's outstanding voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction; (d) the sale of the
outstanding stock of the Company to an unrelated person or entity; or (e) any
other transaction or series of transactions where the owners of the Company's
outstanding voting power prior to such transaction do not own at least a
majority of the outstanding voting power of the relevant entity after the
transaction, in each case in which the Investors (as such term is defined in the
certain Stockholders' Agreement dated as of December 4, 1996, to which the
Grantee is a party) receive cash or other assets having a value upon Closing or
effectiveness thereof in excess of $37.5 million plus all accumulated and unpaid
dividends in respect of the shares acquired by them from the Company on December
4, 1996.
"Shares" shall mean the number of shares of Common Stock being
------
purchased by
2
<PAGE>
the Grantee on the date hereof and any additional shares of Common Stock or
other securities received as a dividend on, or otherwise on account of, the
Shares, as contemplated by the first paragraph of this Agreement.
"Subsidiary" shall mean any corporation or partnership of which
----------
stock or other equity interests possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock or other equity interests is
owned directly or indirectly by the Company.
"Termination Event" shall mean the termination of the Grantee's
-----------------
employment with the Company and its subsidiaries as a result of his resignation
or other voluntary retirement at any time or termination at any time for cause
(as such term is defined in Section 7(b) of the Employment Agreement dated as of
December 4, 1996 between the Company and the Grantee).
"Vested Shares" shall mean all of the Shares that have vested in
---------------
accordance with the vesting schedule attached as Exhibit A hereto.
Section 2. Purchase and Sale of Shares; Investment Representations.
--------- -------------------------------------------------------
2.1. Purchase and Sale. On the date hereof, the Company hereby sells to
-----------------
the Grantee, and the Grantee hereby purchases from the Company, the number of
Shares set forth above for the purchase price per share set forth above.
2.2. Investment Representations. In connection with the purchase and sale
--------------------------
of the Shares contemplated by Section 2.1 above, the Grantee hereby represents
and warrants to the Company as follows:
(a) The Grantee is purchasing the Shares for his own account for
investment only, and not for resale or with a view to the distribution thereof.
(b) The Grantee has had such an opportunity as he has deemed
adequate to obtain from the Company such information as is necessary to permit
him to evaluate the merits and risks of his investment in the Company and has
consulted with his own advisers with respect to his investment in the Company.
(c) The Grantee has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such
purchase.
(d) The Grantee is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Act.
(e) The Grantee can afford a complete loss of the value of the
Shares and is
3
<PAGE>
able to bear the economic risk of holding such Shares for an indefinite period.
(f) The Grantee understands that the Shares are not registered
under the Act (it being understood that the Shares are being issued and sold in
reliance on the exemption provided in Rule 701 thereunder) or any applicable
state securities or "blue sky" laws and may not be sold or otherwise transferred
or disposed of in the absence of an effective registration statement under the
Act and under any applicable state securities or "blue sky" laws (or exemptions
from the registration requirements thereof). The Grantee further acknowledges
that certificates representing the Shares will bear restrictive legends
reflecting the foregoing.
Section 3. Repurchase of Restricted Shares.
--------- -------------------------------
3.1. Repurchase. Upon the occurrence of a Termination Event or the
----------
Bankruptcy of the Grantee, the Company or its assigns shall repurchase and the
Grantee and each Permitted Transferee shall sell to it or them all of the
Restricted Shares held by the Grantee or any Permitted Transferee as of the date
of such Termination Event or Bankruptcy at the per share purchase price set
forth above, subject to adjustment as provided above. In addition, upon the
Bankruptcy of any of the Grantee's Permitted Transferees, the Company or its
assigns shall purchase and each such Permitted Transferee shall sell to it or
them all of the Restricted Shares held by such Permitted Transferee as of the
date of such Bankruptcy at a price equal to the per share purchase price set
forth above, also subject to such adjustment. The purchase and sale
arrangements contemplated by the preceding sentences of this Section 3.1 are
referred to herein as the "Repurchase."
3.2. Closing Procedure. The Company or its assigns shall effect the
-----------------
Repurchase by delivering or mailing to the Grantee (and/or, if applicable, his
Permitted Transferees) written notice within six (6) months after the
Termination Event or Bankruptcy, specifying a date within such six-month period
in which the Repurchase shall be effected. Upon such notification, the Grantee
and his Permitted Transferees shall promptly surrender to the Company any
certificates representing the Restricted Shares being purchased, together with a
duly executed stock power for the transfer of such Restricted Shares to the
Company or the Company's assignee or assignees (as contemplated by Section 6, if
applicable). Upon the Company's or its assignee's receipt of the certificates
from the Grantee or his Permitted Transferees, the Company or its assignee or
assignees shall deliver to him, her or them a check for the purchase price of
the Restricted Shares being purchased, provided, however, that the Company may
pay the purchase price for such shares by offsetting and canceling any
indebtedness then owed by the Grantee to the Company. At such time, the Grantee
and/or any holder of the Restricted Shares shall deliver to the Company the
certificate or certificates representing the Restricted Shares so repurchased,
duly endorsed for transfer, free and clear of any liens or encumbrances. The
Repurchase obligation specified herein shall survive and remain in effect as to
Restricted Shares following and notwithstanding any public offering by or merger
or other transaction involving the Company and certificates representing such
Restricted Shares shall bear legends to such effect.
4
<PAGE>
3.3. Remedy. Without limitation of any other provision of this Agreement
------
or other rights, in the event that the Grantee, his or her Permitted Transferees
or any other person or entity is required to sell his or her Restricted Shares
pursuant to the provisions of this Section 3 and in the further event that he or
she refuses or for any reason fails to deliver to the designated purchaser of
such Restricted Shares the certificate or certificates evidencing such
Restricted Shares together with a related stock power, such designated purchaser
may deposit the purchase price for such Restricted Shares with any bank doing
business within fifty (50) miles of the Company's principal office, or with the
Company's independent public accounting firm, as agent or trustee, or in escrow,
for the Grantee, his or her Permitted Transferees or other person or entity, to
be held by such bank or accounting firm for the benefit of and for delivery to
him, them or it, and/or, in its discretion, pay such purchase price by
offsetting any indebtedness then owed by the Grantee as provided above. Upon
any such deposit and/or offset by the designated purchaser of such amount and
upon notice to the person or entity who was required to sell the Restricted
Shares to be sold pursuant to the provisions of this Section 3, such Restricted
Shares shall at such time be deemed to have been sold, assigned, transferred and
conveyed to such purchaser, the holder thereof shall have no further rights
thereto (other than the right to withdraw the payment thereof held in escrow, if
applicable), and the Company shall record such transfer in its stock transfer
book or in any appropriate manner.
Section 4. Restrictions on Transfer of Shares.
--------- ----------------------------------
(a) General. None of the Shares now owned or hereafter acquired
-------
shall be sold, assigned, transferred, pledged, hypothecated, given away or in
any other manner disposed of or encumbered, whether voluntarily or by operation
of law, unless such transfer is in compliance with all applicable securities
laws (including, without limitation, the Act), and such disposition is in
accordance with the terms and conditions of this Section 4. In connection with
any transfer of Shares, the Company may require the transferor to provide at his
or her own expense an opinion of counsel to the transferor, satisfactory to the
Company, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Shares not in accordance with the terms and conditions of this
Section 4 shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Shares. Subject to the
foregoing general provisions, Shares may be transferred pursuant to the
following specific terms and conditions:
(b) Transfers to Permitted Transferees. The Grantee may sell,
----------------------------------
assign, transfer or give away any or all of the Shares to Permitted Transferees;
provided, however, that such Permitted Transferee(s) shall, as a condition to
- -------- -------
any such transfer, agree to be subject to the provisions of this Agreement
(including, without limitation, the provisions of Section 3 and this Section 4)
and shall have delivered a written acknowledgment to that effect to the Company.
5
<PAGE>
(c) Transfers Upon Death. Upon the death of the Grantee or any
--------------------
Permitted Transferee the Shares may be transferred by operation of law to the
estate, legal representatives, executors and administrators of the Grantee or
any such Permitted Transferee. Any Shares which are Restricted Shares at the
time at such death shall be subject to the Repurchase and all other Shares shall
be and remain subject to Section 4(d), if applicable, and the Grantee's and any
Permitted Transferee's estate, executors, administrators, personal
representatives, heirs, legatees and distributees shall be obligated to convey
such Shares to the Company or its assigns if and to the extent contemplated
hereby.
(d) Other Transfers; Notice; Right of First Refusal. In the
-----------------------------------------------
event that the Grantee (or any transferee holding Shares subject to this Section
4(d)) desires to sell or otherwise transfer all or any part of the Vested Shares
(but in no event Restricted Shares, which shall not be sold or transferred
except as contemplated by Section 3.1, Section 4(b) or (c) or Exhibit A), the
Grantee shall first comply with the provisions of the Stockholders' Agreement
dated as of December 4, 1996 to which the Grantee is a party and thereafter
shall give written notice to the Company of his intention to make such transfer.
Such notice shall state the number of Vested Shares which the Grantee proposes
to sell (the "Offered Shares"), the price and the terms at which the proposed
sale is to be made and the name and address of the proposed transferee. At any
time within 10 days after the receipt of such notice by the Company, the Company
or its assigns may elect to purchase all or any portion of the Offered Shares at
the price and on the terms offered by the proposed transferee and specified in
the notice. The Company or its assigns shall exercise this right by mailing or
delivering written notice to the Grantee within the foregoing 10-day period. If
the Company or its assigns elect to exercise its purchase rights of this Section
4(d), the closing for such purchase shall, in any event, take place within 30
days after the receipt by the Company of the initial notice from the Grantee. In
the event that the Company or its assigns do not elect to exercise such purchase
right, or in the event that the Company or its assigns do not pay the full
purchase price within such 30-day period, the Grantee may, within 60 days
thereafter, sell the Offered Shares to the proposed transferee and at the same
price and on the same terms as specified in his notice. Any Shares purchased by
such proposed transferee shall no longer be subject to the terms of this
Agreement. The provisions of this Section 4(d) shall terminate upon the closing
of an Initial Public Offering.
Section 5. Legend. Any certificate(s) representing the Shares shall carry
------
substantially the following legends:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against
transfers) contained in a certain Restricted Stock Agreement dated
December 4, 1996 between the Company and the holder of this
certificate (a copy of which is available at the offices of the
Company for examination)."
6
<PAGE>
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws
of any state. The shares may not be sold or transferred in the
absence of such registration or an exemption from registration."
Section 6. Escrow. In order to carry out the provisions of Sections 3 and
--------- ------
4 of this Agreement more effectively, the Company shall hold the Shares in
escrow together with separate stock powers executed by the Grantee in blank for
transfer, and any Permitted Transferee shall, as an additional condition to any
transfer of Shares, execute a like stock power as to such Shares. The Company
shall not dispose of the Shares except as otherwise provided in this Agreement.
In the event of any Repurchase, the Company is hereby authorized by the Grantee
and each Permitted Transferee, as the Grantee's and each such Permitted
Transferee's attorney-in-fact, to date and complete the stock powers necessary
for the transfer of the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no longer
Restricted Shares, the Company shall, at the written request of the Grantee,
deliver to the Grantee (or the relevant Permitted Transferee) a certificate
representing such Shares with the balance of the Shares to be held in escrow
pursuant to this Section 6.
Section 7. Assignment. At the discretion of the Board of Directors of the
--------- ----------
Company, the Company shall have the right to assign the right to exercise its
obligation and rights with respect to the Repurchase or pursuant to Section 4(d)
to any person or persons, in whole or in part in any particular instance, upon
the same terms and conditions applicable to the exercise thereof by the Company,
and such assignee or assignees of the Company shall then take and hold any
Shares so acquired subject to such terms as may be specified by the Company in
connection with any such assignment.
Section 8. Miscellaneous Provisions.
--------- ------------------------
8.1. Termination. The restrictions on transfer of Vested Shares under
-----------
Section 4(d) shall terminate on the closing of an Initial Public Offering;
provided, however, that all other provisions shall remain in effect following
the same until all of the Shares have become Vested Shares.
8.2. Record Owner; Dividends. The Grantee and any Permitted Transferees,
-----------------------
during the duration of this Agreement, shall be considered the record owners of
and shall be entitled to vote the Shares. The Grantee and any Permitted
Transferees shall be entitled to receive all dividends and any other
distributions declared on the Shares; provided, however, that the Company is
under no duty to declare any such dividends or to make any such distribution.
8.3. Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies are inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this
7
<PAGE>
Agreement.
8.4. Change and Modifications. This Agreement may not be orally changed,
------------------------
modified or terminated, nor shall any oral waiver of any of its terms be
effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Grantee.
8.5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
8.6. Headings. The headings are intended only for convenience in finding
--------
the subject matter and do not constitute part of the text of this Agreement and
shall not be considered in the interpretation of this Agreement.
8.7. Saving Clause. If any provision(s) of this Agreement shall be
-------------
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
8.8. Notices. All notices, requests, consents and other communications
-------
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage prepaid. Notices to the Company or the Grantee shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other. Notices to any holder of the Shares other than the Grantee shall be
addressed to the address furnished by such holder to the Company.
8.9. Benefit and Binding Effect. This Agreement shall be binding upon and
--------------------------
shall inure to the benefit of the parties hereto, their respective successors,
assigns, and legal representatives. The Company has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of the
Company hereunder to the extent of such assignment.
8.10. Counterparts. For the convenience of the parties and to facilitate
------------
execution, this Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
8
<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
------------------------------
Name: Patrick G. LePore
Title: President
GRANTEE
/s/ Christopher Sweeney
----------------------------------
Christopher Sweeney
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, NJ 07410
9
<PAGE>
EXHIBIT A
Vesting Schedule
----------------
1. Time-Based Vesting. The Shares shall vest and become Vested
------------------
Shares, to the extent not previously vested or repurchased, on December 4, 2003.
2. Vesting Events. Notwithstanding the foregoing, Shares shall vest
--------------
and become Vested Shares upon attainment of one or more specified Performance
Objectives as set forth below.
For purposes of vesting the Shares shall be deemed divided into five
equal tranches of 60,000 shares each (subject to adjustment for stock splits and
the like as provided in the attached Restricted Stock Agreement). An
incremental tranche of Shares will vest each time an incremental Performance
Objective set forth below is achieved (i.e., if only two Performance Objectives
are achieved only two tranches (or 40%) of shares will vest whereas all five
tranches will vest if five Performance Objectives are achieved). Vesting shall
be deemed effective as of the closing of the transaction (in the case of the
first Performance Objective) or as of the last day of the calendar year to which
the Performance Objective relates (in the case of Performance Objectives 2
through 6). Determination of whether a Performance Objective has been met will
be based (in the case of Performance Objectives 2 through 6) conclusively on the
Company's audited financial statements for the relevant year following
preparation thereof.
The "Performance Objectives" are:
1. Redemption prior to December 3, 1998 of the Company's Redeemable
Preferred Stock (or Convertible Preferred Stock) for a cash
payment in the amount of not less than $10 million plus all
accumulated and unpaid dividends.
2. Achievement of both revenues of $ * or more and earnings before
interest, taxes and depreciation but after giving effect to
amortization, and provided that EBITD shall not reflect the
transactions described in Schedule 4.1 to that certain Preferred
Stock Purchase Agreement dated as of December 4, 1996 ("EBITD")
of $ * or more in any calendar year.
3. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
10
<PAGE>
4. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
5. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
6. Achievement of both revenues of $ * or more and EBITD of $ * or
more in any calendar year.
For purposes of the foregoing:
- A maximum of five performance objectives may be achieved.
Thus, Performance Objective number 6 can be relevant only if
Performance Objective number 1 is not attained by December 3,
1998; if Performance Objective number 1 is attained by then,
attainment of Performance Objective number 6 cannot result in
additional vesting.
- More than one Performance Objective may be achieved (and
accordingly more than one tranche of Shares may become Vested
Shares) in any year. For example, if in 1997 revenues were $
* EBITD was $ * and the Redeemable Preferred Stock was
redeemed in full, three tranches of shares (60%) would vest,
with one tranche vesting as of the redemption date and two
tranches vesting as of December 31, 1997.
- Vesting may be "caught up." For example, if revenues were $ *
and EBITD was $ * in 1997, and revenues were $ * and EBITD
was $ * million in 1998, no tranches would vest in 1997 but
two would vest as of December 31, 1998.
- The revenues and EBITD tests are conjunctive (i.e., if a
revenues objective is met in a given year but the related
EBITD test is not met, vesting of a tranche will not occur;
vesting could occur if both tests were met in a subsequent
year).
- Once a Performance Objective has been achieved, resulting in
the vesting of a tranche, an additional tranche can vest only
if the revenues and EBITD move to the next level of
Performance Objective (or upon redemption the preferred stock
within two years). For example, if
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
11
<PAGE>
revenues were $ * and EBITD was $ * for 1997 one tranche
would vest, and if revenues and EBITD were the same in the
following year no additional tranches would vest. The next
tranche would only vest when revenues and EBITD for a
succeeding year reached the levels specified for Performance
Objectives 3, 4, 5 or 6.
- Revenues and EBITD will reflect revenues and expenses of or
relating to acquired companies (including amortization), as
well as the effect of divestitures, if any.
- Should the Grantee's employment terminate due to death,
disability or termination without cause, all Vested and
Restricted Shares then held by him will continue to be held
by him or his estate, heirs, etc. subject to the terms of the
attached Restricted Stock Agreement, including inability to
sell Restricted Shares before they vest due to the Company's
performance or passage of time.
3. Sale Events. In the event of a Sale Event, as defined in the
-----------
attached Restricted Stock Agreement, any unvested tranches of Shares will be
deemed Vested Shares as of the closing of such transaction (and the Repurchase
and Section 4 of the attached Agreement shall no longer apply to such Shares).
However, the vesting provisions set forth herein will not change upon an Initial
Public Offering (as defined in the attached Restricted Stock Agreement) and the
Repurchase under Section 3 of the attached Restricted Stock Agreement will
remain in effect following any such event.
4. Termination of Vesting. Notwithstanding the foregoing
----------------------
paragraphs of this Exhibit A or any provision of the Restricted Stock Agreement,
no Restricted Shares shall vest after a Termination Event or Bankruptcy and all
Restricted Shares as of the date of any Termination Event or Bankruptcy shall
remain subject to the Repurchase.
5. Adjustment of Target Prices in Certain Events. The numbers of
---------------------------------------------
Shares set forth above will be subject to adjustment in the case of a merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, in which case appropriate and proportionate
adjustments shall be made as provided in the attached Restricted Stock
Agreement, subject to Section 3 of this Exhibit A.
- ----------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
12
<PAGE>
Exhibit 10.19
RESTRICTED STOCK AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
1996 STOCK OPTION AND GRANT PLAN
NAME OF GRANTEE: Timothy J. McIntyre
CLASS OF SHARES: Class A Common Stock
NO. OF SHARES: 20,000
PER SHARE PURCHASE PRICE: $0.285 DATE: June 6, 1997
AGGREGATE PURCHASE PRICE: $5,700
Pursuant to the Boron, LePore & Associates, Inc. 1996 Stock Option and
Grant Plan (the "Plan"), Boron, LePore & Associates, Inc., a Delaware
corporation (together with its successors, the "Company"), has heretofore
granted and hereby issues and sells to the person named above (the "Grantee"),
who is an officer or full-time employee of the Company or any of the
Subsidiaries (as defined below) of the Company, the number of shares of Class A
Common Stock, par value $0.01 per share ("Common Stock"), of the Company
indicated above (subject to the provisions below, the "Shares"), for the per
share purchase price specified above, subject to the terms and conditions set
forth herein and in the Plan. The Grantee agrees to the provisions set forth
herein and acknowledges that each such provision is a material condition of the
Company's issuance and sale of the Shares to him. The Company hereby
acknowledges receipt of the amount specified above in full payment for the
Shares. All references to share prices and amounts herein shall be equitably
adjusted to reflect stock splits, stock dividends, recapitalizations, mergers,
reorganizations and similar changes affecting the capital stock of the Company,
and any shares of capital stock of the Company received on or in respect of
Shares in connection with any such event (including any shares of capital stock
or any right, option or warrant to receive the same or any security convertible
into or exchangeable for any such shares or received upon conversion of any such
shares) shall be subject to this Agreement on the same basis and extent at the
relevant time as the Shares in respect of which they were issued, and shall be
deemed Shares as if they were issued at the date hereof.
Section 1. Definitions. For the purposes of this Agreement, the following
--------- -----------
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules
---
and regulations thereunder.
"Bankruptcy" means (i) the filing of a voluntary petition under any
----------
bankruptcy or insolvency law, or a petition for the appointment of a receiver or
the making of an assignment for the benefit of creditors, with respect to the
Grantee or any Permitted
1
<PAGE>
Transferee, or (ii) the Grantee or any Permitted Transferee being subjected
involuntarily to such a petition or assignment or to an attachment or other
legal or equitable interest with respect to his assets, which involuntary
petition or assignment or attachment is not discharged within 60 days after its
date, and (iii) the Grantee or any Permitted Transferee being subject to a
transfer of Restricted Shares by operation of law, except by reason of death.
"Common Stock" shall mean the Company's Class A Common Stock, par
------------
value $0.01 per share, together with any shares into which Common Stock may be
converted or exchanged.
"Initial Public Offering" shall mean the consummation of the first
-----------------------
fully underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4 or S-8 or their
then equivalents, covering the offer and sale by the Company of its equity
securities, or such other event as a result of or following which the Common
Stock shall be publicly held.
"Permitted Transferees" shall mean any of the following to whom the
---------------------
Grantee may transfer Shares hereunder: the Grantee's spouse, parents, children
(natural or adopted), stepchildren or grandchildren or a trust for their
principal benefit of which the Grantor is the settlor; provided, however, that
-------- -------
any such trust does not require or permit distribution of any Shares during the
term of this Agreement unless subject to its terms.
"Restricted Shares" shall mean all of the Shares that are not Vested
-----------------
Shares at the relevant date of determination.
"Sale Event" shall mean any of the following transactions: (a) the
----------
dissolution or liquidation of the Company; (b) the sale of all or substantially
all of the assets of the Company and its Subsidiaries to another person or
entity; (c) a merger, reorganization or consolidation in which the holders of
the Company's outstanding voting power immediately prior to such transaction do
not own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction; (d) the sale of the
outstanding stock of the Company to an unrelated person or entity; or (e) any
other transaction or series of transactions where the owners of the Company's
outstanding voting power prior to such transaction do not own at least a
majority of the outstanding voting power of the relevant entity after the
transaction, in each case in which the Investors (as such term is defined in the
certain Stockholders' Agreement dated as of December 4, 1996), receive cash or
other assets having a value upon closing or effectiveness thereof in excess of
$37.5 million plus all accumulated and unpaid dividends in respect of the shares
acquired by them from the Company on December 4, 1996.
2
<PAGE>
"Shares" shall mean the number of shares of Common Stock being
------
purchased by the Grantee on the date hereof and any additional shares of Common
Stock or other securities received as a dividend on, or otherwise on account of,
the Shares, as contemplated by the first paragraph of this Agreement.
"Subsidiary" shall mean any corporation or partnership of which stock
----------
or other equity interests possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock or other equity interests is owned
directly or indirectly by the Company.
"Termination Event" shall mean the termination of the Grantee's
-----------------
employment with the Company and its subsidiaries as a result of his resignation
or other voluntary termination or retirement at any time regardless of the
circumstances thereof, or termination of such employment by the Company at any
time for "cause," with the Board of Directors of the Company having the right to
its sole discretion, exercised in good faith, to determine the cause of any
termination of the Grantee's employment. For purposes hereof the employment of
the Grantee shall be deemed to have been terminated "for cause" if such
termination results from:
(i) the Grantee's commission of an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Company or any of
its subsidiaries, or conviction by a court of competent jurisdiction of, or
pleading guilty or nolo contendere to, any felony or any crime involving
moral turpitude; or
(ii) the Grantee's commission of a breach of any of the
covenants, terms or provisions of any agreement with the Company, which
breach has not been remedied within thirty (30) days after delivery to the
Grantee by the Company of written notice of the facts constituting the
breach; or
(iii) the Grantee's failure to comply with reasonable written
instructions from the Company's Chief Executive Officer or Board of
Directors, or the Grantee's substantial failure to perform his duties as an
employee of the Company or any of its Subsidiaries for a period of thirty
(30) days after written notice from the Company.
"Vested Shares" shall mean all of the Shares as of the close of
-------------
business on December 31, 1997, it being understood that all of the Shares shall
be deemed vested as of such time provided that prior thereto no Termination
Event or Bankruptcy shall have occurred.
Section 2. Purchase and Sale of Shares; Investment Representations.
--------- -------------------------------------------------------
2.1. Purchase and Sale. On the date hereof, the Company hereby sells to
-----------------
the Grantee, and the Grantee hereby purchases from the Company, the number of
Shares set forth above for the purchase price per share set forth above.
3
<PAGE>
2.2. Investment Representations. In connection with the purchase and sale
--------------------------
of the Shares contemplated by Section 2.1 above, the Grantee hereby represents
and warrants to the Company as follows:
(a) The Grantee is purchasing the Shares for his own account for
investment only, and not for resale or with a view to the distribution thereof.
(b) The Grantee has had such an opportunity as he has deemed adequate
to obtain from the Company such information as is necessary to permit him to
evaluate the merits and risks of an investment in the Company and has consulted
with his own advisers with respect to his investment in the Company.
(c) The Grantee has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the purchase of
the Shares and to make an informed investment decision with respect to such
purchase.
(d) The Grantee can afford a complete loss of the value of the Shares
and is able to bear the economic risk of holding such Shares for an indefinite
period.
(e) The Grantee understands that the Shares are not registered under
the Act (it being understood that the Shares are being issued and sold in
reliance on the exemption provided in Rule 701 thereunder) or any applicable
state securities or "blue sky" laws and may not be sold or otherwise transferred
or disposed of in the absence of an effective registration statement under the
Act and under any applicable state securities or "blue sky" laws (or exemptions
from the registration requirements thereof). The Grantee further acknowledges
that certificates representing the Shares will bear restrictive legends
reflecting the foregoing.
Section 3. Repurchase of Restricted Shares.
--------- -------------------------------
3.1. Repurchase. Upon the occurrence of a Termination Event or the
----------
Bankruptcy of the Grantee, the Company or its assigns shall repurchase and the
Grantee and each Permitted Transferee shall sell to it or them all of the
Restricted Shares held by the Grantee or any Permitted Transferee as of the date
of such Termination Event or Bankruptcy at the per share purchase price set
forth above, subject to adjustment as provided above. In addition, upon the
Bankruptcy of any of the Grantee's Permitted Transferees, the Company or its
assigns shall purchase and each such Permitted Transferee shall sell to it or
them all of the Restricted Shares held by such Permitted Transferee as of the
date of such Bankruptcy at a price equal to the per share purchase price set
forth above, also subject to such adjustment. The purchase and sale
arrangements contemplated by the preceding sentences of this Section 3.1 are
referred to herein as the "Repurchase."
3.2. Closing Procedure. The Company or its assigns shall effect the
-----------------
Repurchase by delivering or mailing to the Grantee (and/or, if applicable, his
Permitted Transferees) written notice within six (6) months after the
Termination Event or Bankruptcy, specifying a date
4
<PAGE>
within such six-month period in which the Repurchase shall be effected. Upon
such notification, the Grantee and his Permitted Transferees shall promptly
surrender to the Company any certificates representing the Restricted Shares
being purchased, together with a duly executed stock power for the transfer of
such Restricted Shares to the Company or the Company's assignee or assignees (as
contemplated by Section 6, if applicable). Upon the Company's or its assignee's
receipt of the certificates from the Grantee or his Permitted Transferees, the
Company or its assignee or assignees shall deliver to him or them a check for
the purchase price of the Restricted Shares being purchased, provided, however,
that the Company may pay the purchase price for such shares by offsetting and
canceling any indebtedness then owed by the Grantee to the Company. At such
time, the Grantee and/or any holder of the Restricted Shares shall deliver to
the Company the certificate or certificates representing the Restricted Shares
so repurchased, duly endorsed for transfer, free and clear of any liens or
encumbrances, as contemplated by Section 6, if applicable.
3.3 Sale Events. Upon the occurrence of a Sale Event, all of the Shares
-----------
shall be deemed Vested Shares. However, the vesting provisions and the
Repurchase set forth herein will remain in effect and not change upon an initial
public offering or other public offering.
3.4. Remedy. Without limitation of any other provision of this Agreement
------
or other rights, in the event that the Grantee, his Permitted Transferees or any
other person or entity is required to sell his Restricted Shares pursuant to the
provisions of this Section 3 and in the further event that he refuses or for any
reason fails to deliver to the designated purchaser of such Restricted Shares
the certificate or certificates evidencing such Restricted Shares together with
a related stock power, such designated purchaser may deposit the purchase price
for such Restricted Shares with any bank doing business within fifty (50) miles
of the Company's principal office, or with the Company's independent public
accounting firm, as agent or trustee, or in escrow, for the Grantee, his
Permitted Transferees or other person or entity, to be held by such bank or
accounting firm for the benefit of and for delivery to him, them or it, and/or,
in its discretion, pay such purchase price by offsetting any indebtedness then
owed by the Grantee as provided above. Upon any such deposit and/or offset by
the designated purchaser of such amount and upon notice to the person or entity
who was required to sell the Restricted Shares to be sold pursuant to the
provisions of this Section 3, such Restricted Shares shall at such time be
deemed to have been sold, assigned, transferred and conveyed to such purchaser,
the holder thereof shall have no further rights thereto (other than the right to
withdraw the payment thereof held in escrow, if applicable), and the Company
shall record such transfer in its stock transfer book or in any appropriate
manner.
Section 4. Restrictions on Transfer of Shares. None of the Shares now
--------- ----------------------------------
owned or hereafter acquired shall be sold, assigned, transferred, pledged,
hypothecated, given away or in any other manner disposed of or encumbered,
whether voluntarily or by operation of law, unless such transfer is in
compliance with all applicable securities laws (including, without limitation,
the Act), and such disposition is in accordance with the terms and conditions of
this Section 4. In connection with any transfer of Shares, the Company may
require the transferor to provide at his own expense an opinion of counsel to
the transferor, satisfactory to the
5
<PAGE>
Company, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Shares not in accordance with the terms and conditions of this
Section 4 shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Shares. Subject to the
foregoing general provisions, Shares may be transferred pursuant to the
following specific terms and conditions:
(a) Transfers to Permitted Transferees. The Grantee may sell, assign,
----------------------------------
transfer or give away any or all of the Shares to Permitted Transferees;
provided, however, that such Permitted Transferee(s) shall, as a condition to
- -------- -------
any such transfer, agree to be subject to the provisions of this Agreement
(including, without limitation, the provisions of Section 3 and this Section 4)
and shall have delivered a written acknowledgment to that effect to the Company.
(b) Transfers Upon Death. Upon the death of the Grantee or any
--------------------
Permitted Transferee, the Shares may be transferred by operation of law to the
estate, legal representative, executors and administrators of the Grantee or any
such Permitted Transferee. Any Shares which are Restricted Shares at the time of
such death shall remain subject to the terms of this Agreement (including
Sections 3 and 4 to the extent applicable), and the Grantee's and any Permitted
Transferee's estate, executors, administrators, personal representatives, heirs,
legatees and distributees shall be obligated to convey such Shares to the
Company or its assigns if and to the extent contemplated hereby.
(c) Other Transfers; Notice; Right of First Refusal. In the event
-----------------------------------------------
that the Grantee (or any transferee holding Shares subject to this Section 4(c))
desires to sell or otherwise transfer all or any part of the Vested Shares (but
in no event Restricted Shares, which shall not be sold or transferred except as
contemplated by Section 3.1, 3.3 or 4(a) or (b)), the Grantee first shall give
written notice to the Company of such proposed transfer. Such notice shall state
the number of Vested Shares which the Grantee or the Permitted Transferee
proposes to sell (the "Offered Shares"), the price and the terms at which the
proposed sale is to be made and the name and address of the proposed transferee.
At any time within 30 days after the receipt of such notice by the Company, the
Company or its assigns may elect to purchase all or any portion of the Offered
Shares at the price and on the terms offered by the proposed transferee and
specified in the notice. The Company or its assigns shall exercise this right
by mailing or delivering written notice to the Grantee or the Permitted
Transferee within the foregoing 30-day period. If the Company or its assigns
elect to exercise their purchase rights of this Section 4(c), the closing for
such purchase shall, in any event, take place within 30 days after the receipt
by the Company of the initial notice of the proposed transfer. In the event
that the Company or its assigns do not elect to exercise such purchase right, or
in the event that the Company or its assigns do not pay the full purchase price
within such 30-day period, the Grantee or the Permitted Transferee may, within
60 days thereafter, sell the Offered Shares to the proposed transferee and at
the same price and on the same terms
6
<PAGE>
as specified in his notice. Any Shares purchased by such proposed transferee
shall no longer be subject to the terms of this Agreement.
(d) Stand-Off. The Grantee and each Permitted Transferee shall agree,
---------
if requested by the Company and any underwriter engaged by the Company, not to
sell or otherwise transfer or dispose of any securities of the Company
(including, without limitation pursuant to Rule 144 under the Act (or any
successor or similar exemptive rule hereafter in effect)) held by them for such
period following the effective date of any registration statement of the Company
filed under the Act as the Company or such underwriter shall specify reasonably
and in good faith, not to exceed 180 days in the case of the Company's Initial
Public Offering or 90 days in the case of any other public offering.
Section 5. Legend. Any certificate(s) representing the Shares shall carry
--------- ------
substantially the following legends:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against transfers)
contained in a certain Restricted Stock Agreement dated June __, 1997
between the Company and the holder of this certificate (a copy of
which is available at the offices of the Company for examination)."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the securities laws of
any state. The shares may not be sold or transferred in the absence
of such registration or an exemption from registration."
Section 6. Escrow. In order to carry out the provisions of Sections 3 and
--------- ------
4 of this Agreement more effectively, the Company shall hold the Shares in
escrow together with separate stock powers executed by the Grantee in blank for
transfer, and any Permitted Transferee shall, as an additional condition to any
transfer of Shares, execute a like stock power as to such Shares. The Company
shall not dispose of the Shares except as otherwise provided in this Agreement.
In the event of any Repurchase, the Company is hereby authorized by the Grantee
and each Permitted Transferee, as the Grantee's and each such Permitted
Transferee's attorney-in-fact, to date and complete the stock powers necessary
for the transfer of the Shares being purchased and to transfer such Shares in
accordance with the terms hereof. At such time as any Shares are no longer
Restricted Shares, the Company shall, at the written request of the Grantee,
deliver to the Grantee (or the relevant Permitted Transferee) a certificate
representing such Shares with the balance of the Shares to be held in escrow
pursuant to this Section 6.
Section 7. Withholding Taxes. The Grantee acknowledges and agrees that
--------- -----------------
the Company or any of its Subsidiaries have the right to deduct from payments of
any kind
7
<PAGE>
otherwise due to the Grantee, or from the Shares held pursuant to Section 6
hereof, any federal, state or local taxes of any kind required by law to be
withheld with respect to the purchase of the Shares by the Grantee. In
furtherance of the foregoing the Grantee agrees to elect, in accordance with
Section 83(b) of the Internal Revenue Code of 1986, as amended, to recognize
ordinary income in the year of acquisition of the Shares, and to pay to the
Company all withholding taxes shown as due on his Section 83(b) election form,
or otherwise ultimately determined to be due with respect to such election,
based on the excess, if any, of the fair market value of such Shares as of the
date of the purchase of such Shares by the Grantee over the purchase price for
such Shares.
Section 8. Assignment. At the discretion of the Board of Directors of the
--------- ----------
Company, the Company shall have the right to assign the right to exercise its
obligation and rights with respect to the Repurchase or pursuant to Section 4(c)
to any person or persons, in whole or in part in any particular instance, upon
the same terms and conditions applicable to the exercise thereof by the Company,
and such assignee or assignees of the Company shall then take and hold any
Shares so acquired subject to such terms as may be specified by the Company in
connection with any such assignment.
Section 9. Miscellaneous Provisions.
--------- ------------------------
9.1. Termination. The restrictions on transfer of Vested Shares under
-----------
Section 4(c) shall terminate on an Initial Public Offering; provided, however,
that all other provisions shall remain in effect following the same until all of
the Shares have become Vested Shares.
9.2. Record Owner; Dividends. The Grantee and any Permitted Transferees,
-----------------------
during the duration of this Agreement, shall be considered the record owners of
and shall be entitled to vote the Shares (if and to the extent such Shares are
entitled to vote). The Grantee and any Permitted Transferees shall be entitled
to receive all dividends and any other distributions declared on the Shares;
provided, however, that the Company is under no duty to declare any such
dividends or to make any such distribution.
9.3. Equitable Relief. The parties hereto agree and declare that
----------------
legal remedies are inadequate to enforce the provisions of this Agreement and
that equitable relief, including specific performance and injunctive relief, may
be used to enforce the provisions of this Agreement.
9.4. Change and Modifications. This Agreement may not be orally changed,
------------------------
modified or terminated, nor shall any oral waiver of any of its terms be
effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Grantee.
9.5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
8
<PAGE>
9.6. Headings. The headings are intended only for convenience in finding
--------
the subject matter and do not constitute part of the text of this Agreement and
shall not be considered in the interpretation of this Agreement.
9.7. Saving Clause. If any provision(s) of this Agreement shall be
-------------
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
9.8. Notices. All notices, requests, consents and other communications
-------
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage prepaid. Notices to the Company or the Grantee shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other. Notices to any holder of the Shares other than the Grantee shall be
addressed to the address furnished by such holder to the Company.
9.9. Benefit and Binding Effect. This Agreement shall be binding upon and
--------------------------
shall inure to the benefit of the parties hereto, their respective successors,
assigns, and legal representatives. This Agreement supersedes and replaces all
prior agreements or understandings, written, oral or otherwise, with respect to
the Shares subject hereto and the terms applicable thereto. The Company has the
right to assign this Agreement, and such assignee shall become entitled to all
the rights of the Company hereunder to the extent of such assignment.
9.10. Counterparts. For the convenience of the parties and to facilitate
------------
execution, this Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement
as of June 6, 1997.
BORON, LEPORE & ASSOCIATES, INC.
By:/s/ Patrick G. LePore
--------------------------------
Patrick G. LePore, President
GRANTEE
/s/ Timothy J. McIntyre
-----------------------------------
Timothy J. McIntyre
-----------------------------------
-----------------------------------
Address
10
<PAGE>
Exhibit 10.20
Confidential Treatment Requested
--------------------------------
Incentive Stock Option Agreement
under the Boron, LePore & Associates, Inc.
1996 Stock Option and Grant Plan
Name of Optionee: Timothy J. McIntyre
No./Class of Option Shares: 300,000 Shares of Class A Common Stock
Grant Date: June 9, 1997
Expiration Date: June 9, 2007
Option Exercise Price/Share: $6.30
Pursuant to the Boron, LePore & Associates, Inc. 1996 Stock Option and
Grant Plan (the "Plan"), Boron, LePore & Associates, Inc., a Delaware
corporation (the "Company"), hereby grants to the person named above (the
"Optionee"), who is an officer or full-time employee of the Company or any of
its subsidiaries, an option (the "Stock Option") to purchase on or prior to the
expiration date specified above (the "Expiration Date") all or any part of the
number of shares of Class A Common Stock, par value $0.01 per share ("Common
Stock"), of the Company indicated above (the "Option Shares"), at the per share
option exercise price specified above, subject to the terms and conditions set
forth in this Incentive Stock Option Agreement (the "Agreement") and in the
Plan. This Stock Option is intended to qualify as an "incentive stock option"
as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
from time to time (the "Code"). To the extent that any portion of the Stock
Option does not so qualify (e.g. upon vesting of more than $100,000 of options
in any year based on exercise price or in the event of a disqualifying
disposition), it shall be deemed a non-qualified stock option. All capitalized
terms used herein and not otherwise
<PAGE>
defined shall have the respective meanings set forth in the Plan.
1. Vesting and Exercisability.
--------------------------
(a) No portion of this Stock Option may be exercised until such
portion shall have vested.
(b) Except as set forth below and in Section 6, and subject to the
determination of the Compensation Committee of the Board of Directors of the
Company or the Board of Directors of the Company, as applicable (the
"Committee"), in its sole discretion to accelerate the vesting schedule
hereunder, this Stock Option shall be vested and exercisable as provided in
Schedule A hereto.
- ----------
(c) In the event that the Optionee's Service Relationship (as
hereinafter defined) with the Company and its subsidiaries terminates for any
reason or under any circumstances, including the Optionee's resignation,
retirement or termination by the Company, upon the Optionee's death or
disability, or for any other reason, regardless of the circumstances thereof, or
in the event that as of October 1, 1997, the Optionee has failed to permanently
relocate to the greater New York Metropolitan area, this Stock Option shall no
longer vest or become exercisable with respect to any Option Shares not vested
as of the date of such termination from and after the date of such termination,
except as provided in Section 1(d) and Section 5 of Schedule A hereto, and this
----------
Stock Option may thereafter be exercised, to the extent it was vested and
exercisable on such date of such termination or as of October 1, 1997, if
applicable, until the Expiration Date contemplated by Section 1(d). Except as
the Committee may otherwise determine, after either such event this Stock Option
shall be null and void as to any Option Shares not then vested. For purposes
hereof, a "Service Relationship"
2
<PAGE>
shall mean any relationship as an employee, part-time employee or consultant of
the Company or any subsidiary of the Company such that, for example, a Service
Relationship shall be deemed to continue without interruption in the event the
Optionee's status changes from full-time employee to part-time employee or
consultant.
(d) Once any portion of this Stock Option becomes vested and
exercisable, it shall continue to be exercisable by the Optionee or his
successors as contemplated herein at any time or times prior to the earlier of
(i) the date which is 12 months following the date on which the Optionee's
Service Relationship with the Company and its subsidiaries terminates due to
death or disability or for three months following the date on which the
Optionee's Service Relationship with the Company and its subsidiaries terminates
if the termination is due to any other reason, except as provided in Section 5
of Schedule A, or (ii) June 9, 2007, subject to the provisions hereof,
----------
including, without limitation, Section 7 hereof which provides for the
termination of unexercised options upon completion of certain transactions as
described therein (the "Expiration Date").
(e) It is understood and intended that this Stock Option shall qualify
as an "incentive stock option" as defined in Section 422 of the Code.
Accordingly, the Optionee understands that in order to obtain the benefits of an
incentive stock option under Section 422 of the Code, no sale or other
disposition may be made of any Option Shares within the one-year period
beginning on the day after the day of the transfer of such Option Shares to him,
nor within the two-year period beginning on the day after the grant of this
Stock Option, and that exercise of this Stock Option must occur while Optionee
is an employee of the Company or within three months after he ceases to be an
employee of the Company (or twelve months in
3
<PAGE>
the case of death or disability). If the Optionee disposes (whether by sale,
gift, transfer or otherwise) of any such Option Shares within either of these
holding periods, he will notify the Company within thirty (30) days after such
disposition. The Optionee also agrees to provide the Company with any
information concerning any such dispositions required by the Company for tax
purposes.
2. Exercise of Stock Option.
------------------------
(a) The Optionee may exercise only vested portions of this Stock
Option and only in the following manner: Prior to the Expiration Date (subject
to Section 7 and Schedule A ), the Optionee may deliver a Stock Option Exercise
----------
Notice (an "Exercise Notice") in the form of Appendix A hereto indicating his
----------
election to purchase some or all of the Option Shares with respect to which this
Stock Option has vested at the time of such notice. Such notice shall specify
the number of Option Shares to be purchased.
Payment of the purchase price for the Option Shares may be made by one or
more (if applicable) of the following methods: (a) in cash, by certified or
bank check or other instrument acceptable to the Option Committee; or (b) if the
closing of the first underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock of the Company to the public has occurred,
then (i) in the form of shares of Common Stock that are not then subject to
restrictions under any Company plan and that have been held by the Optionee for
at least six months, if permitted by the Committee in its discretion; (ii) by
the Optionee delivering to the Company a properly executed Exercise Notice
together with irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the
4
<PAGE>
Company to pay the option purchase price, provided that in the event the
Optionee chooses to pay the option purchase price as so provided, the Optionee
and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Option Committee shall prescribe as a
condition of such payment procedure, or (c) a combination of (a), (b)(i) and
(b)(ii) above. Payment instruments will be received subject to collection.
(b) Certificates for the Option Shares so purchased will be issued and
delivered to the Optionee upon compliance to the satisfaction of the Option
Committee with all requirements under applicable laws or regulations in
connection with such issuance. Until the Optionee shall have complied with the
requirements hereof and of the Plan, the Company shall be under no obligation to
issue the Option Shares subject to this Stock Option, and the determination of
the Option Committee as to such compliance shall be final and binding on the
Optionee. The Optionee shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of stock subject to this
Stock Option unless and until this Stock Option shall have been exercised
pursuant to the terms hereof, the Company shall have issued and delivered the
Option Shares to the Optionee, and the Optionee's name shall have been entered
as a stockholder of record on the books of the Company. Thereupon, the Optionee
shall have full dividend and other ownership rights with respect to such Option
Shares, subject to the terms of this Agreement.
(c) Notwithstanding any other provision hereof or of the Plan, no
portion of this Stock Option shall be exercisable after the Expiration Date,
including such date as is contemplated by Section 7 hereof.
5
<PAGE>
3. Incorporation of Plan. Notwithstanding anything herein to the
---------------------
contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan, provided that in the event of any inconsistency in
the specific terms, this Stock Option shall be given effect.
4. Transferability. This Agreement is personal to the Optionee and is
---------------
not transferable by the Optionee in any manner other than by will or by the laws
of descent and distribution. This Stock Option may be exercised during the
Optionee's lifetime only by the Optionee. The Optionee may elect to designate a
beneficiary by providing written notice of the name of such beneficiary to the
Company, and may revoke or change such designation at any time by filing written
notice of revocation or change with the Company; such beneficiary may exercise
the Optionee's Stock Option in the event of the Optionee's death to the extent
provided herein. If the Optionee does not designate a beneficiary, or if the
designated beneficiary predeceases the Optionee, the personal representative of
the Optionee may exercise this Stock Option to the extent provided herein in the
event of the Optionee's death.
5. Adjustment Upon Changes in Capitalization. The shares of stock
-----------------------------------------
covered by this Stock Option are shares of Class A Common Stock of the Company.
Subject to Section 6 hereof, if the shares of Class A Common Stock as a whole
are increased, decreased, changed or converted into or exchanged for a different
number or kind of shares or securities of the Company, whether through merger or
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate adjustment
shall be made in
6
<PAGE>
the number and kind of shares and in the per share exercise price of shares
subject to any unexercised portion of this Stock Option. In the event of any
such adjustment in this Stock Option, the Optionee thereafter shall have the
right to purchase the number of shares under this Stock Option at the per share
price, as so adjusted, which the Optionee could purchase at the total purchase
price applicable to this Stock Option immediately prior to such adjustment.
Adjustments under this Section 5 shall be determined by the Option Committee of
the Company, whose determination as to what adjustment shall be made, and the
extent thereof, shall be conclusive. No fractional shares of Common Stock shall
be issued under the Plan resulting from any such adjustment, but the Company in
its discretion may make a cash payment in lieu of fractional shares.
6. Effect of Certain Transactions. In the case of (a) the dissolution
------------------------------
or liquidation of the Company; (b) the sale of all or substantially all of the
assets of the Company and its Subsidiaries to another person or entity; (c) a
merger, reorganization or consolidation in which the holders of the Company's
outstanding voting power immediately prior to such transaction do not own a
majority of the outstanding voting power of the surviving or resulting entity
immediately upon completion of such transaction; (d) the sale of the outstanding
stock of the Company to an unrelated person or entity; or (e) any other
transaction or series of transactions effectively constituting a sale of the
Company in which the owners of the Company's outstanding voting power
immediately prior to such transaction do not own a majority of the outstanding
voting power of the surviving or resulting entity immediately upon completion of
such transaction (a "Sale Event"), this Stock Option (i) shall be deemed fully
vested and exercisable (to the extent not previously vested) immediately prior
to the effective
7
<PAGE>
date of (or, if relevant, the record date for determining stockholders entitled
to participate in) such transaction to the extent, but only to the extent,
provided in Schedule A hereto, provided that such acceleration and any notice
----------
of exercise of options that become vested as a result thereof shall in all cases
be subject to and contingent upon the closing or consummation of such
transaction, and (ii) shall no longer vest as to any Option Shares not then
vested or which do not vest as a result of such transaction except as the
Committee otherwise may determine in its sole discretion. In any case, this
Stock Option (with respect to both vested and unvested Stock Options) shall
terminate on the effective date of (or, if relevant, the record date for
determining stockholders entitled to participate in) such transaction or event;
provided, however, that if (and only if) the Optionee agrees, provision may be
made in such transaction in the sole discretion of the parties thereto for the
assumption of this Stock Option or the substitution for this Stock Option of a
new stock option of the successor person or entity or a parent or subsidiary
thereof, with such adjustment as to the number and kind of shares and the per
share exercise price as such parties shall agree to, and, in the case of an
assumption, with references to the Company being deemed to refer to such
successor entity. In the event of any transaction which will result in such
termination, the Company shall give to the Optionee written notice thereof at
least fifteen (15) days prior to the effective date of such transaction or the
record date on which stockholders of the Company entitled to participate in such
transaction shall be determined, whichever comes first. Until the earlier to
occur of such effective date or record date, the Optionee may exercise any
vested portion of this Stock
8
<PAGE>
Option, but after such effective date or record date, as the case may be, the
Optionee may not exercise this Stock Option unless it is assumed or substituted
by the successor as provided above.
7. Withholding Taxes. The Optionee shall, not later than the date as of
-----------------
which the exercise of this Stock Option becomes a taxable event for federal
income tax purposes, pay to the Company or make arrangements satisfactory to the
Committee for payment of any federal, state and local taxes required by law to
be withheld on account of such taxable event. Subject to approval by the
Committee, the Optionee may elect to have such tax withholding obligation
satisfied, in whole or in part, by authorizing the Company to withhold from
shares of Common Stock to be issued or transferring to the Company, a number of
shares of Common Stock with an aggregate Fair Market Value that would satisfy
the withholding amount due. For purposes of this Section 7 "Fair Market Value"
on any given date means the last reported sale price at which Common Stock is
traded on such date or, if no Common Stock is traded on such date, the next
preceding date on which Common Stock was traded, as reflected on the principal
stock exchange or, if applicable, any other national stock exchange on which the
Common Stock is traded or admitted to trading. The Optionee acknowledges and
agrees that the Company or any subsidiary of the Company has the right to deduct
from payments of any kind otherwise due to the Optionee, or from the Option
Shares to be issued in respect of an exercise of this Stock Option, any federal,
state or local taxes of any kind required by law to be withheld with respect to
the issuance of Option Shares to the Optionee.
9
<PAGE>
8. Miscellaneous Provisions.
------------------------
(a) Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies may be inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
(b) Change and Modifications. This Agreement may not be orally
------------------------
changed, modified or terminated, nor shall any oral waiver of any of its terms
be effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Optionee.
(c) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware.
(d) Headings. The headings are intended only for convenience in
--------
finding the subject matter and do not constitute part of the text of this
Agreement and shall not be considered in the interpretation of this Agreement.
(e) Saving Clause. If any provision(s) of this Agreement shall be
-------------
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
(f) Notices. All notices, requests, consents and other communications
-------
shall be in writing and be deemed given when delivered personally, by telex or
facsimile transmission or when received if mailed by first class registered or
certified mail, postage
10
<PAGE>
prepaid. Notices to the Company or the Optionee shall be addressed as set forth
underneath their signatures below, or to such other address or addresses as may
have been furnished by such party in writing to the other.
(g) Benefit and Binding Effect. This Agreement shall be binding upon
--------------------------
and shall inure to the benefit of the parties hereto, their respective
successors, permitted assigns, and legal representatives. The Company has the
right to assign this Agreement, and such assignee shall become entitled to all
the rights of the Company hereunder to the extent of such assignment.
(h) Counterparts. For the convenience of the parties and to facilitate
------------
execution, this Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same document.
11
<PAGE>
The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned.
BORON, LEPORE & ASSOCIATES, INC.
By:
----------------------------------
Title:
-------------------------------
Address: BORON, LEPORE & ASSOCIATES, INC.
Attention: President
17-17 Route 208 North
Fair Lawn, New Jersey 07410
OPTIONEE:
--------------------------------------
Timothy J. McIntyre
Optionee's Address:
------------------------------
------------------------------
DESIGNATED BENEFICIARY:
------------------------------
Beneficiary's Address:
------------------------------
------------------------------
12
<PAGE>
Schedule A
----------
Vesting Schedule
----------------
1. Defined Terms. All capitalized terms used herein and not defined
-------------
shall have the respective meanings provided in the attached Agreement.
2. Time-Based Vesting. Subject to Section 1(c) of the attached
------------------
Agreement, this Stock Option and the Option Shares subject thereto shall vest
and become exercisable to the extent not previously vested, on June 9, 2004.
3. Performance Vesting Events. Notwithstanding anything hereunder to the
--------------------------
contrary and as contemplated by Section 6 of the attached Agreement, the
following numbers of Option Shares shall vest upon attainment of the performance
objectives set forth below for 1997, 1998 and 1999, respectively, subject,
however, in each case to the rights of the Committee in its sole discretion to
grant whole or partial vesting of one or more tranches of Option Shares
notwithstanding failure to attain the specified performance objectives:
<TABLE>
<CAPTION>
Incremental
No. of Shares
Tranche Performance Objective Vesting Date Vested/1/
- ------- --------------------- ------------ -------------
<S> <C> <C> <C>
A. 1997
----
1. Execution prior to December 31, 1997 of Date of Execution of * 25,000
definitive "corporate contract" agreement with Contract
* (the "*" Contract") (provided that no
vesting of this tranche of Option Shares
shall occur pursuant to this Schedule A if
execution occurs after that date).
2. Execution prior to December 31, 1997 of new Date of Execution of contract 25,000
contracts by the Company and customers relating pursuant to which * revenue
to consumer meetings programs providing target achieved
aggregate revenue of at least * for the
Company (provided that no vesting of the
Tranche of Option Shares shall occur pursuant
to this Schedule A if such contracts are not
executed in 1997).
</TABLE>
/1/ Subject to stock splits, stock dividends and the like as indicted in the
attached Agreement.
- -------------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
A-1
<PAGE>
<TABLE>
<CAPTION>
Incremental
No. of Shares
Tranche Performance Objective Vesting Date Vested/1/
- ------- --------------------- ------------ -------------
<S> <C> <C> <C>
B. 1998
----
3. Initial execution prior to December 31, 1998 Date of initial execution or 25,000
of the * contract, or renewal of such contract 1998 renewal
on substantially the same terms in 1998
(provided that no vesting of this Tranche of
Option Shares shall occur pursuant to this
Schedule A if such initial execution or renewal
does not occur in 1998).
</TABLE>
/1/ Subject to stock splits, stock dividends and the like as indicated in the
attached Agreement.
# Subject to pro ration as provided under "Vesting Date."
- ------------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
A-2
<PAGE>
<TABLE>
<CAPTION>
Incremental
No. of Shares
Tranche Performance Objective Vesting Date Vested/1/
- ------- --------------------- ------------ -------------
<S> <C> <C> <C>
4. Attainment by the Company's BLA Division (or As of December 31, 1998 provided the 100,000#
any successor thereto conducting its provided the Optionee has a
promotional meetings business as Service Relationship as of
determined in good faith by the Company) such date even if such Service
of the financial and strategic Relationship terminates
objectives set forth in the 1998 business thereafter, based on the
plan which is recommended by the CEO of Company's review of its 1998
the Company based upon his good faith assessment financial results; provided,
of the business of the BLA Division and --------
approved by the Board of Directors of however, that if the Service
the Company prior to or shortly following -------
the commencement of the 1998 fiscal year, Relationship is terminated
but no later than January 31, (provided pursuant to Section 6(c), 6(e)
that no vesting of this Tranche of Option Shares or 6(f) of the Employment
shall occur pursuant to this Schedule A if Agreement between the Optionee
such objectives are not obtained.) and the Company dated June 9,
1997, and the performance
objective is obtained, a pro
rata percentage of the 100,000
Option Shares shall vest as of
December 31, 1998, such
percentage to be equal to the
percentage of 1998 which has
transpired (measured in full
months) prior to the
termination of such Service
Relationship.
</TABLE>
C. 1999
----
/1/ Subject to stock splits, stock dividends and the like as indicated in the
attached Agreement.
# Subject to pro ration as provided under "Vesting Date."
A-3
<PAGE>
<TABLE>
<CAPTION>
Incremental
No. of Shares
Tranche Performance Objective Vesting Date Vested/1/
- ------- --------------------- ------------ -------------
<S> <C> <C> <C>
5. Initial execution prior to December 31, 1999 of Date of initial execution or 25,000
the * Contract, or renewal of such contract 1999 renewal
on substantially the same terms in 1999 (provided
that no vesting of this Tranche of Option Shares
shall occur pursuant to this Schedule A if such
initial execution or renewal does not occur in
1999).
6. Attainment by the Company's BLA Division (or As of December 31, 1999 100,000/#/
any successor thereto conducting its provided the Optionee has a
promotional meetings business as Service Relationship as of
verified in good faith by the Company) of such date even if such Service
the financial and strategic objectives set Relationship terminates
forth in the 1999 business plan which thereafter, based on the
is recommended by the CEO of Company's review of its 1999
the Company based upon his good faith financial results; provided,
assessment of the business of the BLA however that if the Service
Division and approved by the Board Relationship is terminated
of Directors of the Company prior to or pursuant to Section 6(c), 6(e)
shortly following the commencement of or 6(f) of the Employment
the 1999 fiscal year, but no later Agreement between the Optionee
than January 31 (provided that no vesting and the Company dated June 9,
of this Tranche of Option Shares 1997, and the performance
shall occur pursuant to this Schedule A objective is obtained, a pro
if such objectives are not obtained). rata percentage of the 100,000
Option Shares shall vest as of
December 31, 1999, such
percentage to be equal to the
percentage of 1999 which has
transpired (measured in full
months) prior to the
termination of such Service
Relationship.
</TABLE>
4. Acceleration of Vesting on Certain Sale Events. As of the effective date
----------------------------------------------
(or, as applicable, the record date) of any Sale Event (as defined in Section 6
of the attached Agreement), to the extent not previously vested, (i) if such
Sale Event occurs before December 31, 1997, than all unvested Tranches shall
automatically vest , and (ii) if such Sale Event occurs after December 31, 1997,
then to the extent not previously vested, Tranches 4 and 6 shall thereupon vest,
Tranches 3 and 5 shall automatically vest if (and only if) Tranche 1 has
# Subject to pro ration as provided under "Vesting Date."
---------------------------------
* Omitted pursuant to a request for confidential treatment. The omitted
material has been separately filed with the Securities and Exchange
Commission.
A-4
<PAGE>
<TABLE>
<CAPTION>
Incremental
No. of Shares
Tranche Performance Objective Vesting Date Vested/1/
- ------- --------------------- ------------ -------------
<S> <C> <C> <C>
</TABLE>
theretofore vested, and Tranche 5 shall automatically vest if (and only if)
Tranche 3 has theretofore vested, and thereupon vesting shall otherwise cease
and this Stock Option shall terminate as provided in Section 6 of the attached
Agreement.
5. Certain Employment-Related Terminations. Notwithstanding anything herein
---------------------------------------
to the contrary, in the event Tranche 1 has vested in accordance with its terms
as provided above and thereafter the employment of the Grantee terminates as a
result of (i) a termination by the Company without cause, or (ii) resignation or
a termination by the Employee due to an uncured, material default by the Company
pursuant to or under the circumstances contemplated by Sections 6(e) and 6(f) of
the Employment Agreement between the Company and the Grantee dated as of June 9,
1997, then the Stock Option as to Tranches 3 and 5, respectively, shall
nonetheless remain in effect (as a non-qualified option, if applicable), until
such time in 1998 or 1999, respectively, if ever, as the renewal specified above
occurs, whereupon the relevant tranche shall vest as of the date of the renewal
and be exercisable for three months after the Company gives the Optionee notice
thereof, but if such event fails to occur in 1998 or 1999, respectively, then
the Stock Option or the relevant tranche shall lapse and terminate as of
December 31 of the relevant year. In any case this Stock Option shall terminate
as contemplated by Section 6 of the attached Agreement or on the Expiration
Date.
A-5
<PAGE>
Appendix A
STOCK OPTION EXERCISE NOTICE
Boron, LePore & Associates, Inc.
Attention: Chief Financial Officer
17-17 Route 208 North
Fair Lawn, New Jersey 07410
Dear Sirs:
Pursuant to the terms of my stock option agreement dated ____________
(the "Agreement") under the Boron, LePore & Associates, Inc 1996 Stock Option
and Grant Plan, I, [Insert Name] ___________________, hereby [Circle One]
partially/fully exercise such option by including herein payment in the amount
of $_______ representing the purchase price for [Fill in number of Option
Shares] __________ option shares. I have chosen the following form(s) of
payment:
[_] 1. Cash
[_] 2. Certified or Bank Check payable to Boron, LePore & Associates, Inc.
[_] 3. Other (as described in the Agreement (please describe)) __________.
Sincerely yours,
--------------------------------------------
Please Print Name
--------------------------------------------
Signature
A-6
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Boron, LePore & Associates, Inc.
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made part of this registration
statement.
Arthur Andersen LLP
Roseland, New Jersey
August 13, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this registration statement on Form S-1 of our
report dated April 10, 1996, on our audit of the financial statements of
Boron, LePore & Associates, Inc. as of December 31, 1995 and for the years
ended December 31, 1994 and 1995. We also consent to the reference to our firm
under the caption "Experts."
M.R. Weiser & Co. llp
Edison, NJ
August 13, 1997
