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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
(Mark one)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number: 0-23093
BORON, LEPORE & ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2365997
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
17-17 Route 208 North, Fair Lawn, New 07410
Jersey (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code (201) 791-7272
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value $0.01 per share)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [_] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or Information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 15, 2000, there were 12,302,134 shares of Common Stock
outstanding. The aggregate market value of shares of such Common Stock (based
upon the last sale price of $8.6875 per share as of March 15, 2000 on the
NASDAQ National Market System) held by non-affiliates was approximately
$96,961,000.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's Proxy Statement in connection with the
Registrant's 2000 Annual Meeting of Stockholders scheduled to be held in May
2000 are incorporated by reference in Part III hereof.
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Statements made or incorporated into this Form 10-K include a number of
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward
looking statements include, without limitation, statements containing the words
"anticipates", "believes", "expects", "intends", "future", and words of similar
import which express management's beliefs, expectations or intentions regarding
our future performance. Our actual results could differ materially from those
set forth in the forward-looking statements. Certain factors that might cause
such a difference are discussed in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 14 of this Form 10-K.
ITEM 1. Business
General
Boron, LePore & Associates, Inc. (the "Company" or "BLP") provides
integrated marketing, educational and sales services to the healthcare industry
which include promotional and other meetings, medical education, product
marketing, contract sales and field sales force logistics; including a variety
of internet-based solutions related to these services. Substantially all of our
customers are large pharmaceutical companies seeking to communicate their
messages to physicians and other healthcare professionals on a cost-effective
basis. We are a leading provider of peer-to-peer meetings. Our service
offerings also include promotional and educational content development,
accredited medical education programs and symposia, web-cast programs, visiting
faculty meetings, clinical advisory panels, contract sales and field sales
force logistic services. In December 1999, we announced the wind-down of our
teleservice business in Norfolk, Virginia. This wind-down was completed during
the first quarter of 2000.
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 and Company Overview
Based on data from Scott-Levin, a healthcare marketing information company,
pharmaceutical companies spent approximately $1.6 billion in 1999 on
promotional and marketing meetings and events, including peer-to-peer meetings,
symposia, third party events and teleconferences. 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.
Our objective, is to enhance our position as a leading provider of peer-to-
peer and other meetings, continue to expand our educational services,
selectively expand and add complimentary services to our array of other
outsourced promotional, marketing and logistical services and expand the market
for our field sales force logistics services. The principal elements of our
strategy are to: (i) offer integrated solutions that include promotional,
educational, marketing and logistical services, including a variety of
internet-based solutions related to these services; (ii) increase business with
existing customers; (iii) obtain new customers; (iv) target new audiences; and
(v) pursue strategic acquisitions.
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Services
Our principal lines of business presently include: (i) marketing and
educational services which include promotional and other conferencing services,
educational conferencing services, and product marketing services; (ii)
contract sales services; and (iii) field sales force logistics services.
Promotional and Other Conferencing Services
We conduct and produce conferences in a variety of formats and through
different forms of media. All of our conferences are sponsored by our
pharmaceutical company customers. The conferences are designed to communicate
the sponsoring pharmaceutical company's message to the physicians and other
healthcare professionals who attend. Our 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. Our
meetings are not limited to these formats, however, as we can 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 our 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 our 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-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.
We believe 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. Our 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 our meetings increase their prescriptions of drugs
reviewed at the meetings. We believe that our reputation, which has been
developed over approximately 20 years of conducting peer-to-peer meetings,
facilitates recruiting physicians to attend our peer-to-peer meetings.
We believe that our moderators who are generally hired as full-time
employees have been an important factor in the success of our peer-to-peer
meetings. We have historically focused on hiring individuals with industry
experience as moderators. We have developed training techniques to enable our
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, we perform periodic quality
reviews of our moderators and solicit feedback from customers and physicians
about each moderator.
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Our contracts for the coordination and production of peer-to-peer meetings
are generally fee based, although some contain a performance component. Our
contracts typically require it to provide a certain number of meetings (usually
100 to 300) and/or a certain number of attendees (usually 10 to 12) over a
specified period of time (typically three to six months) on behalf of a
customer. The terms of each of our contracts may 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 location for the meetings. The volume of
meetings coordinated and produced by us has enabled us to obtain discount
pricing from vendors of services such as airline and overnight courier
services.
In 1999, 1998 and 1997, BLP conducted 8,014, 12,822 and 10,398 peer-to-peer
meetings, respectively. These meetings generated revenues of approximately
$32.4 million in 1999, $52.8 million in 1998 and $45.1 million in 1997,
representing 21.7%, 32.0%, and 61.9%, respectively, of our revenues in each of
these years.
Symposia. We added symposia in the fourth quarter of 1996 to complement our
peer-to-peer meeting business. Our symposium generally involve 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 consulting 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 us throughout
the United States. We actively work with our customers to identify speakers and
select locations for each conference. We utilize our in-house travel agent and
our other relationships with vendors to assist in coordinating symposia. We
believe that the key considerations for our customers in selecting a provider
for symposia are cost and the ability to effectively organize a large medical
conference.
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, we adhere to our 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 our 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.
Our symposium contracts generally are fee based. The terms of each of our
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. We conducted 28 symposia in 1999, 169 in
1998, and 48 in 1997. Symposia accounted for revenues of approximately $8.1
million in 1999, $28.9 million in 1998 and $20.7 million in 1997, representing
5.4%, 17.5% and 28.3%, respectively, of our revenues in each of these years.
Additional Conferencing Services. We provide a range of additional
conferencing services. We emphasize flexibility and conduct meetings in any
format that can effectively communicate our 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 consulting fee to discuss a new drug or
indication or other medical topic. We broadcast the conferences via satellite
on television to various locations throughout the United States. The video
satellite conferences typically utilize interactive media
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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,
we seek to enable our clients to effectively and efficiently communicate
medical information to physicians so that physicians can better understand and
utilize our pharmaceutical customers' 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. We coordinate
CE conferences that are funded through unrestricted educational grants 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.
The CE programs, which are conducted by a separate division of the Company,
utilize certain of our core competencies in handling conferencing logistics. As
with our promotional conferencing services, some of the CE programs are
conducted by teleconference. The CE programs are also frequently taped or
otherwise recorded for further distribution to those individuals who are unable
to attend. We also provide educational conferences that are not intended to
satisfy certified CE requirements.
In March 1998, we acquired substantially all of the assets of Strategic
Implications International, Inc., a privately held company located in Vienna,
Virginia ("Strategic Implications"). Strategic Implications is a provider of
continuing medical education and other related services, and has received
accreditation by the American Council for Continuing Medical Education and the
American Council on Pharmaceutical Education to provide such services.
Strategic Implications is operated as a separate subsidiary of BLP. In May
1998, we acquired substantially all of the assets of Medical Education Systems,
Inc., a privately held company located in Philadelphia, Pennsylvania ("MES").
MES is also a provider of continuing medical education and other related
services. MES is also operated as a separate subsidiary of BLP. Combined
revenues for Strategic Implications and MES totaled $23.9 million in 1999 and
$19.3 million in 1998, representing 16.0% and 11.7%, respectively, of our
revenue in each of these years.
Product Marketing Services
We introduced product marketing services in 1996. Our 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. We
believe that the sales of certain of these products could be increased if their
therapeutic benefits were actively communicated to physicians or other
healthcare professionals. We believe we can leverage our customer relationships
and existing services to market some of these products successfully by devising
and implementing a variety of promotional and marketing strategies.
We anticipate that product marketing engagements typically will involve the
grant by a pharmaceutical company of rights to market a particular product for
a specified period. We will generally bear most marketing costs during this
period and in return share incremental revenue if the product achieves
specified sales objectives. We contemplate that some of these engagements,
however, may be fee based to some extent.
We currently have 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 December 2000, unless terminated by Parke-
Davis in the event of a sale, license or transfer of the product to a third
party. Under the contract, we are compensated based on the increase in the
sales of Ponstel(R) above an established baseline. During 1998, we also had the
right in the United States to market Duricef(R) (a registered trademark of
Bristol-Myers Squibb), which we marketed for most of 1998.
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We believe 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. Our 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. Our involvement in product marketing need not
be limited to a particular stage of a drug's life cycle, as we 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 a number of the same risks as our
conferencing services, as well as additional risks that are not present in our
conferencing services, including the risk that we will expend resources to sell
a product and not achieve the level of sales required to realize any revenue
from our efforts. We will seek to manage this risk by carefully selecting the
products we agree to promote based on our 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.
Contract Sales Services
We established a contract sales organization (the "CSO") in August 1997. We
believe that contract sales is an attractive outsourced service to
pharmaceutical companies because it allows a customer to shift fixed cost to
variable cost by outsourcing portions of its sales function and to respond
quickly to the need for alternative and additional sales support for its
products. We expect that the CSO will engage in traditional product detailing
efforts, which involve providing pharmaceutical product samples and related
promotional and educational materials to physicians. In addition, the CSO will
utilize advanced information technology to offer clients a fully integrated
sales approach. This approach will include unique training, development and
recruiting disciplines designed to enable the CSO to compete effectively to
service the specialized needs of the pharmaceutical industry. We expect that
our CSO will continue to be structured along the dedicated sales force model,
with groups of sales persons recruited by us to conduct sales for a particular
client.
Combined revenues for the CSO organization totaled $23.1 million in 1999 and
$23.0 million in 1998, representing 15.5% and 14.0%, respectively, of our
revenue in each of these years.
We believe that the quality of sales representatives, speed of recruitment
and management of the CSO are the most important factors in responding to its
customers' needs for outsourced sales support. We believe that our established
reputation in the industry, our ability to provide an array of complementary
promotional services and our ability to recruit and staff new sales forces in a
timely manner will assist us in expanding our CSO in the coming year.
Contract sales is an area of business for us involving a number of the same
risks as our conferencing services, as well as additional 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 assurances that we will establish and maintain a significant or lasting
presence in this market.
Field Sales Force Logistics Services
Our customers generally provide their sales forces in the field with budgets
with which to engage in promotional and educational efforts. Because these
field sales representatives typically have been responsible for planning,
coordinating and implementing these efforts with in-house staff, outside
vendors and meeting participants, we believe that the representatives have
historically had to divert valuable time away from their primary sales and
education activities. Our field sales force logistics organization was created
to allow pharmaceutical companies to increase the efficiency and reach of their
field sales forces by providing integrated outsource solutions for the sales
forces' meeting planning, event coordination and other logistical functions. We
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believe that field sales force logistics represents a substantial, emerging
business opportunity, and that our historical expertise and ability to invest
in technology provide us with a strategic advantage in delivering such services
to potential customers.
Our field sales force logistics organization is designed to handle all
logistical matters for the field sales force of a customer upon the direction
of the sales force personnel. For example, a field sales representative could
contact a dedicated resource at BLP and request the implementation of a meeting
with doctors in an indicated field to be chaired by a specified speaker. We
would secure the meeting site, target and generate the appropriate audience,
identify and/or contact the speaker, arrange for attendee and speaker travel
arrangements, send out invitations and post-meeting thank you notes, assist in
obtaining any necessary approvals from the home office and handle all other
logistical details. We would also process and make available to the sales
representative all relevant programs and data on a virtual basis via the
internet and other forms of remote access.
We began forming a field sales force logistics organization in late 1997. In
March 1998, we signed a contract with a large pharmaceutical company to provide
field sales force logistical services for up to a two-year period. In October
1999, the contract was renewed for another two-year period through December
2001. The contract provides for a management fee component and a fee-for-
service component. The management fee for 2001 is subject to negotiation. There
can be no assurance that the managament fee for such year will be negotiated on
terms acceptable to us (which failure to so negotiate the management fee would
result in the termination of the contract on December 31, 2000). The fee-for-
service component is dependent upon the level of services provided. Pursuant to
that contract, we have created an organization of approximately 100 employees
dedicated to servicing the field sales force logistics requirements of this
particular customer. We also have a contract with another customer and are
currently pursuing other related opportunities to provide field sales force
logistics services to other customers. Revenues for the field sales force
logistics organization totaled $58.2 million in 1999 and $35.5 million in 1998,
representing 38.9% and 21.6%, respectively, of the Company's revenue in each of
these years.
Field sales force logistics is an area of business for us involving a number
of the same risks as our conferencing services, as well as risks not present in
its traditional business, such as the risks that it will be unable to
efficiently implement the significant planning and coordination efforts
required by this business or that this new service will not be accepted
generally by pharmaceutical companies. There can be no assurance that we will
establish a lasting presence in the market, or that this market will continue
to develop at all.
Teleservices
In December 1999, we announced the wind-down of our teleservice business.
This wind-down was completed during the first quarter of 2000 and we are
pursuing the disposition of those related assets. We continue to use a portion
of our Norfolk, Virginia facility for telerecruiting for our conferencing
services and other administrative support.
Customers
We believe that our relationships with our customers, which include many of
the largest pharmaceutical companies, are among our most important strategic
advantages. Prior to 1996, our customers principally engaged us to hold peer-
to-peer meetings. Commencing in 1996, several of the relationships expanded to
include other services such as symposia, product marketing, contract sales and
field sales force logistics.
Our 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. Our sales executives (currently 16 individuals) develop relationships
principally with the product managers at the pharmaceutical companies and spend
significant time on-site at customer facilities. Our sales executives, together
with our client service organization which was formed in 1999, work with the
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product managers to implement, and in some cases assist in developing, the
customer's marketing plan within a prescribed budget. Although we market
competing products from time to time, we do not market such products through
the same type of promotional or marketing service without the consent of our
customers.
Revenue from two customers accounted for approximately $59.0 million (39%)
and $16.6 million (11%) of total revenue for the year ending December 31, 1999,
and $56.5 million (34%) and $44.0 million (27%) of total revenue for the year
ending December 31, 1998.
In late 1998, we were advised that a significant customer would not be
making any new commitments for speaker training and advisory panel meetings
with us. This customer represented 27% of our total revenues during the year
ended December 31, 1998. A substantial portion of this revenue was comprised of
speaker training and advisory panel meetings. Except for a limited amount of
speaker training revenue in the three-month period ending March 31, 1999, we
did not receive any revenue related to this customer in 1999.
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 our 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 our competitors in
this area, however, offer services that are somewhat wider in scope. Although
we believe we are a leading provider of peer-to-peer meetings, there are many
providers of symposia and educational conferences.
As we seek to expand our range of services, we are 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 our product marketing services. The provision
of contract sales services is also a relatively new and undeveloped industry in
the United States, and we face significant competition in providing such
services from larger, established companies having greater resources and access
to capital. For instance, some of our larger competitors have computerized
resume tracking systems for recruiting contract sales representatives.
Overall, we believe that our most significant competition is potentially
from other companies that provide outsourced promotional, marketing,
educational and field sales force logistics services and large advertising
agencies which may seek to expand their service offerings. In addition, the
pharmaceutical companies' in-house sales and marketing departments may provide
similar services to those provided by us and competition could increase as a
result of the expansion of the in-house marketing capabilities by our customers
or in the pharmaceutical industry generally.
We compete 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,
ability to provide services quickly and price. Some of our distinguishing
characteristics are the longevity of our relationships with our customers, our
reputation for quality service and our 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, sale and reimbursement of healthcare services and
products,
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including pharmaceutical products. It is possible that additional or amended
laws, regulations or guidelines could be adopted in the future.
Our 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 and some of our
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 our 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,
including the practice of providing product samples to physicians. Under this
statute, the FDA asserts its authority to regulate all promotional activities
involving prescription drugs. For example, in connection with focus groups
conducted by one of our competitors, the FDA issued warning letters indicating
concern about the manner in which the focus groups were conducted, and the FDA
also questioned the content of the information provided to the focus group
participants and requested delivery of remedial information. Accordingly, our
businesses and our customers' businesses, to the extent such business involves
promotion and marketing of pharmaceutical products, are subject to the
extensive regulation governing the pharmaceutical industry, and there can be no
assurance that we will not be subject to increased regulatory scrutiny in the
future.
The failure of us or our 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 us or our customers
from conducting certain business activities, subject us or our customers to
adverse publicity, increase the costs of regulatory compliance or subject us or
our customers to monetary fines or other penalties. Any such actions could have
a material adverse effect on us.
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, educational and field sales force logistics
services to the pharmaceutical industry, we are subject to the risk of being
named as a party in such lawsuits. As a result of our introduction of product
marketing services and contract sales services, we believe that the relative
likelihood of becoming involved in litigation regarding the information given
or products sold or distributed by our 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 us.
We maintain insurance policies, including liability insurance, which we
believe to be adequate in amount and coverage for the current size and scope of
our operations. There can be no assurance, however, that the coverage we
maintain will be sufficient to cover all future claims or will continue to be
available in adequate amounts or at a reasonable cost. During 1998, we
increased our insurance coverage in connection with expanding our service
offerings. In addition, although our contracts with our customers sometimes
require the
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customer to indemnify us for the customer's negligent conduct, the contracts do
not provide for adequate indemnification against many of the potential
litigation risks facing us and often require us to indemnify our customer for
our negligence. We, therefore, could be held responsible for losses incurred in
connection with the performance of our services under the terms of these
contracts or otherwise and could incur substantial costs in connection with
legal proceedings associated with our services or the pharmaceutical products
with respect to which it provides services.
Employees
As of March 15, 2000, BLP had 503 employees of which, 32 were moderators, 16
were engaged in sales, 191 were engaged in sales support and production, 72
were contract sales representatives, 3 were engaged in business development and
89 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.
ITEM 2. Properties
BLP's corporate headquarters are located in Fair Lawn, New Jersey, in
approximately 22,838 square feet of space occupied under a lease, which expires
on January 31, 2001.
The Company commenced operations at its teleservice center in Norfolk,
Virginia, in July 1997. The space for the facility consists of approximately
28,700 square feet under a lease expiring in July 2007. BLP also has leased a
14,248 square foot warehouse adjacent to this facility. In December 1999, the
Company announced the wind-down of its teleservice business. Such wind-down was
completed during the first quarter of 2000. The Company continues to use a
portion of these facilities for telerecruiting for its conferencing services
and other administrative support. The Company has consolidated the operations
and functions in these facilities and is pursuing a sublease of the remaining
space.
The Company operates its field force logistics business in Piscataway, New
Jersey, in approximately 20,840 square feet of space occupied under several
related leases, which expire on various dates during 2003.
The Company operates its MES business in Philadelphia, Pennsylvania, in
approximately 17,570 square feet of space occupied under a lease, which expires
on March 31, 2008.
In addition, the Company leases other sales offices around the United States
on a short-term basis to support its local sales and service operations.
ITEM 3. Legal Proceedings
Thomas S. Boron, a former stockholder and officer of the Company, filed a
complaint on March 27, 1998 in the United States District Court for the
District of New Jersey against the Company, Patrick G. LePore and Gregory F.
Boron, senior officers and directors of the Company, and Michael W. Foti and
Christopher J. Sweeney, former officers of the Company, alleging, among other
matters, securities and common law fraud and breach of contract in connection
with the settlement of contractual arrangements with Thomas S. Boron in
December 1996. The damages sought by Thomas S. Boron are not stated in the
complaint. The Company's By-laws provide for mandatory indemnification of the
Company's officers and former officers to the fullest extent authorized by the
Delaware General Corporation Law against all expenses incurred in proceedings
in which an officer or former officer is involved as a result of serving or
having served as an officer, director or employee of the Company. The Company
believes the allegations of Thomas S. Boron are without merit and intends to
contest them vigorously. The Company believes that the matter may involve
significant litigation-related expenses but that it will not have a material
adverse effect on its financial condition or results of operations; there can
be no assurance, however, that this will be the case.
On or about May 25, 1999, one stockholder of the Company filed a putative
class action lawsuit against the Company and certain of the Company's officers
in the United States District Court for the District of
10
<PAGE>
New Jersey. The suit alleges that the Company, certain of its officers and
directors, and certain institutional stockholders violated the federal
securities laws by making material misrepresentations and omissions in certain
public disclosures related to, among other things, the secondary offering made
by the Company in May 1998, the Company's acquisition of Decision Point, Inc.
in January 1998, the termination of the Company's relationship with Glaxo-
Wellcome, and the impact of various events on the Company's earnings. The suit
seeks unspecified damages. On February 17, 2000, the Company filed a motion to
dismiss all claims asserted against it and its officers and directors. The
motion to dismiss remains pending before the court and the Company is not in a
position to make any estimates regarding the probable outcome of the case. The
Company believes that the plaintiff's claims are without merit and intends to
vigorously defend the lawsuit.
In addition, the Company, from time to time, is involved in legal
proceedings incurred in the normal course of business. The Company believes
none of these proceedings will have a material adverse effect on the financial
condition or liquidity of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
11
<PAGE>
PART II
ITEM 5. Market For The Registrant's Common Equity and Related Stockholder
Matters
(a) Market Information
The Company's Common Stock, $.01 par value ("Common Stock") has been traded
on the NASDAQ National Market ("Nasdaq") since the Company's initial public
offering on September 23, 1997 and currently trades under the symbol "BLPG".
The following table sets forth the high and low of the closing sales prices for
the Company's Common Stock as reported by Nasdaq for the periods indicated:
<TABLE>
<CAPTION>
Market
Prices(1)
---------------
High Low
------- -------
<S> <C> <C>
1998 Fiscal Quarters
First Quarter................................................. $36.750 $23.875
Second Quarter................................................ $38.000 $27.875
Third Quarter................................................. $41.375 $30.000
Fourth Quarter................................................ $43.000 $25.000
1999 Fiscal Quarters
First Quarter................................................. $34.563 $10.375
Second Quarter................................................ $10.875 $ 8.125
Third Quarter................................................. $10.250 $ 5.500
Fourth Quarter................................................ $ 7.750 $ 5.125
</TABLE>
- --------
(1) The prices listed reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions.
Holders
The number of record holders of our Common Stock as of March 15, 2000 was
approximately 49, although we believe that the number of beneficial owners of
Common Stock as of that date was substantially higher.
Dividends
We did not pay cash dividends on our Common Stock during the years ended
December 31, 1999, 1998 and 1997, and intend to retain all available funds for
use in the operation and expansion of our business. We do not anticipate that
any cash dividends on our Common Stock will be declared or paid in the
foreseeable future.
Recent Sales of Unregistered Securities
In August 1998, we purchased substantially all of the assets and assumed
certain liabilities of Strategem Plus, Inc. ("Strategem"), a New Jersey
corporation. The purchase price was $1.6 million in cash and 13,630 shares of
our common stock. In addition, we paid $0.4 million in cash and issued 9,934
shares of our common stock during the second quarter of 1999 and paid $0.8
million in cash and issued 33,472 shares of our common stock during the fourth
quarter of 1999 based on the attainment of certain performance goals. We
continued to operate Strategem as an ongoing business unit during 1999 and
1998.
12
<PAGE>
ITEM 6. Selected Financial Data
The selected statement of operations data for the years ended December 31,
1999, 1998, and 1997 and the selected balance sheet data at December 31, 1999
and 1998 have been derived from the audited Financial Statements of the Company
included elsewhere in this Report on Form 10-K. The selected statement of
income data for the years ended December 31, 1996 and 1995 and the selected
balance sheet data at December 31, 1997, 1996 and 1995 have been derived from
the audited financial statements of the Company not included in this Report on
Form 10-K. 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 Form 10-K.
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-------- -------- ------- -------- -------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues...................... $149,448 $164,670 $72,907 $ 40,220 $21,775
Cost of sales................. 109,678 115,712 51,580 26,005 12,788
-------- -------- ------- -------- -------
Gross profit................ 39,770 48,958 21,327 14,215 8,987
-------- -------- ------- -------- -------
Selling, general and
administrative expenses...... 38,942 34,625 12,444 19,995(1) 6,341
Provision for restructuring
and other severance.......... 2,920 -- -- -- --
Goodwill impairment charge.... 754 -- -- -- --
-------- -------- ------- -------- -------
Total operating expenses.... 42,616 34,625 12,444 19,995 6,341
-------- -------- ------- -------- -------
Operating income (loss)..... (2,846) 14,333 8,883 (5,780) 2,646
Interest income (expense),
net.......................... 1,873 1,664 (1,071) (255) (86)
Nonrecurring loss on
forgiveness of related party
loan......................... -- -- -- (1,076) --
-------- -------- ------- -------- -------
Income (loss) before
provision (benefit) for
income taxes............... (973) 15,997 7,812 (7,111) 2,560
Provision (benefit) for income
taxes(2)..................... (390) 5,550 1,700 -- 51
-------- -------- ------- -------- -------
Net income (loss)........... $ (583) $ 10,447 $ 6,112 $ (7,111) $ 2,509
======== ======== ======= ======== =======
Net income (loss) per common
share--basic................. $ (0.05) $ 0.88 $ 1.07 $ (1.18)
======== ======== ======= ========
Weighted average common shares
outstanding--basic........... 12,633 11,936 4,947 6,028
======== ======== ======= ========
Net income (loss) per common
share--diluted............... $ (0.05) $ 0.84 $ 0.72 $ (1.18)
======== ======== ======= ========
Weighted average common shares
outstanding--diluted(3)...... 12,633 12,370 8,507 6,028
======== ======== ======= ========
<CAPTION>
December 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-------- -------- ------- -------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents..... $ 44,631 $ 36,924 $24,016 $ 7,176 $ 963
Working capital............... 50,141 56,470 29,805 2,416 3,046
Total assets.................. 118,144 125,102 51,056 23,097 10,499
Long-term debt, less current
maturities................... -- -- -- 20,000 2,061
Redeemable equity securities.. -- -- -- 12,500 --
Total stockholders' equity
(deficit).................... 94,700 97,496 32,843 (29,387) 2,505
</TABLE>
- --------
(1) Includes $10.0 million for special officer bonuses, including $7.5 million
as part of a recapitalization transaction and $0.6 million for fees
related to the recapitalization.
(2) 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.
(3) Due to the effect of the 1996 recapitalization 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. Weighted average common shares outstanding has been computed as
described in Note 3 to the Financial Statements of the Company included
elsewhere in this Report on Form 10-K.
13
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain statements contained in this report, including statements regarding
the anticipated development of our business, the intent, belief or current
expectations of our Company, its directors or its officers, primarily with
respect to our business model and future operating performance of our business,
including expectations regarding the possible cost savings associated with our
restructuring plan in current and future periods, trends in the mix of
educational and marketing services revenues toward more value-added products,
the possible effects aimed at improving costs and efficiencies, expectations
regarding certain field force logistics relationships and related revenues and
profits, and regarding results in future periods, operating performance and
growth in 2000, the effects of loss of revenue and the magnitude and timing of
revenues from new and existing clients, and expectations regarding business
units within our business, and other statements contained herein regarding
matters that are not historical facts, are "forward-looking" statements (as
such term is defined in the Private Securities Litigation Reform Act of 1995).
Because such statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements include, but are
not limited to: uncertainties regarding implementation of the restructuring
plan, continuation of trends in educational and marketing services, risks
relating to the market for our services, our ability to secure new contracts
for our contract sales organization, acceptance of our new services,
difficulties inherent in locating acquisition candidates and consummating
acquisitions, and those risks and uncertainties contained under the heading
"Risk Factors" on page 6 of our Registration Statement on Form S-1 as amended,
as filed with the Securities and Exchange Commission.
Overview
Boron, LePore & Associates, Inc. (the "Company" or "BLP") provides
integrated marketing, educational and sales services to the healthcare industry
which include promotional and other meetings, medical education, product
marketing, contract sales and field sales force logistics; including a variety
of internet-based solutions related to these services. Substantially all of our
customers are large pharmaceutical companies seeking to communicate their
messages to physicians and other healthcare professionals on a cost-effective
basis. We are a leading provider of peer-to-peer meetings. Our service
offerings also include promotional and educational content development,
accredited medical education programs and symposia, web-cast programs, visiting
faculty meetings, clinical advisory panels, contract sales and field sales
force logistic services.
Our objective, is to enhance our position as a leading provider of peer-to-
peer and other meetings, continue to expand its educational services,
selectively expand and add complimentary services to our array of other
outsourced promotional, marketing and logistical services and expand the market
for our field sales force logistics services. The principal elements of our
strategy are to: (i) offer integrated solutions that include promotional,
educational, marketing and logistical services, including a variety of
internet-based solutions related to these services; (ii) increase business with
existing customers; (iii) obtain new customers; (iv) target new audiences; and
(v) pursue strategic acquisitions.
Following several years of relatively modest revenue growth, our revenues
grew significantly from 1995 to 1998. This growth resulted from increased
business with existing customers, the addition of new customers and the
expansion of services offered. We believe that the increase in business with
existing customers and the addition of new customers reflected increased
recognition of peer-to-peer meeting programs as an effective promotional
technique and increased levels of marketing and educational spending in the
pharmaceutical industry. We also expanded our portfolio of services to include
symposia, medical education, product marketing, teleservices, contract sales
and field force logistics services. The expansion of these services resulted
from: (i) the acquisition of two medical education providers in 1998; (ii) the
opening of a teleservice center in Norfolk, Virginia during 1997; (iii) the
establishment of a contract sales organization during 1997 and addition of new
related clients in 1998; and (iv) a contract with a large pharmaceutical
company to provide field force logistics services through December 1999 (which
was recently renewed through 2001).
14
<PAGE>
In late 1998, we were advised that a significant customer would not be
making any new commitments for speaker training and advisory panel meetings
with the Company. Such meetings have a lower gross margin percentage than the
Company's other services. This customer represented $44.0 million or 27% of our
revenues during 1998. Except for a limited amount of revenue in the first
quarter of 1999, we did not generate any revenue related to this customer in
1999. During the second quarter of 1999, we commenced discussions with another
customer relating to the termination of its field sales force logistics
contract. This contract terminated during the third quarter of 1999 and
accounted for 4.3% of our revenue for 1999. We did not generate revenue from
this contract after the third quarter of 1999.
Revenue was $149.4 million in 1999 as compared to $164.7 million in 1998. We
incurred a net loss of $0.6 million in 1999 as compared to net income of $10.4
million in 1998. Included in the net loss for 1999 was a pre-tax charge of $0.8
million incurred during the first quarter of 1999 related to the write-down of
goodwill associated with our January 1998 acquisition of Decision Point, Inc.,
a pre-tax charge of $1.7 million incurred during the second quarter of 1999
related to a restructuring plan and a pre-tax charge of $1.2 million incurred
during the fourth quarter related to a restructuring plan and other severance.
During 1999, we restructured our operations to improve operational
efficiencies and to better align costs and expenses with anticipated revenues.
As part of these efforts we reduced our work force, closed certain office
locations and initiated the wind-down of our teleservice business in Norfolk,
Virginia. This wind-down was completed during the first quarter of 2000. We are
pursuing the disposition of some of the assets formerly used in the teleservice
center. We continue to use a portion of the Norfolk, Virginia facility for
telerecruiting for our conferencing services and other administrative support.
During the second half of 1999, the Company also enhanced its management team
and realigned its internal operations to better leverage its promotional and
educational service capabilities.
Also, during 1999, we considered strategic alternatives and retained the
services of Bear, Stearns & Co., Inc, as its investment advisor. During the
third quarter of 1999, we decided not to pursue a sale or recapitalization
transaction at that time. We may reconsider such a transaction in the future.
As a result of the aforementioned efforts, our financial performance
improved during the second half of 1999. Our operating results improved from a
net loss of $1.1 million in the first quarter and a net loss of $0.7 million in
the second quarter to net income of $0.4 million in the third quarter and net
income of $0.8 million in the fourth quarter. In addition to the pre-tax charge
of $1.2 million mentioned above, the fourth quarter results for 1999 included a
short-term project which generated revenues of $7.5 million. In November 1999,
as mentioned above, we renewed our field sales force logistics contract with a
large pharmaceutical company for another two years through December 2001. The
contract provides for a management fee component and a fee-for-service
component. The management fee for 2001 is subject to negotiation. There can be
no assurance that the management fee for such year will be negotiated on terms
acceptable to us (which failure to so negotiate the management fee would result
in the termination of the contract on December 31, 2000). During March 2000, we
were notified by a customer that it would be terminating its contract sales
service contract on May 31, 2000. During the fourth quarter of 1999 and the
full year 1999, such contract represented $4.1 million or 9% and $15.4 million
or 10% of our revenues, respectively.
Certain of our newer services, particularly symposia and field sales force
logistics, have lower gross margin percentages than our historical peer-to-peer
meeting business, while other services, particularly educational conferencing
and medical education content development, have higher gross margin percentages
than our historical peer-to-peer meeting business. As such, the mix of business
generated from individual services could impact our operating profit
percentage. Our operating performance objective is to further enhance our
operating profit through efficiency efforts, carefully managing operating
expenses, improving our mix of revenue and increasing our overall revenue. We
believe our efforts in 1999, along with our strong balance sheet and cash
position, have resulted in a stabilization of our business and will enable us
to capitalize on opportunities in the evolving pharmaceutical services
marketplace. However, there can be no assurance that we will achieve our
operating performance objective.
15
<PAGE>
Results of Operations
The following table sets forth as a percentage of revenues certain items
reflected in the Company's Statement of Operations for the periods indicated.
<TABLE>
<CAPTION>
Years Ended
December 31,
--------------------
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Revenues................................................ 100.0 % 100.0% 100.0%
Cost of sales........................................... 73.4 70.3 70.7
----- ----- -----
Gross profit............................................ 26.6 29.7 29.3
----- ----- -----
Selling, general and administrative expenses............ 26.1 21.0 17.1
Provision for restructuring and other severance......... 1.9 -- --
Goodwill impairment charge.............................. 0.5 -- --
----- ----- -----
Total operating expenses.............................. 28.5 21.0 17.1
----- ----- -----
Operating income (loss)............................... (1.9) 8.7 12.2
----- ----- -----
Interest income (expense), net.......................... 1.2 1.0 (1.5)
----- ----- -----
Income (loss) before provision (benefit) for income
taxes.................................................. (0.7) 9.7 10.7
Provision (benefit) for income taxes.................... (0.3) 3.4 2.3
----- ----- -----
Net income (loss)..................................... (0.4)% 6.3% 8.4%
===== ===== =====
</TABLE>
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues decreased $15.3 million, or 9%, from $164.7 million in 1998 to
$149.4 million in 1999. This decline primarily resulted from the decrease in
marketing and educational services revenue of $38.0 million offset by the
addition of $22.7 million of revenue from field sales force logistics services.
The decrease in marketing and educational services was primarily due to the
aforementioned loss of revenue from a significant customer, partially offset by
an increase in other business. The increase in field sales force logistics
services includes $6.5 million in revenue from a contract which was terminated
during 1999 and $7.5 million in revenue from a short-term project which was
completed during the fourth quarter of 1999.
Cost of sales decreased $6.0 million, or 5%, from $115.7 million in 1998 to
$109.7 million in 1999. Cost of sales as a percentage of revenues increased
from 70.3% in 1998 to 73.4% in 1999. The increase in cost of sales as a
percentage of revenues was primarily due to the increased proportion of field
sales force logistics and contract sales revenue, which have a lower average
gross profit than our historical business due to a higher proportion of
production costs which are passed through to the customer with little or no
markup.
Selling, general and administrative expenses increased $4.3 million, or 13%,
from $34.6 million in 1998 to $38.9 million in 1999. This increase was due to
the net increase in the cost of personnel of approximately $2.5 million,
primarily due to the personnel of acquired companies partially offset by
reductions in the workforce related to our 1999 restructurings; an increase in
bad debts of approximately $0.9 million; and an increase in other operating
costs of approximately $0.9 million. Selling, general and administrative
expenses increased as a percentage of revenues from 21.0% in the prior year
period to 26.1% in the current year period. This percentage increase was
largely the result of the aforementioned decrease in and change in the mix of
revenues for the year ended December 31, 1999.
During the year ended December 31, 1999, we incurred provisions for
restructuring and other severance of $2.9 million which involved the reduction
of our workforce, consolidation of our facilities, the wind-down of our
teleservice business, including a disposition of assets, and changes in
management. As a percentage of revenues, this charge represented 1.9% of
revenues for the year ended December 31, 1999.
16
<PAGE>
During the year ended December 31, 1999, we determined that the remaining
goodwill balance of $754,000 associated with the acquisition of Decision Point,
Inc. in January 1998 was impaired. As a result, we incurred a charge to write-
down the asset value to zero during the year ended December 31, 1999. As a
percentage of revenues, this charge represented 0.5% for the year ended
December 31, 1999.
Operating income (loss) decreased $17.1 million from income of $14.3 million
in 1998 to a loss of $2.8 million in 1999. Operating income (loss) as a
percentage of revenues declined from income of 8.7% in 1998 to a loss of 1.9%
in 1999. The decrease in operating income (loss) as a percentage of revenues
was due to the aforementioned increases in cost of sales, selling, general and
administrative expenses, provisions for restructuring and other severance and
noncash charges to write down an impaired asset as a percentage of revenues.
Interest income, was $1.7 million in 1998 compared to $1.9 million of
interest income in 1999. The increase in interest income was primarily due to
our higher average cash balance and higher prevailing interest rates in the
current year period as compared to the prior year period.
The provision (benefit) for income taxes for the year ended December 31,
1999 and December 31, 1998 reflects estimated Federal and state income tax
expense partially offset by the utilization of benefits from net operating
losses previously not recognized in 1998 and the recording of the benefits of
the net loss in 1999.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Revenues increased $91.8 million, or 126%, from $72.9 million in 1997 to
$164.7 million in 1998. This growth primarily resulted from the addition of
$34.5 million of revenue from field sales force logistics services, an increase
of $20.9 million of revenue from contract sales services, an increase of $18.9
million in educational conferencing services and a $17.5 million increase in
promotional conferencing services revenue. The increase in our promotional
conferencing services revenue was comprised of an $8.2 million increase in
symposia services revenue and an increase in revenue from peer-to-peer meetings
and other conferencing services of $9.3 million.
Cost of sales increased $64.1 million, or 124%, from $51.6 million in 1997
to $115.7 million in 1998. Cost of sales as a percentage of revenues decreased
from 70.7% in 1997 to 70.3% in 1998. The decrease in cost of sales as a
percentage of revenues was primarily due to the increase in educational
services revenue which has a higher gross profit percentage than our historical
peer-to-peer meeting business. This decrease was partially offset by an
increased proportion of field sales force logistics revenue, which, during
1998, had a lower average gross profit than our historical business due to the
higher proportion of production costs which are passed through to the customer
with little or no markup and a decreased proportion of symposia services.
Selling, general and administrative expenses increased $22.2 million, or
178%, from $12.4 million in 1997 to $34.6 million in 1998. This increase was
due to the cost of personnel additions of approximately $12.6 million,
including the personnel of acquired companies, and an increase in other
operating costs of approximately $9.6 million incurred to support our growth.
Selling, general and administrative expenses increased as a percentage of
revenues from 17.1% in the prior year period to 21.0% in the current year
period as the percentage increase in selling, general and administrative
expenses was partially offset by the increase of revenues.
Operating income increased $5.4 million from $8.9 million in 1997 to $14.3
million in 1998. Operating income as a percentage of revenues declined from
12.2% in 1997 to 8.7% in 1998. The decrease in operating income as a percentage
of revenues was primarily due to the aforementioned increase in selling,
general and administrative expenses as a percentage of revenues.
Interest expense, net of interest income, was $1.1 million in 1997 compared
to $1.7 million of interest income in 1998. This change was due to a decrease
in interest expense in the current year period as compared
17
<PAGE>
to the prior year period related to our full repayment of its bank debt during
1997, and an increase in interest income in the current year period as compared
to the prior year period related to our higher average cash balance in the
current year period as compared to the prior year period.
The provision for income taxes for 1998 was $5.6 million versus $1.7 million
for 1997, reflecting estimated Federal and state income tax expense partially
offset by the utilization of benefits from net deferred tax assets recognized
on our December 31, 1996 balance sheet which are related to net operating loss
carryforwards previously not recognized.
Liquidity and Capital Resources
At December 31, 1999, we had $50.1 million in net working capital, a
decrease of $6.3 million from December 31, 1998. Our primary sources of
liquidity as of December 31, 1999 were cash and cash equivalents and accounts
receivable.
Our accounts receivable turnover averaged 57 days for the period ended
December 31, 1999 and 93 days for the period ended December 31, 1998. The
allowance for doubtful accounts and credit memo reserves was $1.3 million at
December 31, 1999 and $0.5 million at December 31, 1998.
During 1999, we generated approximately $23.5 million in cash from operating
activities as compared to $11.5 million of cash used in operating activities
during 1998. The amount provided by operating activities was primarily related
to the decrease in accounts receivable turnover. We believe our ability to
generate cash flow from operations is inversely related to revenue growth. As
such, during periods of rapid growth we will use cash, whereas during periods
of slow growth or decline we believe we will be able to generate cash from
operations.
During 1999, we used approximately $13.3 million of cash in investing
activities which was comprised of $11.4 million of cash related to the payments
of contingent consideration and $1.9 million used to purchase computer,
telephone and office equipment. We made cash payments of approximately $11.4
million during 1999 based upon the attainment of contingent payment goals
established during the acquisitions of Medical Education Systems, Inc.,
Strategic Implications International, Inc., and Stratagem Plus, Inc. There are
no remaining contingent payments under any of these acquisition agreements.
Financing activities during 1999 used approximately $2.5 million of net cash
outflows. The amount used by financing activities was primarily the result of
our repurchase of our common stock in the amount of $2.6 million offset by
proceeds from exercises of stock options in the amount of $0.1 million. During
1999, our Board of Directors authorized us to repurchase up to 1,000,000 shares
of our common stock through December 31, 2000. We have repurchased 427,500
shares through December 31, 1999.
On October 31, 1999, we permitted our $5.0 million unsecured revolving
credit facility to expire. There were no amounts outstanding as of December 31,
1999 and 1998. Currently, we do not intend to obtain a new credit facility and
believe we have sufficient other capital resources.
Year 2000
During 1999, we completed our Year 2000 program to identify and correct the
areas of our computer systems and our operations that could be affected by the
Year 2000 issue. As a result of such effort, our computer systems and software
programs are functioning properly and our business and operations have not been
affected by the Year 2000 issue. Our costs associated with our Year 2000
program, excluding any costs that we may incur as a result of the failure of
any third parties to become Year 2000 compliant, was approximately $300,000 in
total.
18
<PAGE>
There is still a possibility that some computer systems and software
programs may not function properly later in the year 2000 and beyond. In the
event we are unable to fix a serious Year 2000 problem, there could be an
interruption or failure of our operations. Likewise, in the event our suppliers
are unable to fix a material Year 2000 problem, a resulting interruption or
failure of their business could also negatively impact us.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative financial instruments and hedging
activities. The Company will be required to adopt SFAS No. 133 in fiscal 2001
in accordance with SFAS No. 137, which delays the required implementation of
SFAS No. 133 for one year. The adoption of this pronouncement is expected to
have no material impact on its financial position, results of operations or
cash flows.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
None.
19
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
BORON, LEPORE & ASSOCIATES, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants................................. 21
Consolidated Balance Sheets as of December 31, 1999 and 1998............. 22
Consolidated Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997..................................................... 23
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997........................................ 24
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997..................................................... 25
Notes to Consolidated Financial Statements............................... 26
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO BORON, LEPORE & ASSOCIATES, INC.:
We have audited the accompanying consolidated balance sheets of Boron,
LePore & Associates, Inc. (a Delaware Corporation) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years ending December 31, 1999. These consolidated financial statements and
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule 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. and subsidiaries as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years ending December 31,
1999 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to the
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements, and in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Arthur Andersen LLP
Roseland, New Jersey
February 7, 2000
21
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31,
------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 44,631 $ 36,924
Accounts receivable, net of allowance for doubtful
accounts and credit memo reserves of $1,332 and $535 at
December 31, 1999 and 1998, respectively................ 27,567 44,394
Prepaid expenses and other current assets................ 1,387 1,678
-------- --------
Total current assets................................... 73,585 82,996
Furniture, fixtures and equipment, at cost, net of
accumulated depreciation of $4,391 and $2,036 at December
31, 1999 and 1998, respectively........................... 7,397 7,884
Intangible assets, net..................................... 36,476 33,592
Other assets............................................... 686 630
-------- --------
Total assets........................................... $118,144 $125,102
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 3,568 $ 5,138
Accrued payroll.......................................... 1,532 1,808
Accrued expenses......................................... 8,536 9,981
Deferred revenue......................................... 9,808 9,599
-------- --------
Total current liabilities.............................. 23,444 26,526
-------- --------
Deferred income taxes, net................................. -- 1,080
-------- --------
Commitments and contingencies.............................. -- --
Stockholders' equity:
Preferred stock, $.01 par value, 2,000 shares authorized,
none issued and outstanding............................. -- --
Common stock, $.01 par value, 50,000 shares authorized;
16,938 issued and 12,302 outstanding at December 31,
1999; 16,882 issued and 12,682 outstanding at December
31, 1998................................................ 169 169
Class A common stock, $.01 par value, none authorized,
issued and outstanding.................................. -- --
Class B common stock, $.01 par value, none authorized,
issued and outstanding.................................. -- --
Treasury stock, at cost, 4,636 shares at December 31,
1999 and 4,200 shares at December 31, 1998.............. (26,989) (24,350)
Additional paid-in capital............................... 118,789 118,363
Retained earnings........................................ 2,731 3,314
-------- --------
Total stockholders' equity............................. 94,700 97,496
-------- --------
Total liabilities and stockholders' equity............. $118,144 $125,102
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
22
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Revenues.......................................... $149,448 $164,670 $72,907
Cost of sales..................................... 109,678 115,712 51,580
-------- -------- -------
Gross profit.................................... 39,770 48,958 21,327
-------- -------- -------
Selling, general and administrative expenses...... 38,942 34,625 12,444
Provision for restructuring and other severance... 2,920 -- --
Goodwill impairment charge........................ 754 -- --
-------- -------- -------
Total operating expenses........................ 42,616 34,625 12,444
-------- -------- -------
Operating income (loss)......................... (2,846) 14,333 8,883
Interest income (expense), net of interest expense
of $0 in 1999 and 1998, net of interest income of
$461 in 1997, respectively....................... 1,873 1,664 (1,071)
-------- -------- -------
Income (loss) before provision (benefit) for
income taxes................................... (973) 15,997 7,812
Provision (benefit) for income taxes.............. (390) 5,550 1,700
-------- -------- -------
Net income (loss)................................. $ (583) $ 10,447 $ 6,112
======== ======== =======
Net income (loss) per common and common equivalent
share:
Basic........................................... $ (0.05) $ 0.88 $ 1.07
======== ======== =======
Diluted......................................... $ (0.05) $ 0.84 $ 0.72
======== ======== =======
Weighted average number of common and common
equivalent shares:
Basic........................................... 12,633 11,936 4,947
======== ======== =======
Diluted......................................... 12,633 12,370 8,507
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In Thousands)
<TABLE>
<CAPTION>
Class A Additional Retained
Common Common Treasury Paid-in Earnings
Stock Stock Stock Capital (Deficit)
------ ------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance as of December 31, 1996.. $ 57 $ 7 $(18,850) $ 1,813 $(12,414)
Net income..................... -- -- -- -- 6,112
Non cash compensation expense.. -- -- -- 43 --
Dividends on convertible
participating preferred
stock......................... -- -- -- -- (831)
Net proceeds of initial public
offering...................... 37 -- -- 59,750 --
Repurchase of minority
stockholder's 467 shares of
common stock as treasury
stock......................... -- -- (5,500) -- --
Conversion of convertible
participating preferred stock
to common stock............... 47 -- -- 2,453 --
Issuance of Class A common
stock......................... -- 1 -- 118 --
Conversion of Class A common
stock to common stock......... 8 (8) -- -- --
---- ----- -------- -------- --------
Balance as of December 31, 1997.. 149 -- (24,350) 64,177 (7,133)
Net income..................... -- -- -- -- 10,447
Net proceeds of public stock
offering...................... 16 -- -- 44,396 --
Issuance of stock for business
acquisitions.................. 3 -- -- 9,403 --
Issuance of stock for stock
option exercises.............. 1 -- -- 387 --
---- ----- -------- -------- --------
Balance as of December 31, 1998.. 169 -- (24,350) 118,363 3,314
Net income..................... -- -- -- -- (583)
Issuance of stock for stock
option exercises.............. -- -- -- 118 --
Issuance of stock for business
acquisitions.................. -- -- -- 308 --
Repurchase of 436 shares of
common stock as treasury
stock......................... -- -- (2,639) -- --
---- ----- -------- -------- --------
Balance as of December 31, 1999.. $169 $ -- $(26,989) $118,789 $ 2,731
==== ===== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss).............................. $ (583) $ 10,447 $ 6,112
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization................ 4,210 2,296 360
Provision for doubtful accounts and credit
memo reserves............................... 1,249 135 100
Provision for restructuring and other
severance................................... 2,920 -- --
Goodwill impairment charge................... 754 -- --
Write-off of unamortized deferred financing
costs....................................... -- -- 271
Non-cash compensation expense................ -- -- 43
Deferred income taxes........................ (1,280) (429) 1,509
Changes in operating assets and liabilities,
net of effects from acquisitions of
businesses:
Decrease (increase) in accounts
receivable................................ 15,578 (13,804) (6,895)
Decrease (increase) in prepaid expenses and
other current assets...................... 291 (880) (475)
Decrease (increase) in intangibles......... 553 -- (1)
Decrease (increase) in other assets........ 144 (537) (46)
Decrease in accounts payable and accrued
expenses.................................. (511) (781) (3,046)
Increase (decrease) in deferred revenue.... 209 (7,912) 766
-------- -------- --------
Net cash provided by (used in) operating
activities............................... 23,534 (11,465) (1,302)
-------- -------- --------
Cash Flows From Investing Activities:
Purchases of furniture, fixtures and
equipment..................................... (1,873) (4,507) (4,433)
Business acquisitions, net of acquired cash.... -- (15,920) --
Business acquisitions, contingent
consideration................................. (11,433) -- --
-------- -------- --------
Net cash used in investing activities..... (13,306) (20,427) (4,433)
-------- -------- --------
Cash Flows From Financing Activities:
Repayments of long term debt and revolving line
of credit..................................... -- -- (21,000)
Redemption of convertible participating
preferred stock............................... -- -- (10,831)
Proceeds from the issuance of common stock..... -- 44,412 59,787
Proceeds from the issuance of Class A common
stock......................................... -- -- 119
Proceeds from exercise of stock options........ 118 388 --
Purchase of treasury stock..................... (2,639) -- --
Purchase of treasury stock from former
stockholders.................................. -- -- (5,500)
-------- -------- --------
Net cash provided by (used in) financing
activities............................... (2,521) 44,800 22,575
-------- -------- --------
Net increase in cash and cash
equivalents.............................. 7,707 12,908 16,840
Cash and Cash Equivalents, beginning of period.. 36,924 24,016 7,176
-------- -------- --------
Cash and Cash Equivalents, end of period........ $ 44,631 $ 36,924 $ 24,016
======== ======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest..................................... $ -- $ -- $ 1,614
Taxes........................................ $ 1,799 $ 5,515 $ 252
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Description of The Business:
Business:
Boron, LePore & Associates, Inc. and subsidiaries (the "Company") provides
outsourced marketing, educational and sales 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. The Company also conducts
meetings such as symposia, continuing education conferences and video satellite
conferences; product marketing services; contract sales services; and field
force logistics services.
Incorporation and Merger:
On November 22, 1996, BLA Acquisition Corporation ("BLA") was incorporated
in the State of Delaware. On November 27, 1996, the stockholders of BLA and the
stockholders of Boron, LePore & Associates, Inc., all under common control,
unanimously approved the Agreement and Plan of Merger ("Merger Agreement") of
the two companies. On December 3, 1996, the merger became effective and was
accounted for comparable to a pooling of interests. The surviving corporation
was BLA, which subsequently changed its name to Boron, LePore & Associates,
Inc. (the "Company").
On September 24, 1997, the Company completed the initial public offering of
3,735,000 shares of Common Stock at $17.50 per share resulting in net proceeds,
after underwriter commissions and offering costs, of approximately $59,800 (the
"IPO"). Of these net proceeds, approximately $19,600 was used to retire
outstanding debt and pay related interest expense, approximately $10,800 was
used to redeem all shares of Redeemable Preferred Stock and related accumulated
dividends and approximately $5,600 was used to purchase 466,666 shares of
Common Stock from a former officer of the Company.
Upon completion of the IPO, all outstanding shares of non-voting Class A
Common Stock converted into shares of Common Stock. Also upon completion of the
IPO, the Convertible Participating Preferred Stock of the Company converted
into 4,666,666 shares of Common Stock and 5,600,000 shares of Redeemable
Preferred Stock which, as described above, was redeemed with a portion of the
net proceeds of the IPO.
On May 27, 1998, the Company completed a secondary stock offering of
2,980,000 shares of Common Stock at $30.00 per share resulting in net proceeds,
after underwriter commissions and offering costs, of approximately $44,400 (the
"Secondary Offering"). The Company intends to use these net proceeds from the
Secondary Offering for working capital and other general corporate purposes,
including the funding of potential acquisitions.
All common share amounts have been retroactively adjusted to reflect a two-
for-three reverse stock split which occurred on September 11, 1997.
2. 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
26
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
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.
Consolidation:
The consolidated financial statements include the accounts of Boron, LePore
& Associates, Inc. and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Reclassification:
Certain prior year balances have been reclassified to conform to current
year presentation.
Cash and Cash Equivalents:
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 recognized 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 field force logistics services are recorded in the period the
services are performed, based on the specific terms of the contract.
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.
Depreciation and Amortization:
Depreciation and amortization is provided on the straight-line method over
the estimated useful lives of the related assets, generally a three to ten year
period. Expenditures for repairs and maintenance are expensed as incurred while
renewals and betterments are capitalized.
Intangible Assets:
Intangible assets generally represent goodwill associated with the excess of
purchase price over net assets acquired and non-compete agreements. Goodwill is
generally amortized over a period not to exceed 20 years, and other intangible
assets are amortized over the term of the related agreement or debt instrument.
During September 1997, in conjunction with the IPO and the settlement of all
outstanding bank debt (Note 4), the Company wrote-off the remaining balance of
unamortized deferred financing costs, which amounted to approximately $271.
The Company's amortization expense was $1,850, $985, and $55 for the years
ending December 31, 1999, 1998 and 1997, respectively, and accumulated
amortization expense was $2,795 and $985 at December 31, 1999 and 1998,
respectively.
27
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Income Taxes:
The provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109") require the use of the asset and
liability method of accounting for income taxes. Under this method, deferred
tax assets and liabilities are determined based on temporary differences
between financial reporting and tax bases of assets and liabilities, tax credit
carryforwards and operating loss carryforwards. A valuation allowance is
established to reduce deferred tax assets if it is more likely than not that
such deferred tax assets will not be realized.
Long-lived Assets:
The provisions of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-lived Assets" ("SFAS 121") require,
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. If the fair
value is less than the carrying amount of the asset, a loss is recognized for
the difference (See Note 17).
Stock Based Compensation:
The provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123") require 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"). The Company elected to remain with the
accounting under Opinion 25 and has made the 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 (See Note 12).
Earnings Per Share:
The provisions of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128") require the presentation of basic earnings
per share ("Basic EPS") and diluted earnings per share ("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 for
the period adjusted to reflect potentially dilutive securities (See Note 3).
Segments of an Enterprise:
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131") established
standards for reporting of financial information about operating segments in
annual financial statements (See Note 15).
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative financial instruments and hedging
activities.
28
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
The Company will be required to adopt SFAS No. 133 in fiscal 2001 in accordance
with SFAS No. 137, which delays the required implementation of SFAS No. 133 for
one year. The adoption of this pronouncement is expected to have no material
impact on the Company's financial position, results of operations or cash
flows.
3. Earnings Per Share:
The following table reconciles income and share amounts used to calculate
basic earnings per share and diluted earnings per share.
<TABLE>
<CAPTION>
For the Years Ended December
31,
--------------------------------
1999 1998 1997
---------- ---------- ---------
<S> <C> <C> <C>
Numerator:
Net income (loss)--Diluted.................. $ (583) $ 10,447 $ 6,112
Less dividends on convertible participating
preferred stock............................ -- -- (831)
---------- ---------- ---------
Net income (loss)--Basic.................... $ (583) $ 10,447 $ 5,281
========== ========== =========
Denominator:
Weighted average shares outstanding--Basic.. 12,633,483 11,935,773 4,947,018
Incremental shares from assumed conversions
of options................................. -- 434,126 159,364
Convertible participating preferred stock... -- -- 3,400,911
---------- ---------- ---------
Weighted average shares outstanding--
Diluted.................................... 12,633,483 12,369,899 8,507,293
========== ========== =========
Net income (loss) per share--Basic.......... $ (0.05) $ 0.88 $ 1.07
========== ========== =========
Net income (loss) per share--Diluted........ $ (0.05) $ 0.84 $ 0.72
========== ========== =========
</TABLE>
The diluted share base for the year ended December 31, 1999 excludes
incremental shares of 77,104 related to employee stock options. These shares
are excluded due to their antidilutive effect as a result of the Company's loss
from continuing operations during 1999.
4. Long-term Debt:
During 1996, the Company entered into a borrowing agreement with a bank. The
borrowing agreement provided for a $5,000 revolving credit facility and a
$20,000 term loan (the "Credit Facility"). The interest rates on the loans vary
and are a function of the stated LIBOR rate and the effective prime rate as
defined in the Agreement. In September 1997, in conjunction with the IPO, the
Company repaid the then outstanding balance of the term loan, $19,500, and
$1,000 outstanding under the revolving credit facility. In connection with this
debt repayment, the Company wrote-off the balance of unamortized deferred
financing costs related to the credit facility, resulting in a charge of $271.
During 1998, the Company renegotiated the revolving credit facility. Under the
new loan agreement, the Company may borrow up to $5,000 on an unsecured basis.
On October 31, 1999, the revolving credit facility expired. As of December 31,
1998, there were no outstanding borrowings under the revolving credit facility.
29
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
5. Furniture, Fixtures and Equipment:
Furniture, fixtures and equipment consists of:
<TABLE>
<CAPTION>
December 31,
----------------
1999 1998
------- -------
<S> <C> <C>
Telephone and computer equipment......................... $ 8,832 $ 7,206
Office equipment......................................... 2,137 2,080
Other.................................................... 819 634
------- -------
11,788 9,920
Less: Accumulated depreciation........................... (4,391) (2,036)
------- -------
Furniture, fixtures and equipment net of accumulated
depreciation............................................ $ 7,397 $ 7,884
======= =======
</TABLE>
Depreciation expense was $2,360, $1,311, and $305 for the years ending
December 31, 1999, 1998 and 1997, respectively.
6. Accrued Expenses:
Accrued expenses are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-------------
1999 1998
------ ------
<S> <C> <C>
Accrued honoraria............................................. $ 901 $2,470
Accrued earnout............................................... -- 5,700
Accrued restructuring and other severance..................... 2,287 --
Accrued meeting expenses...................................... 3,936 358
Other accrued expenses........................................ 1,412 1,453
------ ------
Totals...................................................... $8,536 $9,981
====== ======
</TABLE>
7. Commitments and Contingencies:
Operating Leases:
The Company leases office space, automobiles, and equipment under various
operating leases expiring in 2008. Approximate annual lease commitments for the
next five years and thereafter are as follows:
<TABLE>
<S> <C>
2000.................................................................. $2,217
2001.................................................................. 1,387
2002.................................................................. 1,184
2003.................................................................. 816
2004.................................................................. 673
2005 and thereafter................................................... 1,976
</TABLE>
Rent expense charged against operations approximated $1,610, $1,530 and $525
for the years ended December 31, 1999, 1998 and 1997, respectively.
30
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
[Legal Counsel to Update]
Litigation:
Thomas S. Boron, a former stockholder and officer of the Company, filed a
complaint on March 27, 1998 in the United States District Court for the
District of New Jersey against the Company, Patrick G. LePore and Gregory F.
Boron, senior officers and directors of the Company, and Michael W. Foti and
Christopher J. Sweeney, former officers of the Company, alleging, among other
matters, securities and common law fraud and breach of contract in connection
with the settlement of contractual arrangements with Thomas S. Boron in
December 1996. The damages sought by Thomas S. Boron are not stated in the
complaint. The Company's By-laws provide for mandatory indemnification of the
Company's officers and former officers to the fullest extent authorized by the
Delaware General Corporation Law against all expenses incurred in proceedings
in which an officer or former officer is involved as a result of serving or
having served as an officer, director or employee of the Company. The Company
believes the allegations of Thomas S. Boron are without merit and intends to
contest them vigorously. The Company believes that the matter may involve
significant litigation-related expenses but that it will not have a material
adverse effect on its financial condition or results of operations; there can
be no assurance, however, that this will be the case.
On or about May 25, 1999, one stockholder of the Company filed a putative
class action lawsuit against the Company and certain of the Company's officers
in the United States District Court for the District of New Jersey. The suit
alleges that the Company, certain of its officers and directors, and certain
institutional stockholders violated the federal securities laws by making
material misrepresentations and omissions in certain public disclosures related
to, among other things, the secondary offering made by the Company in May 1998,
the Company's acquisition of Decision Point, Inc. in January 1998, the
termination of the Company's relationship with Glaxo-Wellcome, and the impact
of various events on the Company's earnings. The suit seeks unspecified
damages. On February 17, 2000, the Company filed a motion to dismiss all claims
asserted against it and its officers and directors. The motion to dismiss
remains pending before the court and the Company is not in position to make any
estimates regarding the probable outcome of the case. The Company believes that
the plaintiff's claims are without merit and intends to vigorously defend the
lawsuit.
In addition, the Company, from time to time, is involved in legal
proceedings incurred in the normal course of business. The Company believes
none of these proceedings will have a material adverse effect on the financial
condition or liquidity of the Company.
Employment Agreements:
The Company has entered into employment and other agreements with its
executive officers and certain other senior management employees, some of whom
are stockholders of the Company. The employment agreements specify duties,
benefits, confidentiality and miscellaneous other provisions. The employment
agreements generally have initial terms of no greater than three years, with
one-year renewals after such initial term. At December 31, 1999, the maximum
contingent liability related to employment and other agreements is
approximately $2,952.
31
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
8. Income Taxes:
The components of the provision (benefit) for income taxes are summarized as
follows for the years ending December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
Current............................................. $ 890 $ 5,979 $ 191
Deferred............................................ (1,280) (429) 1,509
------- ------- ------
Total............................................. $ (390) $ 5,550 $1,700
======= ======= ======
</TABLE>
The following table indicates the significant elements contributing to the
difference between the Federal statutory rate and the Company's effective tax
rate:
<TABLE>
<CAPTION>
1999 1998
----- ----
<S> <C> <C>
Federal statutory rate....................................... (34.0)% 34.0%
State taxes net of Federal effect............................ (6.0) 6.0
Utilization of net operating loss carryforwards, net of
valuation allowance......................................... -- (6.3)
Other........................................................ -- 1.0
----- ----
Effective tax rate........................................... (40.0)% 34.7%
===== ====
</TABLE>
Deferred income taxes represent the tax effect of the difference between
book and tax bases of assets and liabilities. The major components of deferred
tax assets and liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
----- -------
<S> <C> <C>
Allowance for doubtful accounts............................. $ 533 $ 214
State Net Operating Losses.................................. 450 --
Other operating reserves.................................... 161 57
Tax over book depreciation.................................. (612) (180)
Cash to accrual liability................................... (586) (1,171)
Tax over book goodwill amortization......................... (362) --
Restructuring and other severance reserves.................. 616 --
----- -------
Total..................................................... $ 200 $(1,080)
===== =======
</TABLE>
As of December 31, 1999, the net deferred tax asset of $200 is reflected in
the balance sheet as an other asset. The realization of the Company's net
deferred tax assets is dependent on future taxable income. The Company believes
that it is more likely than not such assets will be realized; however, ultimate
realization could be negatively impacted by market conditions and other
variables not known or anticipated at this time.
9. Major Customers:
Revenue from two customers accounted for approximately $59,000 (39%) and
$16,600 (11%) of total revenue for the year ending December 31, 1999.
Revenue from two customers accounted for approximately $56,500 (34%) and
$44,000 (27%) of total revenue for the year ending December 31, 1998.
32
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Revenue from two customers accounted for approximately $35,900 (49%) and
$13,400 (18%) of total revenue for the year ending December 31, 1997.
Major customers accounted for approximately $21,501 or 75%, and $25,358, or
56%, of accounts receivable at December 31, 1999 and 1998, respectively.
10. Purchase of Treasury Stock:
In September 1997, the Company paid a former officer of the Company
approximately $5,600 to repurchase 466,666 shares of common stock and to amend
the employment agreement of such former officer. At December 31, 1997, the
shares are held in treasury at a cost of approximately $5,500.
During 1999, the Company's Board of Directors authorized the Company to
repurchase up to 1,000,000 shares of its common stock through December 2000, in
open market or negotiated transactions. As of December 31, 1999, 427,500 shares
have been repurchased at a cost of $2,636.
Additionally, during 1999, the Company repurchased 8,333 shares of common
stock from two former employees at a cost of $3.
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 $0.01 par value Convertible Participating Preferred Stock for
$12,500. The Convertible Participating Preferred Stock had a minimum
liquidation value of $10,000 and was 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 were
entitled to receive an annual cash dividend of approximately $0.1429 per share.
The Convertible Participating Preferred shares had voting rights similar to
common stock and were subject to certain liquidating and redemption features,
as defined, at the option of the holder.
In September 1997, upon completion of the Company's IPO (see Note 1), the
7,000,000 shares of Convertible Participating Preferred Stock converted into
4,666,666 shares of Common Stock and 5,600,000 shares of Redeemable Preferred
Stock. The Redeemable Preferred Stock was immediately redeemed for $10,000 plus
accumulated dividends of approximately $831.
12. Stock Option and Grant Plan and Employee Stock Purchase Plan:
During 1996, the Boron, LePore & Associates 1996 Stock Option and Grant Plan
(the "1996 Plan") was established. In August, 1997, the Plan was amended to
increase the shares of stock reserved for issuance under the 1996 Plan to
3,000,000 shares. During 1998 the Boron, LePore & Associates 1998 Employee
Stock Option
33
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
Plan (the "1998 Plan") was established, under which 500,000 shares of Common
Stock can be issued through the exercise of stock options. The following table
summarizes stock option activity:
<TABLE>
<CAPTION>
Number of Exercise Price Weighted Average
Shares Per Share Exercise Price
---------- ---------------- ----------------
<S> <C> <C> <C>
Outstanding at December 31,
1996........................ -- -- --
Granted.................... 733,059 $ 0.43 -- $22.00 $11.27
Canceled................... (1,500) 21.25 21.25
Exercised.................. -- -- --
---------- ---------------- ------
Outstanding at December 31,
1997........................ 731,559 0.43 -- 22.00 11.26
Granted.................... 1,155,525 26.50 -- 38.50 30.58
Canceled................... (26,666) 0.43 -- 26.50 10.21
Exercised.................. (40,916) 9.45 9.45
---------- ---------------- ------
Outstanding at December 31,
1998........................ 1,819,502 9.45 -- 38.50 24.42
Granted.................... 1,638,200 6.31 -- 13.00 9.14
Canceled................... (1,031,460) 6.31 -- 38.50 21.89
Exercised.................. (12,499) 9.45 9.45
---------- ---------------- ------
Outstanding at December 31,
1999........................ 2,413,743 $ 6.31 -- $35.75 $15.21
========== ================ ======
Shares exercisable at
December 31, 1999........... 535,876 $ 8.31 -- $35.75 $18.54
========== ================ ======
</TABLE>
The following table summarizes information about options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
Options Exercisable at
Options Outstanding at December 31, 1999 December 31, 1999
------------------------------------------- --------------------------
Weighted Average
Number Weighted Average Contractual Life Number Weighted Average
Range of Shares Exercise Price (Years) of Shares Exercise Price
- ---------------- --------- ---------------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
$ 6.31 -- $ 8.00 875,000 $ 6.97 9.68 -- $ --
$ 8.01 -- $12.00 476,831 10.73 8.69 292,498 11.31
$12.01 -- $28.00 493,100 15.83 8.19 89,725 20.09
$28.01 -- $35.75 568,812 31.39 8.39 153,653 31.39
--------- ------ ------- ------
2,413,743 $15.21 535,876 $18.54
========= ====== ======= ======
</TABLE>
Of the total options outstanding under the 1996 and 1998 Plans, 535,876,
345,065 and 13,000 were exercisable at December 31, 1999, 1998 and 1997,
respectively. Stock options available for grant were 1,032,842, 1,639,582, and
2,269,941 at December 31, 1999, 1998 and 1997, respectively.
34
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
As permitted by SFAS 123, 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 stock options granted at or above
market value. Had the fair value method of accounting been applied to the
Company's stock option grants, which requires recognition of compensation costs
ratably over the vesting period of the underlying equity instruments, net
income (loss) would have been as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Pro forma net income (loss).......................... $(5,298) $5,890 $6,080
Pro forma net income (loss) per common share:
Basic.............................................. $ (0.42) $ 0.49 $ 1.07
Diluted............................................ $ (0.42) $ 0.48 $ 0.71
</TABLE>
The fair value of options were estimated at the date of grant using a Black-
Scholes option pricing model with the following assumptions for 1999, 1998 and
1997: weighted-average risk-free interest rates of 6.8%, 4.7% and 6.5% for
1999, 1998 and 1997, respectively, no dividends, volatility factors of the
expected market price of the Company's common stock of 100%, 65.9% and 38.0%
for 1999, 1998 and 1997, respectively, a weighted-average expected life of the
options of 6.0 years for 1999, 1998 and 1997 and a weighted-average grant date
fair value of options granted during fiscal years of $7.51, $19.53 and $4.38
for 1999, 1998 and 1997, respectively.
13. Savings and Investment Plan:
During 1998, the Company adopted the Boron LePore & Associates Savings Plan
(the "401(k) Plan"), which is intended to qualify under Section 401(k) of the
Internal Revenue Code of 1986, as amended. The 401(k) Plan is a defined
contribution plan established to provide retirement benefits for all employees
who have completed six months of service with the Company.
The 401(k) Plan is employee funded up to an elective annual deferral. In
addition, the Company matches 50% of the participant's contribution up to a
maximum employer contribution of 2.0% of the employee's total compensation. For
the years ended December 31, 1999, 1998 and 1997, the Company's matching
contributions to the 401(k) Plan were approximately $227, $99 and $0,
respectively.
14. Quarterly Results of Operations (Unaudited)
Summarized unaudited quarterly operating results for 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
Fiscal Quarters Ended
--------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
1999(1) 1999(2) 1999 1999(3)
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues............................ $33,849 $38,568 $33,394 $43,637
Gross profit........................ 8,866 10,303 9,644 10,957
Net income (loss)................... (1,127) (685) 401 828
Net income (loss) per common share--
basic.............................. $ (0.09) $ (0.05) $ 0.03 $ 0.07
Net income (loss) per common share--
diluted............................ $ (0.09) $ (0.05) $ 0.03 $ 0.07
</TABLE>
- --------
(1) The results for the fiscal quarter ended March 31, 1999 include a pre-tax
goodwill impairment charge of $754.
(2) The results for the fiscal quarter ended June 30, 1999 include a pre-tax
provision for restructuring of $1,700.
(3) The results for the fiscal quarter ended December 31, 1999 include a pre-
tax provision for restructuring and other severance of $1,220.
35
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Fiscal Quarters Ended
-------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues................ $32,154 $47,740 $41,937 $42,839
Gross profit............ 8,397 13,082 14,070 13,409
Net income.............. 1,875 2,372 3,101 3,099
Net income per common
share--basic........... $ 0.17 $ 0.20 $ 0.25 $ 0.24
Net income per common
share--diluted......... $ 0.17 $ 0.20 $ 0.24 $ 0.24
</TABLE>
15. Segment Information:
The Company's management considers its business to be a single business
entity--the providing of outsourced marketing, educational and sales services
to the pharmaceutical industry. The Company's services generally are utilized
by customers and people associated with the pharmaceutical industry and the
medical profession. Management evaluates its product offerings on a revenue
basis, which is presented below, and profitability is generally evaluated on an
enterprise-wide basis due to shared infrastructures.
<TABLE>
<CAPTION>
For the Years Ended
December 31,
-------------------------
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Revenues:
Marketing and educational services................ $ 68,081 $106,106 $69,740
Contract sales services........................... 23,173 23,019 2,167
Field sales force logistics services.............. 58,194 35,545 1,000
-------- -------- -------
Total revenues.................................. $149,448 $164,670 $72,907
======== ======== =======
</TABLE>
16. Acquisitions:
In January 1998, the Company purchased certain assets from Decision Point,
Inc., an Illinois company. The purchase price was $800 in cash. The acquisition
has been accounted for using the purchase method of accounting. The excess of
purchase price over net assets acquired was approximately $800. As described in
note 19, in connection with respect to the measurement of goodwill impairment
as discussed in note 2, the Company determined that the remaining unamortized
purchase price of $754 was impaired. As a result, the Company wrote down the
goodwill to zero during 1999.
In March 1998, the Company purchased substantially all of the assets and
assumed certain liabilities of Strategic Implications International, Inc., a
Maryland corporation. The purchase price was $4,300 in cash and approximately
137,000 shares of the Company's common stock. In addition, the Company paid
$700 during 1999 based on the attainment of performance goals. The acquisition
has been accounted for using the purchase method of accounting. The excess of
purchase price over net assets acquired was estimated to be approximately
$9,200 and is being amortized over twenty years.
In May 1998, the Company purchased substantially all of the assets and
assumed certain liabilities of Medical Education Systems, Inc., a Pennsylvania
corporation. The purchase price was $10,000 in cash and 160,103 shares of the
Company's common stock. The Company paid an additional $9,500 during 1999 based
upon the attainment of certain operating income goals. The acquisition has been
accounted for using the purchase method of accounting. The excess of purchase
price over net assets acquired was estimated to be approximately $26,000 and is
being amortized over twenty years.
36
<PAGE>
BORON, LEPORE & ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(in thousands, except share and per share data)
In August 1998, the Company purchased substantially all of the assets and
assumed certain liabilities of Strategem Plus, Inc., a New Jersey corporation.
The purchase price was $1,600 in cash and 13,630 shares of the Company's common
stock. During 1999, the Company paid $1,233 in cash and 43,406 shares of the
Company's common stock based on the attainment of certain revenue goals. The
acquisition has been accounted for using the purchase method of accounting. The
excess of purchase price over net assets acquired was estimated to be
approximately $4,000 and is being amortized over twenty years.
The following unaudited pro forma summary presents information as if the
acquisitions had occurred at the beginning of the respective periods:
<TABLE>
<CAPTION>
Year Ended
December 31, 1998
-----------------
<S> <C>
Net revenues............................................... $169,263
Net income................................................. $ 10,048
========
Pro forma diluted earnings per share....................... $ 0.84
========
</TABLE>
The pro forma information is not necessarily indicative of the results that
would have occurred had the acquisitions taken place at the beginning of the
respective periods.
17. Goodwill Impairment Charge:
The Company determined that the goodwill related to the acquisition of
Decision Point, Inc. was impaired. The Company based its determination on the
inability of the long-lived asset to generate future cash flows sufficient to
recover the carrying amount. As a result, the Company recorded a write-down
during 1999 in the amount of $754 to bring the book value of this asset to
zero.
18. Provision for Restructuring and Other Severance:
During 1999, the Company incurred two provisions for restructuring and other
severance based on approved management plans. During the second quarter of
1999, the Company recorded a provision for restructuring in the amount of
$1,700 and during the fourth quarter of 1999, the Company recorded a provision
for restructuring and other severance in the amount of $1,220. The fourth
quarter provision was net of a $280 reversal related to the second quarter
provision. The second quarter provision related to a workforce reduction of
approximately 90 employees, the downsizing or closing of certain office
locations and other related costs which represent approximately 67%, 21% and
12%, respectively, of the total provision. The fourth quarter provision related
to the wind-down of the Company's teleservice business in Norfolk, Virginia,
including a workforce reduction of approximately 75 employees and the
disposition of certain assets, and a management change which represent
approximately 12%, 60% and 28%, respectively, of the total provision. During
1999, the actual cash payments related to the 1999 restructurings amounted to
approximately $630 and were related primarily to employee termination costs.
The balance of the restructuring and other severance reserve at December 31,
1999 was $2,287.
37
<PAGE>
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of The Registrant
The information appearing under the captions "Information Regarding
Directors" and "Executive Officers" in the registrant's definitive proxy
statement relating to the 2000 Annual Meeting of Stockholders to be held in May
2000 is incorporated herein by reference.
ITEM 11. Executive Compensation
The information appearing under the caption "Executive Compensation" in the
registrant's definitive proxy statement relating to the 2000 Annual Meeting of
Stockholders to be held in May 2000 is incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information appearing under the caption "Principal and Management
Stockholders" in the registrant's definitive proxy statement relating to the
2000 Annual Meeting of Stockholders to be held in May 2000 is incorporated
herein by reference.
ITEM 13. Certain Relationships and Related Transactions
The information appearing under the caption "Certain Transactions" in the
registrant's definitive proxy statement relating to the 2000 Annual Meeting of
Stockholders to be held in May 2000 is incorporated herein by reference.
38
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements.
(a)(2) 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.
(a)(3) Exhibits. Exhibits 10.4 through 10.35 constitute all of the
management contracts and compensation plans and arrangements of the Company
required to be filed as exhibits to this Annual Report. The following is a
complete list of Exhibits filed or incorporated by reference as part of this
Annual Report.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger by and between the Predecessor and the
Company.(2)
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.(2)
2.3 Preferred Stock Purchase Agreement dated as of December 4, 1996 by and
among the Company and the Investors named therein.(2)
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)
2.4(a) Consent and Second Amendment to Stockholder's Agreement, dated March
11, 1998.(5)
2.5 Registration Rights Agreement by and among the Company, Christos S.
Efessiou and Alicia A. Angelides, dated March 18, 1998.(5)
2.6 Asset Purchase Agreement by and among the Company, Christos S.
Efessiou, Alicia A. Angelides, Strategic Implications International,
Inc. and EFAN Holdings, dated March 18, 1998.(5)
2.7 Asset Purchase Agreement by and among the Company, MES Acquisition
Corp., Medical Education Systems, Inc., Mary Parenti and James
Jamieson.(6)
3.1 Third Amended and Restated Certificate of Incorporation.(5)
3.2 Amended and Restated By-laws.(5)
4.1 Specimen certificate for shares of Common Stock, $.01 par value, of
the Company.(4)
4.2 Credit Agreement with Fleet National Bank as Agent and Lender, as
amended.(2)
10.1(a) Lease between MBM Associates and the Company.(2)
10.1(b) Sublease between Lonza, Inc. and the Company.(2)
10.2 Lease by and between SPENCO, Ltd. and the Company.(2)
10.3 Deed of Lease Agreement by and between Norfolk Commerce Center Limited
Partnership and the Company.(2)
10.4 1999 Employment Agreement for Patrick G. LePore.(7)
10.5 Employment Agreement for Gregory F. Boron.(2)
10.7 Employment Agreement for Timothy J. McIntyre.(7)
</TABLE>
39
<PAGE>
<TABLE>
<C> <S>
10.8 Non-Competition Agreement for Patrick G. LePore.(5)
10.9 Non-Competition Agreement for Gregory F. Boron.(2)
10.11 Employment Agreement for Martin J. Veilleux.(7)
10.12 Boron, LePore & Associates, Inc. Amended and Restated 1996 Stock Option
and Grant Plan.(3)
10.13 Boron, LePore & Associates, Inc. 1998 Employee Stock Option and Grant
Plan.(6)
10.14 Form of Indemnification Agreement between the Registrant and
directors.(2)
10.19 Restricted Stock Agreement for Timothy J. McIntyre.(2)
10.20 Incentive Stock Option Agreement for Timothy J. McIntyre.(1)
10.21 Non-qualified Stock Option Agreement for Timothy J. McIntyre.(3)
10.22 Incentive Stock Option Agreement for Martin J. Veilleux.(3)
10.23 Incentive Stock Option Agreement for Martin J. Veilleux.(3)
10.24 Incentive Stock Option Agreement for Brian J. Smith.(3)
10.25 Employment Agreement for Brian J. Smith.(6)
10.27 Lease Agreement by and between Maurice M. Weill, Trustee, as Landlord
and BLP Group Companies, as Tenant.(5)
10.28 Incentive Stock Option Agreement for Timothy J. McIntyre.(5)
10.29 Incentive Stock Option Agreement for Patrick G. LePore.(5)
10.30 Indemnification Agreement for Patrick G. LePore(7)
10.31 Employment Agreement for Steven M. Freeman
10.32 Incentive Stock Option Agreement for Steven M. Freeman
10.33 Separation Agreement for Martin J. Veilleux
10.34 Separation Agreement for Timothy J. McIntyre
10.35 Separation Agreement for Brian J. Smith
10.36 Employment Agreement for Claudia Estrin
16.1 Letter re: Change in Certifying Accountant.(1)
21.1 Subsidiaries of the Registrant.(5)
23.2 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
</TABLE>
- --------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (SEC File No. 333-30573) filed with the Commission on July 1,
1997.
(2) Previously filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (SEC File No. 333-30573) filed with the
Commission on August 15, 1997.
(3) Previously filed as an exhibit to Amendment No. 2 to the Company's
Registration Statement on Form S-1 (SEC File No. 333-30573) filed with the
Commission on August 29, 1997.
(4) Previously filed as an exhibit to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (SEC File No. 333-30573) filed with the
Commission on September 18, 1997.
(5) Previously filed as an exhibit to the Company's Registration Statement on
Form 10-K (SEC File No. 000-23093) for the year ended December 31, 1997,
filed with the Commission on March 31, 1998.
(6) Previously filed as an exhibit to the Company's current report on Form 10-K
filed on March 26, 1999.
(7) Previously filed as an exhibit to the Company's current report on Form 8-K
filed on July 13, 1999.
40
<PAGE>
A COPY OF ANY EXHIBIT TO THIS ANNUAL REPORT MAY BE OBTAINED UPON PAYMENT OF
A REASONABLE FEE FOR COPYING BY WRITTEN REQUEST TO ATTENTION: ALLISON WEY,
BORON, LEPORE & ASSOCIATES, INC., 17-17 ROUTE 208 NORTH, FAIR LAWN, NEW JERSEY
07410.
(b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K
during the last quarter of the period covered by this Annual Report.
41
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in Fair Lawn, New
Jersey, on March 30, 2000.
Boron, Lepore & Associates, Inc.
/s/ Patrick G. LePore
By: _________________________________
Patrick G. LePore
Chairman, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Patrick G. LePore Chairman of the Board, March 30, 2000
______________________________________ Chief Executive Officer,
Patrick G. LePore Director (Principal
Executive Officer)
/s/ Steven M. Freeman Chief Operating Officer, March 30, 2000
______________________________________ President and Director
Steven M. Freeman (Principal Executive
Officer)
/s/ Martin J. Veilluex Chief Financial Officer, March 30, 2000
______________________________________ Secretary and Treasurer,
Martin J. Veilluex (Principal Financial and
Accounting Officer)
/s/ Roger Boissonneault Director March 30, 2000
______________________________________
Roger Boissonneault
/s/ Jacqueline C. Morby Director March 30, 2000
______________________________________
Jacqueline C. Morby
/s/ Melvin Sharoky Director March 30, 2000
______________________________________
Melvin Sharoky
/s/ Joseph E. Smith Director March 30, 2000
______________________________________
Joseph E. Smith
/s/ John T. Spitznagel Director March 30, 2000
______________________________________
John T. Spitznagel
/s/ John A. Staley, IV Director March 30, 2000
______________________________________
John A. Staley, IV
</TABLE>
42
<PAGE>
Schedule II
BORON, LEPORE & ASSOCIATES, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to
Beginning Costs and Charged Balance at
of Year Expenses To Sales Deductions End of Year
---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1997:
Allowance for doubtful
accounts............. $300,000 $100,000 $ 0 $ 0 $ 400,000
Year ended December 31,
1998:
Allowance for doubtful
accounts............. $400,000 $135,000 $ 0 $ 0 $ 535,000
Year ended December 31,
1999:
Allowance for doubtful
accounts and Credit
memo reserve......... $535,000 $949,000 $300,000 $452,000(a) $1,332,000
</TABLE>
- --------
(a) Charges to the reserve account for uncollectible amounts written off and
credits issued during the year.
43
<PAGE>
Exhibit 10.31
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 1st day of October, 1999 by and between
Steven Freeman (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. 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 second anniversary of
the Effective Date; provided, however, that the term of the Employee's
employment pursuant to this Agreement shall be extended automatically for
successive one-year periods ending on the relevant anniversary of the 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 the
term of the Employee's employment pursuant to this Agreement, whereupon such
term of employment shall terminate as of such anniversary date; and provided
further, however, that in the event a Change of Control (as defined in Section
10 hereof) shall occur, then (subject to Sections 6 and 10) such term of
employment shall not expire by reason of non-extension by the Company pursuant
to this Section 2 prior to the date which is 18 months following such Change of
Control. 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."
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title of President, 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 Chief Executive Officer 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
<PAGE>
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 $335,000 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 $335,000 per annum.
(b) Annual 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, provided that the Employee's target bonus for each year shall be 60% of
the Employee's Base Salary and that the maximum amount of the Employee's bonus
for each year shall be 200% of the Employee's Base Salary. Notwithstanding the
foregoing, the Employee's bonus for the Company's fiscal year ending December
31, 1999 shall be pro rated for the portion of the year that the Employee is
employed by the Company and shall be based upon the same criteria as have been
established for other executives of the Company for the Company's 1999 fiscal
year.
(c) Start Bonus. The Company shall pay the Employee a start bonus of
-----------
$250,000, to be paid as follows: (i) $75,000 payable on the Effective Date;
(ii) $75,000 payable on January 1, 2000; and (iii) $100,000 payable on April 1,
2000, provided, however, that such payments shall only be made if the Employee
remains employed by and in good standing with the Company on the date such
payment is otherwise due.
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,
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.
2
<PAGE>
(b) Notwithstanding the foregoing, during the Term of Employment the
Company shall reimburse the Employee for a Company automobile, up to $750 per
month, in accordance with the Company's practices for executive officers, as in
effect from time to time.
(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) The Company will purchase on behalf of the Employee a term life
insurance policy providing a death benefit of $1,000,000 in the event of the
Employee's death and naming such person or persons as the Employee may designate
as loss payee or payees. The obligation to purchase and the maintenance of such
life insurance policy during the Term of Employment, however, shall be
contingent upon (i) the Employee's satisfactory completion of all requirements
in connection therewith including, without limitation, a physical examination,
and (ii) the annual premium payments for such policy not exceeding $5,000;
provided, however, that if such amount is not adequate to cover a policy with a
death benefit of $1,000,000, the Company shall purchase a term life insurance
policy providing for the maximum death benefit payable for an annual premium of
$5,000.
(f) During the Term of Employment, the Company shall pay for the one-
time initiation fee and the regular club dues in connection with the Employee's
association with a club of the Employee's choice, provided that the Company's
obligations under this Section 5(f) shall not exceed $25,000 with respect to the
one-time initiation fee and $6,000 per annum with respect to the regular club
dues.
(g) Compliance with the provisions of Section 4(b) or 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 provided in Sections 5(b), 5(c), 5(d),
5(e) and 5(f).
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.
3
<PAGE>
(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 the
Employee shall not be entitled to (1) 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, and (B) the Company shall have any and all rights and
remedies under this Agreement and applicable law; provided, however, that
termination of this Agreement by the Employee for Good Reason (as defined
in Section 10) within 18 months following a Change of Control shall not be
deemed grounds for termination pursuant to this Section 6(b).
(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; (ii) the obligation of the
Company to pay the Employee or his estate cash bonuses earned as of the
date of termination; and (iii) the obligation of the Company to pay the
Employee or his estate a pro rated portion of the Employee's target bonus
if the criteria for earning such bonus are achieved by a successor to the
Employee following the termination of the Employee
4
<PAGE>
pursuant to this Section 6(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 at least 60 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 (i) 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 (ii) 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 to the Employee in the manner
contemplated by Section 4(a) from the date of termination through the first
anniversary of the date on which such termination occurs, and the Company
shall also remain obligated to pay the full amount of the target bonus
contemplated by Section 4(b) for the year in which such termination occurs,
whether or not such bonus is earned or would otherwise have been paid, at
the time it otherwise would have paid such bonuses; subject, however, to
the provisions of Section 10 in the event any such termination occurs
within 18 months following any Change of Control. Notwithstanding the
foregoing, if the Employee's employment terminates pursuant to Section 6(e)
or 6(f) in the 18 months following a Change of Control and at the time of
such termination no target bonus shall be in effect or such target bonus
shall be lower than the higher of the Employee's target bonuses (whether
paid or not) for each of the two most recent years, then in such
circumstances the bonus payment of the Employee's severance which is
otherwise used to determine the amount payable pursuant to this Agreement
shall be the higher of the Employee's target bonuses for the two most
recent years and all amounts due shall be paid promptly following such
termination. Such payments of bonus and Base Salary amounts contemplated
by Section 6(e) or 6(f) are agreed by the parties hereto to be in full
satisfaction, compromise and release of any claims arising out of the
Employee's employment or termination thereof pursuant to this Section 6(e)
or Section 6(f). In any case the payment of all such amounts under
Sections 6(e) or 6(f) shall be contingent upon the Employee's compliance
with Section 8 below and the Employee's delivery of a general release upon
termination of employment covering all matters arising under or connection
with this Agreement. Such release shall be in a form reasonably
satisfactory
5
<PAGE>
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 (i) 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 or (ii) without limitation of
clause (i), for Good Reason during the 18 months following any Change of
Control as contemplated by Section 10. The rights and obligations of the
parties shall be as set forth in Section 6(e) and Section 10, as
applicable, 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, 8, 9, 11, 12,
13 and 14 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 (i) to hold the Confidential Information in strict confidence; (ii) not
to disclose the Confidential Information to any person (other than in the
regular business of the Company or its affiliates); and (iii) 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 (A) is then generally known to the public; (B)
became or becomes generally known to the public through no fault of the
Employee; or (C) 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
6
<PAGE>
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 Chief Executive
Officer of the Company and without additional compensation or consideration, any
business prospects, contacts 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.
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
the Employee's employment with the Company and its subsidiaries and thereafter
for a period of one year following the termination of the Employee's employment
with the Company, 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, field force logistics services and outsource marketing involving
pharmaceutical and healthcare companies. Without implied limitation, the
foregoing 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
7
<PAGE>
the Company or any of its direct or indirect subsidiaries and diverting to any
person (as defined in Section 14) 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, or interests in public companies of less
than five (5%) percent. The Employee further acknowledges that he will not
bring to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any previous employment or
other party.
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 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.
10. Assignability; Change of Control.
--------------------------------
This Agreement shall inure to the benefit of, and be binding upon and
assignable to, successors of the Company by way of merger, reorganization,
consolidation or other sale. In addition, if the Company sells all or
substantially all of its assets, the Company will cause this Agreement to be
assumed by the buyer and if the buyer does not assume this Agreement, such non-
assumption shall be treated as a material breach under Section 6(f). This
Agreement may
8
<PAGE>
not be assigned by the Employee. Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, in the event of (a) the sale of all
or substantially all of the assets of the Company and its Subsidiaries to
another person or entity; (b) 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;
(c) the sale of all or substantially all of the outstanding stock of the Company
to an unrelated person or entity 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; or (d) any other transaction or
series of transactions where 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 (collectively, a "Change of Control"), if, and
within the 18 months thereafter, the Company terminates the Employee's
employment pursuant to Section 6(e) or the Employee terminates his employment
pursuant to Section 6(f), including for Good Reason (as hereinafter defined),
the Employee shall receive severance of two years Base Salary rather than one
year, payable through the second anniversary of such termination, in addition to
two times the bonus payment contemplated by Section 6(e). For purposes of this
Agreement, "Good Reason" shall mean the occurrence of any of the following
events: (A) a substantial adverse change in the nature or scope of the
Employee's responsibilities, authorities, title, powers, functions, or duties;
(B) a reduction in the Employee's annual base salary except for across-the-board
salary reductions similarly affecting all or substantially all management
employees; or (C) the relocation of the offices at which the grantee is
principally employed to a location more than fifty (50) miles from Fair Lawn,
New Jersey.
11. 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, New Jersey 07410
Attention: Patrick G. LePore, President and CEO
To the Employee: Steven Freeman
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, New Jersey 07410
9
<PAGE>
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.
12. Dispute Resolution. In the event of a dispute between the parties
------------------
concerning their respective rights and obligations under this Agreement or under
any stock option agreement to which the Employee and the Company are party, that
the parties are unable to resolve amicably between themselves within sixty (60)
days of proper notice from one party to another, such dispute shall be settled
by arbitration in the State of New Jersey in an expedited manner in accordance
with the Commercial Rules of the American Arbitration Association by a duly
registered arbitrator to be selected jointly by the parties. The decision of
the arbitrator shall be final and binding upon the parties. Notwithstanding
anything to the contrary herein, the provisions of this Section 12 shall not
apply to any equitable remedies to which any party may be entitled to hereunder.
13. Litigation and Regulatory Cooperation.
-------------------------------------
During and after Employee's employment, the Employee shall reasonably
cooperate with the Company in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on
behalf of the Company which relate to events or occurrences that transpired
while the Employee was employed by the Company; provided, however, that such
cooperation shall not materially and adversely affect the Employee or expose the
Employee to an increased probability of civil or criminal litigation. The
Employee's cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Company at mutually
convenient times. During and after the Employee's employment, the Employee also
shall cooperate fully with the Company in connection with any investigation or
review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
the Employee was employed by the Company. The Company shall also provide the
Employee with compensation on an hourly basis calculated at his final base
compensation rate (calculated by taking the final base compensation rate divided
by 48 weeks of 40 hours each) for requested litigation and regulatory
cooperation that occurs after his termination of employment, and reimburse the
Employee for all costs and expenses incurred in connection with his performance
under this Paragraph 13, including, but not limited to, reasonable attorneys'
fees and costs.
14. 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,
10
<PAGE>
or of any other breach hereunder. This Agreement supersedes, terminates and in
all respects replaces all prior understandings and agreements, written or oral,
between the parties relating to the subject matter hereof (but not including any
Stock Option Agreements between the Company and the Employee). 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.
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
------------------------------------
Patrick G. LePore, President
/s/ Steven Freeman
----------------------------------------
STEVEN FREEMAN
11
<PAGE>
Exhbit 10.32
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE BORON, LEPORE & ASSOCIATES, INC.
AMENDED AND RESTATED
1996 STOCK OPTION AND GRANT PLAN
NAME OF OPTIONEE: Steven Freeman
NO. OF OPTION SHARES: 150,000 Shares of Common Stock
GRANT DATE: October 11, 1999
FINAL EXPIRATION DATE: October 11, 2009
OPTION EXERCISE PRICE/SHARE: $6.69
Pursuant to the Boron, LePore & Associates, Inc. Amended and Restated 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 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, it shall be deemed a non-qualified stock option.
All capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Plan.
<PAGE>
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 with respect to the
following number of Option Shares on the date indicated:
<TABLE>
<CAPTION>
Incremental (Aggregate Number)
Of Option Shares Exercisable/*/ Vesting Date
---------------------------- ------------
<S> <C>
1. 37,500 (37,500) October 11, 2001
2. 37,500 (75,000) October 11, 2002
3. 37,500 (112,500) October 11, 2003
4. 37,500 (150,000) October 11, 2004
</TABLE>
(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,
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
- ------------------------
*Subject to Section 5.
2
<PAGE>
date of such termination, and this Stock Option may thereafter be exercised, to
the extent it was vested and exercisable on such date of such termination, until
the Expiration Date contemplated by Section 1(d), except as the Committee may
otherwise determine. For purposes hereof, a "Service Relationship" 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 or her
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 terminates if the termination
is due to any other reason or (ii) the date which is ten years after the Grant
Date first above written, subject to the provisions hereof, including, without
limitation, Section 6 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
3
<PAGE>
one-year period beginning on the day after the day of the transfer of such
Option Shares to him or her, nor within the two-year period beginning on the day
after the grant of this Stock Option. If the Optionee disposes (whether by sale,
gift, transfer or otherwise) of any such Option Shares within either of these
periods, he or she 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 6), the Optionee may deliver a Stock Option Exercise Notice (an
"Exercise Notice") in the form of Appendix A hereto indicating his or her
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 Committee; or (b) (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 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
4
<PAGE>
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; (iii) by the Optionee delivering to the Company a
promissory note if the Board has authorized the loan of funds for the purpose of
exercising this Option, provided that at least par value is paid other than with
the promissory note; or (c) a combination of (a), (b)(i), (b)(ii) and (b) (iii)
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 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
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 or after such date as is contemplated by Section 6 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.
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 Common Stock of the Company. Subject
to Section 6 hereof, if the shares of 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 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
6
<PAGE>
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
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 where 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, this Stock Option shall no
longer vest except as the Committee may determine in its sole discretion and 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,
unless provision is 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
7
<PAGE>
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 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 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
8
<PAGE>
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.
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.
9
<PAGE>
(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 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.
[Remainder of Page Intentionally Left Blank]
10
<PAGE>
The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned as of the date first above written.
BORON, LePORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
------------------------------------------
Title: Chief Executive Officer
------------------------------------------
Address: BORON, LePORE & ASSOCIATES, INC.
Attention: President
17-17 Route 208 North
Fair Lawn, New Jersey 07410
OPTIONEE:
/s/ Steven Freeman
-------------------------------------------------
Steven Freeman
Optionee's Address:
------------------------
------------------------
DESIGNATED BENEFICIARY:
-------------------------------------------------
Beneficiary's Address:
------------------------
------------------------
11
<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. Amended and Restated
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-1
<PAGE>
Exhibit 10.33
February 24, 2000
CONFIDENTIAL
- ------------
Martin J. Veilleux
6 Emory Place
Holmdel, New Jersey 07733
Dear Marty:
This amended and restated letter agreement (this "Agreement") formalizes
the agreement that we have reached regarding your voluntary resignation from all
positions you hold (whether as an officer or employee) with Boron, LePore &
Associates, Inc. (the "Company") as of October 31, 2000 (the "Resignation
Date"). This Agreement amends and restates in its entirety the terms of the
agreement dated December 13, 1999 regarding the same subject matter. The
purpose of this Agreement is to establish an amicable arrangement for ending
your employment relationship. For purposes of this Agreement, all references to
the "Company" shall include Boron, LePore & Associates, Inc., a Delaware
corporation, and any of its subsidiaries. Reference is made to the Employment
Agreement between you and the Company dated March 1, 1999 (the "Employment
Agreement"). Capitalized terms used herein and not defined shall have the
meaning set forth in the Employment Agreement. Except as set forth herein, this
Agreement supersedes the Employment Agreement and the Employment Agreement is of
no further force or effect.
In exchange for the promises of you and the Company set forth below, you
and the Company agree as follows:
A. TERMINATION OF EMPLOYMENT. As of March 31, 2000 you hereby resign as
Corporate Executive Vice President, Chief Financial Officer, Treasurer and
Secretary of Boron, LePore & Associates, Inc. and from any other officer
positions currently held by you with Boron, LePore & Associates, Inc. or any of
its subsidiaries. You shall remain employed, as an employee and not as an
independent contractor, by the Company as a Special Assistant for Strategic
Planning and Business Intelligence ("Special Assistant") from April 1, 2000
until the Resignation Date, at which date you agree to voluntary resign and
terminate your employment from all positions and service relationships you hold
with the Company, unless you and the
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 2
Company mutually agree in writing to extend such date. Said resignations are
hereby accepted by the Company. The Company hereby agrees that your employment
as Special Assistant shall require no more than forty (40) hours per month
unless you agree to increase such hours. Travel time and time spent in
litigation cooperation under G, below, or under the Advancement Agreement (even
if necessary for your own defense in litigation where the Company is also a
defendant) shall be included when calculating such hours. Time you agree to work
in excess of 40 hours per month in this position will be compensated at a rate
to be set on a case by case basis by mutual agreement. Notwithstanding any
termination of your employment by the Company prior to October 31, 2000, in the
event of any such termination you shall continue to be entitled to receive all
of the benefits provided under this Agreement as if you had remained employed by
the Company through October 31, 2000. In addition, in the event of termination
by the Company, your death or disability, in each case prior to October 31,
2000, you will be entitled to a lump sum payment of $125,000.
B. SEVERANCE; COMPENSATION. The Company shall continue to make payments in
the amount of your Base Salary (as subsequently raised to $250,000) from
December 13, 1999 until March 31, 2000. During the period from April 1, 2000
through October 31, 2000 you will be employed by the Company as a Special
Assistant for Strategic Planning and Business Intelligence and receive monthly
salary payments of $5,000, provided, however, that if you terminate your
employment for any reason during this period, including if you terminate your
employment due to your death or disability, you will no longer receive such
$5,000 payments. Notwithstanding any early termination as Special Assistant for
Strategic Planning and Business Intelligence, during the period from April 1,
2000 until March 31, 2001, you will receive payments equal to your Base Salary
as of the date hereof. You shall also receive $100,000 as your bonus for 1999
and $125,000, the full amount of your target bonus set for 2000, when such
bonuses would otherwise be paid, but in no event later than January 31, 2001.
In the event the Company breaches this Agreement, the Company shall not be
entitled to offset any amounts payable for income or benefits you receive from
other sources. In consideration of these payments, you are hereby delivering to
the Company in paragraph I hereto a release of claims, and you agree, as a
condition to the Company's obligation to pay you any amounts which are due you
on or after the Resignation Date pursuant to this Agreement, to deliver another
release in the same form on or about the Resignation Date. The foregoing
payments shall be payable in accordance with the Company's payroll practices for
its executive officers, in all cases subject to withholding under applicable
law; provided, however, that the Company in its sole discretion may elect to pay
at any time any remaining amounts due to you hereunder
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 3
in a lump sum; and provided further, that in the event of a Change of Control of
the Company (as such term is defined in your current Employment Agreement), all
remaining amounts payable to you hereunder shall be paid in full in a lump sum
immediately upon the occurrence of such Change of Control, except that all of
your rights to receive the $125,000 payment provided for in Section A above and
your employment as Special Assistant for Strategic Planning and Business
Intelligence shall terminate upon the consummation of a Change of Control.
The Company agrees to pay you at your Base Salary rate for any unused vacation
time you have accrued through March 31, 2000, based on Company policy related to
such vacation time, which shall be paid promptly upon termination of your
employment relationship with the Company. Other than the payments described in
this Agreement, you shall not be entitled to any additional payments from the
Company relating to your employment with the Company or the termination thereof,
including, without limitation, any amounts specified in the Employment
Agreement.
C. STOCK OPTIONS. Notwithstanding any provision to the contrary contained in
the stock option agreements between you and the Company or the governing stock
option plan (collectively, the "Option Agreements"), all stock options to
purchase shares of Common Stock held by you which are unvested as of November 1,
2000 shall terminate as of November 1, 2000, unless mutually agreed in writing
to be extended, and you will have the period of time following the Resignation
Date (or such earlier date on which your service relationship with the Company
terminates due to your voluntary resignation, death or disability) specified in
the Option Agreements and the governing stock option plan to exercise such stock
options which have vested as of the date of termination of your service
relationship with the Company; provided further, that all stock options to
purchase shares of Common Stock held by you prior to a Change of Control will
vest and become exercisable to the extent set forth in the applicable Option
Agreements upon the consummation of the Change of Control.
In addition, in the event that your stock options are to be assumed in a
Transaction (as defined in the relevant Option Agreement) or new awards are
substituted for your Option Agreements in a Transaction, the Company hereby
agrees that the termination of your employment as a Special Assistant upon the
occurrence of a Change of Control, as provided in Paragraph B above, shall be
deemed to be a termination "without cause" for purposes of the so-called "double
trigger" provisions of the Option Agreements and all stock options so assumed,
continued or substituted that provide for vesting in full upon a termination
without cause shall be vested and exercisable in full immediately prior to such
Change of Control.
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 4
D. BENEFITS. You and your beneficiaries shall be entitled to continue to
receive, at the Company's expense, the medical, dental, life and disability
insurance benefits as are currently provided to you (or comparable coverage
pursuant to COBRA) until the earlier of (a) the date on which you secure
permanent employment and become eligible for participation in such employer's
insurance programs or (b) November 1, 2000, at which time all such benefits
shall terminate, except as otherwise provided by law. Until the termination of
your employment with the Company, you shall be entitled to continue to
participate as an employee in any existing 401(k) plan of the Company, and after
the termination of your employment with the Company, your rights with regard to
any such 401(k) plan shall be as provided by law and as may be provided in any
such plan with regard to former employees of the Company. Your eligibility to
participate in the Company's other employee benefit plans and programs will
cease on November 1, 2000, except as otherwise required by law. The Company
shall promptly reimburse you for all reasonable business expenses incurred by
you as an employee of the Company.
E. NON-COMPETITION; CONFIDENTIALITY. You hereby acknowledge that until March
31, 2001, you are still subject to the terms and covenants contained in Article
8 of the Employment Agreement by and between you and the Company, at which time
such terms shall be of no further force or effect. You hereby reaffirm and
readopt all of the terms and covenants of Sections 7 and 9 of the Employment
Agreement as if they were completely restated herein. Except as set forth in
this Agreement, the Employment Agreement is hereby terminated and of no further
force and effect. We hereby agree that the non-competition provisions of your
Employment Agreement will not be deemed to apply to the review, analysis and
interpretation of pharmaceutical marketing trends and techniques, including the
sale of such information no matter to whom such sale is made or your self
employment or investment, ownership, control in or employment by an entity in
which you own the majority equity interest if the business conducted by such
entity is solely in such areas. We further agree that any disclosures required
pursuant to a valid and effective subpoena or order issued by a court of
competent jurisdiction or other valid formal discovery process required or
allowed under applicable rules of court shall be permitted, provided you agree
to (i) immediately notify the Company of the existence, terms and circumstances
surrounding such a request, (ii) consult with the Company on the advisability of
taking legally available steps to resist or narrow such request, and (iii) if
disclosure of such information is required, exercise your best efforts at the
Company's expense to obtain an order or other reliable assurance that
confidential treatment will be accorded to such information. Notice to,
consultation with, and efforts taken by counsel provided by the
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 5
Company (as opposed to separate counsel paid for but not selected by the
Company) shall constitute compliance with the requirements of the immediately
preceding sentence of this Agreement.
F. RETURN OF PROPERTY. You hereby acknowledge that all documents, records,
materials, software, equipment, credit cards, information and other physical or
intellectual property that have come into your possession or been produced or
created by you in connection with your employment with or for the Company
("Property") have been and remain the sole property of the Company. You hereby
acknowledge that you have returned to the Company all such Property or will have
returned all such Property on or prior to October 31, 2000, except for your
Company credit card which will be returned by April 1, 2000.
G. LITIGATION COOPERATION. You agree to reasonably cooperate with the
Company in (i) the defense, prosecution or investigation of any claims or
actions which already have been brought or threatened, or which may be brought
or threatened in the future against or on behalf of the Company and its
affiliates and (ii) responding to, cooperating with, or contesting any
governmental audit, inspection, inquiry or investigation, in either case that
relate to events or occurrences that transpired during your employment or
association with the Company; provided, however, that such cooperation shall not
materially and adversely affect you or expose you to an increased probability of
civil or criminal litigation. Your full cooperation in connection with such
claims or actions shall include, without implication of limitation: being
available to meet with counsel to prepare for discovery or trial; to testify
truthfully as a witness when reasonably requested and at reasonable times
designated by the Company; and to meet with counsel or other designated
representative of the Company to prepare responses to and to cooperate with the
Company's processing of governmental audits, inspections, inquiries or
investigations. You agree that you will maintain the confidences and privileges
of the Company. In addition to your compensation hereunder for such cooperation,
you will be reimbursed by the Company only for any reasonable out-of-pocket
expenses that you reasonably incur in connection with such cooperation,
including but not limited to reasonable attorneys' fees and expenses, subject to
reasonable and satisfactory documentation. The Company will not exercise their
rights under this paragraph so as to interfere with your ability to engage in
gainful employment and shall endeavor to schedule your responsibilities
hereunder so as not to interfere with your schedule so long as you promptly
provide timely alternative dates on which you can fulfill your obligations
hereunder. In the event there are any inconsistencies or conflicts between the
terms
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 6
and conditions of this Paragraph G and the terms and conditions of the
Advancement Agreement and the Side Letter, each dated as of even date herewith,
the terms and conditions of the Advancement Agreement and the Side Letter shall
control.
H. NON-DISPARAGEMENT AND COOPERATION DURING TRANSITION. Each of us agrees,
that until December 13, 2002, we will not to make or cause to be made, directly
or indirectly, any statement to any person criticizing or disparaging the other
or any of the Company's stockholders, directors, officers or employees or
commenting unfavorably or falsely on the character, business judgment, business
practices or business reputation of the other or any of the Company's
stockholders, directors, officers or employees, provided, however, that any
party may truthfully respond to questions in the ordinary course of business or
litigation. You agree that from the date of your receipt of this Agreement, you
will cooperate fully with the Company in arranging for an orderly and
professional transition of your responsibilities. Each of us further agrees
that he or it will present the circumstances of your departure in a light that
will not reflect unfavorably on you or the Company.
I. RELEASE. You hereby irrevocably and unconditionally release, acquit, and
forever discharge the Company and its affiliates, securityholders, subsidiaries,
affiliates and related entities and their respective current and former
partners, members, officers, directors, agents, and employees, from any and all
claims, demands, or causes of action based upon any past action, omission, or
event, whether known or unknown, and whether or not in litigation which you may
have had from the beginning of time or which could be asserted by another on
your behalf, based on any action, omission, or event through the date hereof
relating to your employment at the Company and/or your status as a stockholder
and/or optionholder of the Company. This release includes actions claiming
violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
2000e et seq., the Age Discrimination in Employment Act, the Americans with
Disabilities Act, all other labor laws of New Jersey, and any other federal,
state, or local law, order or regulation. This release also includes any claims
for wrongful discharge or that the Company has dealt with you unfairly or in bad
faith, and actions raising tortious claims, actions raising any claim of express
or implied contract of employment, or any other cause of action or claims of
violation of common law. This release is for any and all relief, without regard
to its form or characterization. Included in this release are any and all
claims for attorneys' fees and for future damages allegedly arising from the
alleged continuation of the effects of any past action, omission or event.
Notwithstanding anything in this release to the contrary, this release shall not
be construed to limit your right to enforce this
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 7
Agreement the Amended and Restated Advancement Agreement entered into as of this
date or any Stock Option Agreements to which you are a party relating to stock
options remaining outstanding in accordance with the terms hereof.
J. INDEMNIFICATION AND INSURANCE. From and after the date of this Agreement,
the Company agrees that it will indemnify you and hold you harmless against any
losses, claims, damages, liabilities, costs and expenses, including without
limitation attorneys' fees and expenses, relating to or arising out of your
employment in any capacity with the Company to the same extent and upon the same
terms, conditions and limitations as indemnification shall be provided to other
executive officers of the Company who are not directors and shall provide, at
the Company's expense, Directors' and Officers' insurance coverage to the same
extent and upon the same terms and conditions as such insurance may be provided
to other executive officers of the Company from time to time. Consistent with
the foregoing, the Company shall have the right to assume the defense of any
proceeding to which you are a party or otherwise subject with counsel of its
choice (with representation by your own counsel following any such assumption to
be at your expense except in cases of conflict of interest under applicable
standards of professional conduct, in which case the Company shall be
responsible for such expense), and advancement of expenses shall be made upon
determination by the Board of Directors to advance such expenses and receipt of
an undertaking by you to repay such expenses if it shall be determined that you
are not entitled to indemnification under applicable law. Without limitation of
the foregoing, you shall be entitled to indemnification in accordance with the
terms of Article V of the Company's By-laws as currently in effect as a former
officer of the Company, notwithstanding any future Changes of Control or
amendment thereof, the terms and conditions of which are incorporated by
reference herein to govern the provision of indemnification to you by the
Company.
K. MISCELLANEOUS.
You are advised to consult with an attorney before signing this Agreement.
By signing this Agreement, you acknowledge that you are doing so
voluntarily and only after consultation with your personal attorney. You also
acknowledge that you are not relying on any representations by the undersigned
or any other representative of the Company concerning the meaning of any aspect
of this Agreement other than as set forth in this Agreement.
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 8
You acknowledge that you have been given the opportunity, if you so
desired, to consider this Agreement for seven (7) days before executing it.
If not signed by you and returned to Mr. Patrick G. LePore, Chief Executive
Officer, Boron, LePore & Associates, Inc., 17-17 Route 208 North, Fair Lawn,
New Jersey 07410, so that he receives it by close of business on the eighth
(8th) day after your receipt of the Agreement, this Agreement will not be valid.
In addition, if you breach any of the conditions of the Agreement within the
seven (7) day period, the offer of this Agreement will be withdrawn and your
execution of the Agreement will not be valid. In the event that you execute and
return this Agreement within seven (7) days or less of the date of its delivery
to you, you acknowledge that such decision was entirely voluntary and that you
had the opportunity to consider this letter agreement for the entire seven (7)
day period. The Company acknowledges that for a period of seven (7) days from
the date on which you execute this Agreement, you shall retain the right to
revoke this Agreement by written notice delivered to Mr. LePore at the address
indicated above, and that this Agreement shall not become effective or
enforceable until the expiration of such revocation period.
In the event of any dispute, this Agreement will be construed as a whole,
will be interpreted in accordance with its fair meaning, and will not be
construed strictly for or against either you or the Company. The laws of
New Jersey will govern any dispute about this Agreement, including any
interpretation or enforcement of this Agreement except for matters relating to
indemnification and advancement of expenses, as to which Delaware law shall
apply. In the event that any provision or portion of a provision of this
Agreement shall be determined to be unenforceable, the remainder of this
Agreement shall be enforced to the fullest extent possible as if such provision
or portion of a provision were not included. This Agreement may be modified only
by a written agreement signed by you and an authorized representative of the
Company.
In the event of a dispute between the parties concerning their respective
rights and obligations under this Agreement or under any stock option agreement
to which you and the Company are party, that the parties are unable to resolve
amicably between themselves within sixty (60) days of proper notice from one
party to another, such dispute shall be settled by arbitration in the State of
New Jersey in an expedited manner in accordance with the Commercial Rules of
J.A.M.S. Endispute by a duly registered arbitrator to be selected jointly by the
parties. The decision of the arbitrator shall be final and binding upon the
parties. The prevailing party in any such arbitration shall be entitled to
reimbursement of reasonable
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 9
attorneys' fees and costs from the non-prevailing party. Notwithstanding
anything to the contrary herein, the provisions of this paragraph shall not
apply to any equitable remedies to which any party may be entitled.
Notwithstanding the foregoing, it is specifically understood and agreed
that any breach of the provisions of Sections A, E, F and H hereof is likely to
result in irreparable injury to the nonbreaching party 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 nonbreaching party shall
be entitled to enforce the specific performance of Sections A, E, F and H of
this Agreement and to seek both temporary and permanent injunctive relief (to
the extent permitted by law).
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed by overnight
mail (with receipt 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, New Jersey 07410
Attention: Patrick G. LePore, Chief Executive Officer
To the Employee: Martin J. Veilleux
6 Emory Place
Holmdel, New Jersey 07733
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 delivery.
The Company is executing this Agreement with you on behalf of itself and
each of its subsidiaries and hereby represents to you that the execution and
delivery of this Agreement by the Company and the performance of the Company's
obligations hereunder have been duly authorized by all necessary action on the
part of the Company.
PGL ____ MJV ____
<PAGE>
Martin J. Veilleux
February 24, 2000
Page 10
If you agree to these terms, please sign and date below and return this
Agreement to the undersigned within the time limitation set forth above.
Sincerely,
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
----------------------------
Name: Patrick G. LePore
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
/s/ Martin J. Veilleux
- ----------------------------
Martin J. Veilleux
Dated:
---------------------
SPOUSAL CONSENT: I ACKNOWLEDGE THAT I HAVE READ THE FOREGOING AGREEMENT AND THAT
I UNDERSTAND THE CONTENTS THEREOF AND HEREBY ACCEPT AND AGREE TO THE FOREGOING
TERMS.
- ----------------------------
Name:
Dated:
---------------------
PGL _____ MJV _____
<PAGE>
Exhibit 10.34
September 7, 1999
CONFIDENTIAL
- ------------
Timothy J. McIntyre
1735 York Ave., Apt. 35C
New York, New York 10128
Dear Tim:
This letter agreement (this "Agreement") formalizes the agreement that we
have reached regarding your voluntary resignation from all positions you hold
(whether as an officer or employee) with Boron, LePore & Associates, Inc. (the
"Company") as of September 7, 1999 (the "Resignation Date"). The purpose of
this Agreement is to establish an amicable arrangement for ending your
employment relationship. For purposes of this Agreement, all references to the
"Company" shall include Boron, LePore & Associates, Inc., a Delaware
corporation, and any of its subsidiaries. Reference is made to the Employment
Agreement between you and the Company dated June 21, 1999 (the "Employment
Agreement"). Capitalized terms used herein and not defined shall have the
meaning set forth in the Employment Agreement. Except as set forth herein, this
Agreement supersedes the Employment Agreement and the Employment Agreement is of
no further force or effect.
In exchange for the promises of you and the Company set forth below, you
and the Company agree as follows:
A. TERMINATION OF EMPLOYMENT. As of September 7, 1999 you hereby resign as
Corporate Executive Vice President of Boron, LePore & Associates, Inc. and from
any other positions currently held by you with Boron, LePore & Associates, Inc.
or any of its subsidiaries. Said resignations are hereby accepted by the
Company.
B. SEVERANCE; COMPENSATION. You shall not be entitled to any additional
payments from the Company relating to your employment with the Company or the
termination thereof after September 7, 1999. The Company will provide you with
the salary, compensation and benefits set forth in the Employment Agreement
through September 7, 1999.
PGL ____ TJM ____
<PAGE>
Timothy J. McIntyre
September 7, 1999
Page 2
C. STOCK OPTIONS. Notwithstanding any provision to the contrary contained in
the stock option agreements between you and the Company or the governing stock
option plan (collectively, the "Option Agreements"), all options to purchase
shares of Common Stock held by you which are unvested as of September 7, 1999
shall terminate as of September 7, 1999, and you will have the period of time
following the Resignation Date specified in the Option Agreements and the
governing stock option plan to exercise such stock options which have vested as
of September 7, 1999.
D. NON-COMPETITION; CONFIDENTIALITY. You hereby acknowledge that until
September 7, 2000, you are still subject to the terms and covenants contained in
Section 8 of the Employment Agreement by and between you and the Company, at
which time such terms shall be of no further force or effect. Notwithstanding
the foregoing sentence, after the date of this Agreement, (i) you shall be
permitted to provide services to the pharmaceutical industry, provided, however,
that such services are not competitive with the business, activities, products
or services conducted or offered by the Company or its subsidiaries as of the
date hereof, and (ii) after the date which is 90 days after the date hereof (or
such earlier time as the Company may agree), you shall be permitted to hire or
engage and attempt to hire the following individuals: James McIntyre; Kerry
Cuttone; Jennifer Brock; James Smith and Robert Diehl. You hereby reaffirm and
readopt all of the terms and covenants of Sections 7 and 9 of the Employment
Agreement as if they were completely restated herein. Except as set forth in
this paragraph D, the Employment Agreement is hereby terminated and of no
further force and effect.
E. RETURN OF PROPERTY. You hereby acknowledge that all documents, records,
materials, software, equipment, credit cards, information and other physical or
intellectual property that have come into your possession or been produced or
created by you in connection with your employment with or for the Company
("Property") have been and remain the sole property of the Company. You hereby
acknowledge that you have returned to the Company all such Property or will have
returned all such Property on or prior to September 7, 1999.
F. LITIGATION COOPERATION. You agree to reasonably cooperate with the Company
in (i) the defense, prosecution or investigation of any claims or actions which
already have been brought or threatened, or which may be brought or threatened
in the future against or on behalf of the Company and its affiliates and (ii)
responding to, cooperating with, or contesting any governmental audit,
inspection, inquiry or investigation, in either case that relate to events or
PGL ____ TJM ____
<PAGE>
Timothy J. McIntyre
September 7, 1999
Page 3
occurrences that transpired during your employment or association with the
Company; provided, however, that such cooperation shall not materially and
adversely affect you or expose you to an increased probability of civil or
criminal litigation. Your full cooperation in connection with such claims or
actions shall include, without implication of limitation: being available to
meet with counsel to prepare for discovery or trial; to testify truthfully as a
witness when reasonably requested and at reasonable times designated by the
Company; and to meet with counsel or other designated representative of the
Company to prepare responses to and to cooperate with the Company's processing
of governmental audits, inspections, inquiries or investigations. You agree
that you will maintain the confidences and privileges of the Company. You will
be reimbursed by the Company for any reasonable out-of-pocket expenses that you
reasonably incur in connection with such cooperation, including but not limited
to reasonable attorneys' fees and expenses, subject to reasonable and
satisfactory documentation. The Company will also provide you with compensation
on an hourly basis calculated based upon your base salary as of September 7,
1999 (calculated by taking such salary and dividing by 48 weeks of 40 hours) for
requested litigation and regulatory cooperation. The Company will not exercise
their rights under this paragraph so as to interfere with your ability to engage
in gainful employment and shall endeavor to schedule your responsibilities
hereunder so as not to interfere with your schedule so long as you promptly
provide timely alternative dates on which you can fulfill your obligations
hereunder.
G. NON-DISPARAGEMENT AND COOPERATION DURING TRANSITION. Each of us agrees not
to make or cause to be made, directly or indirectly, any statement to any person
criticizing or disparaging the other or any of the Company's stockholders,
directors, officers or employees or commenting unfavorably or falsely on the
character, business judgment, business practices or business reputation of the
other or any of the Company's stockholders, directors, officers or employees.
You agree that from the date of your receipt of this Agreement, you will
cooperate fully with the Company in arranging for an orderly and professional
transition of your responsibilities. Each of us further agrees that he or it
will present the circumstances of your departure in a light that will not
reflect unfavorably on you or the Company.
H. MISCELLANEOUS.
You are advised to consult with an attorney before signing this Agreement.
PGL ____ TJM ____
<PAGE>
Timothy J. McIntyre
September 7, 1999
Page 4
By signing this Agreement, you acknowledge that you are doing so
voluntarily and only after consultation with your personal attorney. You also
acknowledge that you are not relying on any representations by the undersigned
or any other representative of the Company concerning the meaning of any aspect
of this Agreement other than as set forth in this Agreement.
In the event of any dispute, this Agreement will be construed as a whole,
will be interpreted in accordance with its fair meaning, and will not be
construed strictly for or against either you or the Company. The laws of
Delaware will govern any dispute about this Agreement, including any
interpretation or enforcement of this Agreement. In the event that any
provision or portion of a provision of this Agreement shall be determined to be
unenforceable, the remainder of this Agreement shall be enforced to the fullest
extent possible as if such provision or portion of a provision were not
included. This Agreement may be modified only by a written agreement signed by
you and an authorized representative of the Company.
In the event of a dispute between the parties concerning their respective
rights and obligations under this Agreement or under any stock option agreement
to which you and the Company are party, that the parties are unable to resolve
amicably between themselves within sixty (60) days of proper notice from one
party to another, such dispute shall be settled by arbitration in the State of
New Jersey in an expedited manner in accordance with the Commercial Rules of the
American Arbitration Association by a duly registered arbitrator to be selected
jointly by the parties. The decision of the arbitrator shall be final and
binding upon the parties. Notwithstanding anything to the contrary herein, the
provisions of this paragraph shall not apply to any equitable remedies to which
any party may be entitled.
Notwithstanding the foregoing, it is specifically understood and agreed
that any breach of the provisions of Sections D and F hereof is likely to result
in irreparable injury to the nonbreaching party 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 nonbreaching party shall be
entitled to enforce the specific performance of Sections D and F of this
Agreement and to seek both temporary and permanent injunctive relief (to the
extent permitted by law).
PGL ____ TJM ____
<PAGE>
Timothy J. McIntyre
September 7, 1999
Page 5
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed by overnight
mail (with receipt 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, New Jersey 07410
Attention: Patrick G. LePore, President and CEO
To the Employee: Timothy J. McIntyre
1735 York Ave., Apt. 35C
New York, New York 10128
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 delivery.
The Company is executing this Agreement with you on behalf of itself and
each of its subsidiaries and hereby represents to you that the execution and
delivery of this Agreement by the Company and the performance of the Company's
obligations hereunder have been duly authorized by all necessary action on the
part of the Company.
If you agree to these terms, please sign and date below and return this
Agreement to the undersigned within the time limitation set forth above.
Sincerely,
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
------------------------------
Name: Patrick G. LePore
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
PGL ____ TJM ____
<PAGE>
Timothy J. McIntyre
September 7, 1999
Page 6
/s/ Timothy J. McIntyre
- ------------------------------
Timothy J. McIntyre
Dated:
------------------------
<PAGE>
Exhibit 10.35
June 1, 1999
CONFIDENTIAL
- ------------
Brian J. Smith
271 Corona Avenue
Pelham, New York 10803
Dear Brian:
This letter agreement (this "Agreement") formalizes the agreement that we
have reached regarding your voluntary resignation from all positions you hold
(whether as an officer or employee) with Boron, LePore & Associates, Inc. (the
"Company") as of October 31, 1999 (the "Resignation Date"). The purpose of this
Agreement is to establish an amicable arrangement for ending your employment
relationship. For purposes of this Agreement, all references to the "Company"
shall include Boron, LePore & Associates, Inc., a Delaware corporation, and any
of its subsidiaries. Reference is made to the Employment Agreement between you
and the Company dated March 1, 1999 (the "Employment Agreement"). Capitalized
terms used herein and not defined shall have the meaning set forth in the
Employment Agreement. Except as set forth herein, this Agreement supersedes the
Employment Agreement and the Employment Agreement is of no further force or
effect.
In exchange for the promises of you and the Company set forth below, you
and the Company agree as follows:
A. TERMINATION OF EMPLOYMENT. As of June 1, 1999 you hereby resign as
Corporate Executive Vice President of Boron, LePore & Associates, Inc. and from
any other officer positions currently held by you with Boron, LePore &
Associates, Inc. or any of its subsidiaries. You shall remain employed by the
Company as a Special Assistant for Mergers and Acquisitions from June 1, 1999
until the Resignation Date, at which date you agree to voluntary resign and
terminate your employment from all positions and service relationships you hold
with the Company. Said resignations are hereby accepted by the Company.
Notwithstanding any termination of your employment by the Company prior to
October 31, 1999, in the event of any such termination you shall continue to be
entitled to receive all of the
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 2
benefits provided under this Agreement as if you had remained employed by the
Company through October 31, 1999.
B. SEVERANCE; COMPENSATION. The Company shall continue to make payments in
the amount of your Base Salary from the period June 1, 1999 to May 31, 2000
(with such amounts through the Resignation Date constituting compensation as an
employee and the amounts thereafter through May 31, 2000 representing
severance). You shall also receive $112,500, the full amount of your target
bonus set for 1999, when such bonus would otherwise be paid. In consideration of
these payments, you are hereby delivering to the Company in paragraph I hereto a
release of claims, and you agree, as a condition to the Company's obligation to
pay you any amounts which are due you on or after the Resignation Date pursuant
to this Agreement, to deliver another release in the same form on the
Resignation Date. The foregoing payments shall be payable in accordance with
the Company's payroll practices for its executive officers, in all cases subject
to withholding under applicable law; provided, however, that the Company in its
sole discretion may elect to pay at any time any remaining amounts due to you
hereunder in a lump sum; and provided further, that in the event of a Change of
Control of the Company (as such term is defined in your current Employment
Agreement), all remaining amounts payable to you hereunder shall be paid in full
in a lump sum immediately upon the occurrence of such Change of Control. The
Company agrees to pay you at your Base Salary rate for any unused vacation time
you have accrued through June 1, 1999, based on Company policy related to such
vacation time, which shall be paid promptly upon termination of your employment
relationship with the Company. Other than the payments described in this
Agreement, you shall not be entitled to any additional payments from the Company
relating to your employment with the Company or the termination thereof,
including, without limitation, any amounts specified in the Employment
Agreement.
C. STOCK OPTIONS. Notwithstanding any provision to the contrary contained in
the stock option agreements between you and the Company or the governing stock
option plan (collectively, the "Option Agreements"), all stock options to
purchase shares of Common Stock held by you which are unvested as of June 1,
1999 shall terminate as of June 1, 1999, and you will have the period of time
following the Resignation Date (or such earlier date on which your service
relationship with the Company terminates due to your voluntary resignation,
death or disability) specified in the Option Agreements and the governing stock
option plan to exercise such stock options which have vested as of June 1,
1999.
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 3
D. BENEFITS. You and your beneficiaries shall be entitled to continue to
receive, at the Company's expense, the medical, dental, life and disability
insurance benefits as are currently provided to you (or comparable coverage
pursuant to COBRA) until the earlier of (a) the date on which you secure
permanent employment and become eligible for participation in such employer's
insurance programs or (b) June 1, 2000, at which time all such benefits shall
terminate, except as otherwise provided by law. Until the termination of your
employment with the Company, you shall be entitled to continue to participate as
an employee in any existing 401(k) plan of the Company, and after the
termination of your employment with the Company, your rights with regard to any
such 401(k) plan shall be as provided by law and as may be provided in any such
plan with regard to former employees of the Company. Your eligibility to
participate in the Company's other employee benefit plans and programs will
cease on June 1, 1999, except as otherwise required by law.
E. NON-COMPETITION; CONFIDENTIALITY. You hereby acknowledge that until
October 31, 1999, you are still subject to the terms and covenants contained in
Article 8 of the Employment Agreement by and between you and the Company, at
which time such terms shall be of no further force or effect. You hereby
reaffirm and readopt all of the terms and covenants of Sections 7 and 9 of the
Employment Agreement as if they were completely restated herein. Except as set
forth in this paragraph E, the Employment Agreement is hereby terminated and of
no further force and effect.
F. RETURN OF PROPERTY. You hereby acknowledge that all documents, records,
materials, software, equipment, credit cards, information and other physical or
intellectual property that have come into your possession or been produced or
created by you in connection with your employment with or for the Company
("Property") have been and remain the sole property of the Company. You hereby
acknowledge that you have returned to the Company all such Property or will have
returned all such Property on or prior to October 31, 1999 except that any
Company-paid credit cards will be returned on or prior to June 1, 1999.
G. LITIGATION COOPERATION. You agree to reasonably cooperate with the Company
in (i) the defense, prosecution or investigation of any claims or actions which
already have been brought or threatened, or which may be brought or threatened
in the future against or on behalf of the Company and its affiliates and (ii)
responding to, cooperating with, or contesting any governmental audit,
inspection, inquiry or investigation, in either case that relate to events or
occurrences that transpired during your employment or association with the
Company;
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 4
provided, however, that such cooperation shall not materially and adversely
affect you or expose you to an increased probability of civil or criminal
litigation. Your full cooperation in connection with such claims or actions
shall include, without implication of limitation: being available to meet with
counsel to prepare for discovery or trial; to testify truthfully as a witness
when reasonably requested and at reasonable times designated by the Company; and
to meet with counsel or other designated representative of the Company to
prepare responses to and to cooperate with the Company's processing of
governmental audits, inspections, inquiries or investigations. You agree that
you will maintain the confidences and privileges of the Company. You will be
reimbursed by the Company only for any reasonable out-of-pocket expenses that
you reasonably incur in connection with such cooperation, including but not
limited to reasonable attorneys' fees and expenses, subject to reasonable and
satisfactory documentation. The Company will not exercise their rights under
this paragraph so as to interfere with your ability to engage in gainful
employment and shall endeavor to schedule your responsibilities hereunder so as
not to interfere with your schedule so long as you promptly provide timely
alternative dates on which you can fulfill your obligations hereunder.
H. NON-DISPARAGEMENT AND COOPERATION DURING TRANSITION. Each of us agrees not
to make or cause to be made, directly or indirectly, any statement to any person
criticizing or disparaging the other or any of the Company's stockholders,
directors, officers or employees or commenting unfavorably or falsely on the
character, business judgment, business practices or business reputation of the
other or any of the Company's stockholders, directors, officers or employees.
You agree that from the date of your receipt of this Agreement, you will
cooperate fully with the Company in arranging for an orderly and professional
transition of your responsibilities. Each of us further agrees that he or it
will present the circumstances of your departure in a light that will not
reflect unfavorably on you or the Company.
I. RELEASE. You hereby irrevocably and unconditionally release, acquit, and
forever discharge the Company and its affiliates, securityholders, subsidiaries,
affiliates and related entities and their respective current and former
partners, members, officers, directors, agents, and employees, from any and all
claims, demands, or causes of action based upon any past action, omission, or
event, whether known or unknown, and whether or not in litigation which you may
have had from the beginning of time or which could be asserted by another on
your behalf, based on any action, omission, or event through the date hereof
relating to your employment at the Company and/or your status as a stockholder
and/or optionholder of the Company. This release includes actions claiming
violation of Title VII of the Civil Rights Act
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 5
of 1964, as amended, 42 U.S.C. 2000e et seq., the Age Discrimination in
Employment Act, the Americans with Disabilities Act, all other labor laws of
New Jersey, and any other federal, state, or local law, order or regulation.
This release also includes any claims for wrongful discharge or that the Company
has dealt with you unfairly or in bad faith, and actions raising tortious
claims, actions raising any claim of express or implied contract of employment,
or any other cause of action or claims of violation of common law. This release
is for any and all relief, without regard to its form or characterization.
Included in this release are any and all claims for attorneys' fees and for
future damages allegedly arising from the alleged continuation of the effects of
any past action, omission or event. Notwithstanding anything in this release to
the contrary, this release shall not be construed to limit your right to enforce
this Agreement, or any Stock Option Agreements to which you are a party relating
to stock options remaining outstanding in accordance with the terms hereof.
J. INDEMNIFICATION AND INSURANCE. From and after the date of this Agreement,
the Company agrees that it will indemnify you and hold you harmless against any
losses, claims, damages, liabilities, costs and expenses, including without
limitation attorneys' fees and expenses, relating to or arising out of your
employment in any capacity with the Company to the same extent and upon the same
terms, conditions and limitations as indemnification shall be provided to other
executive officers of the Company who are not directors and shall provide, at
the Company's expense, Directors' and Officers' insurance coverage to the same
extent and upon the same terms and conditions as such insurance may be provided
to other executive officers of the Company from time to time. Consistent with
the foregoing, the Company shall have the right to assume the defense of any
proceeding to which you are a party or otherwise subject with counsel of its
choice (with representation by your own counsel following any such assumption to
be at your expense except in cases of conflict of interest under applicable
standards of professional conduct, in which case the Company shall be
responsible for such expense), and advancement of expenses shall be made upon
determination by the Board of Directors to advance such expenses and receipt of
an undertaking by you to repay such expenses if it shall be determined that you
are not entitled to indemnification under applicable law. Without limitation of
the foregoing, you shall be entitled to indemnification in accordance with the
terms of Article V of the Company's By-laws as currently in effect as a former
officer of the Company, notwithstanding any future Changes of Control or
amendment thereof, the terms and conditions of which are incorporated by
reference herein to govern the provision of indemnification to you by the
Company.
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 6
K. MISCELLANEOUS.
You are advised to consult with an attorney before signing this Agreement.
By signing this Agreement, you acknowledge that you are doing so
voluntarily and only after consultation with your personal attorney. You also
acknowledge that you are not relying on any representations by the undersigned
or any other representative of the Company concerning the meaning of any aspect
of this Agreement other than as set forth in this Agreement.
You acknowledge that you have been given the opportunity, if you so
desired, to consider this Agreement for seven (7) days before executing it.
If not signed by you and returned to Mr. Patrick G. LePore, Chief Executive
Officer, Boron, LePore & Associates, Inc., 17-17 Route 208 North, Fair Lawn,
New Jersey 07410, so that he receives it by close of business on the eighth
(8th) day after your receipt of the Agreement, this Agreement will not be valid.
In addition, if you breach any of the conditions of the Agreement within the
seven (7) day period, the offer of this Agreement will be withdrawn and your
execution of the Agreement will not be valid. In the event that you execute and
return this Agreement within seven (7) days or less of the date of its delivery
to you, you acknowledge that such decision was entirely voluntary and that you
had the opportunity to consider this letter agreement for the entire seven (7)
day period. The Company acknowledges that for a period of seven (7) days from
the date on which you execute this Agreement, you shall retain the right to
revoke this Agreement by written notice delivered to Mr. LePore at the address
indicated above, and that this Agreement shall not become effective or
enforceable until the expiration of such revocation period.
In the event of any dispute, this Agreement will be construed as a whole,
will be interpreted in accordance with its fair meaning, and will not be
construed strictly for or against either you or the Company. The laws of
Delaware will govern any dispute about this Agreement, including any
interpretation or enforcement of this Agreement. In the event that any
provision or portion of a provision of this Agreement shall be determined to be
unenforceable, the remainder of this Agreement shall be enforced to the fullest
extent possible as if such provision or portion of a provision were not
included. This Agreement may be modified only by a written agreement signed by
you and an authorized representative of the Company.
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 7
In the event of a dispute between the parties concerning their respective
rights and obligations under this Agreement or under any stock option agreement
to which you and the Company are party, that the parties are unable to resolve
amicably between themselves within sixty (60) days of proper notice from one
party to another, such dispute shall be settled by arbitration in the State of
New Jersey in an expedited manner in accordance with the Commercial Rules of the
American Arbitration Association by a duly registered arbitrator to be selected
jointly by the parties. The decision of the arbitrator shall be final and
binding upon the parties. Notwithstanding anything to the contrary herein, the
provisions of this paragraph shall not apply to any equitable remedies to which
any party may be entitled.
Notwithstanding the foregoing, it is specifically understood and agreed
that any breach of the provisions of Sections E, F and H hereof is likely to
result in irreparable injury to the nonbreaching party 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 nonbreaching party shall
be entitled to enforce the specific performance of Sections E, F and H of this
Agreement and to seek both temporary and permanent injunctive relief (to the
extent permitted by law).
All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed by overnight
mail (with receipt 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, New Jersey 07410
Attention: Patrick G. LePore, President and CEO
To the Employee: Brian Smith
271 Corona Avenue
Pelham, New York 10803
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 delivery.
PGL ____ BJS ____
<PAGE>
Brian J. Smith
June 1, 1999
Page 8
The Company is executing this Agreement with you on behalf of itself and
each of its subsidiaries and hereby represents to you that the execution and
delivery of this Agreement by the Company and the performance of the Company's
obligations hereunder have been duly authorized by all necessary action on the
part of the Company.
If you agree to these terms, please sign and date below and return this
Agreement to the undersigned within the time limitation set forth above.
Sincerely,
BORON, LEPORE & ASSOCIATES, INC.
By: /s/ Patrick G. LePore
-----------------------------
Name: Patrick G. LePore
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
/s/ Brian J. Smith
- -----------------------------
Brian J. Smith
Dated:
-----------------------
PGL _____ BJS _____
<PAGE>
Brian J. Smith
June 1, 1999
Page 9
SPOUSAL CONSENT: I ACKNOWLEDGE THAT I HAVE READ THE FOREGOING AGREEMENT AND THAT
I UNDERSTAND THE CONTENTS THEREOF AND HEREBY ACCEPT AND AGREE TO THE FOREGOING
TERMS.
- -----------------------------
Name:
Dated:
-----------------------
PGL _____ BJS _____
<PAGE>
Exhibit 10.36
EMPLOYMENT AGREEMENT
--------------------
Employment Agreement, dated the 1st day of July, 1999 by and between
Claudia Estrin (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. 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 second anniversary of
the Effective Date; provided, however, that the term of the Employee's
employment pursuant to this Agreement shall be extended automatically for
successive one-year periods ending on the relevant anniversary of the 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 her or its determination not to extend the
term of the Employee's employment pursuant to this Agreement, whereupon such
term of employment shall terminate as of such anniversary date; and provided
further, however, that in the event a Change of Control (as defined in Section
10 hereof) shall occur, then (subject to Sections 6 and 10) such term of
employment shall not expire by reason of non-extension by the Company pursuant
to this Section 2 prior to the date which is 18 months following such Change of
Control. 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."
3. Duties.
------
During the Term of Employment, the Employee (a) shall serve as an
employee of the Company with the title of Corporate Vice President and Senior
Vice President of the BLA Division, reporting to the President of the BLA
Division 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 such officer, consistent with the general area of the
Employee's experience and skills; (b) upon the request of the Chief Executive
Officer 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 her best efforts in, and
shall devote her full working time, attention, skill and energies to, the
<PAGE>
advancement of the interests of the Company and its subsidiaries and the
performance of her 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 $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, provided that the Employee's target bonus for each year, if any, shall
be established and approved by the Compensation Committee of the Company by
March 1 of each fiscal year following 1999.
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,
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) Notwithstanding the foregoing, during the Term of Employment the
Company shall provide the Employee with or reimburse the Employee for a Company
automobile in accordance with the Company's practices for executive officers, as
in effect from time to time.
(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.
2
<PAGE>
(e) Compliance with the provisions of Section 4(b) or 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 provided in 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 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 the
Employee shall not be entitled to (1) 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, and (B) the Company shall have any and all rights and
remedies under this Agreement and applicable law; provided, however, that
termination of this Agreement by the Employee for Good Reason (as defined
in Section 10) within
3
<PAGE>
18 months following a Change of Control shall not be deemed grounds for
termination pursuant to this Section 6(b).
(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; (ii) the obligation of the
Company to pay the Employee or her estate cash bonuses earned as of the
date of termination; and (iii) the obligation of the Company to pay the
Employee or her estate a pro rated portion of the Employee's target bonus
if the criteria for earning such bonus are achieved by a successor to the
Employee following the termination of the Employee pursuant to this Section
6(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 her 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 at least 60 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 (i) 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 (ii) 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 to the Employee in the manner
contemplated by Section 4(a) from the date of termination through the first
anniversary of the date on which such termination occurs, and the Company
shall also remain obligated to pay the full amount of the target bonus
contemplated by Section 4(b) for the year in which such termination occurs,
whether or not such bonus is earned or would otherwise have been paid, at
the time it otherwise would have paid such bonuses; subject, however, to
the provisions of Section 10 in the event any such termination occurs
within 18 months following any Change of Control. Notwithstanding the
foregoing, if the Employee's employment terminates pursuant to Section 6(e)
or 6(f) in the 18 months following a Change of Control and at the time of
such termination no target bonus shall be in effect or such
4
<PAGE>
target bonus shall be lower than the higher of the Employee's target
bonuses (whether paid or not) for each of the two most recent years, then
in such circumstances the bonus payment of the Employee's severance which
is otherwise used to determine the amount payable pursuant to this
Agreement shall be the higher of the Employee's target bonuses for the two
most recent years and all amounts due shall be paid promptly following such
termination. Such payments of bonus and Base Salary amounts contemplated by
Section 6(e) or 6(f) are agreed by the parties hereto to be in full
satisfaction, compromise and release of any claims arising out of the
Employee's employment or termination thereof pursuant to this Section 6(e)
or Section 6(f). In any case the payment of all such amounts under Sections
6(e) or 6(f) shall be contingent upon the Employee's compliance with
Section 8 below and the Employee's delivery of a general release upon
termination of employment covering all matters arising under or connection
with this Agreement. Such release shall be 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 her employment
hereunder (i) 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 or (ii) without limitation of
clause (i), for Good Reason during the 18 months following any Change of
Control as contemplated by Section 10. The rights and obligations of the
parties shall be as set forth in Section 6(e) and Section 10, as
applicable, 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, 8, 9, 11, 12,
13 and 14 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 (i) to hold the Confidential Information in strict confidence; (ii) not
to disclose the Confidential Information to any person (other than in the
regular business of the Company or its affiliates); and (iii) 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 (A) is then generally known to the public;
(B) became or
5
<PAGE>
becomes generally known to the public through no fault of the Employee; or
(C) 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 her 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 her
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 she 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, contacts or other business opportunities
that she may discover, find, develop or otherwise have available to her in any
field in which the Company or its affiliates are engaged.
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
the Employee's employment with the Company and its subsidiaries and thereafter
for a period of one year following the termination of the Employee's employment
with the Company, and, except as provided in Section 10 below, regardless of the
circumstances of termination, she 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,
6
<PAGE>
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, medical education, telemarketing activities,
contract sales, field force logistics services and outsource marketing involving
pharmaceutical and healthcare companies. Without implied limitation, the
foregoing covenant shall include hiring or engaging or attempting to hire or
engage for or on behalf of herself 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 herself or any such competitor, any such officer
or employee to terminate her or her relationship or employment with the Company
or any of its direct or indirect subsidiaries, soliciting for or on behalf of
herself 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 14) 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 her 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 her 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 her interest in the Company, or interests in public companies of less
than five (5%) percent. The Employee further acknowledges that she will not
bring to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any previous employment or
other party.
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,
7
<PAGE>
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.
10. Assignability; Change of Control.
--------------------------------
This Agreement shall inure to the benefit of, and be binding upon and
assignable to, successors of the Company by way of merger, reorganization,
consolidation or other sale. In addition, if the Company sells all or
substantially all of its assets, the Company will cause this Agreement to be
assumed by the buyer and if the buyer does not assume this Agreement, such non-
assumption shall be treated as a material breach under Section 6(f). This
Agreement may not be assigned by the Employee. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, in the event of (a) the
sale of all or substantially all of the assets of the Company and its
Subsidiaries to another person or entity; (b) 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; (c) the sale of all or substantially all of the outstanding
stock of the Company to an unrelated person or entity 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; or (d) any other
transaction or series of transactions where 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 (collectively, a "Change of
Control"), if, and within the 18 months thereafter, the Company terminates the
Employee's employment pursuant to Section 6(e) or the Employee terminates her
employment pursuant to Section 6(f), including for Good Reason (as hereinafter
defined), the Employee shall (i) receive severance of one years' Base Salary
payable through the first anniversary of such termination, (ii) the bonus
payment contemplated by Section 6(e) and (iii) the Employee shall not be bound
by the covenant not to compete contained in Section 8 above. For purposes of
this Agreement, "Good Reason" shall mean the occurrence of any of the following
events: (A) a substantial adverse change in the nature or scope of the
Employee's responsibilities, authorities, title, powers, functions, or duties;
(B) a reduction in the Employee's annual base salary except for across-the-board
salary reductions similarly affecting all or substantially all management
employees; or (C) the relocation of the offices at which the grantee is
principally employed to a location more than fifty (50) miles from Fair Lawn,
New Jersey.
11. 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
8
<PAGE>
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, New Jersey 07410
Attention: Patrick G. LePore, President and CEO
To the Employee: Claudia Estrin
c/o Boron, LePore & Associates, Inc.
17-17 Route 208 North
Fair Lawn, New Jersey 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.
12. Dispute Resolution. In the event of a dispute between the parties
------------------
concerning their respective rights and obligations under this Agreement or under
any stock option agreement to which the Employee and the Company are party, that
the parties are unable to resolve amicably between themselves within sixty (60)
days of proper notice from one party to another, such dispute shall be settled
by arbitration in the State of New Jersey in an expedited manner in accordance
with the Commercial Rules of the American Arbitration Association by a duly
registered arbitrator to be selected jointly by the parties. The decision of
the arbitrator shall be final and binding upon the parties. Notwithstanding
anything to the contrary herein, the provisions of this Section 12 shall not
apply to any equitable remedies to which any party may be entitled to hereunder.
13. Litigation and Regulatory Cooperation.
-------------------------------------
During and after Employee's employment, the Employee shall reasonably
cooperate with the Company in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on
behalf of the Company which relate to events or occurrences that transpired
while the Employee was employed by the Company; provided, however, that such
cooperation shall not materially and adversely affect the Employee or expose the
Employee to an increased probability of civil or criminal litigation. The
Employee's cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Company at mutually
convenient times. During and after the Employee's employment, the Employee also
shall cooperate fully with the Company in connection with any investigation or
review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
the Employee was employed by the Company. The Company shall also provide the
Employee with compensation on an hourly basis calculated at her final base
compensation rate (calculated by taking the final base compensation rate divided
by 48 weeks of 40 hours each) for requested
9
<PAGE>
litigation and regulatory cooperation that occurs after her termination of
employment, and reimburse the Employee for all costs and expenses incurred in
connection with her performance under this Paragraph 13, including, but not
limited to, reasonable attorneys' fees and costs.
14. 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 supersedes,
terminates and in all respects replaces all prior understandings and agreements,
written or oral, between the parties relating to the subject matter hereof (but
not including any Stock Option Agreements between the Company and the Employee).
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.
10
<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
------------------------------
Patrick G. LePore, President
/s/ Claudia Estrin
---------------------------------
CLAUDIA ESTRIN
11
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 333-51101.
/s/ ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 30, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1999 AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 44,631
<SECURITIES> 0
<RECEIVABLES> 28,899
<ALLOWANCES> 1,332
<INVENTORY> 0
<CURRENT-ASSETS> 1,387
<PP&E> 11,788
<DEPRECIATION> 4,391
<TOTAL-ASSETS> 118,144
<CURRENT-LIABILITIES> 23,444
<BONDS> 0
0
0
<COMMON> 169
<OTHER-SE> 94,531
<TOTAL-LIABILITY-AND-EQUITY> 118,144
<SALES> 0
<TOTAL-REVENUES> 149,648
<CGS> 109,678
<TOTAL-COSTS> 109,678
<OTHER-EXPENSES> 42,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (973)
<INCOME-TAX> (390)
<INCOME-CONTINUING> (583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (583)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
