As filed with the Securities and Exchange Commission on January
20, 1998
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 8731 04-2776269
(State or other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification Number)
of incorporation Classification Code Number)
organization)
195 WEST STREET
Waltham, Massachusetts 02154
(781) 487-9900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOSEF H. VON RICKENBACH
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
PAREXEL INTERNATIONAL CORPORATION
195 West Street
Waltham, Massachusetts 02154
(781) 487-9900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
WILLIAM J. SCHNOOR, JR.
HEATHER M. STONE
TESTA, HURWITZ & THIBEAULT, LLP
High Street Tower, 125 High Street
Boston, Massachusetts 02110
(617) 248-7000
_______________
Approximate Date Of Commencement Of Proposed Sale To The Public:
As soon as practicable after this registration statement becomes
effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. ___
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. x
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ____
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
____
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. __
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of
Shares to be Maximum Maximum Registration
to be Registe Offering Price Aggregate Fee(2)
Registered red Per Share(1) Offering
Price(1)
Common 295,944 $34.13 $10,100,568.00 $2,979.67
Stock, $.01
par value
per share
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457 under the Securities Act of
1933.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933,
the registration fee has been calculated based upon the average
of the high and low prices per share of Common Stock on the
Nasdaq National Market on January 14, 1998.
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
295,944 Shares
PAREXEL INTERNATIONAL CORPORATION
Common Stock
This prospectus relates to the resale of up to 295,944 shares
(the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of PAREXEL International Corporation ("PAREXEL" or the
"Company") by certain selling stockholders of the Company
(collectively, the "Selling Stockholders"). The Shares may be sold
from time to time by any or all of the Selling Stockholders in
brokers' transactions, to market makers or in block placements at
market prices prevailing at the time of sale or at prices otherwise
negotiated. See "Selling Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the resale of
the Shares. The Company has agreed to bear all of the expenses in
connection with the registration and resale of the Shares (other than
selling commissions and the fees and expenses of counsel or other
advisors to the Selling Stockholders).
The Shares include (i) 290,909 shares of Common Stock issued to
former stockholders of Kemper-Masterson Inc. ("KMI") in connection
with the merger of a wholly-owned subsidiary of the Company with and
into KMI pursuant to an Agreement and Plan of Reorganization and
Merger dated October 22, 1997, leaving KMI a wholly-owned subsidiary
of the Company (the "KMI Merger"); and (ii) 5,035 shares of Common
Stock issued to Perceptive Systems, Inc., a Colorado corporation doing
business as Hayden Image Processing Group ("Hayden"), in connection
with the purchase by the Company of substantially all of the assets of
Hayden in exchange for shares of Common Stock of the Company pursuant
to an Asset Purchase Agreement dated September 26, 1997 (the " Hayden
Acquisition"). The Company has agreed to register up to 290,908
additional shares of Common Stock issued to certain of the Selling
Stockholders approximately 180 days after the date of this Prospectus.
The Common Stock of the Company is quoted on the Nasdaq National
Market under the symbol "PRXL". On January 14, 1998, the last
reported sale price for the Common Stock on the Nasdaq National Market
was $33.75 per share.
See "Risk Factors," on page 7 for information that should be
considered by
prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
The date of this Prospectus is January 20, 1998
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices located at Seven World Trade Center, New York, New York
10048, and at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. In addition, the Commission maintains a
Worldwide Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The Common Stock of the Company
is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company may be inspected at the offices of
the National Association of Securities Dealers, Inc. located at 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect
to the Common Stock offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information regarding the Company and the Common Stock offered
hereby, reference is hereby made to the Registration Statement and to the
exhibits and schedules filed therewith. Statements contained in this
Prospectus regarding the contents of any agreement or other document filed
as an exhibit to the Registration Statement are not necessarily complete,
and in each instance reference is made to the copy of such document filed
as an exhibit to the Registration Statement for a more complete description
of the matters involved. The Registration Statement, including the
exhibits and schedules thereto, may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 or through its Worldwide Web site
(http://www.sec.gov).
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of
any or all of the documents incorporated by reference herein (other than
exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies
should be directed to PAREXEL International Corporation, Attention:
Investor Relations Department, 195 West Street, Waltham, Massachusetts,
02154, telephone number (781) 487-9900.
PAREXEL is a registered service mark of the Company.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated in this Prospectus by reference (File
No. 0-27058):
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997.
3.The Company's Current Reports on Form 8-K dated August 7, 1997 and
October 23, 1997.
4.The description of the Company's Common Stock, $.01 par value per
share, contained in the Registration Statement on Form 8-A filed
under the Exchange Act and declared effective on November 21, 1995,
including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering of the Shares, shall be deemed to be incorporated by reference in
this Prospectus and made a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein or in any
Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
SUMMARY
The following summary is qualified in its entirety by the more
detailed information appearing elsewhere or incorporated by reference in
this Prospectus. This Prospectus may contain certain "forward-looking"
information, as that term is defined by (i) the Private Securities
Litigation Reform Act of 1995 (the "Act") and (ii) releases made by the
Securities and Exchange Commission. Such information involves risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Risk Factors." In December 1997, the Company acquired Kemper-Masterson,
Inc. ("KMI") in a business combination accounted for as a pooling of
interests. The accompanying supplemental consolidated financial statements
have been retroactively restated to combine the accounts and operations of
KMI with those of the Company for all periods presented.
THE COMPANY
PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading
contract research organization ("CRO") providing a broad range of knowledge-
based product development and product launch services to the worldwide
pharmaceutical, biotechnology and medical device industries. The Company's
primary objective is to help clients quickly obtain the necessary
regulatory approvals of their products and, ultimately, optimize the market
penetration of those products. Over the past fifteen years, PAREXEL has
developed significant expertise in disciplines supporting this strategy.
The Company's service offerings include: clinical trials management, data
management, biostatistical analysis, medical marketing, clinical
pharmacology, regulatory and medical consulting, performance improvement,
industry training and publishing, and other drug development consulting
services. The Company believes that its integrated services, therapeutic
area depth, and sophisticated information technology, along with its
experience in global drug development and product launch services,
represent key competitive strengths.
The Company complements the research and development ("R&D") functions, as
well as the marketing functions, of pharmaceutical and biotechnology
companies. Through its high quality clinical research and medical
marketing services, PAREXEL helps clients maximize the return on their
significant investments in research and development by reducing the time
and cost of clinically testing their products and launching those products
into the commercial marketplace. By outsourcing these types of services,
clients are provided with a variable cost alternative to the fixed costs
associated with internal drug development and product marketing. Clients
no longer need to staff to peak periods, and can benefit from PAREXEL's
technical resource pool, broad therapeutic area expertise, global
infrastructure designed to expedite parallel, multi-country clinical
trials, and other expertise-oriented advisory services focused on
accelerating time-to-market.
Headquartered near Boston, Massachusetts, the Company has 25 offices in 10
countries, and employs over 3,000 individuals. The Company has established
footholds in the major health care markets around the world, including the
United States, Japan, Germany, the United Kingdom ("U.K."), France, Italy,
Spain, Sweden, Australia, and Israel. During fiscal 1997, PAREXEL derived
33% of its revenues from its international operations, distinguishing the
Company from many of its competitors.
The CRO industry derives substantially all of its revenue from the
pharmaceutical and biotechnology industries. The Company believes that the
following trends will cause the CRO industry to continue to grow: (i) the
worldwide research and development expenditures for new drugs, including
amounts spent on services of the type provided by CROs, have experienced
substantial growth in recent years as a result of pressures to develop new
drugs for an aging population and for the treatment of life threatening
diseases and chronic disorders; (ii) many pharmaceutical companies, in
response to competitive pressures to accelerate time to market and contain
costs, have turned to CROs as a means of adding more flexible drug
development capacity to accommodate their full product pipelines, thereby
shifting fixed costs to variable costs; (iii) pharmaceutical and
biotechnology companies increasingly are attempting to maximize profits
from a given drug by pursuing regulatory approvals in multiple countries in
parallel, rather than sequentially, by outsourcing to CROs with global
capabilities; (iv) as regulatory requirements in many jurisdictions have
become more complex, the pharmaceutical and biotechnology industries are
increasingly outsourcing to certain CROs to take advantage of their
regulatory expertise, data management capabilities and global presence; and
(v) the growth of the biotechnology industry has increased the demand for
expertise and services provided by outside sources, including CROs. There
can be no assurance, however, that these trends will result in growth in
the CRO industry.
Central to PAREXEL's success has been the Company's focused strategy on
building its platform of knowledge in the pursuit of outstanding client
service. This includes a focus on its core clinical research business; a
focus on continuous process improvement, efficiency gains and leveraging
internal expertise, resources and infrastructure; a focus on managing the
Company's strong internal growth while augmenting the Company's knowledge
base through strategic acquisitions; a focus on deeply and broadly
penetrating key client accounts by offering a full spectrum of clinical
development and medical marketing services; and always, a focus on
outstanding quality and superior client service.
The Company's service philosophy involves a flexible approach which allows
its clients to use the Company's services on an individual or bundled
basis. The Company believes its expertise in conducting scientifically
demanding trials and its ability to coordinate complicated global trials
are significant competitive strengths. The Company continues to devote
significant resources to developing innovative methodologies and
sophisticated information systems designed to allow the Company to more
effectively manage its business operations and deliver services to its
clients. The Company has executed a focused growth strategy embracing
internal expansion and strategic acquisitions to expand or enhance the
Company's portfolio of services, geographic presence, therapeutic area
knowledge, information technology, and client relationships.
The Company was incorporated in The Commonwealth of Massachusetts in 1983.
Unless the context otherwise requires, the terms "PAREXEL" and "the
Company" refer to PAREXEL International Corporation and its subsidiaries.
The Company's principal executive offices are located at 195 West Street,
Waltham, Massachusetts 02154, and its telephone number is (781) 487-9900.
RECENT DEVELOPMENTS
KMI Merger. Pursuant to an Agreement and Plan of Reorganization and
Merger dated October 22, 1997 by and among the Company, Kemper-Masterson,
Inc., a Delaware corporation ("KMI"), KMI Acquisition Corporation, a
Massachusetts corporation and a wholly-owned subsidiary of the Company, and
the individual stockholders named therein (the "Merger Agreement"), KMI
Acquisition Corporation merged with and into KMI and KMI became a wholly-
owned subsidiary of the Company (the "KMI Merger"). In connection with the
KMI Merger, the Company issued an aggregate of 581,817 shares of Common
Stock to the stockholders of KMI, of which 290,909 shares are being offered
hereby. PAREXEL is obligated to use commercially reasonable efforts to
maintain the effectiveness of this Registration Statement until October 22,
1998, subject to certain conditions and limitations set forth in a
Registration Rights Agreement among the Company and the former stockholders
of KMI. Pursuant to the terms and provisions of the Registration Rights
Agreement, the Company has agreed to register the remaining 290,908 shares
of Common Stock issued to such former stockholders of KMI approximately 180
days after the date of this Prospectus. The KMI Merger is intended to
qualify as a reorganization under Section 368 of the Internal Revenue Code
of 1986, as amended. The Merger has been accounted for as a pooling of
interests for financial accounting purposes.
KMI is a management consulting firm providing consulting services on
FDA and other regulatory matters to the worldwide pharmaceutical,
biotechnology and medical device industries.
Hayden Acquisition. Pursuant to an Asset Purchase Agreement by and
among the Company, Perceptive Systems, Inc., a Colorado corporation doing
business as Hayden Image Processing Group ("Hayden"), and Howard W. Foster,
the sole stockholder of Hayden, (the "Asset Purchase Agreement"), the
Company acquired substantially all of the assets of Hayden in exchange for
shares of the Company's Common Stock (the "Hayden Acquisition"). In
connection with the closing of the Hayden Acquisition, the Company issued
5,035 shares of Common Stock to Hayden as consideration for the sale of
assets, all of which are being offered hereby. In connection with the
anticipated dissolution of Hayden, the 5,035 shares of Common Stock issued
to Hayden were subsequently transferred to Howard W. Foster, the sole
stockholder of Hayden. As additional consideration for the Hayden
Acquisition and pursuant to the Asset Purchase Agreement, the Company has
agreed to issue additional shares of Common Stock, with a value in the
aggregate not to exceed $228,000, over a three year period representing
contingent payments calculated as a percentage of net receipts received by
the Company and attributable to certain of the assets purchased in
connection with the Hayden Acquisition (the "Contingent Shares"). Pursuant
to the terms and provisions of a Registration Rights Agreement between the
Company and Hayden, the Company has granted certain "piggyback" rights with
respect to the Contingent Shares which would allow the registration of the
Contingent Shares on future registration statements filed by the Company.
The Hayden Acquisition has been accounted for as a purchase for financial
accounting purposes. Hayden developed, serviced and sold software products
that enable radiologists to measure and analyze high resolution medical
images, such as x-rays and magnetic resonance images.
RISK FACTORS
In addition to the other information in this Registration Statement, the
following risk factors should be considered carefully in evaluating the
Company and its business. Information provided by the Company from time to
time may contain certain "forward-looking" information, as that term is
defined by (i) the Private Securities Litigation Reform Act of 1995 (the
"Act") and (ii) in releases made by the Securities and Exchange Commission
(the "SEC"). These risk factors are being provided pursuant to the
provisions of the Act and with the intention of obtaining the benefits of
the "safe harbor" provisions of the Act.
Loss or Delay of Large Contracts
Most of the Company's contracts are terminable upon 60 to 90 days' notice
by the client. Clients terminate or delay contracts for a variety of
reasons, including, among others, the failure of products being tested to
satisfy safety requirements, unexpected or undesired clinical results of
the product, the client's decision to forego a particular study, such as
for economic reasons, insufficient patient enrollment or investigator
recruitment or production problems resulting in shortages of the drug. In
addition, the Company believes that cost-containment and competitive
pressures have caused pharmaceutical companies to apply more stringent
criteria to the decision to proceed with clinical trials and therefore may
result in a greater willingness of these companies to cancel contracts with
CROs. The loss or delay of a large contract or the loss or delay of
multiple contracts could have a material adverse effect on the financial
performance of the Company.
Variability of Quarterly Operating Results
The Company's quarterly operating results have been subject to variation,
and will continue to be subject to variation, depending upon factors such
as the initiation, progress, or cancellation of significant projects,
exchange rate fluctuations, the mix of services offered, the opening of new
offices and other internal expansion costs, the costs associated with
integrating acquisitions and the startup costs incurred in connection with
the introduction of new products and services. In addition, during the
third quarter of fiscal 1995 and 1993, the Company's results of operations
were affected by a noncash write-down due to the impairment of long-lived
assets and a noncash restructuring charge, respectively. See "Risks
Associated with Acquisitions." Because a high percentage of the Company's
operating costs are relatively fixed, variations in the initiation,
completion, delay or loss of contracts, or in the progress of client
projects can cause material adverse variations in quarterly operating
results.
Dependence on Certain Industries and Clients
The Company's revenues are highly dependent on research and development
expenditures by the pharmaceutical and biotechnology industries. The
Company's operations could be materially and adversely affected by general
economic downturns in its clients' industries, the impact of the current
trend toward consolidation in these industries or any decrease in research
and development expenditures. Furthermore, the Company has benefited to
date from the increasing tendency of pharmaceutical companies to outsource
large clinical research projects. A reversal or slowing of this trend would
have a material adverse effect on the Company. In fiscal 1997, 1996, and
1995, and the three months ended September 30, 1997, the Company's top five
clients accounted for 39%, 30%, 23%, and 37%, respectively, of the
Company's consolidated net revenue. For the three months ended September
30, 1997, one client accounted for 16% of the Company's net revenue. In
fiscal 1997, 1996, and 1995, no single customer accounted for more than 10%
of net revenue. The loss of business from a significant client could have
a material adverse effect on the Company.
Management of Business Expansion; Need for Improved Systems; Assimilation
of Foreign Operations
The Company's business and operations have experienced substantial
expansion over the past 15 years. The Company believes that such expansion
places a strain on operational, human and financial resources. In order to
manage such expansion, the Company must continue to improve its operating,
administrative and information systems, accurately predict its future
personnel and resource needs to meet client contract commitments, track the
progress of ongoing client projects and attract and retain qualified
management, professional, scientific and technical operating personnel.
Expansion of foreign operations also may involve the additional risks of
assimilating differences in foreign business practices, hiring and
retaining qualified personnel, and overcoming language barriers. In the
event that the operation of an acquired business does not live up to
expectations, the Company may be required to restructure the acquired
business or write-off the value of some or all of the assets of the
acquired business. Failure by the Company to meet the demands of and to
manage expansion of its business and operations could have a material
adverse effect on the Company's business.
Risks Associated with Acquisitions
The Company has made a number of acquisitions and will continue to review
future acquisition opportunities. No assurances can be given that
acquisition candidates will continue to be available on terms and
conditions acceptable to the Company. Acquisitions involve numerous risks,
including, among other things, difficulties and expenses incurred in
connection with the acquisitions and the subsequent assimilation of the
operations and services or products of the acquired companies, the
diversion of management's attention from other business concerns and the
potential loss of key employees of the acquired company. Acquisitions of
foreign companies also may involve the additional risks of assimilating
differences in foreign business practices and overcoming language barriers.
In the event that the operations of an acquired business do not live up to
expectations, the Company may be required to restructure the acquired
business or write-off the value of some or all of the assets of the
acquired business. In fiscal 1993 and 1995, the Company's results of
operations were materially and adversely affected by write-offs associated
with the Company's acquired German operations. There can be no assurance
that any acquisition will be successfully integrated into the Company's
operations.
Dependence on Government Regulation
The Company's business depends on the comprehensive government regulation
of the drug development process. In the United States, the general trend
has been in the direction of continued or increased regulation, although
the FDA recently announced regulatory changes intended to streamline the
approval process for biotechnology products by applying the same standards
as are in effect for conventional drugs. In Europe, the general trend has
been toward coordination of common standards for clinical testing of new
drugs, leading to changes in the various requirements currently imposed by
each country. Japan also legislated GCP and legitimatized the use of CRO's
in April 1997. Changes in regulation, including a relaxation in regulatory
requirements or the introduction of simplified drug approval procedures, as
well as anticipated regulation, could materially and adversely affect the
demand for the services offered by the Company. In addition, failure on the
part of the Company to comply with applicable regulations could result in
the termination of ongoing research or the disqualification of data, either
of which could have a material adverse effect on the Company.
Competition; CRO Industry Consolidation
The Company primarily competes against in-house departments of
pharmaceutical companies, full service CROs, and, to a lesser extent,
universities, teaching hospitals and other site organizations. Some of
these competitors have greater capital, technical and other resources than
the Company. CROs generally compete on the basis of previous experience,
medical and scientific expertise in specific therapeutic areas, the quality
of services, the ability to organize and manage large-scale trials on a
global basis, the ability to manage large and complex medical databases,
the ability to provide statistical and regulatory services, the ability to
recruit investigators and patients, the ability to integrate information
technology with systems to improve the efficiency of contract research, an
international presence with strategically located facilities, financial
viability and price. PAREXEL believes that it competes favorably in these
areas. There can be no assurance that the Company will be able to compete
favorably in these areas.
The CRO industry is fragmented, with participants ranging from several
hundred small, limited-service providers to several large, full-service
CROs with global operations. Large CROs against whom PAREXEL competes
include Quintiles Transnational Corporation, Covance Inc., IBAH, Inc.,
Pharmaceutical Product Development, Inc. and ClinTrials Research, Inc. The
trend toward CRO industry consolidation has resulted in heightened
competition among the larger CROs for clients and acquisition candidates.
In addition, consolidation within the pharmaceutical industry as well
pharmaceutical companies outsourcing to a fewer number of preferred CROs
has led to heightened competition for CRO contracts.
Potential Volatility of Stock Price
The market price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating
results, changes in earnings estimates by analysts, market conditions in
the industry, prospects of health care reform, changes in government
regulation and general economic conditions. In addition, the stock market
has from time to time experienced significant price and volume fluctuations
that have been unrelated to the operating performance of particular
companies. These market fluctuations may adversely affect the market price
of the Company's Common Stock. Because the Company's Common Stock currently
trades at a relatively high price-earnings multiple, due in part to
analysts' expectations of continued earnings growth, even a relatively
small shortfall in earnings from, or a change in, analysts' expectations
may cause an immediate and substantial decline in the Company's stock
price. Investors in the Company's Common Stock must be willing to bear the
risk of such fluctuations in earnings and stock price.
Potential Adverse Impact of Health Care Reform
Numerous governments have undertaken efforts to control growing health care
costs through legislation, regulation and voluntary agreements with medical
care providers and pharmaceutical companies. In the last several years,
several comprehensive health care reform proposals were introduced in the
U.S. Congress. The intent of the proposals was, generally, to expand health
care coverage for the uninsured and reduce the growth of total health care
expenditures. While none of the proposals were adopted, health care reform
may again be addressed by the U.S. Congress. Implementation of government
health care reform may adversely affect research and development
expenditures by pharmaceutical and biotechnology companies, resulting in a
decrease of the business opportunities available to the Company. Management
is unable to predict the likelihood of health care reform proposals being
enacted into law or the effect such law would have on the Company.
Many European governments have also reviewed or undertaken health care
reform. For example, German health care reform legislation implemented in
January 1993 contributed to an estimated 15% decline in German
pharmaceutical industry sales in calendar 1993 and led several clients to
cancel contracts with the Company. Subsequent to these events, in the third
quarter of fiscal 1993, the Company restructured its German operations and
incurred a restructuring charge of approximately $3.3 million. In addition,
in the third quarter of fiscal 1995, the Company's results of operations
were affected by a non-cash write-down due to the impairment of long-lived
assets of PAREXEL GmbH, the Company's German subsidiary, of approximately
$11.3 million. The Company cannot predict the impact that any pending or
future health care reform proposals may have on the Company's business in
Europe.
Dependence on Personnel; Ability to Attract and Retain Personnel
The Company relies on a number of key executives, including Josef H. von
Rickenbach, its President, Chief Executive Officer and Chairman, upon whom
the Company maintains key man life insurance. Although the Company has
entered into agreements containing non-competition restrictions with its
senior officers, the Company does not have employment agreements with
certain of these persons and the loss of the services of any of the
Company's key executives could have a material adverse effect on the
Company.
The Company's performance also depends on its ability to attract and retain
qualified professional, scientific and technical operating staff. The level
of competition among employers for skilled personnel, particularly those
with M.D., Ph.D. or equivalent degrees, is high. There can be no assurance
the Company will be able to continue to attract and retain qualified staff.
Potential Liability; Possible Insufficiency of Insurance
Clinical research services involve the testing of new drugs on consenting
human volunteers pursuant to a study protocol. Such testing involves a risk
of liability for personal injury or death to patients due to, among other
reasons, possible unforeseen adverse side effects or improper
administration of the new drug. Many of these patients are already
seriously ill and are at risk of further illness or death. The Company
could be materially and adversely affected if it were required to pay
damages or incur defense costs in connection with a claim that is outside
the scope of an indemnity or insurance coverage, or if the indemnity,
although applicable, is not performed in accordance with its terms or if
the Company's liability exceeds the amount of applicable insurance. In
addition, there can be no assurance that such insurance will continue to be
available on terms acceptable to the Company.
Adverse Effect of Exchange Rate Fluctuations
Approximately 33% of the Company's net revenue for fiscal 1997, 35% for
fiscal 1996 and 1995, and 30% for the three months ended September 30,
1997, was derived from the Company's operations outside of North America.
Since the revenue and expenses of the Company's foreign operations are
generally denominated in local currencies, exchange rate fluctuations
between local currencies and the United States dollar will subject the
Company to currency translation risk with respect to the results of its
foreign operations. To the extent the Company is unable to shift to its
clients the effects of currency fluctuations, these fluctuations could have
a material adverse effect on the Company's results of operations. The
Company does not currently hedge against the risk of exchange rate
fluctuations.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock
The Company's Restated Articles of Organization and Restated By-Laws
contain provisions that may make it more difficult for a third party to
acquire, or may discourage a third party from acquiring, the Company. These
provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. In addition,
shares of the Company's Preferred Stock may be issued in the future without
further stockholder approval and upon such terms and conditions, and having
such rights, privileges and preferences, as the Board of Directors may
determine. The rights of the holders of Common Stock will be subject to,
and may be adversely affected by, the rights of any holders of Preferred
Stock that may be issued in the future. The issuance of Preferred Stock,
while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could adversely affect the
market price of the Common Stock and could have the effect of making it
more difficult for a third party to acquire, or discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company.
The Company has no present plans to issue any shares of Preferred Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the Shares of
Common Stock by the Selling Stockholders hereunder. See "Selling
Stockholders" and "Plan of Distribution."
The principal purpose of this offering is to effect an orderly disposition
of the Selling Stockholders' Shares.
SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(1)
The selected supplemental consolidated financial data set forth below
at and for each of the three years in the period ended June 30, 1997 are
derived from, and are qualified by reference to, the Company's financial
statements audited by Price Waterhouse LLP, independent accountants. The
audited balance sheet at June 30, 1997 and 1996 and the related statements
of operations, of stockholders' equity and of cash flows for each of the
three years in the period ended June 30, 1997 and related notes thereto
appear elsewhere in this Prospectus. The financial data set forth below
for the years ended June 30, 1994 and 1993 have been derived from the
unaudited supplemental consolidated financial statements of the Company.
The balance sheet data at September 30, 1997 and the statement of
operations data for the three months ended September 30, 1997 and 1996 are
derived from, and qualified by reference to, the Company's unaudited
supplemental financial statements which appear elsewhere in the Prospectus,
and, in the opinion of management, include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for these periods. The
operating results for the three months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 1998. The selected supplemental consolidated
financial data set forth below should be read in conjunction with, and are
qualified by reference to, "Management's Discussion and Analysis of
Financial Condition and Results of Operations'" and the Company's financial
statements and related notes included elsewhere in this Prospectus.
<TABLE>
`
For the Year Ended June 30, Three Months
Ended
September 30,
(in thousands,
except share 1997 1996 1995 1994 1993 1997 1996
data and number
of employees)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS
DATA
Net revenue $170,355 $97,361 $67,093 $64,416 $59,428 $54,77 $35,244
Income (loss) 14,052 6,627 (10,447)(4) 3,896 842(2)4,953 2,770
from
operations
Net income 11,037 4,693 (10,671) 2,665(3)(1,797) 3,841 1,985
(loss)
Net income $ 0.57 $0.33 $(4.90) $0.22 $(0.94) $0.18 $0.11
(loss) per
share
BALANCE SHEET
DATA
Cash, cash
equivalents
and
marketable $97,250 $45,597 $6,841 $3,085 $8,791 $88,109 $37,227
securities
Working 110,876 53,829 11,587 10,885 7,398 111,757 54,586
capital
Total assets 205,501 106,327 46,378 47,779 47,313 205,192 111,398
Long-term debt 72 410 750 436 317 26 367
Stockholders' $139,164 $62,268 $16,149 $25,718 $22,383 144,522 67,079
equity
OTHER DATA
Investment in
property and
Equipment $22,430 $5,219 $1,867 $2,204 $1,809 $6,629 $2,679
Depreciation 5,354 2,636 2,430 2,535 2,589 2,027 958
and amortization
Number of 2,506 1,423 806 791 696 2,920 1,679
employees
Average common
and common
Equivalent 19,497 14,080 2,177 11,993 1,916 21,073 17,776
shares (5)
<FN>
<F1>
(1) The Company merged with KMI in a transaction accounted for as a pooling
of interests in December 1997. The selected supplemental consolidated
financial data gives retroactive effect to the merger for all periods
presented.
<F2>
(2) Income from operations includes a $3.3 million charge in connection
with a restructuring of operations in Germany.
<F3>
(3) Net income includes $500,000 related to the cumulative effect of
adopting Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes."
<F4>
(4) Loss from operations includes an $11.3 million noncash charge due to
the write-down of impaired long-lived assets of the Company's German
operations. Income from operations on a pro forma basis excluding the
impact of this charge was $303,000. See Note 3 to Supplemental consolidated
Financial Statements entitled, "Impairment of Long-Lived Assets," to
Supplemental consolidated Financial Statements for a description of this
matter.
<F5>
(5) For the years ended June 30, 1993 and 1995, weighted average common
shares outstanding exclude common share equivalents (primarily convertible
preferred stock), as the inclusion of which would have had an anti-dilutive
effect.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
As described in Notes 2 and 16 to the supplemental consolidated financial
statements, the Company consummated a business combination with Kemper-
Masterson, Inc. in December 1997 which was accounted for as a pooling of
interests. All financial data in this discussion and analysis is reported
as though the companies were combined for all periods.
OVERVIEW
The Company is a leading contract research organization ("CRO") providing a
broad range of knowledge-based product development and product launch
services on a contract basis to the worldwide pharmaceutical,
biotechnology, and medical device industries. The Company has developed
expertise in such disciplines as: clinical trials management,
biostatistical analysis and data management, medical marketing, clinical
pharmacology, regulatory and medical consulting, information technology,
industry training and publishing, and other drug development consulting
services. Founded in 1983, the Company has built its business through
internal expansion and acquisitions.
The Company's services contracts are generally fixed price with some
variable components and range in duration from a few months to several
years. A portion of the fee is typically required to be paid at the time
the contract is entered into and the balance in installments over the
duration of the contract, in some cases on a milestone-achievement basis.
Revenue from the contracts is generally recognized on a percentage-of-
completion basis as work is performed.
Most of the Company's contracts are terminable upon 60 to 90 days' notice
by the client. Clients terminate or delay contracts for a variety of
reasons, including, among others, the failure of products being tested to
satisfy safety requirements, unexpected or undesired clinical results of
the product, the client's decision to forego a particular study,
insufficient patient enrollment or investigator recruitment, or production
problems resulting in shortages of the drug.
As is customary in the industry, the Company routinely subcontracts with
third party investigators in connection with clinical trials and with other
third party service providers for laboratory analysis and other specialized
services. These and other reimbursable costs are paid by the Company and
reimbursed by clients and, in accordance with industry practice, are
included in gross revenue. Reimbursed costs vary from contract to contract.
Accordingly, the Company views net revenue, which consists of gross revenue
less reimbursed costs, as its primary measure of revenue growth.
Direct costs consist of compensation and related fringe benefits for
project-related employees, other project-related costs not reimbursed, and
allocated facilities and information systems costs. Selling, general, and
administrative expenses consist of compensation and related fringe benefits
for selling and administrative employees, professional services, and
advertising costs, as well as allocated costs related to facilities and
information systems.
GLOBAL OPERATIONS
The following table presents, for the periods indicated, net revenue by
geographic region and the percentage of total net revenue represented by
each region.
<TABLE>
FOR THE YEARS ENDED JUNE 30, FOR THE THREE MONTHS ENDED
SEPTEMBER 30
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ In 1997 % OF 1996 % OF 1995 % OF 1997 % OF 1998 % OF
Thous TOTAL TOTAL TOTAL TOTAL TOTAL
ands
Net
Reven
ue:
$113,589 67% $63,534 65% $43,557 65% $38,282 70% $24,078 68%
North
Ameri
ca
53,599 31% 32,834 34% 23,443 35% 14,930 28% 10,720 31%
Europ
e
3,167 2% 993 1% 93 - 1,058 2% 446 1%
Asia-
Pacif
ic
Total $170,355 100% $97,361 100% $67,093 100% $54,270 100% $35,244 100%
</TABLE>
The Company's foreign subsidiaries generally enter into contracts
denominated in the local currency of the foreign subsidiary. Because
expenses of the foreign subsidiaries are generally paid in the local
currency, such foreign subsidiaries' local currency earnings are not
materially affected by fluctuations in exchange rates. However, changes in
the exchange rates between these local currencies and the U.S. dollar will
affect the translation of such subsidiaries' financial results into U.S.
dollars for the purposes of reporting the Company's supplemental
consolidated financial results. In cases where the Company contracts for a
multi-country clinical trial and a significant portion of the contract
expenses are in a currency other than the contract currency, the Company
seeks to contractually shift to its client the effect of fluctuations in
the relative values of the contract currency and the currency that the
expenses are incurred. To the extent the Company is unable to shift to its
clients the effects of currency fluctuations, these fluctuations could have
a material effect on the Company's results of operations. The Company does
not currently hedge against the risk of exchange rate fluctuations.
As the Company conducts operations on a global basis, the Company's
effective tax rate has depended, and will continue to depend, upon the
distribution of its revenue among geographic locations with varying tax
rates.
The Company's results of operations may be affected by changes in the tax
rates of the various jurisdictions. In particular, from period to period,
as the geographic mix of the Company's results of operations among various
tax jurisdictions changes, the Company's effective tax rate may vary
significantly.
RESULTS OF OPERATIONS
As an aid to understanding the Company's operating results, the following
table indicates the percentage relationships of income and expense items
included in the Supplemental Consolidated Statements of Operations for the
three years ended June 30, 1997, and the three months ended September 30,
1997, and 1996, and the percentage changes in those items for such periods:
<TABLE>
<CAPTION
Percentage of Revenues Percentage Increase
(Decrease)
Fiscal Year Three Months
Ended 30, Ended Fiscal
September 30 Fiscal Fiscal 1996
1996 1996 to
to to
1997 1996 1995 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue 100% 100% 100% 100% 100% 75.0% 45.1% 54.0%
Costs and expenses:
Direct costs 67.9% 68.0% 71.6% 66.9% 68.7% 74.8% 37.9% 50.0%
Selling, general 20.7% 22.5% 23.6% 20.2% 20.7% 61.0% 38.6% 50.4%
and administrative
Depreciation and 3.1% 2.7% 3.6% 3.8% 2.7% 103.1% 8.5% 111.6%
amortization
Impairment of long- - 16.8% *
lived assets - - - - -
Income (loss) from 8.3% 6.8% (15.6) 9.1% 7.9% 112.1% * 78.8%
operations %
</TABLE>
* not meaningful
THREE MONTHS ENDED SEPTEMBER 30, 1997,
COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996
Net revenue increased by $19.0 million, or 54.0%, from $35.2 million for
the three months ended September 30, 1996, to $54.3 million for the three
months ended September 30, 1997. This net revenue growth was primarily
attributable to an increase in the volume and average contract value of
clinical research projects serviced by the Company. For the three months
ended September 30, 1997, net revenue from North American and European
operations increased by $14.2 million and $4.2 million, respectively, over
the corresponding prior year period. There can be no assurance that the
Company can sustain this rate of increase in net revenue from continuing
operations in future periods. See "Risk Factors."
Direct costs increased by $12.1 million, or 50.0%, from $24.2 million for
the three months ended September 30, 1996, to $36.3 million for the three
months ended September 30, 1997. This increase in direct costs was due to
the increase in the number of project-related personnel, hiring, facilities
and information system costs necessary to support the increased level of
operations. Direct costs as a percentage of net revenue decreased from
68.7% for the three months ended September 30, 1996, to 66.9% for the three
months ended September 30, 1997, primarily due to improved performance of
the Company's North American operations.
Selling, general and administrative expenses increased by $3.7 million, or
50.4%, from $7.3 million for the three months ended September 30, 1996 to
$11.0 million for the three months ended September 30, 1997. This increase
was primarily due to increased administrative personnel, hiring, and
facilities costs necessary to accommodate the Company's growth. Selling,
general and administrative expenses as a percentage of net revenue
decreased slightly from 20.7% for the three months ended September 30,
1996, to 20.2% for the three months ended September 30, 1997.
Depreciation and amortization expense increased by $1.1 million, or 111.6%,
from $958,000 for the three months ended September 30, 1996 to $2.0 million
for the three months ended September 30, 1997. The increase is primarily
due to increased capital spending on computer equipment and facilities to
support the increase in project-related personnel.
Income from operations for the three months ended September 30, 1997,
increased by $2.2 million, or 78.8%, from $2.8 million for the three months
ended September 30, 1996, to $5.0 million for the three months ended
September 30, 1997.
Interest income increased by $549,000 from $439,000 for the three months
ended September 30, 1996, to $988,000 for the three months ended September
30, 1997. This increase resulted from higher average balances of cash,
cash equivalents and marketable securities due primarily to proceeds from
the Company's December 1996 public offering.
The Company's effective income tax rate was 35.0% for the three months
ended September 30, 1997, compared to 36.8% for the three months ended
September 30, 1996. This decrease was due to changes in the mix of taxable
income from the different jurisdictions in which the Company operates and
the impact of tax-exempt interest income from securities held by the
Company.
FISCAL YEAR ENDED JUNE 30, 1997, COMPARED TO FISCAL YEAR ENDED JUNE 30,
1996
Net revenue increased $73.0 million, or 75.0%, from $97.4 million for
fiscal 1996 to $170.4 million for 1997. This growth in revenue was
primarily attributable to an increase in the volume and average contract
value of clinical research projects serviced by the Company and to a lesser
extent, the Company's acquisitions since June 1996. In fiscal 1997, net
revenue in North America and in Europe increased $50.1 million and $20.8
million, respectively, over the prior year.
Direct costs increased $49.5 million, or 74.8%, from $66.2 million for
fiscal 1996 to $115.7 million for 1997. This increase in direct costs was
due to the increase in the number of project-related personnel, hiring,
facilities, and information system costs necessary to support the increased
level of operations. As a percentage of net revenue, direct costs remained
essentially unchanged, decreasing slightly from 68.0% in fiscal 1996 to
67.9% in 1997.
Selling, general, and administrative expenses increased $13.4 million, or
61.0%, from $21.9 million for fiscal 1996 to $35.3 million for 1997. This
increase was primarily due to increased costs associated with additional
administrative personnel, greater hiring and selling costs, and additional
facilities to accommodate the Company's growth. As a percentage of net
revenue, selling, general, and administrative expenses decreased from 22.5%
in fiscal 1996 to 20.7% in 1997, primarily due to leveraging of
infrastructure over an expanding revenue base.
Depreciation and amortization expense increased $2.7 million, or 103.1%
from $2.6 million for fiscal 1996 to $5.4 million for 1997. This increase
was primarily due to increased capital spending on computer equipment and
facilities to support the increase in project-related personnel required to
support the increased level of operations.
Income from operations increased $7.4 million, or 112.1%, from $6.6 million
for fiscal 1996 to $14.1 million in 1997. As a percentage of net revenue,
income from operations increased to 8.3% in fiscal 1997, compared to 6.8%
in 1996.
Interest income increased $2.2 million in fiscal 1997 as a result of higher
average balances of cash and investments. This increase was due to
proceeds from the Company's public offering and cash generated from
operations.
The Company's effective income tax rate decreased from 39.7% in fiscal 1996
to 36.2% in fiscal 1997. This decrease was attributable to changes in the
mix of taxable income from the different geographic jurisdictions that the
Company operated in fiscal 1997 compared to 1996.
FISCAL YEAR ENDED JUNE 30, 1996, COMPARED TO FISCAL YEAR ENDED JUNE 30,
1995
Net revenue increased $30.3 million, or 45.1%, from $67.1 million for
fiscal 1995 to $97.4 million for 1996. This net revenue growth was
attributable to an increase in the number and average contract value of
clinical research projects serviced by the Company.
Direct costs increased $18.1 million, or 37.8%, from $48.1 million for
fiscal 1995 to $66.2 million for 1996. This increase in direct costs was
due to the increase in the number of project-related personnel, facilities,
and information system costs necessary to support the increased level of
operations. Direct costs as a percentage of net revenue decreased from
71.6% for 1995 to 68.0% for 1996, primarily due to improved workforce and
facility utilization.
Selling, general and administrative expenses increased $6.1 million, or
38.6%, from $15.8 million for fiscal 1995 to $21.9 million for 1996. This
increase was primarily due to increased costs associated with additional
administrative personnel, greater hiring and selling costs, and additional
facilities to support the Company's growth and operation as a publicly held
company. Selling, general and administrative expenses as a percentage of
net revenue decreased from 23.6% for fiscal 1995 to 22.5% for 1996,
primarily due to leveraging of infrastructure over an expanded revenue
base.
Depreciation and amortization expense increased $206,000, or 8.5%, from
$2.4 million for fiscal 1995 to $2.6 million for 1996. The change resulted
from an increase in depreciation associated with increased capital
expenditures, offset by a decrease in depreciation and amortization due to
the write-down of impaired long-lived assets of the Company's German
operations. See Note 3 to the Supplemental Consolidated Financial
Statements entitled, "Impairment of Long Lived Assets." Depreciation and
amortization expense in fiscal 1995 includes approximately $588,000 related
to long-lived assets which were written-down and did not recur in 1996.
Income from operations for fiscal 1996 was $6.6 million, compared to a loss
from operations of $10.4 million for 1995. Results for 1995 included an
$11.3 million noncash charge related to the write-down of impaired long-
lived assets of the Company's German operations. Income from operations
for 1995, excluding the impact of the asset impairment charge, was
approximately $221,000.
Interest income increased by $1.1 million in fiscal 1996. This increase
resulted from higher average balances of cash and investments due primarily
to proceeds from the Company's public offerings in November 1995 and March
1996.
The Company's effective income tax rate was 39.7% for fiscal 1996. The
effective tax rate in fiscal 1995, excluding the effect of the $11.3
million noncash, nondeductible write-down due to the impairment of long-
lived assets, would have been 101.0%. The effective income tax rate may
vary with changes in the mix of taxable income from the different
geographic jurisdictions in which the Company operates.
SUPPLEMENTAL QUARTERLY RESULTS
The following table presents unaudited supplemental quarterly operating
results for the Company for each of the ten most recent fiscal quarters in
the period ended September 30, 1997. In the opinion of the Company, this
information has been prepared on the same basis as the supplemental
consolidated financial statements appearing elsewhere in this Prospectus
and reflects all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of results of operations for
those periods. This quarterly financial data should be read in conjunction
with the Supplemental Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The operating results for any
quarter are not necessarily indicative of the results of any future period.
<TABLE>
<CAPTION>
For the quarters ended
Sep. June March Dec Sep 30, June March Dec. Sep. June
30, 30, 30, 31, 1996 30, 31, 31, 30, 30,
1997 1997 1997 1996 1996 1996 1995 1995 1995
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue $54,270 $50,328 $44,863 $39,920 $35,244 $29,661 $24,721 $22,726 $20,253 $18,341
Costs and expenses:
Direct costs 36,310 34,038 30,244 27,198 24,215 19,953 16,548 15,810 13,885 13,558
Selling, general 10,980 10,072 9,460 8,421 7,301 6,685 5,685 4,918 4,614 3,802
and administrative
Depreciation and
amortization 2,027 1,913 1,410 1,073 958 762 691 593 590 483
Total costs and 49,317 46,023 41,114 36,692 32,474 27,400 22,924 21,321 19,089 17,843
expenses
Income from $4,953 $4,305 $3,749 $3,228 $2,770 $2,261 $1,797 $1,405 $1,164 $498
operations
Net income $3,841 $3,564 $3,147 $2,341 $1,985 $1,672 $1,346 $929 $746 $399
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations and growth,
including acquisition costs, with cash flow from operations and the
proceeds from the sale of equity securities. Investing activities
primarily reflect capital expenditures for information systems
enhancements, leasehold improvements, and net purchases of marketable
securities.
The Company's clinical research and development contracts are generally
fixed price with some variable components, and range in duration from a few
months to several years. The cash flows from contracts typically consists
of a down payment required to be paid at the time the contract is entered
into and the balance in installments over the contract's duration, in some
cases on a milestone-achievement basis. Revenue from contracts is
recognized on a percentage-completion basis as the work is performed.
Accordingly, cash receipts do not necessarily correspond to costs incurred
and revenue recognized on contracts.
The Company's cash flow is influenced by the changes in levels of billed
and unbilled accounts receivable, net of amounts advance billed
representing unearned revenue. As a result, the number of days outstanding
in accounts receivable, net of advance billings, and the related dollar
values of these accounts can vary due to the achievement of contractual
milestones and the timing and size of cash receipts. The number of days
revenue outstanding, net of advance billings, was 48 days at June 30, 1996,
45 days at June 30, 1997, and 55 days at September 30, 1997. The increase
in days revenue outstanding from June 30, 1997, to September 30, 1997, was
primarily due to the timing of the achievement of project milestones and
related billings. Accounts receivable, net of the allowance for doubtful
accounts, increased from $42.1 million at June 30, 1996, to $66.1 million
at June 30, 1997, and $70.3 million at September 30, 1997; while advance
billings increased from $20.7 million at June 30, 1996, to $33.4 million at
June 30, 1997, and decreased to $29.7 million at September 30, 1997.
During the three months ended September 30, 1997, unrestricted cash and
cash equivalents increased by $19.5 million as a result of $22.7 million
and $1.6 million in cash provided by investing and financing activities,
respectively, partially offset by $4.3 million in cash used by operating
activities and a $411,000 unfavorable effect of exchange rate changes. Net
cash used by operating activities resulted from increases in accounts
receivable of $5.2 million and decreases in advance billings, accounts
payable, and other current liabilities of $3.0 million, $1.3 million, and
$891,000, respectively, partially offset by net income, excluding noncash
expenses, of $5.9 million. Cash provided by investing activities consisted
primarily of net proceeds from sales of marketable securities of $29.3
million, partially offset by capital expenditures of $6.6 million related
to facility expansion and investments in information technology. Financing
activities consisted primarily of net proceeds from the exercise of stock
options of $1.4 million.
Unrestricted cash and cash equivalents increased by $12.1 million during
fiscal 1997 as a result of $15.6 million of cash provided by operations and
$56.6 million provided by financing activities, offset by $59.1 million of
cash used for investing activities and a $968,000 unfavorable effect of
exchange rate changes. Net cash provided by operating activities resulted
primarily from net income, excluding noncash expenses, of $16.4 million and
increases in advance billings and other current liabilities of $12.4
million and $12.8 million, respectively. Cash used by operating activities
included increases in accounts receivable and other current assets of $21.6
million and $3.0 million, respectively. Financing activities consisted
primarily of net proceeds of approximately $57.2 million from the Company's
December 1996 follow-on public offering of 2,516,300 shares of common stock
net of repayments of long-term debt of $3.5 million. Debt repayments
included $2.3 million to retire third party debt assumed during the August
1996 acquisition of State and Federal Associates, Inc. Investing
activities consisted of net purchases of marketable securities of $37.5
million and capital expenditures.
The Company has invested approximately $22.4 million in fiscal 1997 for
capital expenditures related to facility expansion and investments in
information systems technology and expects to invest approximately $25.0
million in the next twelve months.
The Company has domestic and foreign lines of credit with banks totaling
approximately $14.4 million, and a capital lease line of credit with a U.S.
bank for $2.4 million. At September 30, 1997, the Company had approximately
$15.1 million in available credit under these arrangements.
The Company's primary short-term and long-term cash needs are for the
payment of the salaries and fringe benefits, hiring and recruiting
expenses, business development costs, capital expenditures and facility-
related expenses. The Company believes that its existing capital resources
together with cash flows from operations and borrowing capacity under
existing lines of credit will be sufficient to meet its foreseeable cash
needs. In the future, the Company will consider acquiring businesses to
enhance its service offerings, therapeutic base, and global presence. Any
such acquisitions may require additional external financing, and the
Company may from time to time seek to obtain funds from public or private
issuances of equity or debt securities. There can be no assurance that
such financing will be available on terms acceptable to the Company.
The statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations include forward-looking
statements which involve risks and uncertainties. The Company's actual
experience may differ materially from that discussed above. Factors that
might cause such a difference include, but are not limited to, the loss or
delay of large contracts, the Company's dependence on certain industries
and clients and government regulation of such industries and clients,
competition or consolidation within the industry, as well as those
discussed in "Risk Factors" herein and in the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997.
INFLATION
The Company believes the effects of inflation generally do not have a
material adverse impact on its operations or financial condition.
YEAR 2000
The Company recognizes that it must ensure that its services and operations
will not be adversely affected by Year 2000 software failures (the "Year
2000 issue") which can arise in time-sensitive software applications with
two-year digits to define the applicable year. In such applications, a
date using "00" as the year may be recognized as the year 1900 rather than
the year 2000. The Company is in the process of replacing many of its
business and computer operating systems with software which, when upgraded,
are Year 2000 compatible. The Company is planning to complete all
necessary Year 2000 upgrades of its major systems and is currently
identifying and developing conversion strategies for its remaining systems
that may be impacted by the Year 2000 issue.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." This statement establishes and simplifies standards for computing
and presenting earnings per share. SFAS No. 128 will be effective for the
Company's second quarter of fiscal 1998 and requires the restatement of all
previously reported earnings per share data presented. Early adoption of
this Statement is not permitted. SFAS No. 128 replaces primary and fully
diluted earnings per share with basic and diluted earnings per share. The
Company expects that basic and diluted earnings per share amounts will not
be materially different from the Company's primary and fully diluted
earnings per share amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in the supplemental
consolidated financial statements. SFAS No. 131 establishes standards for
reporting information on operating segments in interim and annual financial
statements. Both statements are effective for the Company for fiscal 1999.
In November 1997, the Emerging Issues Task Force (EITF) reached a consensus
on issue 97-13, "Accounting for Costs Incurred in Connection with a
Consulting Contract or an Internal Project that Combines Business Process
Reengineering and Information Technology Transformation" (EITF 97-13) that
the costs of business process reengineering activities, whether done
internally or by third parties, is to be expensed as incurred. The
consensus also applies to the costs of business process reengineering
activities conducted in conjunction with a project to acquire, develop, or
implement internal-use software. The transition provisions of EITF 97-13
require unamortized previously capitalized costs for business process
reengineering activities to be written off in the Company's fiscal quarter
ending December 31, 1997 and reported as a cumulative effect of a change in
accounting principle. The Company is in the process of assessing the
impact of EITF 97-13 and does not expect that it will have a material
affect on its results of operations for the quarter ending December 31,
1997.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Shares as of January 14, 1998 and the number of Shares
which may be offered by or for the account of the Selling Stockholders or
their transferees or distributes from time to time. Because the Selling
Stockholders may sell all or any part of their Shares pursuant to this
Prospectus, no estimate can be given as to the number of Shares that will
be held by the Selling Stockholders upon termination of this offer. See
"Plan of Distribution."
Shares Shares offered Shares
Owned Pursuant to this Owned
before offering Prospectus after offering
(1)
Selling Stockholders Number Percent(2)Number(2) Percent(2) Number Percent(2)
Clarence A. Kemper 231,339 1.1% 115,670 * 115,669 *
P. Michael Masterson 231,038 1.1% 115,519 * 115,519 *
Mark A. Lester 52,017 * 26,008 * 26,009 *
Ronald F. Tetzlaff 52,017 * 26,008 * 26,009 *
Alan R. Parenteau 5,779 * 2,890 * 2,889 *
Jon R. Voss 5,779 * 2,890 * 2,889 *
Warren Handren 1,924 * 962 * 962 *
David Hyde 1,924 * 962 * 962 *
Howard W. Foster 5,035 * 5,035 * 0 *
586,852 2.8% 295,944 1.4% 290,908 1.4%
___________________*Less than 1% of the outstanding Common Stock.
(1) Assuming all of the Shares owned by each Selling Stockholder and
offered pursuant to this Prospectus are sold.
(2) As of January 14, 1998, there were 20,804,987 shares of Common Stock
outstanding.
None of the Selling Stockholders has had any material relationship with the
Company or any of its affiliates within the past three years except as
described below.
Each of Clarence A. Kemper, P. Michael Masterson, Mark A. Lester, Ronald F.
Tetzlaff, Alan R. Parenteau, Jon Voss, Warren Handren and David Hyde (the
"KMI Stockholders") acquired his Shares in connection with the merger of
KMI Acquisition Corporation, a Massachusetts corporation and wholly-owned
subsidiary of the Company, with and into Kemper-Masterson, Inc., a Delaware
corporation ("KMI") (the "KMI Merger"), pursuant to an Agreement and Plan
of Reorganization and Merger dated October 22, 1997 by and among KMI, KMI
Acquisition Corporation, the Company and the KMI Stockholders (the "Merger
Agreement"). Pursuant to the terms of a Registration Rights Agreement dated
December 1, 1997 by and among the KMI Stockholders and the Company, 290,909
of the 581,817 shares of Common Stock issued to the KMI Stockholders in
connection with the KMI Merger are being offered hereby. The Company has
agreed to register the remaining 290,908 shares of Common Stock issued to
the KMI Stockholders approximately 180 days after the date of this
Prospectus. Such rights are more fully described in the Registration
Rights Agreement filed as Exhibit 4.3 herewith.
An aggregate of 55,706 shares of Common Stock issued to the KMI
Stockholders are being held in escrow pursuant to the Merger Agreement. Of
the 55,706 shares being held in escrow, an aggregate of 25,297 shares are
being held back until the earlier of (i) December 1, 1998 or (ii) the
delivery of an audit report relating to the Company's financial statements
for the fiscal year ended June 30, 1998. These shares will be used to
satisfy any indemnification claims which may be brought by the Company
based upon a breach of the representations or warranties of KMI or the KMI
Stockholders as set forth in the Merger Agreement. An aggregate of 30,409
shares held in escrow will be used if necessary to satisfy certain tax
withholding obligations of the KMI Stockholders. These shares will be
distributed to the KMI Stockholders, to the extent not used to satisfy such
tax withholding obligations, within approximately 25 days after the date
the shares are no longer subject to restriction on transfer pursuant to the
pooling of interests accounting rules. Each of the KMI Stockholders has
sole authority to hold or dispose of, and to vote all securities held by
him, including those shares held in escrow by the Company but issued in the
name of the KMI Stockholder. Each of the KMI Stockholders is presently
employed by KMI in its capacity as a wholly-owned subsidiary of the
Company, including Mr. Masterson, who serves as KMI's President. The KMI
Merger was accounted for as a pooling of interests for financial accounting
purposes.
Perceptive Systems, Inc., a Colorado corporation doing business as Hayden
Image Processing Group ("Hayden") acquired its Shares in connection with
the acquisition by the Company of substantially all of the assets of Hayden
pursuant to an Asset Purchase Agreement dated September 26, 1997 by and
among the Company, Hayden and Howard W. Foster, the sole stockholder of
Hayden (the "Asset Purchase Agreement"). In connection with the
anticipated dissolution of Hayden, the 5,035 shares of Common Stock issued
to Hayden were subsequently transferred to Howard W. Foster, the sole
stockholder of Hayden. Pursuant to the terms of a Registration Rights
Agreement dated September 26, 1997 by and between Hayden and the Company,
all of the 5,035 shares of Common Stock issued upon the closing of the
Hayden Acquisition are being offered hereby. In addition, the Company has
granted certain "piggyback" rights with respect to the Contingent Shares
which would allow the registration of the Contingent Shares on future
registration statements filed by the Company. Such rights are more fully
described in the Registration Rights Agreement filed as Exhibit 4.5
herewith. Howard Foster is currently the Director of Medical Imaging
Research and Development at the Company.
Each of the Selling Stockholders represented to the Company, in connection
with the completion of the KMI Merger and the Hayden Acquisition, that he
or it was acquiring the Shares from the Company without any present
intention of effecting a distribution of those Shares. In recognition of
the fact that the Selling Stockholders may want to be able to sell their
shares when they consider appropriate, the Company agreed to file with the
Commission a Registration Statement on Form S-3 (the "Registration
Statement") (of which this Prospectus is a part) to permit the public sale
of the Shares by the Selling Stockholders from time to time and to use its
commercially reasonable efforts to keep the Registration Statement
effective until the earlier of the sale of all of the Shares pursuant to
this Registration Statement or October 22, 1998. The Company will prepare
and file such amendments and supplements to the Registration Statement as
may be necessary to keep it effective until the earlier of the sale of all
Shares pursuant to the registration statement or until October 22, 1998.
Pursuant to the Registration Rights Agreements by and between the Company
and each of the Selling Stockholders (collectively, the "Registration
Rights Agreements"), the Company has agreed to bear all expenses in
connection with the registration and resale of the Shares (other than
underwriting discounts and selling commissions and the fees and expenses of
counsel and other advisors to the Selling Stockholders). See "Plan of
Distribution." The Registration Rights Agreements provide that the Company
will indemnify the Selling Stockholders for any losses incurred by them in
connection with actions arising from any untrue statement of a material
fact in the Registration Statement or any omission of a material fact
required to be stated therein, unless such statement or omission was made
in reliance upon written information furnished to the Company by the
Selling Stockholder. Similarly, the Registration Rights Agreements provide
that each Selling Stockholder will indemnify the Company and its officers
and directors for any losses incurred by them in connection with any action
arising from any untrue statement of material fact in the Registration
Statement or any omission of a material fact required to be stated therein,
if such statement or omission was made in reliance on written information
furnished to the Company by such Selling Stockholder.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
DESCRIPTION OF CAPITAL STOCK
The current authorized capital stock of the Company is 50,000,000
shares of Common Stock, par value $.01 per share, and 5,000,000 shares of
Preferred Stock, par value $.01 per share.
Common Stock
As of January 14, 1998, there were 20,804,987 shares of Common Stock
outstanding and held of record by 108 stockholders.
Holders of Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders. Holders of Common Stock
do not have cumulative voting rights. Accordingly, holders of a majority of
the shares of Common Stock entitled to vote in any election of directors
may elect all of the directors standing for election. Holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of funds legally available therefor,
subject to any preferential dividend rights of any outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of
the Company available after the payment of all debts and other liabilities
and subject to the prior rights of any outstanding Preferred Stock. Holders
of the Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the
shares offered by the Company in this offering will be, when issued and
paid for, fully paid and nonassessable. The rights, preferences and
privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future.
Preferred Stock
The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time
to time up to an aggregate of 5,000,000 shares of Preferred Stock in one or
more series and to fix or alter the designations, preferences, rights and
any qualifications, limitations or restrictions of the shares of each such
series thereof, including the dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption (including sinking fund
provisions), redemption price or prices, liquidation preferences and the
number of shares constituting any series or designations of such series.
The issuance of Preferred Stock may have the effect of delaying, deferring
or preventing a change of control of the Company. There are no shares of
Preferred Stock outstanding. The Company has no present plans to issue any
shares of Preferred Stock.
Massachusetts Law and Certain Provisions of the Company's Restated Articles
of Organization and By-Laws
The Company believes that it has more than 200 beneficial
stockholders, thus making it subject to Chapter 110F of the Massachusetts
General Laws, an anti-takeover law. In general, this statute prohibits a
publicly held Massachusetts corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person becomes an interested
stockholder, unless (i) the interested stockholder obtains the approval of
the board of directors prior to becoming an interested stockholder, (ii)
the interested stockholder acquires 90% of the outstanding voting stock of
the corporation (excluding shares held by certain affiliates of the
corporation) at the time it becomes an interested stockholder, or (iii) the
business combination is approved by both the board of directors and the
holders of two-thirds of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder). An "interested
stockholder" is a person who, together with its affiliates and associates,
owns (or at any time within the prior three years did own) 5% or more of
the outstanding voting stock of the corporation. A "business combination"
includes a merger, a stock or asset sale, and certain other transactions
resulting in a financial benefit to the interested stockholder. . There
are no shares of Preferred Stock outstanding. The Company may at any time
elect not to be governed by Chapter 110F by vote of a majority of its
stockholders, but such an amendment would not be effective for twelve
months and would not apply to a business combination with any person who
became an interested stockholder prior to the adoption of the amendment.
The Massachusetts Business Corporation Law generally requires that
publicly-held Massachusetts corporations have a classified board of
directors consisting of three classes as nearly equal in size as possible,
unless those corporations elect to opt out of the statute's coverage. By
vote of the Board of Directors, the Company has elected to opt out of the
classified board provisions of this statute and has adopted separate
classified Board provisions in its Restated Articles of Organization.
The Company's By-Laws include a provision that excludes the Company
from the applicability of Massachusetts General Laws Chapter 110D, entitled
"Regulation of Control Share Acquisitions." In general, this statute
provides that any stockholder of a corporation subject to this statute who
acquires 20% or more of the outstanding voting stock of a corporation may
not vote such stock unless the stockholders of the corporation so
authorize. The Board of Directors may amend the Company's By-Laws at any
time to subject the Company to this statute prospectively.
The Company's By-Laws require that nominations for the Board of
Directors made by a stockholder comply with certain notice procedures. A
notice by a stockholder of a planned nomination must be given not less than
60 and not more than 90 days prior to a scheduled meeting, provided that if
less than 70 days' notice is given of the date of the meeting, a
stockholder will have ten days within which to give such notice. The
stockholder's notice of nomination must include particular information
about the stockholder, the nominee and any beneficial owner on whose behalf
the nomination is made. The Company may require any proposed nominee to
provide such additional information as is reasonably required to determine
the eligibility of the proposed nominee.
The By-Laws also require that a stockholder seeking to have any
business conducted at a meeting of stockholders give notice to the Company
not less than 60 and not more than 90 days prior to the scheduled meeting,
provided that if less than 70 days' notice is given of the date of the
meeting, a stockholder will have ten days within which to give such notice.
The notice from the stockholder must describe the proposed business to be
brought before the meeting and include information about the stockholder
making the proposal, any beneficial owner on whose behalf the proposal is
made, and any other stockholder known to be supporting the proposal. The By-
Laws require the Company to call a special stockholders' meeting at the
request of stockholders holding at least 33 1/3% of the voting power of the
Company.
The Company's Restated Articles of Organization include provisions
eliminating the personal liability of the Company's directors for monetary
damages resulting from breaches of their fiduciary duty to the extent
permitted by the Massachusetts Business Corporation Law. Additionally, the
Company's Restated Articles of Organization provide that the Company shall
indemnify each person who is or was a director or officer of the Company,
and each person who is or was serving or has agreed to serve at the request
of the Company as a director or officer of, or in a similar capacity with,
another organization or in any capacity with respect to any employee
benefit plan of the Company, against all liabilities, costs and expenses
reasonably incurred by any such persons in connection with the defense or
disposition of or otherwise in connection with or resulting from any
action, suit or other proceeding in which they may be involved by reason of
being or having been such a director or officer, or by reason of any action
taken or not taken in such capacity, except with respect to any matter as
to which such person shall have been finally adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the Company or,
to the extent such matter relates to service with respect to an employee
benefit plan, in the best interests of the participants or beneficiaries of
such employee benefit plan.
The Restated Articles of Organization provide that certain
transactions, such as the sale, lease or exchange of all or substantially
all of the Company's property and assets and the merger or consolidation of
the Company into or with any other corporation, may be authorized by the
approval of the holders of a majority of the shares of each class of stock
entitled to vote thereon, rather than by two-thirds as otherwise provided
by statute, provided that the transactions have been authorized by a
majority of the members of the Board of Directors and the requirements of
any other applicable provisions of the Restated Articles of Organization
have been met.
Certain of the provisions of the Restated Articles of Organization and
By-Laws discussed above would discourage or make more difficult a proxy
contest or the assumption of control by a holder of a substantial block of
the Company's stock. Such provisions could also have the effect of
discouraging a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt
might be beneficial to the Company and its stockholders. In addition, since
the Restated Articles of Organization and By-Laws are designed to
discourage accumulations of large blocks of the Company's stock by
purchasers whose objective is to have stock repurchased by the Company at a
premium, such provisions could tend to reduce the temporary fluctuations in
the market price of the Company's stock which are caused by such
accumulations. Accordingly, stockholders could be deprived of certain
opportunities to sell their stock at a temporarily higher market price.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is BankBoston,
N.A.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Stockholders for their own accounts. The Company will receive none of the
proceeds from this offering. The Selling Stockholders will pay or assume
brokerage commissions or other charges and expenses incurred in the resale
of the Shares.
Resales of the Shares by the Selling Stockholders are not subject to
any underwriting agreement. The Shares covered by this Prospectus may be
sold by the Selling Stockholders or by pledgees, donees, transferees or
other successors in interest. The Shares offered by each Selling
Stockholder may be sold from time to time at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices or at
negotiated prices. Such sales may be effected in the over-the-counter
market, on the Nasdaq National Market, or on any exchange on which the
Shares may then be listed. The Shares may be sold by one or more of the
following: (a) one or more block trades in which a broker or dealer so
engaged will attempt to sell all or a portion of the Shares held by the
Selling Stockholders as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) in negotiated
transactions, and (e) through other means. The Selling Stockholders may
effect such transactions by selling Shares through customary brokerage
channels, either through broker-dealers acting as agents or brokers, or
through broker-dealers acting as principals, who may then resell the
Shares, or at private sales or otherwise, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such transactions
by selling Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions,
commissions, or fees from the Selling Stockholders and/or purchasers of the
Shares for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation to a particular broker-dealer
might be in excess of customary commissions). Any broker-dealers that
participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be underwriters and any commissions received by them and
any profit on the resale of the Shares positioned by them might be deemed
to be underwriting compensation, within the meaning of the Securities Act,
in connection with such sales.
The Company intends to maintain the effectiveness of this Prospectus
until October 22, 1998 or such period as is required to satisfy the
Company's obligations under the Registration Rights Agreements by and among
the Selling Stockholders and the Company; provided, however, that the
rights of the Selling Stockholders to resell the Shares pursuant to this
Registration Statement may be suspended by the Company under certain
circumstances, as set forth in the Registration Rights Agreements.
The Company will inform the Selling Stockholders that the
antimanipulation rules under the Securities Exchange Act of 1934
(Regulation M - Rule 102) may apply to sales in the market and will furnish
the Selling Stockholders upon request with a copy of these Rules. The
Company will also inform the Selling Stockholders of the need for delivery
of copies of this Prospectus.
Any Shares covered by the Prospectus that qualify for resale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "PRXL."
LEGAL MATTERS
Certain legal matters with respect to the issuance of the Shares are being
passed upon for the Company and the Selling Stockholders by Testa, Hurwitz
& Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The supplemental consolidated financial statements of the Company as of
June 30, 1997 and 1996 and for each of the three years in the period ended
June 30, 1997 included in this Prospectus and the Company's consolidated
financial statements as of June 30, 1997 and 1996 and for each of the three
years in the period ended June 30 1997 incorporated in this Prospectus by
reference to the Company's 1997 Annual Report on Form 10-K have been so
included and incorporated in reliance on the reports of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
Supplemental Consolidated Financial Statements
The following supplemental consolidated financial statements give
effect to the business combination between the Company and Kemper-
Masterson, Inc. ("KMI") consummated in December 1997 and accounted for
as a pooling of interests. These supplemental financial statements
will become the restated historical financial statements of the
Company upon publication of the combined results of the companies
covering a period subsequent to the combination. The supplemental
financial statements assume that the business combination occurred at
the earliest period presented. Due to the differing year ends of the
Company and KMI, financial information for dissimilar fiscal years has
been combined in the supplemental consolidated financial statements
for the Company's fiscal year 1996 and 1995. KMI's results of
operations for its fiscal years ended December 31, 1996 and 1995 were
combined with the Company's results of operations for the fiscal years
ended June 30, 1996 and 1995, respectively. Balance sheet information
as of June 30, 1996 includes the financial position of KMI as of
December 31, 1996 and the Company as of June 30, 1996. Accordingly,
KMI's results of operations for the six months ended December 31, 1996
(including revenue, operating income, and net income of $5.0 million,
$167,000, and $117,000, respectively) were duplicated in the combined
statements of operations for fiscal 1997 and 1996. Therefore, KMI's
net income for one of the six month periods ended December 31, 1996,
was eliminated from stockholders' equity.
Supplemental consolidated earnings per share is based on the combined
weighted average number of shares of common stock of the Company, and
common stock issued by the Company to the former shareholders of KMI.
The supplemental consolidated balance sheets reflect the issuance of
shares of common stock of the Company in exchange for all of the
outstanding shares of KMI.
PAREXEL INTERNATIONAL CORPORATION
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
Report of independent accountants F-2
Supplemental consolidated statements of operations
for the three years ended June 30, 1997 and unaudited for
the three months ended September 30, 1997 and 1996 F-3
Supplemental consolidated balance sheets at June 30,
1997 and 1996 and unaudited at September 30, 1997 F-4
Supplemental consolidated statements of stockholders'
equity for the three years ended June 30, 1997 and
unaudited for the three months ended September 30, 1997 F-5
Supplemental consolidated statements of cash flows for
the three years ended June 30, 1997 and unaudited for
the three months ended September 30, 1997 and 1996 F-7
Notes to supplemental consolidated financial F-9
Report of Independent Accountants
To the Board of Directors and
Stockholders of PAREXEL International Corporation:
In our opinion, the accompanying supplemental consolidated balance
sheets and the related supplemental consolidated statements of
operations, of stockholders' equity and of cash flows present fairly,
in all material respects, the financial position of PAREXEL
International Corporation and its subsidiaries at June 30, 1997 and
1996, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1997, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.
As described in Note 16, on December 1, 1997, the Company merged with
Kemper-Masterson, Inc. in a transaction accounted for as a pooling of
interests. The accompanying supplemental consolidated financial
statements give retroactive effect to the merger of the Company with
Kemper-Masterson, Inc.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 6, 1997, except as to
Note 16 and the pooling of
Interests with Kemper-Masterson,
Inc., which is as of
December 1, 1997
<TABLE>
<CAPTION>
PAREXEL INTERNATIONAL CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the three months
For the year ended June 30, ended September 30,
1997 1996 1995 1997 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenue $220,511 $132,880 $90,453 $66,765 $45,704
Reimbursed costs (50,156) (35,519) (23,360) (12,495) (10,460)
Net revenue 170,355 97,361 67,093 54,270 35,244
Costs and expenses 115,695 66,196 48,056 36,310 24,215
Direct costs 35,254 21,902 15,801 10,980 7,301
Selling, general
and administrative
Depreciation and 5,354 2,636 2,430 2,027 958
amortization
Impairment of - - 11,253 - -
long-lived assets
156,303 90,734 77,540 49,317 32,474
Income (loss) 14,052 6,627 (10,447) 4,953 2,770
from operations
Interest Income 3,465 1,297 225 988 439
Interest expenses (212) (165) (172) (38) (55)
Other income (7) 22 14 7 (14)
expense),net
3,246 1,154 67 957 370
Income (loss) before 17,298 7,781 (10,380) 5,910 3,140
provision for income
taxes
Provision for income 6,261 3,088 291 2,069 1,155
income taxes
Net income (loss) $11,037 $4,693 ($10,671) $3,841 $1,985
Net income $0.57 $0.33 ($4.90) $0.18 $0.11
(loss per share)
Weighted average
common and common
equivalent shares
outstanding 19,497 14,080 2,177 21,173 17,776
The accompanying notes are an integral part of the supplemental
consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
PAREXEL INTERNATIONAL CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
September June 30,
30,
1997 1997 1996
(unaudited)
<S> <C> <C> <C>
ASSETS
Current
assets:
Cash and cash
equivalents:
$47,879 $28,392 $16,278
Unrestricted
2,752 1,967 858
Restricted
Marketable 37,478 66,891 29,319
securities
Accounts 70,336 66,061 42,113
receivable, net
Other current 12,271 12,106 7,171
assets
Total 170,716 175,417 95,739
current assets
Property and 32,586 28,222 8,777
equipment, net
Other assets 1,890 1,862 1,810
$205,192 $205,501 $106,326
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Liabilities:
Notes payable and current portion $1,116 $1,698 $1,468
of long-term debt
Accounts 6,737 8,127 7,309
payable
Advance 29,678 33,369 20,690
billings
Other current 21,428 21,347 12,442
liabilities
Total 58,959 64,541 41,909
current
liabilities
Long term 26 72 410
debt
Other liabilities 1,685 1,724 1,739
Total liabilities 60,670 66,337 44,058
Commitments and
and contingencies
Stockholders' equity
Preferred stock - $.01 par value; - - -
shares authorized; 5,000,000
Common stock - $.01 par value;
shares authorized 50,000,000 at
September 30, 1997, and at
June 30, 1997, and 25,000,000 at
June 30, 1996; shares issued:
20,620,864 at September 30, 1997,
20,563,924 at June 30, 1997, and
16,151,277 at June 30, 1996;
shares outstanding: 20,601,452 at
September 30, 1997, 20,534,512
at June 30, 1997 and 16,121,865 at June
30, 1996 206 205 161
Additional paid-in capital 133,973 132,543 67,124
Retained earnings 10,899 7,189 (5,059)
(accumulated deficit)
Cumulative translation (556) (773) 42
adjustment
Total stockholders' equity 144,522 139,164 62,268
$205,192 $205,501 $106,326
The accompanying notes are an integral part of the
supplemental consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Convertible Preferred Stock Common Stock
Number of Issuance Number of Par Additional Retained Stock Cumula- Total
Shares Price,Net Shares Value Paid-In Earnings Sub- tive Stock-
Net Capital (accumu- Scrip- Trans- Holder
lated tions Lation Equity
deficit) Receiv- Adjust-
Able Ment
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June
30, 1994 2,327,744 $23,683 2,137,367 $21 $741 $1,891 $(163)$(454)$25,719
Shares issued 43,972 2 64 66
under stock option
plans
Deferred 183 183
compensation 183
Repurchase of (17)
common shares (2,746) (17)
Proceeds from
stock
subscriptions 6 6
receivable
Foreign currency
translation 863 863
Net loss
(10,671) (10,671)
Balance at June 2,327,744 23,683 2,178,593 23 971 (8,780) (157) 409 16,149
30, 1995
Convertible
preferred stock 176,887 1,769 1,769
issue upon
Exercise of
warrants
Proceeds from
stock 157
subscriptions 157
receivable
Conversion of
preferred stock
into common upon (2,504,631) (25,452) 8,956,016 88 25,364 -
initial public
offering
Payment of accrued
preferred stock (940) (940)
dividends
Net proceeds from 4,200,000 42 36,845 36,887
public offerings
Shares issued under
stock option plans
Deferred
compensation
Acquisitions
625,620 6 405 411
337 337
161,636 2 144 (76) 70
Income tax benefit
from exercise of 3,058 3,058
stock options
Net unrealized 44 44
gain on marketable
securities
Foreign currency (367) (367)
translation
Net income
4,693 4,693
Balance at June
30, 1996 - - 16,121,865 161 67,124 (5,059) - 42 62,268
</TABLE>
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
<TABLE>
<CAPTION>
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30,
1996 - - 16,121,865 161 67,124 (5,059) - 42 62,268
Net proceeds from
public offering 2,516,300 25 57,161 57,186
Shares issued under
stock option plans 529,902 5 1,427 1,432
Shares issued under
employee stock
Purchase plan 154,384 2 1,743 1,745
Deferred compensation 492
492
Income tax benefit from
exercise of stock
Options 4,527 4,527
Income tax benefit from
building acquisition 320 320
Net unrealized gain on
marketable securities 97 97
Acquisitions (note 4)
1,217,841 12 30 1,231 1,273
Foreign currency
translation (815) (815)
Elimination of KMI's
net activity for the (5,780) (281) (117) (398)
six months ended (398)
December 31, 1996
Net income 11,037 11,037
Balance at June 30, 1997
- - 20,534,512 205 132,543 7,189 - (773) 139,164
Shares issued under 16,540 146 146
stock option plans
Shares issued under
employee stock 45,365 1 1,084 1,085
Purchase plan
Acquisitions (note 16)
5,035 200 200
Net unrealized loss on
marketable securities (131) (131)
Foreign currency translation 217 217
Net income 3,841 3,841
Balance at September 30,
1997 (Unaudited) - - 20,601,452 $206 $133,973 $10,899- $(556) $144,522
The accompanying notes are an integral part of the supplemental consolidated
financial statements.
</TABLE>
<TABLE>
PAREXEL INTERNATIONAL CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands,except per share data)
For the
three
months
ended
For the September 30,
year ended
June 30,
1997 1996 1995 1997 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash
flows from operating
activities:
Net income (loss) $11,037 $4,693 ($10,671) $3,841 $1,985
Adjustments to
reconcile net income
(loss) to net 5,354 2,636 2,430 2,027 958
Depreciation and
amortization - (135) (683) - -
Impairment of Long-
lived assets - - 11,253 - -
Stock compensation expense 492 337 184 - -
Change in assets and
liabilities,net of
effects from acquisitions:
Restricted cash (1,109) 502 (929) (780) (511)
Accounts receivable(net) (21,559) (15,684) (1,279) (5,190) (8,686)
Other current assets (3,004) (76) (1,474) 543 637
Other assets (1,107) (317) (53) (5) (72)
Accounts payable (397) 4,377 680 (1,292) 1,347
Advance billings 12,387 6,507 4,512 (3,047) (1,067)
Other current
liabilities 12,762 3,227 2,234 (891) (763)
Other liabilities 791 65 56 482 35
Net cash provided (used 15,647 6,132 6,260 (4,312) (6,137)
by operating activities
Cash flows from investing
activities (118,698) (131,903) (3,510) (39,020) (10,849)
Purchase of marketable
securities 81,223 104,128 2,710 68,302 13,773
Proceeds from sale of
marketable securities 781 52 - - 251
Cash related to
acquisition activities (22,430) (5,219) (1,867) (6,629) (2,679)
Net cash provided (used) (59,124) 32,942) (2,667) 22,653 496
by investing activities
Cash flows from financing
activities:
Proceeds from issuance
of convertible preferred
stock - 1,769 - - -
Proceeds from issuance
of common stock 60,363 37,298 66 1,431 1,429
Cash receoved from stock - 157 6 - -
subscriptions
Purchase of treasury
stock - - (17) - -
Net proceeds (repayments)
under line of credit (318) 619 (275) 224 211
Proceeds from long term
debt - - 200 - -
Repayments of long term
debt (3,464) (1,001) (751) (98) (2,784)
Dividends on convertible
preferred stock - (940) - - -
Net cash provided (used) 56,581 37,902 (771) 1,557 (1,144)
by financing activities
Elimination of KMI's net
cash activities for the
six months ended 12/31/96 (21) - - - -
Effect of Exchange rate
changes on unrestricted
cash and cash equivalents (969) (155) 134 (411) (40)
Net increase (decrease)
in unrestricted cash
and cash equivalents 12,114 10,937 2,956 19,487 (6,825)
Unrestricted cash and 16,278 5,341 2,385 28,392 16,257
cash equivalents at
beginning of period
Unrestricted cash and
cash equivalents at
end of period $28,392 $16,278 $5,341 $47,879 $9,432
The accompanying notes are an integral part of the supplemental
consolidated financial statements.
</TABLE>
<TABLE>
PAREXEL INTERNATIONAL CORPORATION
SUPPMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
For
the Three months
year Ended
ended September 30,
June
30,
1997 1996 1995 1997 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Supplmental disclosures of
cash flow information:
Cash paid during the year
for:
Interest $265 $247 $260 $26 $74
Income Taxes $1,576 $1,649 $565 $421 $392
Supplemental disclosures
of noncash financing
activities:
Property and equipment - $536 $1,265 - -
acquired under capital
lease obligations
Income tax benefit
from exercise of stock options $4,527 $3,058 - - -
Income tax benefit from
building acquisition $320 - - - $320
</TABLE>
The accompanying notes are an integral part of the supplemental
consolidated financial statements.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
The Company is a leading contract research organization ("CRO")
providing a broad range of knowledge-based product development and
product launch services on a contract basis to the worldwide
pharmaceutical, biotechnology, and medical device industries. The
Company has developed expertise in such disciplines as: clinical
trials management, biostatistical analysis and data management,
medical marketing, clinical pharmacology, regulatory and medical
consulting, information technology, industry training and publishing,
and other drug development consulting services.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Supplemental Financial Information
The accompanying supplemental consolidated financial statements have
been prepared to give retroactive effect to the acquisition of Kemper-
Masterson, Inc. (KMI) by the Company accounted for as a pooling of
interests which occurred in December 1997 (Note 16). Generally
accepted accounting principles prohibit giving effect to a consummated
business combination accounted for as a pooling of interests in
financial statements that do not include the date of consummation;
accordingly, these financial statements are supplemental information.
The accompanying supplemental consolidated financial statements do not
extend through the date of consummation; however, they will become the
historical consolidated financial statements of the Company after
financial statements covering the date of consummation of the business
combination are issued.
Principles of Consolidation
The supplemental consolidated financial statements include the
accounts of PAREXEL International Corporation and its wholly-owned
domestic and foreign subsidiaries. In fiscal year 1997, the Company's
French subsidiary changed its fiscal year end to June 30, which
resulted in a 13-month year. The additional month is included in the
fiscal year 1997 results of operations and does not materially affect
the Company's supplemental consolidated financial statements. For
fiscal year 1997, the Company's German subsidiary operated on a fiscal
year that ended May 31. For fiscal years 1996 and 1995, the Company's
German and French subsidiaries operated on a fiscal year that ended
May 31. All significant intercompany accounts and transactions have
been eliminated.
Accounting 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,
liabilities, revenues and expenses, and disclosure of contingent
assets and liabilities. Actual results may differ from those
estimates.
Interim Financial Data (Unaudited)
The interim financial data included in the accompanying supplemental
consolidated financial statements and notes thereto, is unaudited;
however, in the opinion of the Company, the interim financial data
include all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the results for the
interim periods. The interim financial data are not necessarily
indicative of the results of operations for a full fiscal year.
Revenue
Fixed price contract revenue is recognized using the percentage-of-
completion method based on the ratio that costs incurred to date bear
to estimated total costs at completion. Revenue from other contracts
is recognized as services are provided. Revenue related to contract
modifications is recognized when realization is assured and the
amounts are reasonably determinable. Adjustments to contract cost
estimates are made in the periods in which the facts that require the
revisions become known. When the revised estimate indicates a loss,
such loss is provided in the current period in its entirety. "Unbilled
accounts receivable" represents revenue recognized in excess of
amounts billed. "Advance billings" represents amounts billed in excess
of revenue recognized.
Investigator Fees
Investigator fees are accrued as investigator services are rendered.
The timing of payments to investigators is determined by reference to
predetermined contractual arrangements, which may differ from the
accrual of the expense. Payments to investigators in excess of amounts
accrued are classified as prepaid expenses included in other current
assets, and accrued expenses in excess of amounts paid are classified
as other current liabilities.
Cash, Cash Equivalents, Marketable Securities, and Financial
Instruments
The Company considers all highly liquid debt instruments purchased
with original maturities of three months or less to be cash
equivalents. Marketable securities include securities purchased with
original maturities of greater than three months. Cash equivalents and
marketable securities are classified as "available for sale" and are
carried at fair market value. Any unrealized gains or losses are
recorded as part of stockholders' equity. Restricted cash consists of
advances and deposits from customers subject to certain restrictions.
The Company occasionally purchases securities with seven-day put
options that allow the Company to sell the underlying securities in
seven days at par value. The Company uses these derivative financial
instruments on a limited basis to shorten contractual maturity dates,
thereby managing interest rate risk. Approximately $2.7 million of
securities were subject to seven-day put options at June 30, 1997, and
$1.0 million at June 30, 1996. The Company does not hold derivative
instruments for trading purposes.
Concentration of Credit Risk
Financial instruments which potentially expose the Company to
concentrations of credit risk include trade accounts receivable.
However, such risk is limited due to the large number of clients and
their international dispersion. In addition, the Company maintains
reserves for potential credit losses and such losses, in the
aggregate, have not exceeded management expectations. One customer
accounted for 11% of the Company's supplemental consolidated net
revenue for the year ended June 30, 1997. No single customer accounted
for more than 10% of the Company's supplemental consolidated net
revenue for the years ended June 30, 1996 and 1995.
Property and Equipment
Property and equipment is stated at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the assets
ranging from three to eight years. Leasehold improvements are
amortized over the lesser of the estimated useful lives of the
improvements or the remaining lease term. Repair and maintenance costs
are charged to expense as incurred.
Intangible Assets
Intangible assets consist principally of goodwill, customer lists,
covenants not to compete, and other intangible assets attributable to
businesses acquired. Goodwill represents the excess of the cost of
businesses acquired over the fair value of the related net assets at
the date of acquisition. Intangible assets are amortized using the
straight-line method over their expected useful lives. Goodwill and
other intangibles are currently being amortized over five to ten
years.
Impairment of Long-Lived Assets
The Company periodically assesses the recoverability of the carrying
amount of long-lived assets, including intangible assets. A loss is
recognized when expected future cash flows (undiscounted and without
interest) are less than the carrying amount of the asset. The amount
of the impairment loss is determined as the difference by which the
carrying amount of the asset exceeds the fair value of the asset.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109. Deferred tax assets and
liabilities are recognized for the expected future tax consequences,
utilizing current tax rates, of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. Deferred
tax assets are recognized, net of any valuation allowance, for the
estimated future tax effects of deductible temporary differences and
tax operating loss and credit carryforwards. Deferred income tax
expense represents the change in the net deferred tax asset and
liability balances.
Foreign Currency
Assets and liabilities of the Company's international operations are
translated into U.S. dollars at exchange rates in effect at the
balance sheet date. Income and expense items are translated at average
exchange rates prevailing during the year. Translation adjustments are
accumulated in a separate component of stockholders' equity. Realized
gains and losses recorded in the statements of operations were not
material for each period presented.
Net Income (Loss) Per Share
Net income (loss) per share is calculated based on the weighted
average number of common shares and common equivalent shares assumed
outstanding during the period. Pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 83, certain common and common
equivalent shares issued by the Company during the twelve months
immediately preceding the initial filing of the registration statement
relating to the Company's initial public offering have been included
in the calculation of weighted average shares, using the treasury
stock method and the initial public offering price, as if these shares
were outstanding for all periods prior to the initial public offering.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation." As permitted by SFAS No.
123, the Company has elected to continue to follow the accounting
provisions of Accounting Principles Board Opinion (APBO) No. 25,
"Accounting for Stock Issued to Employees," and furnish pro forma
disclosures.
Recently Issued Accounting Standards
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share."
This statement replaces primary and fully diluted earnings per share
with basic and diluted earnings per share. SFAS No. 128 will be
effective for the Company's second quarter of fiscal 1998 and requires
the restatement of all previously reported earnings per share data
presented. Early adoption of this Statement is not permitted. The
Company expects that basic and diluted earnings per share amounts will
not be materially different from the Company's primary and fully
diluted earnings per share amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in the supplemental consolidated financial statements. SFAS
No. 131 establishes standards for reporting information on operating
segments in interim and annual financial statements. Both statements
are effective for the Company for fiscal 1999.
NOTE 3. IMPAIRMENT OF LONG-LIVED ASSETS
In the third quarter of fiscal 1995, PAREXEL GmbH's operations
suffered a decline in net revenue resulting in a net loss for the
period. Also during the third quarter, drug development regulations in
Germany and Europe were modified and further changes were being
contemplated, all of which were expected to have a detrimental impact
on PAREXEL GmbH's operations. Considering the cumulative impact of the
above-described factors, management assessed the realizability of the
long-lived assets of PAREXEL GmbH.
In accordance with its accounting policy for impaired long-lived
assets, management prepared a forecast of PAREXEL GmbH's expected
future cash flows on an undiscounted basis and without interest
charges, based upon assumptions developed by management using PAREXEL
GmbH's historical experience as well as the best estimate of future
trends and events. The sum of the forecasted cash flows from
management's model was less than the carrying amount of PAREXEL's
investment in PAREXEL GmbH.
To assess the fair value of PAREXEL GmbH, a discounted cash flow
valuation technique was utilized with a discount rate of approximately
19.5% based upon PAREXEL GmbH's calculated cost of capital. The
results of this calculation indicated a de minimus valuation; and
accordingly, the Company recorded an impairment loss on long-lived
assets of $11.3 million in fiscal 1995.
NOTE 4. ACQUISITIONS
In February 1997, the Company acquired, in separate transactions,
RESCON, Inc., a medical marketing consulting business located in the
Washington, D.C. area, and Sheffield Statistical Services, Ltd. (S-
Cubed), a company located in the United Kingdom that specializes in
biostatistical analysis. The Company issued a total of 209,537 shares
of common stock in exchange for all the outstanding shares of RESCON
and S-Cubed.
In August 1996, the Company acquired, in separate transactions, Lansal
Clinical Pharmaceutics, Limited (Lansal), a contract research
organization located in Israel, and State and Federal Associates, Inc.
(S&FA), a medical marketing business located in the Washington, D.C.
area. The Company issued 1,008,304 shares of common stock in exchange
for all of the outstanding shares of Lansal and S&FA.
In June 1996, the Company acquired, in separate transactions, Sitebase
Clinical Systems, Inc. (Sitebase), a provider of remote data entry
technology, and Caspard Consultants (Caspard), a Paris-based
biostatistical and data management consulting company. The Company
issued a total of 161,636 shares of common stock in exchange for all
of the outstanding shares of Sitebase and Caspard.
All of these transactions were accounted for as poolings of interests.
The aggregate historical results of operations and financial position
of the above acquisitions were not material to the Company's
supplemental consolidated financial statements. Therefore, prior
period amounts have not been restated and results of operations of the
acquired companies have been included since the period of acquisition.
Pro forma results of the Company, assuming the above acquisitions were
made at the beginning of each period presented, would not be
materially different from the actual results reported.
NOTE 5. INVESTMENTS
Available-for-sale securities included in cash and cash equivalents as
of June 30, 1997 and 1996, consisted of the following:
($in thousands) 1997 1996
Money market $ 988 $ 2,492
Municipal securities 1,000 10,000
Repurchase agreements 20,210 1,141
$22,198 $13,633
Available-for-sale securities included in marketable securities at
June 30, 1997, consisted of the following:
Amortized Unrealized Fair
($ in Cost Gains Losses Value
thousands)
Municipal securities
$3,785 $ 5 $(2) $3,788
Federal government -
securities 23,400 (1) 23,399
Corporate debt securities
39,565 140 (1) 39,704
$66,750 $145 $(4) $66,891
Available-for-sale securities included in marketable securities at
June 30, 1996, consisted of the following:
Amortized Unrealized Fair
($ in Cost Gains Losses Value
thousands)
Municipal
securities $16,972 $3 $(34) $16,941
Federal
government 10,344 66 (1) 10,409
securities
Corporate debt
securities 1,959 10 - 1,969
$29,275 $79 $(35) $29,319
The contractual maturity of available-for-sale securities at June 30,
1997, was $67.3 million within one year, $19.1 million over one year
and less than five years, and $2.7 million over five years. Proceeds
from the maturities and sales of available-for-sale securities
amounted to approximately $1.9 billion for the year ended June 30,
1997, $568 million for the year ended June 30, 1996, and $3 million
for the year ended June 30, 1995. Purchases amounted to approximately
$1.9 billion for the year ended June 30, 1997, $607 million for the
year ended June 30, 1996, and $4 million for the year ended June 30,
1995. Gains and losses realized upon the sale of securities (the cost
of which is based upon the specific identification method) were not
significant.
NOTE 6. ACCOUNTS RECEIVABLE
Accounts receivable at June 30, 1997 and 1996, consisted of the
following:
($ in thousands) 1997 1996
Billed $40,819 23,854
Unbilled 28,228 19,889
Allowance for
doubtful (2,986) (1,630)
accounts
$66,061 $42,113
NOTE 7. PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1997 and 1996, consisted of the
following:
($ in thousands) 1997 1996
Computer and office
equipment $24,172 $11,431
Computer software 5,351 1,767
Furniture and fixtures 9,167 3,342
Leasehold improvements 2,311 677
Building 2,757 -
43,758 17,217
Less accumulated
depreciation and 15,536 8,440
amortization
$28,222 $ 8,777
Included in the above amounts is computer and office equipment
acquired under capital lease obligations of approximately $3.6 million
at June 30, 1997 and 1996. Accumulated depreciation on computer and
office equipment under capital leases totaled approximately $2.4
million and $1.8 million at June 30, 1997 and 1996, respectively.
Depreciation and amortization expense relating to property and
equipment was approximately $5.2 million, $2.4 million, and $1.9
million for the years ended June 30, 1997, 1996, and 1995,
respectively, of which $560,000, $634,000, and $427,000 related to
amortization of property and equipment under capital leases.
NOTE 8. OTHER CURRENT LIABILITIES
Other current liabilities at June 30, 1997 and 1996, consisted of the
following:
($ in thousands) 1997 1996
Accrued
compensation and
withholdings $ 9,679 $ 5,012
Accrued
investigator fees 350 1,565
Other
11,318 5,865
$21,347 $12,442
NOTE 9. CREDIT ARRANGEMENTS
The Company has domestic and foreign line of credit arrangements with
banks totaling approximately $14.5 million. The lines are
collateralized by accounts receivable, payable on demand, and bear
interest at varying rates that differ from country to country
(resulting in interest rates ranging from 4.9% to 9.5% at June 30,
1997). The lines of credit expire at various dates through April 1998
and are renewable. There was approximately $1.3 million and $600,000
outstanding under these lines of credit at June 30, 1997 and 1996,
respectively.
The Company has a $2.4 million capital lease line of credit with a
U.S. bank for the financing of property and equipment. This line is
collateralized by property and equipment. Borrowings under this line
are payable over a three-year term with interest fixed at the five-
year U.S. Treasury note rate plus 2.5% (8.03% at June 30, 1997). This
line of credit expires on November 30, 1997, and is renewable
annually. Available capacity under this line was approximately $2.0
million at June 30, 1997.
Long-term debt at June 30, 1997 and 1996, consisted of borrowings
under the capital lease line. The fair value of debt is estimated
based on the market value for similar debt and approximates carrying
value at June 30, 1997 and 1996. Aggregate lease obligations bear a
weighted average interest rate of approximately 8.3% at June 30, 1997,
and 7.9% at June 30, 1996. Long-term debt matures as follows: $43,000
in fiscal 1999 and $29,000 in fiscal 2001.
NOTE 10. STOCKHOLDERS' EQUITY
On January 28, 1997, the Board of Directors of the Company declared a
two-for-one stock split of the Company's common stock, payable in the
form of a 100% stock dividend to be distributed to stockholders of
record as of the close of business on February 7, 1997. All share and
per share data, including stock and stock option, stock purchase plan,
and market price information, included in these supplemental
consolidated financial statements have been restated to reflect the
two-for-one stock split.
As of June 30, 1997 and 1996, there were 5 million shares of preferred
stock, $0.01 per share, authorized, but none were issued or
outstanding. Preferred stock may be issued at the discretion of the
Board of Directors (without stockholder approval) with such
designations, rights and preferences, as the Board of Directors may
determine.
There were 29,412 shares of common stock held in treasury as of June
30, 1997 and 1996, at a cost of $17,430.
NOTE 11. STOCK AND EMPLOYEE BENEFIT PLANS
Common Stock Options
In September 1995, the Company adopted the 1995 Stock Plan (1995
Plan), which provided for the grant of incentive stock options for the
purchase of up to an aggregate of 1,000,000 shares of common stock to
directors, officers, employees, and consultants of the Company. In
November 1996, the Company's stockholders approved an increase in the
number of shares issuable under the 1995 Plan from 1,000,000 to
2,000,000 shares. The Stock Option Committee of the Board of Directors
is responsible for the administration of the Company's stock option
plans and determines the term of each option, the option exercise
price, number of shares granted, and the rate that options vest.
Options generally expire eight to ten years from the date of grant and
generally vest over four to five years.
In September 1995, the Company adopted the 1995 Non-Employee Director
Stock Option Plan (Director Plan) under which options to purchase an
aggregate of 600,000 shares of common stock may be granted to
nonemployee directors. On November 21, 1995, nonemployee directors
were granted an aggregate of 173,000 options (initial options). The
initial options became exercisable on June 30, 1996. Other options
granted under the Director Plan vest ratably in three equal annual
installments beginning on the first anniversary of the date of grant,
subject to certain requirements as defined in the Director Plan.
In September 1995, the Board of Directors voted to grant no further
options under the 1986 Incentive Stock Option Plan, the 1987 Stock
Plan, and the 1989 Stock Plan and to reduce the number of shares
authorized for those plans to the number of options outstanding at
that time.
In January 1994, the Kemper-Masterson, Inc. Stock Option Plan (the
"Plan") was adopted which provides for the grant of stock options for
the purchase of up to an aggregate of 138,714 shares of Class B common
stock to key employees of KMI. Options under the Plan generally expire
ten years from the date of grant.
In accordance with the provisions of the Plan, KMI grants options
under which the underlying Class B common stock acquired upon exercise
of such options may be subject to repurchase by KMI at certain times
or upon certain events pursuant to the respective stock option
agreements. For certain options granted ("Formula Options"), KMI has
the right, but not the obligation to repurchase any shares obtained
through the exercise of options granted at the formula price
prescribed in the underlying stock option agreements. In the event
KMI does not initially elect to repurchase the stock acquired through
Formula Options, the stockholder can sell such stock to a third party
subject to KMI's right of first refusal. KMI has also granted options
under which KMI is obligated to repurchase upon termination
("Repurchase Options"), shares acquired through the exercise of
previously issued options at the exercise price. All options have
been granted with an exercise price of $0.17 per share.
All options are being accounted for as a variable options. For
Formula Options, compensation cost is recognized for the difference
between the formula value of the stock at the date of option exercise
and the exercise price. Prior to option exercise, compensation cost
is recognized based on the estimated formula value and accrued over
the vesting period. Changes in the formula value of the stock result
in a change to the measurement of compensation for the options. For
Repurchase Options, compensation cost is recognized as the difference
between the amount for which the common stock is repurchased by KMI
and the exercise price. Aggregate compensation expense related KMI's
stock options was $491,000 and $337,000 for fiscal 1997 and 1996
respectively.
Vesting of both the Formula and Repurchase options is accelerated upon
a change in control of KMI. Because the exercise price of the
Formula and Repurchase options is considered non-substantive,
compensation expense will be recognized for these options and the
related common shares upon a change in control. Accordingly, the
Company expects to incur compensation expense of approximately $4.1
million in December 1997, the time at which the Company acquired KMI
in a transaction accounted for as a pooling of interests (Note 16).
Aggregate stock option activity for the two years ended June 30, 1997,
was as follows:
Weighted Average
Options Exercise Price
Outstanding at June 1,303,805 $ 1.57
30, 1995
Granted 899,647 12.71
Canceled ( 52,146) 5.03
Exercised (625,620) 0.61
Outstanding at June
30, 1996 1,525,686 $ 8.42
Granted 410,500 24.38
Canceled (31,260) 19.98
Exercised (524,122) 2.75
Outstanding at June
30, 1997 380,804 $15.05
Exercisable at June
30, 1997 560,711 $ 8.12
Available for future
grant at June 30, 1,431,426
1997
Summary information related to options outstanding and exercisable as
of June 30, 1997, is as follows:
Options Outstanding Options Exercisable
Weighted
Outstanding Average Weighted Exercisable Weighted
Range Of As Of Remaining Average As Of Average
Exercise 6/30/97 Contractual Exercise 6/30/97 Exercise
Prices Life Price Price
(Years)
$ 0.17 - 556,954 7.36 $ 5.43 458,694 $ 5.12
10.00
10.01 - 406,650 8.79 18.50 49,750 18.31
20.00
20.01 - 417,200 9.30 24.54 52,267 24.69
27.25
1,380,804 8.37 $15.05 560,711 $ 8.12
The fair value for options granted was estimated at the time of the
grant using the Black-Scholes option pricing model with the following
weighted-average assumptions for the two years ended June 30, 1997:
Risk free interest rate of 6.18%, dividend yield of 0.0%, volatility
factor of the expected market price of the Company's common stock of
45%, and an average expected life of the option of one year from the
date of vesting. Under these assumptions, the estimated weighted-
average fair value of options granted during the fiscal years ended
June 30, 1997 and 1996, was $12.18 and $7.56, respectively.
Employee Stock Purchase Plan
In September 1995, the Company adopted the 1995 Employee Stock
Purchase Plan (the Purchase Plan). Under the Purchase Plan, employees
have the opportunity to purchase common stock at 85% of the average
market value on the first or last day of the plan period (as defined
by the Purchase Plan), whichever is lower, up to specified limits. An
aggregate of 600,000 shares may be issued under the Purchase Plan.
Had compensation cost for the Company's stock options and the Purchase
Plan been determined based on the fair value at the date of grant, as
prescribed in SFAS 123, the Company's net income and net income per
share would have been as follows:
($ in thousands, 1997 1996
except per share data)
Pro forma net income $8,631 $3,224
Pro forma net income $ 0.44 $ 0.23
per share
As stock options vest over several years and additional stock option
grants are expected to be made each year, the above pro forma
disclosures are not necessarily representative of pro forma effects on
reported operations for future years.
401(k) Plan
The Company sponsors an employee savings plan (the Plan) as defined by
Section401(k) of the Internal Revenue Code of 1986, as amended. The
Plan covers substantially all employees in the U.S. who elect to
participate. Participants have the opportunity to invest on a pre-tax
basis in a variety of mutual fund options. The Company matches 100% of
each participant's voluntary contributions up to 3% of gross salary
per payroll period. Company contributions vest to the participants in
20% increments for each year of employment and become fully vested
after five years of continuous employment. Company contributions to
the Plan were $1,053,000, $526,000, and $327,000 for the years ended
June 30, 1997, 1996, and 1995, respectively.
NOTE 12. INCOME TAXES
Domestic and foreign income (loss) before income taxes for the three
years ended June 30, 1997, are as follows:
($ in thousands) 1997 1996 1995
Domestic $11,189 $5,655 $ 280
Foreign 6,109 2,126 (10,660)
$17,298 $7,781 $(10,380)
The provision for income taxes for the three years ended June 30,
1997, are as follows:
($ in
thousands) 1997 1996 1995
Current:
Federal $4,468 $2,364 $403
State 1,121 684 232
Foreign 1,444 78 427
7,033 3,475 713
Deferred:
Federal (432) (297) (315)
State (146) (87) (102)
Foreign (194) (3) (5)
(772) (387) (422)
$ 6,261 $3,088 $291
The Company's supplemental consolidated effective income tax rate
differed from the U.S. federal statutory income tax rate as set forth
below:
($ in thousands) 1997 1996 1995
Income tax expense
(benefit) at the federal $ 6,055 $2,646 $(3,529)
statutory rate
State income taxes, net of
federal benefit 998 474 87
Foreign rate differential 107 (234) (108)
Utilization of foreign net
operating losses (1,118) - -
carryforwards
Nondeductible amortization
of intangible assets 45 45 169
Nondeductible impairment of
assets - - 3,348
Foreign operating losses
without current benefit 142 26 334
Other
32 131 (10)
$6,261 $3,088 $ 291
Provision has not been made for U.S. or additional foreign taxes on
undistributed earnings of foreign subsidiaries as those earnings have
been permanently reinvested. Such taxes, if any, are not expected to
be significant.
Significant components of the Company's net deferred tax asset as of
June 30, 1997 and 1996, are as follows:
($ in thousands) 1997 1996
Deferred tax
assets:
Foreign loss
carryforwards $5,173 $6,048
Accrued expenses 1,121 566
Property and
equipment - 486
Allowance for
doubtful accounts 878 528
Other 756 648
Gross deferred
tax assets 7,928 8,276
Deferred tax
asset valuation (3,372) (5,926)
allowance
Total
deferred tax 4,556 2,350
assets
Deferred
contract profit (803) (274)
Property and
equipment (739) (83)
Other
(96) (292)
Total
deferred tax (1,638) (649)
liabilities
$2,918 $ 1,701
The net deferred tax assets are included in the supplemental
consolidated balance sheet as of June 30, 1997 and 1996, as follows:
($ in 1997 1996
thousands)
Other
current $3,251 $1,361
assets
Other
assets - 423
Other
current (240) -
liabilities
Other
liabilities (93) (83)
$2,918 $1,701
The net deferred tax asset includes the tax effect of approximately
$11 million of pre-acquisition and post-acquisition foreign tax loss
carryforwards available to offset future liabilities for foreign
income tax. Substantially all of the foreign tax losses are carried
forward indefinitely, subject to certain limitations. A valuation
allowance has been established for the future foreign income tax
benefits primarily related to income tax loss carryforwards and
temporary differences based on management's assessment that it is more
likely than not that such benefits will not be realized. Principally
due to the use of previously reserved foreign net operating loss
carryforwards, the Company's valuation allowance decreased to
approximately $3.4 million at June 30, 1997, from approximately $5.9
million at June 30, 1996. The ultimate realization of the remaining
loss carryforwards is dependent upon the generation of sufficient
taxable income in respective jurisdictions, primarily Germany.
NOTE 13. GEOGRAPHIC INFORMATION
The Company's operations involve a single industry segment providing
clinical research and development services. The principal financial
information by geographic area for the three years ended June 30,
1997, is as follows:
($ in thousands) 1997 1996 1995
Net revenue:
North America $113,589 $63,534 $43,557
Europe 53,599 32,834 23,443
Asia/Pacific 3,167 993 93
$170,355 $97,361 $67,093
Income (loss)
from operations:
North America $10,240 $5,537 $1,084
Europe 3,639 1,266 (11,531)
Asia/Pacific 173 (176) -
$ 14,052 $6,627 $(10,447)
Identifiable
assets:
North America
$175,189 $81,418 $28,416
Europe 29,619 24,752 17,927
Asia/Pacific
693 156 35
$205,501 $106,326 $46,378
NOTE 14. LEASES
The Company leases its facilities under operating leases which include
renewal and escalation clauses. Total rent expense was approximately
$8.4 million, $5.5 million, and $4.7 million for years ended June 30,
1997, 1996, and 1995, respectively. Future minimum lease payments due
under noncancelable operating leases and capital lease obligations are
as follow:
Capital
($ in thousands) leases Operating
leases
1998 $352 $12,475
1999 26 11,726
2000 - 9,478
2001 30 8,154
2002 - 4,204
Thereafter - 1,033
Total 408 $47,070
obligations
Less amount 16
representing
interest
$ 392
NOTE 15. RELATED PARTY TRANSACTIONS
Certain of the Company's Directors are related with certain of the
Company's customers. Net revenue recognized from these customers was
$13.1 million, $8.1 million, and $3.0 million in fiscal 1997, 1996,
and 1995, respectively. Amounts included in accounts receivable at
June 30, 1997 and 1996, were $3.3 million and $1.9 million,
respectively. Related party amounts included in accounts receivable
are on standard terms and manner of settlement.
NOTE 16. SUBSEQUENT EVENTS
On September 26, 1997, the Company acquired substantially all of the
assets of Perceptive Systems, Inc., a Colorado corporation doing
business as Hayden Image Processing Group ("Hayden") in exchange for
5,035 shares of the Company's common stock. In addition, Hayden will
receive three annual contingent payments (not exceeding $228,000 in
aggregate) of the Company's common stock, based onnet receipts
generated by certain acquired assets. The transaction was accounted
for as a purchase for financial accounting purposes.
In November 1997, the stockholders of the Company approved an
amendment to the Company's 1995 Stock Plan (the "1995 Plan"). In
connection therewith, the Company terminated the 1995 Non-Employee
Director Stock Option Plan (the "Director Plan") and transferred all
remaining shares under the Director Plan to the 1995 Plan, without
increasing the aggregate number of shares available for grant under
all of the Company's stock option plans. The amendment also provides
for the annual formula grant of options to purchase up to 15,000
shares of common stock of the Company to non-employee directors
dependent upon the attendance by such non-employee directors at
meetings of the Board of Directors and committees thereof.
In December 1997, the Company acquired Kemper-Masterson, Inc. ("KMI")
in a business combination accounted for as a pooling of interests.
The accompanying supplemental consolidated financial statements have
been retroactively restated to combine the accounts and operations of
KMI with those of the Company for all periods presented.
Due to the differing year ends of the Company and KMI, financial
information for dissimilar fiscal years has been combined for the
Company's fiscal year 1996 and 1995. KMI's results of operations for
its fiscal years ended December 31, 1996 and 1995 were combined with
the Company's results of operations for the fiscal years ended June
30, 1996 and 1995, respectively. Balance sheet information as of June
30, 1996 includes the financial position of KMI as of December 31,
1996 and the Company as of June 30, 1996. Accordingly, KMI's results
of operations for the six months ended December 31, 1996 (including
revenue, operating income, and net income of $5.0 million, $167,000,
and $117,000, respectively) were duplicated in the combined statements
of operations for fiscal 1997 and 1996. Therefore, KMI's net income
for one of the six month periods ended December 31, 1996, was
eliminated from stockholders' equity.
Revenues and net income (loss) for each of the two
previously separate companies for
the period prior to the KMI Acquisition are as follows:
Year Ended Three
June 30, Months
1996 Ended
September
30, 1997
1997 1996 1995 1997 1996
Net Revenues:
PAREXEL $159,679 $88,006 $58,573 $51,211 $33,033
KMI 10,676 9,355 8,520 3,059 2,214
$170,355 $97,361 $67,093 $54,270 $35,244
Net Income
(loss)
PAREXEL $10,848 $ 4,599 ($10,630) $ 3,628 $ 1,936
KMI 189 94 (41) 213 49
$11,037 $ 4,693 ($10,671) $ 3,841 $ 1,985
In November 1997, the Emerging Issues Task Force (EITF) reached a
consensus on issue 97-13, "Accounting for Costs Incurred in Connection
with a Consulting Contract or an Internal Project that Combines
Business Process Reengineering and Information Technology
Transformation"(EITF 97-13) that the costs of business process
reengineering activities, whether done internally or by third parties,
is to be expensed as incurred. The consensus also applies to the
costs of business process reengineering activities conducted in
conjunction with a project to acquire, develop, or implement internal-
use software. The transition provisions of EITF 97-13 require
unamortized previously capitalized costs for business process
reengineering activities to be written off in the Company's fiscal
quarter ending December 31, 1997 and reported as a cumulative effect
of a change in accounting principle. The Company is in the process of
assessing the impact of EITF 97-13 and does not expect that it will
have a material affect on its results of operations for the quarter
ending December 31, 1997.
No dealer, sales representative
or any other person has been
authorized to give any
information or to make any 295,944 Shares
representations in connection
with this offering other than
those contained in this
prospectus, and, if given or PAREXEL INTERNATIONAL
made, such information or CORPORATION
representations must not be
relied upon as having been
authorized by the company, any Common Stock
of the selling stockholders or
any of the underwriters. This
prospectus does not constitute
an offer to sell, or a
solicitation of an offer to buy,
any securities other than the
registered securities to which
it relates or an offer to, or a
solicitation of, any person in _______________________
any jurisdiction where such
offer or solicitation would be PROSPECTUS
unlawful. Neither the delivery
of this prospectus nor any sale
made hereunder shall, under any
circumstances, create any ________________________
implication that there has been
no change in the affairs of the
company since the date hereof or
that the information contained
herein is correct as of any time
subsequent to the date hereof.
_________________________
TABLE OF CONTENTS
PAGE
Available Information 2
Incorporation of Certain
Information
by Reference 3
The Company 4
Risk Factors 7
Use of Proceeds 11
Management's Discussion and
Analysis of Financial
Condition 12
Description of Capital Stock 20
Plan of Distribution 25
Legal Matters 26
Experts 26
Index to Supplemental
consolidated
Financial Statements F-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses payable in connection with the sale of the
Common Stock offered hereby are as follows:
SEC Registration fee $ 2,979.67
Nasdaq Additional Listing fee 13,637
Legal fees and expenses 20,000
Accounting fees and expenses 15,000
Total $51,616.67
The Company will bear all expenses shown above. All amounts
other than the SEC Registration fee and the Nasdaq Additional Listing
fee are estimated solely for the purpose of this offering.
Item 15. Indemnification of Directors and Officers.
Article 6 of the Company's Restated Articles of Organization
provides that the Company shall indemnify each person who is or was a
director or officer of the Company, and each person who is or was
serving or has agreed to serve at the request of the Company as a
director or officer of, or in a similar capacity with, another
organization against all liabilities, costs and expenses reasonably
incurred by any such persons in connection with the defense or
disposition of or otherwise in connection with or resulting from any
action, suit or other proceeding in which they may be involved by
reason of being or having been such a director or officer or by reason
of any action taken or not taken in such capacity, except with respect
to any matter as to which such person shall have been finally
adjudicated by a court of competent jurisdiction not to have acted in
good faith in the reasonable belief that his or her action was in the
best interests of the Company. Section 67 of Chapter 156B of the
Massachusetts Business Corporation Law authorizes a corporation to
indemnify its directors, officers, employees and other agents unless
such person shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that such action was in
the best interests of the corporation.
Reference is hereby made to Section 10 of the Registration Rights
Agreements filed as Exhibits 4.3 and 4.5 to this Registration
Statement, for a description of indemnification arrangements between
the Company and the Selling Stockholders, pursuant to which the
Selling Stockholders are obligated, under certain circumstances, to
indemnify directors, officers and controlling persons of the Company
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
Item 16. Exhibits.
Exhibits:
4.1 Specimen certificate representing the Common
Stock (filed as Exhibit 4.1 to Registrant's
Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by reference).
4.2 Agreement and Plan of Reorganization and
Merger dated as of October 22, 1997 by and among the
Company, Kemper-Masterson, Inc., KMI Acquisition
Corporation, Clarence A. Kemper, P. Michael Masterson,
Mark A. Lester, Ronald F. Tetzlaff, Alan R. Parenteau,
Jon Voss, Warren Handren and David Hyde.
4.3 Registration Rights Agreement dated as of
December 1, 1997 by and among the Company and each of
Clarence A. Kemper, P. Michael Masterson, Mark A.
Lester, Ronald F. Tetzlaff, Alan R. Parenteau, Jon
Voss, Warren Handren and David Hyde.
4.4 Asset Purchase Agreement dated as of
September 26, 1997 by and among the Company, Perceptive
Systems, Inc. and Howard W. Foster.
4.5 Registration Rights Agreement dated as of
September 26, 1997 by and between the Company and
Perceptive Systems, Inc.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP.
11.1 Statement re Computation of Per Share Earnings
27.1 Financial Data Schedule
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Testa, Hurwitz & Thibeault, LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (included as part of the
signature page to this Registration Statement).
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993,
as amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized in
the City of Waltham, Commonwealth of Massachusetts on January __,
1998.
PAREXEL INTERNATIONAL CORPORATION
By: /s/Josef H. von Rickenbach
Josef H. von Rickenbach
President, Chief Executive Officer and
Chairman
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of PAREXEL
International Corporation, hereby severally constitute and appoint
Josef H. von Rickenbach, William T. Sobo, Jr. and William J. Schnoor,
Jr., and each of them singly, as true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in
the capacities indicated below, any and all pre-effective and post-
effective amendments to this Registration Statement on Form S-3, and
generally to do all things in our names and on our behalf in such
capacities to enable PAREXEL International Corporation to comply with
the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the
following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature Title(s) Date
/s/ Josef H. von President, Chief Executive January 20,
Rickenbach Officer and Chairman 1998
Josef H. von Rickenbach (principal executive
officer)
/s/ William T. Sobo, Jr. Senior Vice President and January 20,
William T. Sobo, Jr. Treasurer (principal 1998
financial and accounting
officer)
/s/A. Dana Callow, Jr. Director January 20,
A. Dana Callow, Jr. 1998
/s/Patrick J. Fortune Director January 20,
Patrick J. Fortune 1998
/s/Werner M. Herrmann Director January 20,
Werner M. Herrman 1998
/s/Serge Okun Director January 20,
Serge Okun 1998
/s/James A. Saalfield Director January 20,
James A. Saalfield 1998
Schedule II
PAREXEL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Balance at Charged to Balance at
beginning costs and Charged Deductions end of
Description of period expenses to other and write- period
accounts offs
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
Year ended June $ 590,000 $1,106,000 -- $(349,000) $1,347,000
30, 1995
Year ended June 1,347,000 5 -- (290,000) 1,6
30, 1996 73,000 30,000
Year ended June 1,630,000 384,000
30, 1997 1,617,000 (645,000) 2,986,000
DEFERRED TAX
ASSET VALUATION
ALLOWANCE
Year ended June 6,071,000 -- (200,000) 7,4
30, 1995 1,620,000 91,000
Year ended June 7,491,000 -- -- (1,565,000) 5,9
30, 1996 26,000
Year ended June 5,926,000 -- -- (2,554,000)
30, 1997 3,372,000
EXHIBIT INDEX
Exhibit No. Description of Exhibit
4.1 Specimen certificate representing the Common
Stock (filed as Exhibit 4.1 to Registrant's
Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by reference).
4.2 Agreement and Plan of Reorganization and
Merger dated as of October 22, 1997 by and among the
Company, Kemper-Masterson, Inc., KMI Acquisition
Corporation, Clarence A. Kemper, P. Michael Masterson,
Mark A. Lester, Ronald F. Tetzlaff, Alan R. Parenteau,
Jon Voss, Warren Handren and David Hyde.
4.3 Registration Rights Agreement dated as of
December 1, 1997 by and among the Company and each of
Clarence A. Kemper, P. Michael Masterson, Mark A.
Lester, Ronald F. Tetzlaff, Alan R. Parenteau, Jon
Voss, Warren Handren and David Hyde.
4.4 Asset Purchase Agreement dated as of
September 26, 1997 by and among the Company, Perceptive
Systems, Inc. and Howard W. Foster.
4.5 Registration Rights Agreement dated as of
September 26, 1997 by and between the Company and
Perceptive Systems, Inc.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP.
11.1 Statement re Computation of Per Share
Earnings
27.1 Financial Data Schedule
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Testa, Hurwitz & Thibeault, LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (included as part of the
signature page to this Registration Statement).
Exhibit 4.2
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
PAREXEL INTERNATIONAL CORPORATION,
KMI ACQUISITION CORPORATION,
KEMPER-MASTERSON, INC.,
CLARENCE A. KEMPER,
P. MICHAEL MASTERSON,
MARK A. LESTER,
RONALD F. TETZLAFF,
ALAN R. PARENTEAU,
WARREN HANDREN,
DAVID HYDE
AND
JON R. VOSS
Dated as of October 22, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I 2
DEFINITIONS 2
1.01. DEFINITIONS 2
ARTICLE II 5
REORGANIZATION AND MERGER 5
2.01. THE MERGER. 5
2.02. CLOSING 6
2.03. CERTIFICATES FOR PARENT STOCK 7
2.04. TRANSFER TAXES 7
2.05. BOOKS AND RECORDS 7
2.06. RESIGNATIONS 7
2.07. NO FRACTIONAL SHARES 7
ARTICLE III 8
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS 8
3.01. CORPORATE EXISTENCE AND POWER 8
3.02. CORPORATE AUTHORIZATION 8
3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS 8
3.04. NON-CONTRAVENTION 9
3.05. CAPITALIZATION 9
3.06. SUBSIDIARIES 9
3.07. FINANCIAL STATEMENTS 10
3.08. ABSENCE OF CERTAIN CHANGES 10
3.09. PROPERTY AND EQUIPMENT 12
3.10. NO UNDISCLOSED MATERIAL LIABILITIES 12
3.11. LITIGATION 12
3.12. MATERIAL CONTRACTS 12
3.13. INSURANCE COVERAGE 14
3.14. COMPLIANCE WITH LAWS; NO DEFAULTS 14
3.15. FINDERS' FEES 14
3.16. INTELLECTUAL PROPERTY 14
3.17. INVENTORIES 16
3.18. RECEIVABLES 16
3.19. TAXES 16
3.20. ENVIRONMENTAL COMPLIANCE 17
3.21. CUSTOMERS AND SUPPLIERS 18
3.22. TRANSACTIONS WITH AFFILIATES 18
3.23. OTHER INFORMATION 18
3.24. INTERCOMPANY ARRANGEMENTS 18
3.25. EMPLOYEES 19
ARTICLE IV 19
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 19
4.01. TITLE TO AND VALIDITY OF SHARES 19
4.02. AUTHORITY 19
4.03. PURCHASE FOR INVESTMENT 19
4.04. POWER TO ACT AS TRUSTEE OR EXECUTOR 20
4.05. NO LEGAL PROCEEDINGS 20
ARTICLE V 20
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 20
5.01. ORGANIZATION AND EXISTENCE 20
5.02. CORPORATE AUTHORIZATION 20
5.03. GOVERNMENTAL AUTHORIZATION 20
5.04. LITIGATION 20
5.05. REPORTS AND FINANCIAL STATEMENTS 21
5.06. FINDER'S FEES 21
5.07. NON-CONTRAVENTION 21
ARTICLE VI 22
COVENANTS OF THE COMPANY AND EACH STOCKHOLDER 22
6.01. CONFIDENTIALITY 22
6.02. AFFILIATE AGREEMENTS 22
6.03. EXPENSES 23
6.04. SATISFACTION OF PARENT'S WITHHOLDING OBLIGATION 23
ARTICLE VII 23
COVENANTS OF PARENT 23
7.01. ACCESS 23
7.02. QUARTERLY REPORT ON FORM 10-Q 24
7.03. AFFILIATE AGREEMENTS 24
7.04. REORGANIZATION STATUS 24
7.05. BUSINESS CONTINUITY 24
7.06. CONFIDENTIALITY 24
7.07. PUBLICATION OF INTERIM FINANCIAL RESULTS 25
7.08. NASDAQ NATIONAL MARKET ADDITIONAL SHARES NOTIFICATION 25
ARTICLE VIII 25
COVENANTS OF ALL PARTIES 25
8.01. BEST EFFORTS 25
8.02. CERTAIN FILINGS 25
8.03. PUBLIC ANNOUNCEMENTS 25
8.04. POOLING 26
ARTICLE IX 26
EMPLOYEE BENEFITS 26
9.01. EMPLOYEE BENEFITS DEFINITIONS 26
9.02. ERISA REPRESENTATIONS 27
9.03. NO THIRD PARTY BENEFICIARIES 28
ARTICLE X 29
CONDITIONS TO CLOSING 29
10.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY 29
10.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB 29
10.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY 31
ARTICLE XI 32
SURVIVAL; INDEMNIFICATION 32
11.01. SURVIVAL 32
11.02. INDEMNIFICATION 32
11.03. PROCEDURES 33
11.04. HOLDBACK AND WITHHOLDING SHARES 34
11.05. HOLDBACK TERMINATION 34
11.06. WITHHOLDING TERMINATION 34
ARTICLE XII 35
MISCELLANEOUS 35
12.01. NOTICES 35
12.02. AMENDMENTS; NO WAIVERS 37
12.03. EXPENSES 37
12.04. SUCCESSORS AND ASSIGNS 37
12.05. FURTHER ASSURANCES 37
12.06. GOVERNING LAW 38
12.07. COUNTERPARTS; EFFECTIVENESS 38
12.08. ENTIRE AGREEMENT 38
12.09. CAPTIONS 38
12.10. JURISDICTION 38
SCHEDULES
SCHEDULE 2.01 LIST OF STOCKHOLDERS
SCHEDULE 3.03 REQUIRED CONSENTS
SCHEDULE 3.05 COMPANY OPTIONS
SCHEDULE 3.06 LIST OF SUBSIDIARIES
SCHEDULE 3.07 FINANCIAL STATEMENTS
SCHEDULE 3.08 ABSENCE OF CHANGES
SCHEDULE 3.10 NO UNDISCLOSED MATERIAL LIABILITIES
SCHEDULE 3.11 LITIGATION
SCHEDULE 3.12 MATERIAL CONTRACTS
SCHEDULE 3.14 PERMITS
SCHEDULE 3.16 INTELLECTUAL PROPERTY
SCHEDULE 3.18 RECEIVABLES
SCHEDULE 3.19 TAXES AND AUDITS
SCHEDULE 3.21 CUSTOMERS
SCHEDULE 3.22 TRANSACTIONS WITH AFFILIATES
SCHEDULE 3.24 INTERCOMPANY ARRANGEMENTS
SCHEDULE 3.25 EMPLOYEES
SCHEDULE 5.03 GOVERNMENTAL AUTHORIZATION
SCHEDULE 9.02 EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS
EXHIBITS
EXHIBIT A ARTICLES OF MERGER TO BE FILED WITH THE SECRETARY OF
STATE OF THE
COMMONWEALTH OF MASSACHUSETTS
EXHIBIT B CERTIFICATE OF MERGER TO BE FILED WITH THE SECRETARY
OF STATE OF THE
STATE OF DELAWARE
EXHIBIT C REGISTRATION RIGHTS AGREEMENT
EXHIBIT D LETTER AGREEMENT BETWEEN PARENT ON THE ONE HAND AND
KEMPER AND MASTERSON ON THE OTHER HAND
EXHIBIT E AFFILIATE AGREEMENT OF THE COMPANY'S AFFILIATES
EXHIBIT F COMPANY COUNSEL OPINION
EXHIBIT G AFFILIATE AGREEMENT OF PARENT'S AFFILIATES
EXHIBIT H NON-COMPETITION, EMPLOYEE AND KEY EMPLOYEE AGREEMENTS
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT dated as of October 22, 1997 by and among PAREXEL
International Corporation, a Massachusetts corporation
("Parent"), KMI Acquisition Corporation, a Massachusetts
corporation ("Sub"), Kemper-Masterson, Inc., a Delaware
corporation (the "Company"), Clarence A. Kemper ("Kemper"),
P. Michael Masterson ("Masterson"), Mark A. Lester ("Lester"),
Ronald Tetzlaff ("Tetzlaff"), Alan R. Parenteau ("Parenteau"),
Warren Handren ("Handren"), David Hyde ("Hyde") and Jon R. Voss
("Voss"). Kemper and Masterson are hereinafter referred to
collectively as the "Principal Stockholders" and the Principal
Stockholders, Lester, Tetzlaff, Parenteau, Handren, Hyde and Voss
are hereinafter referred to collectively as the "Stockholders".
W I T N E S S E T H :
WHEREAS, subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Massachusetts
Articles of Merger attached hereto as Exhibit A (the
"Massachusetts Articles of Merger") and the Delaware Certificate
of Merger attached hereto as Exhibit B (the "Delaware Certificate
of Merger"), the respective boards of directors of Parent, Sub
and the Company, and Parent as sole stockholder of Sub, have
approved the merger of Sub with and into the Company (the
"Merger"), whereby each issued and outstanding share of Class A
and Class B common stock, no par value per share, of the Company
(the "Shares") will be converted into the right to receive common
stock, $.01 par value per share, of Parent as provided herein;
WHEREAS, for federal income tax purposes, it is intended
that (i) the Merger shall qualify as a reorganization, and (ii)
this Agreement (and the other agreements entered into in
connection herewith) shall qualify as a plan or reorganization
within the meaning of the regulations issued pursuant to Section
368 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the Merger is intended to be treated as a "pooling
of interests" transaction for accounting purposes under generally
accepted accounting principles, and Price Waterhouse LLP has
confirmed to Parent in writing that it has reviewed to the extent
it deemed necessary the terms and structure of the Merger, that
it has reviewed this Agreement, the Articles of Merger and such
other documents as it has requested as necessary for its review
and that, as of the date of this Agreement, it knows of nothing
that will prohibit the Merger from being treated as a "pooling of
interests" transaction for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the
other as an inducement to the consummation of the Merger.
NOW, THEREFORE, in reliance on the foregoing recitals and in
and for the consideration and mutual covenants set forth herein,
and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. (a) The following terms, as used
herein, have the following meanings:
"Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or
under common control with such Person.
"Ancillary Agreements" means the Registration Rights
Agreement attached hereto as Exhibit C, the Letter Agreement
attached hereto as Exhibit D, the Affiliate Agreement attached
hereto as Exhibit E and the non-competition, employee and key
employee agreements, forms of which are attached hereto as
Exhibit H.
"Balance Sheet" means the balance sheet of the Company
as of June 27, 1997 referred to in Section 3.07.
"Balance Sheet Date" means June 27, 1997.
"Closing Date" means the date of the Closing.
"Company" means KMI Masterson, Inc., a Delaware
corporation.
"Company Counsel" means the law firm of Carey & Levin,
Holliston, Massachusetts.
"Conversion Ratio" means Parent Stock divided by the
total number of Shares and Option Shares outstanding on the
Closing Date.
"Intellectual Property Right" means any trademark,
trade name, trade dress, service mark, service name, logo, and
corporate name, registration thereof or application for
registration therefor; invention, patent, patent application,
patent disclosure and any related continuation, continuation-in-
part, divisional, reissue, re-examination, utility, model,
certificate of invention and design patent, patent application,
registration and application for registration; mask work and
registration and application for registration thereof; computer
software, data and documentation; trade secret, know-how, and
confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how,
manufacturing and product processes and techniques, research and
development information, copyrightable works, financial,
marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and
information; copyright, copyright registration, application for
copyright registration; or any other similar type of proprietary
intellectual property right, (including without limitation
associated goodwill and remedies against infringements thereof
and rights of protection of an interest therein under the laws of
all jurisdictions) in each case which is owned or licensed by
the Company and used or held for use by the Company.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, restriction or
encumbrance of any kind in respect of such asset.
"Material Adverse Change" means a material adverse
change in the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company,
including but not limited to the departure of a key employee or a
significant deterioration in backlog or earnings.
"Massachusetts Articles of Merger" means the Articles
of Merger to be filed with the Secretary of State of the
Commonwealth of Massachusetts on the Closing Date, in the form
set forth in Exhibit A.
"Material Adverse Effect" means a material adverse
effect on the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company,
which effect shall be deemed to have occurred upon, among other
things, the departure of a key employee or a significant
deterioration in backlog or earnings.
"Merger" means the merger of Sub with and into the
Company.
"1934 Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Option Shares" means the shares of the Company's
capital stock issuable upon the exercise of Company Options (as
defined in Section 3.05), all of which are set forth in
Schedule 3.05.
"Parent" means PAREXEL International Corporation, a
Massachusetts corporation.
"Parent Common Stock" means the common stock, $.01 par
value per share, of Parent.
"Parent Stock" means the number of shares of Parent
Common Stock as is determined by dividing $23,000,000 by the
average of the last reported sale price of Parent's Common Stock
on the Nasdaq National Market on each of the twenty business days
up to and including the second business day preceding the date of
this Agreement (subject to appropriate adjustment in the event of
a stock split or reverse stock split) (the "Parent Stock Price");
provided, however, that if the Parent Stock Price is less than
$34.00, then the Parent Stock Price shall be $34.00 and if the
Parent Stock Price is greater than $40.00, then the Parent Stock
Price shall be $40.00. Accordingly, in no event shall the Parent
Stock Price be less than $34.00 or greater than $40.00.
"Parent's Counsel" means the law firm of Testa,
Hurwitz & Thibeault, LLP, Boston, Massachusetts.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Principal Stockholders" means Kemper and Masterson,
collectively.
"Registration Rights Agreement" means the Registration
Rights Agreement between the Stockholders and Parent in the form
set forth in Exhibit C.
"Shares" means all outstanding shares of capital stock
of the Company, all of which are set forth on Schedule 2.01.
"Stockholders" means Kemper, Masterson, Lester,
Tetzlaff, Parenteau, Handren, Hyde and Voss, collectively.
"Sub" means KMI Acquisition Corporation, a
Massachusetts corporation.
"Subsidiary" means any entity of which securities or
other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are owned directly or indirectly by the
Company.
"Delaware Certificate of Merger" means the Certificate
of Merger to be filed with the Secretary of State of the State of
Delaware on the Closing Date, in the form set forth in Exhibit B.
"Working Capital" means cash and cash equivalents (on
hand or in bank accounts), plus accounts receivable (net of any
allowance for doubtful accounts), minus current liabilities.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Affiliate 6.02
Agreements
Benefit Arrangement 9.01
Claims 11.02
Closing 2.02
Code Preamble
Company Affiliate 6.02
Company Option 3.05
Company Securities 3.05
Damages 11.02
Effective Date 2.02
Employee Plans 9.01
Environmental Laws 3.20
Environmental 3.20
Liabilities
ERISA 9.01
ERISA Affiliate 9.01
Financial 3.07
Statements
Holdback Shares 2.02
Indemnified Party 11.03
Indemnifying Party 11.03
Parent Group 11.02
Multiemployer Plan 9.01
Permit 3.14
Reports 5.05
Return 3.19
Returns 3.19
Surviving 2.01
Corporation
Tax 3.19
Taxes 3.19
ARTICLE II
REORGANIZATION AND MERGER
2.01. The Merger. Subject to the terms and conditions of
this Agreement, the Massachusetts Articles of Merger and the
Delaware Certificate of Merger, Sub shall be merged with and into
the Company in accordance with the applicable provisions of the
laws of the Commonwealth of Massachusetts and the State of
Delaware and with the terms and conditions of this Agreement, the
Massachusetts Articles of Merger and the Delaware Certificate of
Merger so that:
(a) At the Effective Date, Sub shall be merged with
and into the Company. As a result of the Merger, the separate
corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (sometimes referred to
herein as the "Surviving Corporation") and shall succeed to and
assume all of the rights and obligations of the Company in
accordance with the laws of the Commonwealth of Massachusetts and
the State of Delaware.
(b) The articles of organization and bylaws of the
Company in effect immediately prior to the Effective Date shall
be the articles of organization and bylaws, respectively, of the
Surviving Corporation after the Effective Date unless and until
further amended as provided by law.
(c) The directors and officers of Sub immediately
prior to the Effective Date shall be the directors and officers
of the Surviving Corporation after the Effective Date. Such
directors and officers shall hold their positions until the
election and qualification of their respective successors or
until their tenures are otherwise terminated in accordance with
the bylaws of Surviving Corporation.
The Shares that are issued and outstanding immediately prior
to the Effective Date will, by virtue of the Merger and at the
Effective Date, automatically and without further action on the
part of the Stockholders, be converted into such number of shares
of Parent Stock as is equal to the number of Shares held by each
Stockholder (as set forth on Schedule 2.01) multiplied by the
Conversion Ratio (rounded down to the largest whole number of
shares of Parent Stock pursuant to Section 2.07 below).
Each option evidencing the right to purchase the Option
Shares (each a "Company Option") that is outstanding immediately
prior to the Effective Date shall be exercised by the holder
thereof contemporaneously with the Closing (as hereinafter
defined) and the Option Shares that are outstanding as a result
of such exercise will, by virtue of the Merger and at the
Effective Date, automatically and without further action on the
part of such holder, be converted into such number of shares of
Parent Stock as is equal to the number of Option Shares held by
such Stockholder (as set forth on Schedule 2.01) multiplied by
the Conversion Ratio (rounded down to the largest whole number of
shares of Parent Stock pursuant to Section 2.07 below).
2.02. Closing. The closing (the "Closing") of the
transactions contemplated hereunder shall take place at the
offices of Parent's Counsel in Boston, Massachusetts as soon as
possible after satisfaction of the conditions set forth in
Article X, but in no event later than 11:59 p.m., Boston time, on
December 1, 1997, or at such other time or place as Parent and
the Company may agree. Simultaneously with the Closing, the
Massachusetts Articles of Merger shall be filed in the office of
the Secretary of State of the Commonwealth of Massachusetts and
the Delaware Certificate of Merger shall be filed in the office
of the Secretary of State of the State of Delaware. The Merger
shall become effective immediately upon the date stamped by the
Massachusetts Secretary of State on the Massachusetts Articles of
Merger (such date is referred to as the "Effective Date"). At
the Closing, Parent shall deliver to each Stockholder
certificates representing the number of shares of Parent Stock to
which such Stockholder is entitled pursuant to Section 2.01
hereof, less such Stockholder's portion of the "Holdback Shares"
and the "Withholding Shares" (as hereinafter defined). Each
certificate shall be duly endorsed by the Parent's transfer agent
and registered in the name of each such Stockholder, as is
determined in accordance with Section 2.01. At the Closing,
Parent shall retain in accordance with the provisions of
Section 11.04 certificates representing the number of shares of
Parent Stock worth $1,000,000 (calculated using the Parent Stock
Price) (rounded up to the nearest whole number of shares) (the
"Holdback Shares") and certificates representing the number of
shares of Parent Stock worth $1,202,093 (calculated using the
Parent Stock Price) (rounded up to the nearest whole number of
shares (the "Withholding Shares"), to be held by the Parent in
accordance with the provisions of Sections 11.04, 11.05 and
11.06.
2.03. Certificates for Parent Stock. Each certificate for
Parent Stock issued to the Stockholders as part of the Merger
shall bear the following legend:
"The securities represented hereby have
not been registered under the Securities Act
of 1933, as amended, and may not be sold,
transferred or otherwise disposed of except
in accordance with the terms thereof and
unless registered with the Securities and
Exchange Commission of the United States and
the securities regulatory authorities of
certain states or unless an exception from
such registration is available."
2.04. Transfer Taxes. The Stockholders shall pay any and
all sales, documentary, use, filing, transfer and other taxes
payable as a result of the Merger.
2.05. Books and Records. On or before the Closing Date,
the Company and the Stockholders shall deliver to Parent, or its
representatives, where located, all minute books, stock record
books and corporate seals of the Company, and the original copies
of all books of account, leases, other agreements, securities,
customer lists, files and other documents, instruments and papers
of any kind or nature belonging to or relating to the Company or
its business.
2.06. Resignations. The Company will deliver to Parent the
resignations of all officers and directors of the Company from
their positions with the Company at or prior to the Closing Date,
unless otherwise specified by Parent.
2.07. No Fractional Shares. No certificates or scrip for
fractional shares of Parent Stock will be issued, no Parent stock
split or dividend shall be paid in respect of any fractional
share interest, and no such fractional share interests shall
entitle the owner thereof to vote or to any rights of or as a
stockholder of Parent. In lieu of such fractional shares, any
holder of shares of Common Stock of the Company who would
otherwise be entitled to a fraction of a share of Parent Stock
(after aggregating all fractional shares of Parent Stock to be
received by such holder) will be paid the cash value of such
fraction, which shall be equal to the fraction multiplied by the
Parent Stock Price (subject to appropriate adjustment in the
event of a stock split or reverse stock split).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE PRINCIPAL STOCKHOLDERS
The Company and the Principal Stockholders hereby jointly
and severally represent and warrant to Parent and Sub as of the
date hereof that:
3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in the United States where the character of the
property owned or leased by it or the nature of its activities
make such qualification necessary, except for those jurisdictions
where failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has
heretofore delivered to Parent true and complete copies of the
corporate charter and bylaws, and all amendments thereto, of the
Company.
3.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within
the Company's corporate powers and have been duly authorized by
all necessary corporate action on the part of the Company. This
Agreement constitutes a valid and binding agreement of the
Company.
3.03. Governmental Authorization; Consents.
(a) The execution and delivery of this Agreement
by the Company and the Stockholders, and the performance by the
Company and the Stockholders of their obligations under this
Agreement, require no action by or in respect of, or filing with,
any governmental body, agency, official or authority or any other
Person, other than the Massachusetts Articles of Merger and the
Delaware Certificate of Merger.
(b) Except as set forth on Schedule 3.03, no consent,
approval, waiver or other action by any Person under any
contract, agreement, indenture, lease, instrument or other
document to which the Company is a party or by which it is bound
is required or necessary for the execution and delivery of this
Agreement by the Company and the Stockholders, the performance by
the Company and the Stockholders of their obligations under this
Agreement or the consummation of the transactions contemplated
hereby.
3.04. Non-Contravention. The execution and delivery of
this Agreement by the Company and the Stockholders, the
performance by the Company and the Stockholders of their
obligations under this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i)
contravene or conflict with the corporate charter or bylaws of
the Company, (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the
Company; (iii) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right
or obligation of the Company or to a loss of any benefit to which
the Company is entitled under any provision of any agreement,
contract or other instrument binding upon the Company or any
permit held by the Company or (iv) assuming the receipt of all
required consents, result in the creation or imposition of any
Lien on any asset of the Company.
3.05. Capitalization. The authorized capital stock of the
Company consists of 90,000 shares of Class A Common Stock, no par
value, and 30,000 shares of Class B Common Stock, no par value.
As of the date hereof, there were outstanding 80,000 shares of
Class A Common Stock and 6,000 shares of Class B Common Stock.
All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and are
owned by the Stockholders as shown on Schedule 2.01. As of the
date hereof, 14,666 shares of the Company's Class B Common Stock
were reserved for issuance upon exercise of stock options granted
pursuant to the Company's Stock Option Plan (the "Company
Options") and 9,334 shares of the Company's Class B Common Stock
were reserved for issuance upon exercise of future grants of
stock options. Except for the Company Options, all of which are
listed on Schedule 3.05, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which the Company is a party or by which the Company is bound
relating to the issued or unissued capital stock of the Company
or obligating the Company to issue or sell any shares of capital
stock of, or other equity interests in, the Company. All shares
of Company Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations
of the Company to repurchase, redeem or otherwise acquire any
shares of Company Common Stock. Except as set forth in this
Section 3.05, there are no outstanding (i) shares of capital
stock, other securities or phantom or other equity interests of
the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or other securities of
the Company or (iii) options or other rights to acquire from the
Company any capital stock, other securities or phantom or other
equity interests of the Company (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the
Company, actual or contingent, to issue or deliver or to
repurchase, redeem or otherwise acquire any Company Securities.
3.06. Subsidiaries. The Company does not have any
Subsidiaries or any ownership or equity interest in or control of
(direct or indirect) any other person. Except as set forth on
Schedule 3.06, the Company has never had any Subsidiaries or any
ownership or equity interest in or control of (direct or
indirect) any other person. The Subsidiaries set forth on
Schedule 3.06 have been duly dissolved in accordance with the
laws of their respective jurisdictions of incorporation, in each
case without any liability to the Company.
3.07. Financial Statements. The Company has previously
furnished Parent with a true and complete copy of the balance
sheets of the Company as of December 31, 1995 and 1996 and
June 27, 1997 and the statements of operations, and changes in
stockholders' equity of the Company for the respective years or
period then ended, (collectively, the "Financial Statements"),
which are attached hereto as Schedule 3.07. Each of the balance
sheets included in the Financial Statements fairly presents in
all material respects the financial position of the Company as of
its date, and the other statements included in the Financial
Statements fairly present in all material respects the results of
operations and stockholders' equity, as the case may be, of the
Company for the periods therein set forth, in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved.
3.08. Absence of Certain Changes. Except as set forth in
Schedule 3.08, since the Balance Sheet Date, the Company has
conducted its business in the ordinary course consistent with
past practices and there has not been:
(a) any Material Adverse Change or any event,
occurrence, development or state of circumstances or facts which
could reasonably be expected to result in a Material Adverse
Change;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any Company
Securities or any repurchase, redemption or other acquisition by
the Company of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company;
(c) any amendment of any outstanding security of the
Company;
(d) any incidence, assumption or guarantee by the
Company of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms
consistent with past practices;
(e) any creation or assumption by the Company of any
Lien on any asset;
(f) any making of any loan, advance or capital
contributions to or investment in any Person;
(g) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or
assets of the Company which, individually or in the aggregate,
has had or would reasonably be expected to have a Material
Adverse Effect;
(h) any transaction or commitment made, or any
contract or agreement entered into, by the Company relating to
its assets or business (including the acquisition or disposition
of any assets) or any relinquishment by the Company of any
contract or other right, in either case, material to the Company,
other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by
this Agreement;
(i) any change in any method of accounting or
accounting practice by the Company;
(j) any (i) grant of any severance or termination pay
to any director, officer or employee of the Company, (ii)
entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company,
(iii) change in benefits payable under existing severance or
termination pay policies or employment agreements or (iv) change
in compensation, bonus or other benefits payable to directors,
officers or employees of the Company;
(k) any change in the business or operations or in the
manner of conducting the business or operations of the Company
other than changes in ordinary course of business;
(l) except as reflected on the Balance Sheet, any
mortgage, pledge or subjection of any properties or assets to any
claim, Lien or liability, except claims, Liens or liabilities for
taxes not yet due;
(m) any write-down of the value of any inventory, or
write-off of any notes or accounts receivable or any portion
thereof as uncollectible, other than valuation reserves
established for inventory and receivables;
(n) any cancellation or release of any other debts or
claims, or waivers of any rights;
(o) any sale, transfer or conveyance of any property
or assets, except in the ordinary course of business consistent
with past practice;
(p) any disposition of, or lapse, or other failure to
preserve the exclusive rights of the Company to any Intellectual
Property Right;
(q) any payments, loans or advances of any amount to
or in respect of, or sale, transfer or lease of any properties or
assets to, or the entering into of any agreement, arrangement or
transaction with any of the Stockholders, officers or directors
of the Company, any Affiliate or associate of any of the
Stockholders, the Company or any officer or director of the
Company, or any business or entity in which any of the
Stockholders or the Company, or any Affiliate or associate of any
such person, has any direct or material indirect interest;
(r) any lease of real or personal property or any
capital expenditures or commitments for additions to property,
plant, equipment or capital assets; or
(s) any agreement, whether in writing or otherwise, to
take any action described in this Section 3.08.
3.09. Property and Equipment. The Company has marketable
title to, or in the case of leased property has valid leasehold
interests in, all property and assets (whether real or personal,
tangible or intangible) reflected on the Balance Sheet or
acquired after the Balance Sheet Date. None of such properties
or assets is subject to any Liens, except Liens for taxes not yet
due or being contested in good faith (and for which adequate
accruals or reserves have been established on the Balance Sheet),
Liens disclosed on the Balance Sheet or Liens which do not
materially detract from the value of such property or assets as
now used, or materially interfere with any present or intended
use of such property or assets.
3.10. No Undisclosed Material Liabilities. There are no
liabilities of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in
such a liability, other than:
(i) liabilities disclosed on Schedule 3.10 or in any
other Schedule hereto or provided for in the Balance Sheet;
and
(ii) liabilities incurred in the ordinary course of
business consistent with past practice since the Balance
Sheet Date, which in the aggregate are not material to the
Company.
3.11. Litigation. Other than as disclosed on
Schedule 3.11, there is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Company
and Principal Stockholders threatened against or affecting, the
Company or any of its properties or the transactions contemplated
hereby before any court or arbitrator or any governmental body,
agency, official or authority.
3.12. Material Contracts.
(a) Except for agreements, contracts, plans,
leases, arrangements or commitments disclosed in Schedule 3.12,
the Company is not a party to or subject to:
(i) any lease providing for annual rentals of $5,000
or more;
(ii) any contract for the purchase of materials,
supplies, goods, services, equipment or other assets in an
amount exceeding $1,000;
(iii) any partnership, joint venture or other
similar arrangement or agreement or any license agreement
under which the Company is the licensee, or any agency,
distributor, dealer, franchise, sales representative or
other similar contract or commitment;
(iv) except for trade indebtedness incurred in the
ordinary course of business, any loan or credit agreements
or any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of any asset,
business, company or other entity or indebtedness for
borrowed money by way of direct loan, sale of debt
securities, purchase money obligation, conditional sale,
guarantee, or otherwise, or agreement relating to the
mortgaging, pledging or otherwise placing a lien on any
assets of the Company or any guaranty of indebtedness or
performance of others by the Company;
(v) any contract or other document that limits the
freedom of the Company to compete in any line of business or
with any Person or in any area or which would so limit the
freedom of the Company after the Closing Date;
(vi) any guarantees;
(vii) any contract for personal services or
employment (including without limitation contracts with
directors, officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors or
dealers);
(viii) any agreement or arrangement providing for
the sale of any of the assets, properties or rights of the
Company (other than in the ordinary course of business) or
for the grant of a preferential right to purchase any of the
Company's assets, properties or rights or which required the
consent of any third party to the transfer and assignment of
any of its assets, properties or rights; and
(ix) any other agreements, contracts, leases, licenses
or commitments to which the Company is a party (or under
which the Company may be obligated or which the Company or
any of its rights, properties or assets may be subject or
bound) and which is material to the financial condition,
results of operations, business, property or prospects of
the Company or is not made in the ordinary course of
business that is material to the Company.
(b) Each agreement, contract, plan, lease, arrangement
and commitment disclosed in any schedule to this Agreement or
required to be disclosed pursuant to Section 3.12(a) is a valid
and binding agreement of the Company and is in full force and
effect, and neither the Company, nor, to the knowledge of the
Company and the Stockholders, any other party thereto is in
default in any material respect under the terms of any such
agreement, contract, plan, lease, arrangement or commitment.
3.13. Insurance Coverage. The Company has furnished to
Parent a list of, and true and complete copies of, all insurance
policies covering the assets, business, equipment, properties,
operations, employees, officers and directors of the Company.
There is no claim by the Company pending under any of such
policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies. All premiums
payable under all such policies have been paid and the Company is
otherwise in full compliance with the terms and conditions of all
such policies. Such policies are of the type and in amounts
customarily carried by Persons conducting businesses similar to
those of the Company.
3.14. Compliance with Laws; No Defaults.
(a) The Company is not currently in violation of, and
since its inception has not violated, any applicable provisions
of any laws, statutes, ordinances or regulations except for
violations that have not had and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect.
(b) Schedule 3.14 correctly describes each license and
permit (a "Permit") material to the business of the Company,
together with the name of the governmental agency or entity
issuing such license or permit. Such licenses and permits are
valid and in full force and effect in accordance with their terms
and none of such licenses or permits will be terminated or
impaired or become terminable as a result of the transactions
contemplated hereby.
(c) The Company is not in default under, and no
condition exists that with notice or lapse of time or both would
constitute a default under, (i) any mortgage, loan agreement,
indenture or evidence of indebtedness for borrowed money to which
the Company is a party or by which the Company or any material
amount of its assets is bound or (ii) any judgment, order or
injunction of any court, arbitrator or governmental body, agency,
official or authority which defaults or potential defaults
individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect.
3.15. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of the Stockholders or the
Company who might be entitled to any fee or commission from
Parent, Sub, the Company or any of their respective Affiliates
upon consummation of the transactions contemplated by this
Agreement.
3.16. Intellectual Property.
(a) Schedule 3.16 includes a list of all
Intellectual Property Rights specifying as to each, as
applicable: (i) the nature of such Intellectual Property Right;
(ii) the owner of such Intellectual Property Right; (iii) the
jurisdictions by or in which such Intellectual Property Right has
been registered or in which an application for such registration
has been filed, including the respective registration or
application numbers; and (iv) licenses, sublicenses and other
agreements as to which the Company or any of its Affiliates is a
party and pursuant to which any Person is authorized to use such
Intellectual Property Right, including the identity of all
parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) The Company has not since its inception been
charged in writing with or been a defendant in any claim, suit,
action or proceeding relating to its business that has not been
finally terminated prior to the date hereof and that involves a
claim of infringement of any patents, trademarks, service marks
or copyrights. The Company and the Principal Stockholders have
no knowledge of any other claim or infringement by the Company,
or no knowledge of any continuing infringement by any other
Person of any Intellectual Property Rights. To the knowledge of
the Company and the Principal Stockholders, no Intellectual
Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by
the Company or restricting the licensing thereof by the Company
to any Person. The Company has not entered into any agreement to
indemnify any other Person against any charge of infringement of
any patent, trademark, service mark or copyright.
(c) None of the Intellectual Property Rights of the
Company, the value of which to the Company is contingent upon
maintenance of the confidentiality thereof, has been disclosed by
the Company or by any of the Stockholders or, to the knowledge of
the Company and the Principal Stockholders, by any employee of
the Company to any Person other than Persons who are parties to
confidentiality agreements with the Company.
(d) To the knowledge of the Company and the Principal
Stockholders, no third party has asserted any claim, or has
threatened to assert any claim, against the Company with respect
to (i) the continued employment by, or association with, the
Company of any of the present officers, employees of or
consultants to the Company or (ii) the use by the Company or any
of such Persons in connection with their activities for or on
behalf of the Company of any information which the Company or any
of such Persons would be prohibited from using under any prior
agreements or arrangements or any laws applicable to unfair
competition, trade secrets or proprietary information.
(e) None of the former or present employees, officers,
directors, consultants or contractors of the Company holds any
right, title or interest, directly or indirectly, in whole or in
part, in or to any of the Intellectual Property Rights which the
Company is currently using or the use of which is necessary for
the business of the Company as presently conducted. To the best
knowledge of the Company and the Principal Stockholders, no
employee of the Company is in violation of any term of any
employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such
employee with the Company or any other party because of the
nature of the business conducted by the Company. No person has
any so-called "moral rights," including any right to
identification of authorship, rights of approval of modifications
or limitations on subsequent modifications, in or to any of the
Intellectual Property Rights owned by the Company. Nothing
prohibits the Company from (i) modifying, changing, altering,
adapting, revising, translating, adding to or subtracting from
any of the Intellectual Property Rights owned by the Company,
(ii) doing any of the foregoing without obligation to name the
author of any of the Intellectual Property Rights owned by the
Company or to give credit to any person in connection therewith
or (iii) leasing, licensing, distributing or marketing any of the
Intellectual Property Rights owned by the Company without the
consent of any person.
3.17. Inventories. The Company has no inventories.
3.18. Receivables. Except as set forth on Schedule 3.18,
all accounts, notes receivable and other receivables (other than
receivables collected since the Balance Sheet Date) reflected on
the Balance Sheet are, and all accounts and notes receivable of
the Company at the Closing Date will be, valid, genuine and fully
collectible (using commercially reasonable collection efforts)
within ninety (90) days in the aggregate amount thereof, less any
reserves for doubtful accounts recorded on the Balance Sheet.
All accounts, notes receivable and other receivables of the
Company at the Balance Sheet Date have been included in the
Balance Sheet.
3.19. Taxes.
(a) The term "Taxes" as used herein means all
federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs duties,
or other Taxes, fees, assessments or other charges of any kind
whatever, together with any interest and any penalties, additions
to Tax or additional amounts with respect thereto, and the term
"Tax" means any one of the foregoing taxes. The term "Returns"
as used herein, means all returns, declarations, reports,
statements and other documents required to be filed in respect of
Taxes, and "Return" means any one of the foregoing Returns. All
citations to the Code, or the Treasury regulations promulgated
thereunder, shall include any amendments or any substitute or
successor provisions thereto.
(b) The Company has filed all Returns required to
be filed by the due date for such Return and has paid all Taxes
owed (whether or not shown as due on such returns), including,
without limitation, all Taxes which the Company is obligated to
withhold for amounts owing to employees, creditors and third
parties. All such Returns were complete and correct in all
respects. All Taxes with respect to which the Company has become
obligated pursuant to elections made by it in accordance with
generally accepted practice have been paid and adequate reserves
have been established for all Taxes accrued but not yet payable.
No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Returns and the
Return, have never been audited by any state or federal
authorities. No waivers of statutes of limitation with respect
to any of the Returns have been given by or requested from the
Company. All deficiencies asserted or assessments made as a
result of any examinations have been fully paid, or are fully
reflected as a liability in the financial statements of the
Company, or are being contested and an adequate reserve therefor
has been established and is fully reflected in the financial
statements of the Company. There are no liens for Taxes (other
than for current Taxes not yet due and payable) upon the assets
of the Company. All material elections with respect to Taxes
affecting the Company, as of the date hereof, are set forth in
the financial statements of the Company, or are set forth on
Schedule 3.19. The Company has not agreed to make any adjustment
under Section 481(a) of the Code by reason of a change in
accounting method or otherwise, and the Company will not be
required to make any such adjustment as a result of the
transactions set forth in this Agreement. Except as set forth on
Schedule 3.19, the Company does not have and has not had a
permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States of
America and such foreign country. The Company is not a party to
any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in (i) the payment
of any "excess parachute payments" within the meaning of
Section 280G of the Code (without regard to the exception in
Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii) any
payments or other transactions that would be, in whole or in
part, nondeductible under Sections 162 or 404 of the Code. The
Company is not a party to any tax sharing or similar agreement
with any Person. The Company has never been a member of an
affiliated group (within the meaning of Section 1504 of the Code)
filing a consolidated federal Return (other than a group the
common parent of which was the Company). The Company does not
have any liability for Taxes of any Person (other than the
Company) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise. The Company
has never filed a consent pursuant to Section 341(f) of the Code,
relating to collapsible corporations.
3.20. Environmental Compliance.
(i) The Stockholders and the Company have complied
with all federal, state and local laws (including without
limitation case law, rules, regulations, orders, judgments,
decrees, permits, licenses and governmental approvals) which
are intended to protect the environment and/or human health
or safety (collectively, "Environmental Laws") and the
Stockholders and the Company have not received any notice of
non-compliance with Environmental Laws;
(ii) none of the Stockholders or the Company have
handled, generated, used, stored, transported or disposed of
any substance or waste which is regulated by Environmental
Laws, except for reasonable amounts of ordinary office
and/or office-cleaning supplies which have been used in
compliance with Environmental Laws; and
(iii) there are no "Environmental Liabilities".
For purposes of this Agreement, "Environmental Liabilities"
are any liabilities which (y) arise out of or in any way
relate to the Company or any real estate at any time owned,
used or leased by the Company, or the Company's or any
Stockholder's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, and
(z) arise from or relate to actions occurring (including any
failure to act) or conditions existing on or before the
Closing Date.
3.21. Customers and Suppliers. Schedule 3.21 sets forth an
accurate list of the Company's twenty (20) largest customers by
revenue. The Company and the Stockholders have not received
notice from or otherwise have knowledge that any group of
customers who are under common ownership or control and who
accounted as a group for a material percentage of the aggregate
products and services furnished by the Company during the past 18
months has stopped or intends to stop purchasing the Company's
products or services nor has the Company lost any supplier or
group of suppliers, which accounted for a material percentage of
the aggregate supplies purchased by the Company during the past
18 months.
3.22. Transactions with Affiliates. Except as set forth on
Schedule 3.22, there are no loans, leases, royalty agreements or
other continuing transactions between the Company and any
Stockholder, any Affiliate of any Stockholder, or any member of
any Stockholder's family. Except as set forth on Schedule 3.22,
to the best knowledge of the Company and the Principal
Stockholders, none of the officers or directors of the Company or
Stockholder (a) has any material direct or indirect interest in
any entity which does business with the Company; (b) has any
direct or indirect interest in any property, asset or right which
is used by the Company in the conduct of its business; or (c) has
any contractual relationship with the Company other than such
relationships which occur from being an officer, director or
stockholder of the Company.
3.23. Other Information. None of the documents or
information delivered to Parent in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading. The Kemper-Masterson, Inc. August 15, 1997 Forecast
and accompanying information relating to the projected future
performance of the Company delivered to Parent constitute the
Company's and the Principal Stockholders' best estimate of the
information purported to be shown therein, and the Company and
the Principal Stockholders are not aware of any fact or
information that would lead them to believe that such projections
are incorrect or misleading in any material respect. The results
forecast in the above-referenced document are estimates and the
Company and the Principal Stockholders cannot guarantee that any
particular result will be achieved.
3.24. Intercompany Arrangements. Except as set forth on
Schedule 3.24, the Company does not own any note, bond, debenture
or other indebtedness, and is not otherwise a creditor, of any
Stockholder or any of his or its Affiliates. Since the Balance
Sheet Date there has not been any payment by the Company to any
Stockholder or any of his or its Affiliates, charge by any
Stockholder or any of his or its Affiliates to the Company or
other transaction between the Company and any Stockholder and any
of his or its Affiliates, except in any such case in the ordinary
course of business of the Company consistent with past practice.
3.25. Employees. Schedule 3.25 sets forth a true and
complete list of (a) the names, titles, annual salaries and other
compensation of all employees of the Company and (b) the wage
rates for non-salaried employees of the Company (by
classification). None of such employees and no other employee of
the Company has indicated to the Company or any Stockholder that
he intends to resign, retire or file a claim or otherwise bring
an action against the Company, Parent or Sub as a result of the
transactions contemplated by this Agreement or otherwise.
ARTICLE IV
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to, and agrees
with, Parent and Sub as follows:
4.01. Title to and Validity of Shares. The Stockholder now
has, and on the Closing Date will have (or, with respect to a
Stockholder who has Option Shares, on the Closing Date only will
have), good and marketable title to and unrestricted power to
vote and sell the Shares designated as owned by such Stockholder
opposite such Stockholder's name on Schedule 2.01 and
Schedule 3.05, free and clear of any Lien. All Shares owned by
such Stockholder have been duly authorized and validly issued and
are fully paid and non-assessable.
4.02. Authority. Such Stockholder has the legal power,
right and authority to enter into and perform this Agreement and
each of the Ancillary Agreements, and to perform each of his or
its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and each of the
Ancillary Agreements by such Stockholder does not contravene, or
constitute a default under, any provision of applicable law or
regulation or of any agreement, judgment, injunction, order,
decree or any other instrument binding upon such Stockholder.
This Agreement and each of the Ancillary Agreements have been
duly executed and delivered by such Stockholder and constitute
valid and binding obligations of such Stockholder, enforceable in
accordance with their respective terms.
4.03. Purchase for Investment. Such Stockholder is
acquiring the shares of Parent Stock for investment for his or
its own account and not with a view to, or for sale in connection
with, any distribution thereof. Such Stockholder agrees that the
shares of Parent Stock acquired by such Stockholder may not be
sold, transferred or otherwise disposed of unless such shares are
registered with the Securities and Exchange Commission and the
securities regulatory authorities of certain states or unless an
exemption from such registration is available.
4.04. Power To Act as Trustee or Executor. If such
Stockholder is serving as trustee or executor with respect to its
Shares, such Stockholder is the only such trustee or executor and
is duly authorized and empowered by the instruments creating such
trust or trusts or by the will of which such Stockholder is
acting as executor and under applicable law to enter into this
Agreement with respect to the Shares held by such Stockholder and
to consummate the transactions contemplated herein.
4.05. No Legal Proceedings. There is no action, suit,
investigation or proceeding pending against, or to the knowledge
of such Stockholder, threatened against or affecting, the
Stockholder or any of his property or the transactions
contemplated hereby before any court or arbitrator or any
governmental body, agency, official or authority.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant
to the Company and the Stockholders that:
5.01. Organization and Existence. Parent and Sub are
corporations duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and
have all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on their
businesses as now conducted.
5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Sub of this Agreement and by Parent of
the Registration Rights Agreement and the consummation by Parent
and Sub of the transactions contemplated hereby and thereby are
within the corporate powers of Parent and Sub and have been duly
authorized by all necessary corporate action on the part of
Parent and Sub. This Agreement constitutes a valid and binding
agreement of Parent and Sub and the Registration Rights Agreement
constitutes a valid and binding agreement of Parent.
5.03. Governmental Authorization. Except as set forth on
Schedule 5.03, the execution, delivery and performance by Parent
and Sub of this Agreement require no action by or in respect of,
or filing with, any governmental body, agency, official or
authority.
5.04. Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of Parent or
Sub threatened against, Parent or Sub before any court or
arbitrator or any governmental body, agency or official which in
any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby.
5.05. Reports and Financial Statements. Parent has
previously furnished to the Company copies of its (i) Annual
Report on Form 10-K for the fiscal year ended June 30, 1996; (ii)
1996 Annual Report; (iii) Proxy Statement dated October 8, 1996;
(iv) Prospectus dated December 6, 1996; (v) Current Report on
Form 8-K dated January 28, 1997 and (vi) Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 (collectively, the
"Reports"). Taken together, the reports do not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading. The Reports complied as to form, at the time such
form, document or report was filed, in all material respects with
the applicable requirements of the Federal securities laws and
the rules and regulations promulgated thereunder. Since
March 31, 1997, Parent has filed all forms, reports and documents
with the Commission required to be filed by it pursuant to the
Federal securities laws and the rules and regulations promulgated
thereunder, each of which complied as to form, at the time such
form, document or report was filed, in all material respects with
the applicable requirements of the Federal securities laws and
the rules and regulations promulgated thereunder.
5.06. Finder's Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of Parent or Sub who might be
entitled to any fee or commission from the Company, the
Stockholders or any of their respective Affiliates upon
consummation of the transactions contemplated by this Agreement.
5.07. Non-Contravention. The execution and delivery of
this Agreement by the Parent and Sub, the performance by the
Parent and Sub of their obligations under this Agreement and the
consummation of the transactions contemplated hereby do not and
will not (i) contravene or conflict with the corporate charter or
bylaws of the Parent or Sub, (ii) contravene or conflict with or
constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable
to the Parent or Sub; (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of
any right or obligation of the Parent or Sub or to a loss of any
benefit to which the Parent or Sub is entitled under any
provision of any agreement, contract or other instrument binding
upon the Parent or Sub or any permit held by the Parent or Sub or
(iv) assuming the receipt of all required consents, result in the
creation or imposition of any Lien on any asset of the Parent or
Sub.
ARTICLE VI
COVENANTS OF THE COMPANY AND EACH STOCKHOLDER
The Company and each Stockholder agree that:
6.01. Confidentiality. The Company, such Stockholder and
their Affiliates will hold, and will use reasonable efforts to
cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning Parent or Sub
furnished to the Company, such Stockholder or their Affiliates in
connection with the transactions contemplated by this Agreement,
and (after the Closing Date) all confidential documents and
information concerning the Company, except to the extent that
such information can be shown to have been (i) previously known
on a nonconfidential basis by such Stockholder, (ii) in the
public domain through no fault of such Stockholder or (iii) later
lawfully acquired by such Stockholder from sources other than the
Company, Parent or Sub; provided that the Company and such
Stockholder may disclose such information to their respective
officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such
persons are informed by the Company and such Stockholder of the
confidential nature of such information and are directed by the
Company and such Stockholder to treat such information
confidentially. The obligation of the Company, such Stockholder
and their Affiliates to hold any such information in confidence
shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the
confidentiality of their own similar information. If this
Agreement is terminated, the Company, such Stockholder and their
Affiliates will, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to
Parent, upon request, all documents and other materials, and all
copies thereof, obtained by the Company, such Stockholder or
their Affiliates or on their behalf from Parent or Sub in
connection with this Agreement that are subject to such
confidence.
6.02. Affiliate Agreements. The Company shall deliver to
Parent on or prior to the date of this Agreement a letter from
Company Counsel, satisfactory in form and substance to Parent's
Counsel, which, based upon discussion with the Company and such
inquiries as such firm deems necessary, shall identify all
persons who, at the date of this Agreement, such firm believes
may be deemed to be "affiliates" of the Company as such term is
used in and for the purposes of Accounting Series Releases 130
and 135, as amended, of the Securities and Exchange Commission,
and defined in Rule 144(a)(1) of the Securities Act of 1933, as
amended, and who will become the beneficial owners of shares of
Parent Stock pursuant to the transactions contemplated by this
Agreement (each such person being referred to as a "Company
Affiliate"). The Company shall deliver to Parent on or prior to
the Closing Date a letter from Company Counsel, satisfactory in
form and substance to Parent's Counsel, which shall identify all
Company Affiliates as of the Closing Date. The Company shall
cause each of the Company Affiliates to execute and deliver to
Parent (i) on the date of this Agreement and (ii) on the Closing
Date, a written agreement (the "Affiliate Agreement")
satisfactory to Parent and substantially in the form of Exhibit E
hereto, including provisions indicating that such Company
Affiliate (i) has not offered to sell, sold or otherwise disposed
of any Shares in the 30 day period prior to the date hereof,
(ii) will not offer to sell, sell or otherwise dispose of any
shares of Parent Stock, except pursuant to an effective
registration statement or in compliance with an available
exemption from the registration requirements of the Securities
Act (for which Stockholder shall provide Parent with an opinion
of counsel satisfactory to Parent that the securities being sold
thereby may be publicly sold without registration under the
Securities Act), and (iii) will not offer to sell, sell or
otherwise dispose of any shares of Parent Stock until Parent
shall have publicly released financial results covering a period
of at least 30 days of post-closing combined operations of Parent
and the Company.
6.03. Expenses. The Stockholders shall pay, prior to or at
the Closing, all costs and expenses incurred by the Company or
the Stockholder in connection with this Agreement.
6.04. Satisfaction of Parent's Withholding Obligation.
Each of the Stockholders covenants and agrees that he shall pay
to Parent, in immediately available funds (through wire transfer
or federal funds check) not later than 12:00 noon, Eastern
Standard Time, on the tenth business day after the Lapse Date (as
defined below), the federal, state, local and foreign tax
withholding amounts attributable to the Parent Stock issued to
him with respect to the Option Shares, including without
limitation federal, state, local and foreign income tax, Social
Security and Medicare tax withholding and similar amounts
(excluding the employer's portion of such amounts), at the
applicable tax withholding rates, all as determined by Parent and
its accountants. Each Stockholder agrees to cooperate fully and
to follow any reasonable instructions with respect to such tax
withholding obligation, and each understands that the fair market
value of the Parent Stock received in exchange for the Option
Shares must be reported as compensation for tax purposes, such
compensation being reported as of the Lapse Date. For purposes
of this Section 6.04, Lapse Date shall mean the first business
day following the date the Parent Stock issued to such person
pursuant to this Agreement is no longer subject to a restriction
on transfer pursuant to the "pooling of interests" accounting
rules.
ARTICLE VII
COVENANTS OF PARENT
Parent agrees that:
7.01. Access. After the Closing Date, Parent agrees to
give each Stockholder reasonable access to the books and records
provided by the Company and such Stockholder pursuant to Section
2.07 hereof to enable such Stockholder to make required filings
with, and respond to any inquiries from, state or federal tax or
other regulatory authorities.
7.02. Quarterly Report on Form 10-Q . Parent agrees to
file in a timely manner all reports and other documents required
of Parent under the Securities Exchange Act of 1934, including,
without limitation, its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997.
7.03. Affiliate Agreements. Parent shall use its best
efforts to cause each person who, at the date of this Agreement,
Parent believes may be deemed to be "affiliates" of Parent as
such term is used in and for the purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange
Commission, and defined in Rule 144(a)(1) of the Securities Act
of 1933, as amended (each a "Parent Affiliate"), to execute and
deliver on the Closing Date, an Affiliate Agreement substantially
in the form of Exhibit G hereto.
7.04. Reorganization Status. Parent shall consistently
treat for all United States federal income tax purposes the
Merger as a reorganization, within the meaning of Section 368(a)
of the Code.
7.05. Business Continuity. Parent shall either continue to
conduct the historic business of the Company or shall continue to
use the historic assets of the Company in a business.
7.06. Confidentiality. Until the Closing Date, Parent and
Sub and their Affiliates will hold, and will use reasonable
efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Company
furnished to the Parent or Sub or their Affiliates in connection
with the transactions contemplated by this Agreement, except to
the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Parent or Sub,
(ii) in the public domain through no fault of Parent or Sub or
(iii) later lawfully acquired by Parent or Sub from sources other
than the Company; provided that the Parent and Sub may disclose
such information to their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents
in connection with the transactions contemplated by this
Agreement so long as such persons are informed by the Parent or
Sub of the confidential nature of such information and are
directed by the Parent or Sub to treat such information
confidentially. The obligation of the Parent and Sub and their
Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such
information as they would take to preserve the confidentiality of
their own similar information. If this Agreement is terminated,
the Parent and Sub and their Affiliates will, and will use their
best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents
to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained
by the Parent and Sub or their Affiliates or on their behalf from
the Company in connection with this Agreement that are subject to
such confidence.
7.07. Publication of Interim Financial Results. Parent
will use good faith commercially reasonable efforts to cause
interim financial results covering thirty (30) days beginning
December 1, 1997 (or December 2, 1997 if the Closing occurs on
December 1, 1997) to be published as promptly as reasonably
practicable following the Closing.
7.08. Nasdaq National Market Additional Shares
Notification. Parent will file an additional share notification
with the Nasdaq National Market to approve for listing the shares
of Parent Stock to be issued in connection with the Merger, and
Parent will exercise good faith reasonable efforts to cause the
shares to be approved for listing prior to the effective date of
the first Registration Statement to be filed pursuant to the
Registration Rights Agreement.
ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Each Stockholder, the Company
and Parent agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to
consummate or implement expeditiously the transactions
contemplated by this Agreement.
8.02. Certain Filings. The Company, each Stockholder and
Parent shall cooperate with each other (a) in determining whether
any action by or in respect of, or filing with, any governmental
body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement
and (b) in taking such actions or making any such filings,
furnishing information required in connection therewith and
seeking timely to obtain any such actions, consents, approvals or
waivers.
8.03. Public Announcements. The Stockholders and the
Company shall consult with Parent before issuing any press
release or making any public statement with respect to this
Agreement or the transactions contemplated hereby and, except as
may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press
release or make any such public statement prior to such
consultation and approval by Parent.
8.04. Pooling. Each Stockholder, the Company and the
Parent shall use commercially reasonable efforts and shall
cooperate fully to allow the transactions contemplated by this
Agreement to be accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles which
shall be acceptable to the U.S. Securities and Exchange
Commission.
ARTICLE IX
EMPLOYEE BENEFITS
9.01. Employee Benefits Definitions. The following terms,
as used herein, have the following meanings:
"Benefit Arrangement" means each employment, severance
or other similar contract, arrangement or policy (written or
oral) and each plan or arrangement (written or oral) providing
for severance benefits, insurance coverage (including any self-
insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan,
(ii) is entered into, maintained or contributed to, as the case
may be, by the Company, any Stockholder or any of their
Affiliates and (iii) covers any employee or former employee of
the Company.
"Employee Plans" means each "employee benefit plan", as
such term is defined in Section 3(3) of ERISA, that (i) is
subject to any provision of ERISA and (ii) is maintained or
contributed to by the Company or any of its ERISA Affiliates, as
the case may be.
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" of any entity means any other entity
that, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation
established and maintained within the United States Department of
Labor pursuant to Section 4002 of ERISA.
9.02. ERISA Representations. The Company and each
Stockholder, jointly and severally, hereby represent and warrant
to Parent that:
(a) Schedule 9.02 lists each Employee Plan that covers
any employee of the Company, copies and descriptions of all of
which have previously been made available or furnished to Parent.
With respect to each Employee Plan, the Company has provided the
three most recently filed Forms 5500 and an accurate summary
description of such plan. The Company has provided Parent with
complete age, salary, service and related data as of the most
recent practicable date for employees of the Company.
(b) Schedule 9.02 also includes a list of each Benefit
Arrangement of the Company, copies and descriptions of which have
been made available or furnished previously to Parent.
(c) None of the Employee Plans or other arrangements
listed on Schedule 9.02 covers any non-United States employee or
former employee of the Company, except one employee of the
Company located in England who is covered by the Employee Plans
so designated on Schedule 9.02.
(d) No "prohibited transaction", as defined in Section
406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Employee Plan.
(e) No plan or arrangement listed on Schedule 9.02 is
a Multiemployer Plan. Neither the Company nor any Subsidiary or
ERISA Affiliate has ever contributed to or had an obligation to
contribute to any Multiemployer Plan.
(f) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax
pursuant to Section 501(a) of the Code. The Company has
furnished to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such plan.
Each Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, which are applicable to such plan.
(g) Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Benefit Arrangement.
(h) With respect to the employees and former employees
of the Company, there are no employee post-retirement medical or
health plans in effect, except as required by Section 4980B of
the Code.
(i) All contributions and payments accrued under each
Employee Plan and Benefit Arrangement, determined in accordance
with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the Closing Date,
will be discharged and paid on or prior to the Closing Date.
Except as disclosed in writing to Parent prior to the date
hereof, there has been no amendment to, written interpretation of
or announcement (whether or not written) by the Company, any
Stockholder or any of their ERISA Affiliates relating to, or
change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement
above the level of the expense incurred in respect thereof for
the year ended prior to the date hereof.
(j) The Company does not have and has never had any
Employee Plan subject to Title IV of ERISA (a "Defined Benefit
Plan").
(k) No charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand with respect to the
administration or the investment of the assets of any Employee
Plan maintained by the Company or to which the Company has
contributed or the benefit of any current or former employee of
the Company (other than routine claim for benefit) is pending.
(l) There is no contract, agreement, plan or
arrangement covering any employee or former employee of the
Company that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant
to the terms of Section 280G of the Code.
(m) No tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code.
(n) Except as set forth on Schedule 9.02, no employee
of the Company will become entitled to any bonus, retirement,
severance or similar benefit or enhanced benefit solely as a
result of the transactions contemplated hereby.
9.03. No Third Party Beneficiaries. No provision of this
Article IX shall create any third party beneficiary or other
rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Company in respect of
continued employment (or resumed employment) with the Company and
no provision of this Article IX shall create any such rights in
any such Persons in respect of any benefits that may be provided,
directly or indirectly, under any Employee Plan or Benefit
Arrangement or any plan or arrangement that may be established by
Parent or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on rights to amend, modify or
terminate after the Closing Date any Employee Plan or Benefit
Arrangement.
ARTICLE X
CONDITIONS TO CLOSING
10.01. Conditions to the Obligations of Each Party. The
obligations of Parent, Sub, the Company and the Stockholders to
consummate the Closing are subject to the satisfaction or waiver
of the following conditions:
(a) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(b) All actions by or in respect of or filings with
any governmental body, agency, official or authority required to
permit the consummation of the Closing shall have been obtained.
10.02. Conditions to Obligations of Parent and Sub. The
obligation of Parent and Sub to consummate the Closing is subject
to the satisfaction or waiver of the following further
conditions:
(a)(i) the Company and each Stockholder shall have
performed in all material respects all of its or his obligations
hereunder required to be performed on or prior to the Closing
Date, (ii) the representations and warranties of the Company and
each Stockholder contained in this Agreement at the time of its
execution and delivery and in any certificate or other writing
delivered by the Company or such Stockholder pursuant hereto,
disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect, shall be true
at and as of the Closing Date, as if made at and as of such date
with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect and
(iii) Parent shall have received a certificate signed by (A) the
President of the Company and (B) each Stockholder to the
foregoing effect.
(b) No court, arbitrator or governmental body, agency
or official shall have issued any order, and there shall not be
any statute, rule or regulation, restraining the effective
operation by Parent of the business of the Company after the
Closing Date, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(c) Parent shall have received an opinion of Company
Counsel, dated the Closing Date, to the effect specified on
Exhibit F. In rendering such opinion, such counsel may rely upon
certificates of public officers, as to matters governed by the
laws of jurisdictions other than the State of Delaware, the
Commonwealth of Massachusetts or the federal laws of the United
States of America, upon opinions of counsel reasonably
satisfactory to Parent, copies of which shall be
contemporaneously delivered to Parent, and as to matters of fact,
upon certificates of the Stockholders and officers of the
Company.
(d) Each Stockholder and the Company shall have
executed and delivered each of the Ancillary Agreements to be
entered into by them or it at the Closing, in each case
substantially in the form attached as an exhibit to this
Agreement.
(e) Parent shall have received all other closing
documents specified in Section 2.02 of this Agreement and all
other closing documents that it may reasonably request, all in
form and substance reasonably satisfactory to Parent.
(f) Price Waterhouse LLP shall have delivered to
Parent its written opinion that it has no basis for believing
that the transactions contemplated by this Agreement shall not be
accounted for as a "pooling of interests" in accordance with
generally accepted accounting principles, and Parent shall have
no reason to believe that such accounting treatment will not be
accepted by the Securities and Exchange Commission.
(g) The Company shall deliver to Parent a properly
executed statement in a form reasonably requested by Parent for
purposes of satisfying Parent's obligations under Treasury
Regulation 1.1445-2(c)(3).
(h) Parent shall have received evidence satisfactory
to it of the Stockholder's payment of all costs and expenses
incurred by the Company or the Stockholders in connection with
this Agreement.
(i) Parent shall have received from the Company
written evidence that (i) the execution, delivery and performance
of the Agreement have been duly and validly approved and
authorized by the Company's board of directors and by the
stockholders of the Company and (ii) no stockholders of the
Company have, or might be able to perfect, dissenters' or
appraisal rights in connection with the Merger.
(j) Parent shall have received evidence from the
Company of its receipt of the exercise price for the Company
Options.
(k) The Company shall have received all of the
consents and waivers set forth on Schedule 3.03, including but
not limited to all necessary lender consents.
(l) Price Waterhouse LLP shall have completed an
audit, to Parent's satisfaction, of the balance sheet of the
Company as of June 27, 1997 and the accompanying statements for
the period then ended. The Company and the Stockholders shall
cooperate fully with Parent and the accountants in connection
with such audit. The expenses of such audit shall be shared
equally between the Parent on the one hand and the Stockholders
on the other hand; provided, however, that the maximum payment to
be made by the Stockholders in connection with such audit shall
not exceed $20,000 and provided, further, that the expenses of
such audit shall be borne exclusively by Parent if the Merger is
not consummated. Price Waterhouse LLP shall also have completed
a review, to Parent's satisfaction, of the balance sheet of the
Company as of October 31, 1997 and the accompanying statements
for the period ended October 31, 1997. The Company and the
Stockholders shall cooperate fully with Parent and the
accountants in connection with such review. The expenses of such
review shall be borne exclusively by the Parent.
(m) As of the Closing Date, the Company shall have,
and the President and Chief Financial Officer of the Company
shall certify to the Parent that the Company has, Working Capital
of at least $500,000.
(n) Parent shall have completed, to its satisfaction,
its financial, business and legal due diligence investigation of
the Company by November 15, 1997.
(o) Parent shall have received from the Company
written evidence that all outstanding loans of the Company to the
Stockholders have either been paid in full or have been evidenced
by a payment schedule that has been approved by Parent.
(p) Each of the employees of the Company shall have
executed and delivered to Parent a non-competition, key employee
or an employee agreement with Parent, as requested by Parent.
(q) Parent shall have received from the Company good
standing certificates from Delaware and from each state in which
the Company is qualified to do business as a foreign corporation.
10.03. Conditions to Obligations of the Company. The
obligation of the Company to consummate the Closing is subject to
the satisfaction of the following further conditions:
(a)(i) Parent and Sub shall have performed in all
material respects all of their obligations hereunder required to
be performed by them at or prior to the Closing Date, (ii) the
representations and warranties of Parent and Sub contained in
this Agreement at the time of its execution and delivery and in
any certificate or other writing delivered by Parent or Sub
pursuant hereto shall be true in all material respects at and as
of the Closing Date, as if made at and as of such date and (iii)
the Company shall have received a certificate signed by the Chief
Financial Officer of Parent and the President of Sub to the
foregoing effect.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(c) The Company shall have received an opinion of
Parent's Counsel, dated the Closing Date, to the effect specified
in Sections 5.01 through 5.04 and that the shares of Parent Stock
issued in the Merger will, when issued in accordance with the
provisions of this Agreement, be duly authorized, validly issued,
fully paid and nonassessable. In rendering such opinion, such
counsel may rely upon certificates of public officers, as to
matters governed by the laws of jurisdictions other than the
Commonwealth of Massachusetts or the federal laws of the United
States of America, upon opinions of counsel reasonably
satisfactory to the Company, copies of which shall be
contemporaneously delivered to the Company, and as to matters of
fact, upon certificates of officers of Parent and Sub.
(d) Parent and Sub shall have executed and delivered
each of the Ancillary Agreements to be entered into by them at
the Closing, in each case substantially in the form attached as
an exhibit to this Agreement.
(e) The Company and the Stockholders shall have
received all items specified in Section 2.02 of this Agreement
and all other closing documents that they may reasonably request,
all in form and substance reasonably satisfactory to them.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. Survival. The covenants contained in this Agreement
shall survive the Closing and continue until the date set forth
in each such covenant. The agreements, representations and
warranties contained in this Agreement shall survive the Closing
until the earlier of (i) the delivery by Price Waterhouse LLP of
its report on Parent's financial statements for the fiscal year
ended June 30, 1998 or (ii) the one (1) year anniversary of the
Closing Date. Notwithstanding the preceding sentences, any
covenant, agreement, representation or warranty in respect of
which indemnity may be sought under Section 11.02 shall survive
the time at which it would otherwise terminate pursuant to the
preceding sentences, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been
given to the party against whom such indemnity may be sought
prior to such time.
11.02. Indemnification
(a) Each Principal Stockholder, jointly and severally,
and each Stockholder who is not a Principal Stockholder,
severally, hereby indemnifies Parent, Sub, and their respective
subsidiaries, directors, officers, agents and affiliates and,
effective at the Closing, without duplication, the Company
(collectively, the "Parent Group") against and agrees to defend
and hold them harmless from any and all damage, loss, liability
and expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("Damages")
incurred or suffered by Parent, Sub or the Company arising out of
(i) any inaccuracy in or breach or alleged breach of any
agreement, representation or warranty of the Company (with
respect to the Principal Stockholders only) or such Stockholder
contained in or made pursuant to this Agreement or any
certificate or other writing delivered pursuant hereto or in
connection herewith, (ii) any failure by such Stockholder or the
Company (with respect to the Principal Stockholders only) to
perform any of their respective obligations or covenants as set
forth in this Agreement or any certificate or other writing
delivered pursuant hereto or in connection herewith, (iii) any
and all actions, suits, litigation, arbitrations, proceedings,
investigations or claims arising out of any of the foregoing and
based on facts that have occurred on or prior to the Closing Date
even though such action, suit, litigation, arbitration,
proceeding, investigation or claim may not be filed or come to
light until after the Closing Date and (iv) any and all actions,
suits, litigation, arbitrations, proceedings, investigations or
claims filed or made by Paul Stanovich, L.G.M. Technical
Enterprises, Ltd., Bruce Fowler, Ken Chapman or Drumbeat
Dimensions, Inc. (collectively, the "Claims"); provided that the
Stockholders shall not be liable under this Section 11.02(a)
unless the aggregate amount of Damages with respect to all
matters referred to in this Section 11.02(a) exceeds $25,000;
provided, further, that (i) once the Damages exceed $25,000, the
Parent Group shall be entitled to indemnification for the full
amount of such Damages and (ii) such indemnity obligations shall
be satisfied by the Stockholders by transferring to Parent shares
of Parent's common stock owned by the Stockholders having a
value, as of the date hereof, equal to the amount of such Damages
(any deficiency to be paid by such Stockholder in cash). The
maximum liability of all the Stockholders, in the aggregate,
pursuant to this Section 11.02(a) shall be the number of shares
of Parent Stock received by the Stockholders (or the value
thereof as of the Closing Date if previously sold) having an
aggregate value, as of the date hereof, of $10,000,000.
(b) The Stockholders shall have no right of
indemnification, contribution or subrogation against the Company
with respect to any indemnification by the Stockholders under
this Section 11.02 if the transactions contemplated by this
Agreement are consummated.
(c) Parent hereby indemnifies the Stockholders, their
respective agents and affiliates (the "Selling Group") against
and agrees to defend and hold them harmless from any and all
Damages incurred or suffered by the Selling Group arising out of
any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Parent pursuant to this
Agreement, such indemnity obligations to be satisfied by Parent
by issuing shares of its common stock having a value, as of the
date hereof, equal to the amount of such Damages, provided,
however, that such amount in the aggregate shall in no event
exceed $10,000,000.
11.03. Procedures. The party seeking indemnification under
Section 11.02 (the "Indemnified Party") agrees to give prompt
notice to the party against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The
Indemnifying Party may, and at the request of the Indemnified
Party shall, participate in and control the defense of any third
party suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 11.02 for
any settlement effected without its consent (which may not be
unreasonably withheld or delayed) of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder.
11.04. Holdback and Withholding Shares. At the Closing, the
Stockholders shall be deemed to have directed Parent to withhold
from delivery the Holdback Shares and the Withholding Shares.
The Holdback Shares and the Withholding Shares shall be issued to
the Stockholders but held in escrow by Parent subject to the
terms and conditions hereinafter set forth. Holdback Shares and
the Withholding Shares shall be considered issued and outstanding
shares of capital stock of Parent and the Stockholders shall be
entitled to vote such shares and receive any and all dividends or
distributions payable with respect to such shares.
11.05. Holdback Termination. The Holdback Shares shall be
distributed to the Stockholders as follows:
(a) Within 30 days after the earlier to occur of (i) the
delivery by Price Waterhouse LLP of its report on Parent's
financial statements for the fiscal year ended June 30, 1998 or
(ii) the one (1) year anniversary of the Closing Date, the
Holdback Shares shall be distributed to the Stockholders, except
that the portion of the Holdback Shares having a value as of the
date hereof most nearly equal to the Damages incurred by Parent
as to which a Claim shall have been previously and duly delivered
to the Stockholders shall continue to be withheld in escrow.
(b) The value of a Holdback Share as of the date hereof
shall be equal to the Parent Stock Price (subject to appropriate
adjustment in the event of a stock split or reverse stock split).
The amount of such Damages shall be based upon a written
certification of the Chief Executive Officer of Parent to the
Stockholders as to the amount of Damages incurred, together with
supporting documentation. If the Stockholders disagree with the
amount of Damages set forth in such certificate, and if the
Stockholders and Parent cannot reach a mutually satisfactory
understanding with regard to the amount of Damages within five
(5) business days after delivery of the certificate to the
Stockholders, the matter shall be promptly submitted to binding
arbitration in Boston, Massachusetts in accordance with the rules
of the American Arbitration Association. The balance of the
Holdback Shares not so withheld shall be distributed to the
Stockholders.
(c) The Holdback Shares not so distributed to the
Stockholders pursuant to subsection 11.05(a) and 11.05(b) shall
be retained by Parent in escrow until such pending Claims are
resolved; provided, however, that upon the disposition of any
such Claim prior to the disposition of all such Claims, Parent
shall distribute to the Stockholders that amount of the Holdback
Shares having a value as of the date hereof in excess of 100% of
the aggregate amounts of the remaining Damages incurred as
determined above.
11.06. Withholding Termination.
(a) Within 25 business days after the Lapse Date (as
defined in Section 6.04), the Withholding Shares shall be
distributed to the Stockholders, except that the portion of the
Withholding Shares having a value as of the date hereof most
nearly equal to the Damages incurred by Parent as a result of or
relating to a breach of the provisions of Section 6.04 hereof
shall continue to be held in escrow.
(b) The value of the Withholding Shares as of the date
hereof shall be equal to the Parent Stock Price (subject to
appropriate adjustment in the event of a stock split or reverse
stock split). The amount of such Damages shall be based upon a
written certification of the Chief Executive Officer of Parent to
the Stockholders as to the amount of Damages incurred, together
with supporting documentation. If the Stockholders disagree with
the amount of Damages set forth in such certificate, and if the
Stockholders and Parent cannot reach a mutually satisfactory
understanding with regard to the amount of Damages within five
(5) business days after delivery of the certificate to the
Stockholders, the matter shall be promptly submitted to binding
arbitration in Boston, Massachusetts in accordance with the rules
of the American Arbitration Association. The balance of the
Withholding Shares not so withheld shall be distributed to the
Stockholders.
(c) The Withholding Shares not so distributed to the
Stockholders pursuant to subsection 11.06(a) and 11.06(b) shall
be retained by Parent in escrow until such pending Claims are
resolved; provided, however, that upon the disposition of any
such Claim prior to the disposition of all such Claims, Parent
shall distribute to the Stockholders that amount of the
Withholding Shares having a value as of the date hereof in
excess of 100% of the aggregate amounts of the remaining Damages
incurred as determined above.
ARTICLE XII
MISCELLANEOUS
12.01. Notices. All notices and other communications which
by any provision of this Agreement are required or permitted to
be given shall be given in writing and shall be (a) mailed by
first-class or express mail, postage prepaid, (b) sent by telex,
telegram, telecopy or other form of rapid transmission, confirmed
by mailing (by first class or express mail, postage prepaid)
written confirmation at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party
(which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
if to Parent, Sub, or the Company to:
PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: William T. Sobo, Jr.
Senior Vice President and Chief Financial
Officer
Telecopy: (617) 487-9931
with a copy to:
William J. Schnoor, Jr.
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110
Telecopy: (617) 248-7100
if to the Stockholders to:
Clarence A. Kemper
51 Baskin Road
Lexington, MA 02173
P. Michael Masterson
217 Plymouth Road
Newton, MA 02161
Mark A. Lester
5 Grantland Road
Wellesley, MA 02181
Ronald Tetzlaff
3505 Goldenrod Drive
Alpharetta, GA 30202
Alan R. Parenteau
8 Captain Forbush Lane
Acton, MA 01720
Warren Handren
77 Winsor Avenue
Johnston, RI 02919
David Hyde
27 Katherine Way
Plaistow, NH 03865
Jon R. Voss
37 Hall Avenue
Somerville, MA 02144
with a copy to:
James E. Levin
Carey & Levin
13 Water Street
Holliston, MA 01746
Telecopy: (508) 429-8444
Notices shall be deemed duly delivered three business days
after being sent by first class mail, postage prepaid, or one
business day after being sent via a reputable nationwide express
mail service. Notices delivered via any other means shall be
deemed duly delivered upon actual receipt by the individual for
whom such notice is intended. Any notice sent to a party hereto
shall be sent simultaneously, by the same means, to such party's
counsel, as set forth above.
12.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be
amended or waived prior to the Closing Date if, and only if, such
amendment or waiver is in writing and signed by Parent, Sub and
the Company.
(b) No failure or delay by either party in exercising
any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense; provided, however, that if the
Closing shall occur all such costs and expenses incurred by the
Company and the Stockholders shall be paid or reimbursed by the
Stockholders.
12.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer
any of his or its rights or obligations under this Agreement
without the consent of the other parties hereto.
12.05. Further Assurances. From time to time after the
Closing, at the request of Parent and without further
consideration, the Stockholders will execute and deliver to
Parent such other documents, and take such other action, at
Parent's cost and expense, as Parent may reasonably request in
order to consummate more effectively the transactions
contemplated hereby.
12.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the Commonwealth of
Massachusetts, without regard to the conflicts of law rules of
such state.
12.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
12.08. Entire Agreement. This Agreement (including the
exhibits and schedules hereto) constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations,
whether written or oral, between the parties with respect to the
subject matter hereof. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has
been made or relied upon by either party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
12.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
12.10. Jurisdiction. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the
courts of the Commonwealth of Massachusetts, and each of the
parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.
Process in any such action or proceeding may be served on any
party anywhere in the world, whether within or without the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
PAREXEL INTERNATIONAL CORPORATION
By: /s/ Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: Chief Executive Officer
KMI ACQUISITION CORPORATION
By: /s/ Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: Chief Executive Officer
KEMPER-MASTERSON, INC.
By: Clarence A. Kemper
Name: Clarence A. Kember
Title: President
Clarence A. Kemper
Clarence A. Kemper
P. Michael Masterson
P. Michael Masterson
Warren Handren
Warren Handren
David Hyde
David Hyde
Mark A. Lester
Mark A. Lester
Alan R. Parenteau
Alan R. Parenteau
Ronald Tetzlaff
Ronald Tetzlaff
Jon R. Voss
Jon R. Voss
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of December 1, 1997 among PAREXEL
International Corporation, a Massachusetts corporation (the
"Company") and Clarence A. Kemper, P. Michael Masterson, Mark A.
Lester, Ronald Tetzlaff, Alan R. Parenteau, Warren Handren, David
Hyde and Jon R. Voss (individually, a "Stockholder," and
collectively, the "Stockholders").
W I T N E S S E T H :
WHEREAS, pursuant to the Agreement and Plan of Reorganization
and Merger dated as of October 22, 1997 (the "Merger Agreement")
among the Company, KMI Acquisition Corporation, a Massachusetts
corporation ("Sub"), Kemper-Masterson, Inc., a Delaware
corporation ("KMI") and the other parties named therein, Sub will
be merged with and into KMI and KMI will become a wholly-owned
subsidiary of the Company;
WHEREAS, in connection therewith, the Stockholders will
receive unregistered shares of Common Stock of the Company (the
"Shares"); and
WHEREAS, the Company and the Stockholders wish to set forth
certain rights and obligations with regard to the registration of
the Shares;
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time
administering the Securities Act.
"Shares" shall mean the shares of Common Stock of the
Company issued to the Stockholders on even date herewith
pursuant to the Merger Agreement.
"Common Stock" shall mean the Common Stock, $.01 par
value, of the Company, as constituted as of the date of this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so
described in Section 9.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described
in Section 9.
2. Compliance with Securities Laws. The Stockholders
represent and warrant that they:
(a) have paid no brokerage or similar commissions in
connection with the acquisition of the Shares.
(b) are acquiring such Shares solely for their own
account.
(c) have provided such information as may reasonably
have been requested by the Company in order for the Company or
its counsel to evaluate the availability of an exemption under
the Securities Act for the issuance of the Shares to the
Stockholders.
3. Securities Act Matters. The Stockholders acknowledge
and agree that the Shares have not been registered under the
Securities Act or under the securities laws of any state, in
reliance upon certain exemptive provisions of such statutes. The
Stockholders recognize and acknowledge that such claims of
exemption are based, in part, upon the Stockholders'
representations contained in this Agreement. The Stockholders
further recognize and acknowledge that, because the Shares are
unregistered under federal and state laws, they are not presently
eligible for public resale, and may only be resold in the future
pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or
pursuant to a valid exemption from such registration
requirements. The Stockholders recognize and acknowledge that
Rule 144 (which facilitates routine sales of securities in
accordance with the terms and conditions of that Rule, including
a holding period requirement) is not now available for resale of
the Shares, and the Stockholders recognize and acknowledge that,
in the absence of the availability of Rule 144, a sale pursuant
to a claim of exemption from registration under the Securities
Act would require compliance with some other exemption under the
Securities Act, which may not be available for resale of the
Shares. The Stockholders recognize and acknowledge that, except
as set forth in this Agreement, the Company is under no
obligation to register the Shares, either pursuant to the
Securities Act or the securities laws of any state.
4. Restrictive Legend. Each certificate representing
Shares shall, except as otherwise provided in this Section 4 or
in Section 5, be stamped or otherwise imprinted with a legend
substantially in the following form:
"The Securities represented hereby have not been
registered under the Securities Act of 1933, as
amended, and may not be sold, transferred or otherwise
disposed of except in accordance with the terms thereof
and unless registered with the Securities and Exchange
Commission of the United States and the securities
regulatory authorities of certain states or unless an
exemption from such registration is available."
Such certificates shall not bear such legend if in the
opinion of counsel satisfactory to the Company the securities
being sold thereby may be publicly sold without registration
under the Securities Act or if such securities have been sold
pursuant to Rule 144, any other exemption under the Securities
Act or an effective registration statement.
5. Notice of Proposed Transfer. Prior to any proposed
transfer of any Shares before the expiration of the applicable
holding period set forth in Rule 144, each Stockholder shall give
written notice to the Company of his intention to effect such
transfer. Prior to any registration statement described in
Section 6 becoming effective, each such notice shall describe the
manner of the proposed transfer and, if requested by the Company,
shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer may be effected
without registration under the Securities Act, whereupon the
Stockholder shall be entitled to transfer such security in
accordance with the terms of his notice. Each certificate for
Shares transferred as above provided shall bear the legend set
forth in Section 4, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the
provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act), (ii) such
transfer is pursuant to a registration under the Securities Act,
or (iii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee
(other than an affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration
under the Securities Act.
6. Required Registration. The Company agrees to use
commercially reasonable efforts to (i) cause a registration
statement on Form S-3 (the "Initial Registration Statement") or
any successor form thereto under the Securities Act relating to
the resale of fifty percent (50%) of the Shares to be filed no
later than the 90th day following the date of the Merger
Agreement; (ii) cause a registration statement on Form S-3 or any
successor form thereto under the Securities Act (or an amendment
to the Initial Registration Statement) relating to the resale of
the remaining fifty percent (50%) of the Shares (including all of
the Holdback Shares) to be filed approximately 180 days after the
filing date of the Initial Registration Statement; and (iii)
cause the Initial Registration Statement to become effective as
soon as practicable after the filing of the Initial Registration
Statement and thereafter remain effective until the earlier of
(A) one year after the date of the Merger Agreement or (B) the
sale of all Shares covered thereby. Anything to the contrary
herein notwithstanding, the Company shall not be required to take
any action to cause any registration statement to be declared
effective by the Commission at any time prior to the publication
by the Company of financial results including at least thirty
(30) days' post-closing combined operating results of the Company
and KMI (the "Pooling Restricted Period"), and the Company may
suspend sales in accordance with Section 8 at any time under any
registration statement immediately upon written notice to the
Stockholders at their last known address, for any of the reasons
and for the time periods set forth in Section 8.
7. Registration Procedures. If and whenever the Company
is required by the provisions of Section 6 to use commercially
reasonable efforts to effect the registration of any Shares under
the Securities Act, the Company will, as expeditiously as
possible:
(a) prepare and file with the Commission such
amendments and supplements to the applicable registration
statement, and the prospectus used in connection therewith, as
may be necessary to comply with the Securities Act;
(b) furnish to the Stockholders such number of copies
of the relevant registration statement and each amendment and
supplement thereto (in each case including exhibits) and the
prospectus included therein (including each preliminary
prospectus) as they reasonably may request in order to facilitate
the public sale or other disposition of the Shares covered by
such registration statement;
(c) register or qualify the Shares covered by the
applicable registration statement under the securities or "blue
sky" laws of the jurisdictions where the Company is currently
registered or qualified, provided, however, that the Company
shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(d) have the Shares covered by the applicable
registration statement subject to quotation on the Nasdaq
National Market; and
(e) promptly notify each Stockholder (at his last
known address) (i) of the effective date of the applicable
registration statement and the date when any post-effective
amendment to such registration statement becomes effective, (ii)
of any stop order or notification from the Commission or any
other jurisdiction as to the suspension of the effectiveness of
such registration statement, or (iii) of the institution and
ending of any suspension under Section 8.
8. Suspension.
(a) The rights of the Stockholders to resell the
Shares pursuant to this Agreement and the applicable registration
statement may be suspended by the Company on the occurrence of
any of the following events:
(i) the Company has made a determination to
conduct a public offering;
(ii) the Company is about to make a public
disclosure of information of a material nature;
(iii) there then exists material, non-public
information relating to the Company which, in the good faith
determination of its Board of Directors, the disclosure of
which would not be in the interests of the Company or its
stockholders during that time; or
(iv) the Company is engaged in any activity at any
time that, in the good faith determination of its Board of
Directors, would be adversely affected by the continued
compliance with this Agreement or the continued distribution
of the Shares by the Stockholders.
(b) The Company shall use commercially reasonable
efforts to minimize the length of any suspension:
(i) under Section 8(a)(i), to a period of thirty
(30) days, beginning on the day that notice of a suspension is
given to the Stockholders and ending on the earlier of: (A) the
date of disclosure of the public offering, or (B) the date which
is 30 days after the beginning of the suspension, provided that
during such suspension, the Company will proceed with
commercially reasonable efforts to file the appropriate
documentation in respect of, and otherwise complete, such public
offering as expeditiously as practicable;
(ii) under Section 8(a)(ii), to a period of three
(3) business days;
(iii) under Section 8(a)(iii) or 8(a)(iv), if
the activity is a prospective acquisition by the Company, to a
period beginning when the notice of suspension is given to the
Stockholders and ending on the earliest of: (A) the date on
which the Company publicly announces the acquisition, (B) the
closing of the transaction and the making of all required filings
under the Securities Act or Exchange Act, or (C) the date on
which discussions regarding the acquisition are terminated; and
(iv) under Section 8(a)(iii) or 8(a)(iv), for any
reason other than a prospective acquisition by the Company, to a
period beginning when the notice of suspension is given to the
Stockholders and ending on the earlier of: (A) the disclosure of
the activity, or (B) the reason is no longer operative (provided,
however, that the Company shall not avail itself of the
suspension rights contained in Section 8(a)(iv) more than once in
every six (6) month period commencing on the date of
effectiveness of the Registration Statement).
9. Expenses. All expenses incurred by the Company in
complying with Section 6, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for
the Company, fees and expenses incurred in connection with
complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, and costs of issuance,
but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts (if any) and selling
commissions applicable to the sale of the Shares covered by any
registration statement, as well as all professional service fees
incurred by the Stockholders, are called "Selling Expenses".
All Selling Expenses shall be borne by the Stockholders.
The Company will pay all Registration Expenses in connection with
the preparation and filing of each registration statement. The
Company shall not be obligated to pay any Registration Expenses
in connection with the preparation and filing of any registration
statement if such registration statement is withdrawn, delayed or
abandoned for any reason by the Stockholders.
10. Indemnification and Contribution.
(a) In connection with the registration of the Shares
under the Securities Act pursuant to Section 6, the Company will
indemnify and hold harmless each Stockholder, each underwriter of
such Shares thereunder and each other person, if any, who
controls such underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which such Stockholder, underwriter or controlling
person may become subject under the Securities Act, Exchange Act,
state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or
alleged untrue statement of material fact contained in the
registration statement under which such Shares were registered
under the Securities Act pursuant to Section 6, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, (ii) the omission or alleged
omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(iii) any violation by the Company or its agents of any rule or
regulation promulgated under the Securities Act, Exchange Act or
state securities laws applicable to the Company or its agents and
relating to action or inaction required of the Company in
connection with such registration, and the Company will reimburse
each such Stockholder, each such underwriter and each such
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, as such
expenses are incurred, provided, however, that the Company will
not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission so made based upon information furnished by any
such Stockholder, any such underwriter or any such controlling
person.
(b) In connection with the registration of the Shares
under the Securities Act pursuant to Section 6, the Stockholders
will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs such
registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within
the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or
such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) the failure
of the Stockholders to comply with the provisions of Section 13
herein or (ii) any untrue statement or alleged untrue statement
of any material fact contained in the registration statement, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (iii) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, as such expenses are incurred, provided,
however, that the Stockholders will be liable hereunder in any
such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in reliance upon and based upon information
pertaining to the Stockholders, furnished by or for the
Stockholders in writing.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than
under this Section 10 and shall only relieve it from any
liability which it may have to such indemnified party under this
Section 10 if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with
counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof and the
approval by the indemnified party of the counsel chosen by the
indemnifying party, the indemnifying party shall not be liable to
such indemnified party under this Section 10 for any legal
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and
if the interests of the indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying party,
the indemnified party shall have the right to select a separate
counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as
incurred.
(d) In order to provide for just and equitable
contribution to joint liability in any case in which either (i) a
Stockholder exercises rights under this Agreement and makes a
claim for indemnification pursuant to this Section 10 but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding
the fact that this Section 10 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be
required on the part of the Stockholder in circumstances for
which indemnification is provided under this Section 10; then,
and in each such case, the Company and the Stockholders will
contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in proportion to the relative fault of the Company, on
the one hand, and the Stockholders, on the other hand; provided,
however, that, in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(e) The indemnities provided in this Section 10 shall
survive the transfer of any Shares by the Stockholder.
11. Reports Under Securities Exchange Act of 1934. With a
view to making available to each of the Stockholders the benefits
of Rule 144 promulgated under the Securities Act and any other
rule or regulation thereunder that may at any time permit any
such Stockholder to sell securities of the Company to the public
without registration, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) maintain registration of its Common Stock under
Section 12 of the Exchange Act;
(c) file in a timely manner all reports and other
documents required of the Company under the Securities Act and
the Exchange Act; and
(d) furnish to any such Stockholder, so long as the
Stockholder owns any Shares, forthwith upon request: (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such
other information as may be reasonably requested in availing the
Stockholder of any rule or regulation under the Securities Act
which permits the selling of any such securities without
registration or pursuant to such form.
12. Changes in Common Stock. If, and as often as, there is
any change in the Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the
provisions hereof so that the rights and privileges granted
hereby shall continue with respect to the Shares as so changed.
13. Stockholder's Conduct. With respect to any sale of
Shares covered by a registration statement, each Stockholder
understands and agrees as follows:
(a) Each Stockholder will carefully review the
information concerning him contained in any registration
statement and will promptly notify the Company if such
information is not complete and accurate in all respects,
including having properly disclosed any position, office or other
material relationship within the past three years with the
Company or its affiliates;
(b) Each Stockholder agrees to sell Shares only in the
manner set forth in (i) the applicable registration statement
(or in compliance with Section 5 hereof), (ii) the Affiliate
Agreement (as defined in the Merger Agreement) and (iii) Section
14;
(c) Each Stockholder agrees to comply with the anti-
manipulation rules under the Exchange Act in connection with
purchases and sales of securities of the Company during the time
any registration statement remains effective;
(d) Each Stockholder agrees to only sell Shares in a
jurisdiction after counsel for the Company has advised that such
sale is permissible under the applicable state securities or
"Blue Sky" laws;
(e) Each Stockholder agrees to comply with the
prospectus delivery requirements of the Securities Act;
(f) Each Stockholder agrees to promptly notify the
Company of any and all planned sales and completed sales of
Shares; and
(g) Each Stockholder agrees to suspend sales during
the periods when sales are to be suspended pursuant to Section 8.
(h) In connection with the registration of the Shares,
each Stockholder will furnish to the Company in writing such
information requested by the Company with respect to himself and
the proposed distribution by him as shall be necessary in order
to comply with federal and applicable state securities laws.
(i) Each Stockholder hereby agrees that he will not
sell, exchange, transfer, pledge, dispose or otherwise reduce his
risk relative to any Shares owned by him during the period which
begins on the date hereof and ends at such time as the Company
publicly announces financial results covering at least thirty
days of combined operations of the Company and KMI. The Company,
at its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates
representing the Shares, provided that such stop transfer orders
are consistent with the other provisions of this Agreement.
14. Selling Procedures.
(a) Each Stockholder will notify the Company of his
intention to sell Shares under any registration statement not
less than five (5) business days prior to the expected date of
such sale by faxing the "Takedown Request" attached hereto as
Exhibit A to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
During this period, the Company will review the prospectus to
determine if a suspension pursuant to Section 8 is necessary or
appropriate. If the Company does not notify the Stockholder of a
suspension pursuant to Section 8, the Stockholder may conclude
the proposed sale, on the proposed date of sale, strictly in
accordance with the Takedown Request.
(b) Each Stockholder will notify the Company of each
sale under any registration statement in accordance with the
Takedown Request within 24 hours of the sale by faxing the
"Notification of Sale" attached hereto as Exhibit B to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
Based on the information set forth on the Notification of Sale,
the Company will prepare or cause to be prepared the appropriate
notifications to its Transfer Agent to remove the legend
described in Section 4 from the Shares so sold.
15. Representations and Covenants. Each Stockholder hereby
represents and warrants to the Company as follows:
(a) THE STOCKHOLDER UNDERSTANDS THAT HIS INVESTMENT IN
THE SHARES INVOLVES RISK.
(b) THE STOCKHOLDER HAS CONSULTED HIS OWN ATTORNEY(S),
ACCOUNTANT(S) OR INVESTMENT ADVISOR(S) WITH RESPECT TO THE
INVESTMENT CONTEMPLATED HEREBY AND ITS SUITABILITY FOR THE
STOCKHOLDER. ANY SPECIFIC ACKNOWLEDGMENT SET FORTH BELOW WITH
RESPECT TO ANY STATEMENT OR INFORMATION FURNISHED TO THE
STOCKHOLDER SHALL NOT BE DEEMED TO LIMIT THE GENERALITY OF THIS
REPRESENTATION AND WARRANTY.
(c) The Stockholder understands that he must bear the
economic risk of this investment until such time as the Shares
are registered; that the Shares are not currently registered
under the Securities Act, and, therefore, cannot be resold unless
they are subsequently registered under the Securities Act or
unless an exemption from such registration is available; that the
Stockholder is purchasing the Shares with no present view toward
resale or other distribution thereof; and that the Stockholder
agrees not to resell or otherwise dispose of all or any part of
the Shares, except as permitted by law, including, without
limitation, any and all applicable provisions of the Merger
Agreement and this Agreement and any regulations under the
Securities Act and applicable state securities laws.
(d) The Stockholder has adequate means of providing
for his current needs and personal contingencies and has no need
for liquidity in connection with this investment in the Shares.
(e) The Stockholder has reviewed the representations
and warranties of the Company set forth in the Merger Agreement,
as well as the information provided to the Stockholder by the
Company pursuant to Section 5.05 of the Merger Agreement and has
consulted with his personal legal and financial advisors in
evaluating the merits and risks of the investment in the Shares.
(f) The Stockholder received an offer concerning the
Shares and first learned of this investment in the state or other
jurisdiction listed in the Stockholder's residence address on the
signature page hereto, and intends that the state securities laws
of that state or other jurisdiction alone govern this
transaction.
(g) The Stockholder hereby acknowledges receipt of the
documents described in Section 5.05 of the Merger Agreement,
which documents each Stockholder has reviewed. The Stockholder
further acknowledges and warrants that, prior to the execution of
this Agreement, he has had the opportunity to ask questions and
receive answers from the Company and KMI concerning the terms and
conditions of the transactions contemplated by the Merger
Agreement and the issuance of the Shares, and concerning any of
the documents identified above, and to obtain such additional
further information from the Company and KMI as he has deemed
necessary to verify the accuracy of the information contained in
the documents identified above or any other information furnished
to the Stockholder.
(h) The Stockholder has been advised that, as of the
date hereof, he may be deemed to be an "affiliate" of KMI, as the
term "affiliate" is used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission.
(i) The Stockholder understands that the
representations, warranties and covenants set forth herein will
be relied upon by KMI, the Company, the stockholders of the
Company and their respective counsel and accounting firms.
(j) The Stockholder hereby represents and warrants
that he has not sold, exchanged, transferred, pledged, disposed
or otherwise reduced his risk relative to any shares of KMI
common stock owned by him during the 30 day period preceding the
date hereof.
16. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns
of the parties hereto (including without limitation transferees
of any Shares, provided, that such transferee executes a
counterpart signature page to this Agreement), whether so
expressed or not.
(b) All notices and other communications which by any
provision of this Agreement are required or permitted to be given
shall be given in writing and shall be (a) mailed by first-class
or express mail, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by
mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party
(which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
if to the Company, to:
PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: William T. Sobo, Jr.
Senior Vice President and Chief
Financial Officer
Telecopy: (617) 487-9931
with a copy to:
William J. Schnoor, Jr.
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, MA 02110
Telecopy: (617) 248-7100
if to the Stockholders, to:
Clarence A. Kemper
51 Baskin Road
Lexington, MA 02173
P. Michael Masterson
217 Plymouth Road
Newton, MA 02161
Mark A. Lester
5 Grantland Road
Wellesley, MA 02181
Ronald Tetzlaff
3505 Goldenrod Drive
Alpharetta, GA 30202
Alan R. Parenteau
8 Captain Forbush Lane
Acton, MA 01720
Warren Handren
77 Winsor Avenue
Johnston, RI 02919
David Hyde
27 Katherine Way
Plaistow, NH 03865
Jon R. Voss
37 Hall Avenue
Somerville, MA 02144
with a copy to:
James E. Levin, Esq.
Carey & Levin
13 Water Street
Holliston, MA 01746
Telecopy: (508) 429-8444
if to any subsequent holder of Shares, to it at such
address as may have been furnished to the Company in
writing by such Stockholder;
or, in any case, at such other address or addresses as shall have
been furnished in writing to the Company (in the case of a
Stockholder) or to the Stockholders (in the case of the Company)
in accordance with the provisions of this paragraph. Notices
shall be deemed duly delivered three business days after being
sent by first class mail, postage prepaid, or one business day
after being sent via a reputable nationwide express mail service.
Notices delivered via any other means shall be deemed duly
delivered upon actual receipt by the individual for whom such
notice is intended. Any notice delivered to a party hereunder
shall be sent simultaneously, by the same means, to such party's
counsel as set forth above.
(c) This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be amended or modified, and
provisions hereof may be waived, with the written consent of the
Company and the holders of at least a majority of the outstanding
Shares.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PAREXEL International Corporation
By: Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: President and CEO
Clarence A. Kemper
Clarence A. Kemper
P. Micheal Masterson
P. Michael Masterson
Mark A. Lester
Mark A. Lester
Ronald Tetzlaff
Ronald Tetzlaff
Alan R. Parenteau
Alan R. Parenteau
Warren Handren
Warren Handren
David Hyde
David Hyde
Jon R. Voss
Jon R. Voss
[You must complete pages _____ of this Agreement]
CLARENCE A. KEMPER
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
P. MICHAEL MASTERSON
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
MARK A. LESTER
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
RONALD TETZLAFF
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
ALAN R. PARENTEAU
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
WARREN HANDREN
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
DAVID HYDE
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
JON R. VOSS
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of December 1, 1997 among PAREXEL
International Corporation, a Massachusetts corporation (the
"Company") and Clarence A. Kemper, P. Michael Masterson, Mark A.
Lester, Ronald Tetzlaff, Alan R. Parenteau, Warren Handren, David
Hyde and Jon R. Voss (individually, a "Stockholder," and
collectively, the "Stockholders").
W I T N E S S E T H :
WHEREAS, pursuant to the Agreement and Plan of Reorganization
and Merger dated as of October 22, 1997 (the "Merger Agreement")
among the Company, KMI Acquisition Corporation, a Massachusetts
corporation ("Sub"), Kemper-Masterson, Inc., a Delaware
corporation ("KMI") and the other parties named therein, Sub will
be merged with and into KMI and KMI will become a wholly-owned
subsidiary of the Company;
WHEREAS, in connection therewith, the Stockholders will
receive unregistered shares of Common Stock of the Company (the
"Shares"); and
WHEREAS, the Company and the Stockholders wish to set forth
certain rights and obligations with regard to the registration of
the Shares;
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time
administering the Securities Act.
"Shares" shall mean the shares of Common Stock of the
Company issued to the Stockholders on even date herewith
pursuant to the Merger Agreement.
"Common Stock" shall mean the Common Stock, $.01 par
value, of the Company, as constituted as of the date of this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so
described in Section 9.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described
in Section 9.
2. Compliance with Securities Laws. The Stockholders
represent and warrant that they:
(a) have paid no brokerage or similar commissions in
connection with the acquisition of the Shares.
(b) are acquiring such Shares solely for their own
account.
(c) have provided such information as may reasonably
have been requested by the Company in order for the Company or
its counsel to evaluate the availability of an exemption under
the Securities Act for the issuance of the Shares to the
Stockholders.
3. Securities Act Matters. The Stockholders acknowledge
and agree that the Shares have not been registered under the
Securities Act or under the securities laws of any state, in
reliance upon certain exemptive provisions of such statutes. The
Stockholders recognize and acknowledge that such claims of
exemption are based, in part, upon the Stockholders'
representations contained in this Agreement. The Stockholders
further recognize and acknowledge that, because the Shares are
unregistered under federal and state laws, they are not presently
eligible for public resale, and may only be resold in the future
pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or
pursuant to a valid exemption from such registration
requirements. The Stockholders recognize and acknowledge that
Rule 144 (which facilitates routine sales of securities in
accordance with the terms and conditions of that Rule, including
a holding period requirement) is not now available for resale of
the Shares, and the Stockholders recognize and acknowledge that,
in the absence of the availability of Rule 144, a sale pursuant
to a claim of exemption from registration under the Securities
Act would require compliance with some other exemption under the
Securities Act, which may not be available for resale of the
Shares. The Stockholders recognize and acknowledge that, except
as set forth in this Agreement, the Company is under no
obligation to register the Shares, either pursuant to the
Securities Act or the securities laws of any state.
4. Restrictive Legend. Each certificate representing
Shares shall, except as otherwise provided in this Section 4 or
in Section 5, be stamped or otherwise imprinted with a legend
substantially in the following form:
"The Securities represented hereby have not been
registered under the Securities Act of 1933, as
amended, and may not be sold, transferred or otherwise
disposed of except in accordance with the terms thereof
and unless registered with the Securities and Exchange
Commission of the United States and the securities
regulatory authorities of certain states or unless an
exemption from such registration is available."
Such certificates shall not bear such legend if in the
opinion of counsel satisfactory to the Company the securities
being sold thereby may be publicly sold without registration
under the Securities Act or if such securities have been sold
pursuant to Rule 144, any other exemption under the Securities
Act or an effective registration statement.
5. Notice of Proposed Transfer. Prior to any proposed
transfer of any Shares before the expiration of the applicable
holding period set forth in Rule 144, each Stockholder shall give
written notice to the Company of his intention to effect such
transfer. Prior to any registration statement described in
Section 6 becoming effective, each such notice shall describe the
manner of the proposed transfer and, if requested by the Company,
shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer may be effected
without registration under the Securities Act, whereupon the
Stockholder shall be entitled to transfer such security in
accordance with the terms of his notice. Each certificate for
Shares transferred as above provided shall bear the legend set
forth in Section 4, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the
provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act), (ii) such
transfer is pursuant to a registration under the Securities Act,
or (iii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee
(other than an affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration
under the Securities Act.
6. Required Registration. The Company agrees to use
commercially reasonable efforts to (i) cause a registration
statement on Form S-3 (the "Initial Registration Statement") or
any successor form thereto under the Securities Act relating to
the resale of fifty percent (50%) of the Shares to be filed no
later than the 90th day following the date of the Merger
Agreement; (ii) cause a registration statement on Form S-3 or any
successor form thereto under the Securities Act (or an amendment
to the Initial Registration Statement) relating to the resale of
the remaining fifty percent (50%) of the Shares (including all of
the Holdback Shares) to be filed approximately 180 days after the
filing date of the Initial Registration Statement; and (iii)
cause the Initial Registration Statement to become effective as
soon as practicable after the filing of the Initial Registration
Statement and thereafter remain effective until the earlier of
(A) one year after the date of the Merger Agreement or (B) the
sale of all Shares covered thereby. Anything to the contrary
herein notwithstanding, the Company shall not be required to take
any action to cause any registration statement to be declared
effective by the Commission at any time prior to the publication
by the Company of financial results including at least thirty
(30) days' post-closing combined operating results of the Company
and KMI (the "Pooling Restricted Period"), and the Company may
suspend sales in accordance with Section 8 at any time under any
registration statement immediately upon written notice to the
Stockholders at their last known address, for any of the reasons
and for the time periods set forth in Section 8.
7. Registration Procedures. If and whenever the Company
is required by the provisions of Section 6 to use commercially
reasonable efforts to effect the registration of any Shares under
the Securities Act, the Company will, as expeditiously as
possible:
(a) prepare and file with the Commission such
amendments and supplements to the applicable registration
statement, and the prospectus used in connection therewith, as
may be necessary to comply with the Securities Act;
(b) furnish to the Stockholders such number of copies
of the relevant registration statement and each amendment and
supplement thereto (in each case including exhibits) and the
prospectus included therein (including each preliminary
prospectus) as they reasonably may request in order to facilitate
the public sale or other disposition of the Shares covered by
such registration statement;
(c) register or qualify the Shares covered by the
applicable registration statement under the securities or "blue
sky" laws of the jurisdictions where the Company is currently
registered or qualified, provided, however, that the Company
shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(d) have the Shares covered by the applicable
registration statement subject to quotation on the Nasdaq
National Market; and
(e) promptly notify each Stockholder (at his last
known address) (i) of the effective date of the applicable
registration statement and the date when any post-effective
amendment to such registration statement becomes effective, (ii)
of any stop order or notification from the Commission or any
other jurisdiction as to the suspension of the effectiveness of
such registration statement, or (iii) of the institution and
ending of any suspension under Section 8.
8. Suspension.
(a) The rights of the Stockholders to resell the
Shares pursuant to this Agreement and the applicable registration
statement may be suspended by the Company on the occurrence of
any of the following events:
(i) the Company has made a determination to
conduct a public offering;
(ii) the Company is about to make a public
disclosure of information of a material nature;
(iii) there then exists material, non-public
information relating to the Company which, in the good faith
determination of its Board of Directors, the disclosure of
which would not be in the interests of the Company or its
stockholders during that time; or
(iv) the Company is engaged in any activity at any
time that, in the good faith determination of its Board of
Directors, would be adversely affected by the continued
compliance with this Agreement or the continued distribution
of the Shares by the Stockholders.
(b) The Company shall use commercially reasonable
efforts to minimize the length of any suspension:
(i) under Section 8(a)(i), to a period of thirty
(30) days, beginning on the day that notice of a suspension is
given to the Stockholders and ending on the earlier of: (A) the
date of disclosure of the public offering, or (B) the date which
is 30 days after the beginning of the suspension, provided that
during such suspension, the Company will proceed with
commercially reasonable efforts to file the appropriate
documentation in respect of, and otherwise complete, such public
offering as expeditiously as practicable;
(ii) under Section 8(a)(ii), to a period of three
(3) business days;
(iii) under Section 8(a)(iii) or 8(a)(iv), if
the activity is a prospective acquisition by the Company, to a
period beginning when the notice of suspension is given to the
Stockholders and ending on the earliest of: (A) the date on
which the Company publicly announces the acquisition, (B) the
closing of the transaction and the making of all required filings
under the Securities Act or Exchange Act, or (C) the date on
which discussions regarding the acquisition are terminated; and
(iv) under Section 8(a)(iii) or 8(a)(iv), for any
reason other than a prospective acquisition by the Company, to a
period beginning when the notice of suspension is given to the
Stockholders and ending on the earlier of: (A) the disclosure of
the activity, or (B) the reason is no longer operative (provided,
however, that the Company shall not avail itself of the
suspension rights contained in Section 8(a)(iv) more than once in
every six (6) month period commencing on the date of
effectiveness of the Registration Statement).
9. Expenses. All expenses incurred by the Company in
complying with Section 6, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for
the Company, fees and expenses incurred in connection with
complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, and costs of issuance,
but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts (if any) and selling
commissions applicable to the sale of the Shares covered by any
registration statement, as well as all professional service fees
incurred by the Stockholders, are called "Selling Expenses".
All Selling Expenses shall be borne by the Stockholders.
The Company will pay all Registration Expenses in connection with
the preparation and filing of each registration statement. The
Company shall not be obligated to pay any Registration Expenses
in connection with the preparation and filing of any registration
statement if such registration statement is withdrawn, delayed or
abandoned for any reason by the Stockholders.
10. Indemnification and Contribution.
(a) In connection with the registration of the Shares
under the Securities Act pursuant to Section 6, the Company will
indemnify and hold harmless each Stockholder, each underwriter of
such Shares thereunder and each other person, if any, who
controls such underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which such Stockholder, underwriter or controlling
person may become subject under the Securities Act, Exchange Act,
state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or
alleged untrue statement of material fact contained in the
registration statement under which such Shares were registered
under the Securities Act pursuant to Section 6, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, (ii) the omission or alleged
omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(iii) any violation by the Company or its agents of any rule or
regulation promulgated under the Securities Act, Exchange Act or
state securities laws applicable to the Company or its agents and
relating to action or inaction required of the Company in
connection with such registration, and the Company will reimburse
each such Stockholder, each such underwriter and each such
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, as such
expenses are incurred, provided, however, that the Company will
not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission so made based upon information furnished by any
such Stockholder, any such underwriter or any such controlling
person.
(b) In connection with the registration of the Shares
under the Securities Act pursuant to Section 6, the Stockholders
will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs such
registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within
the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or
such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) the failure
of the Stockholders to comply with the provisions of Section 13
herein or (ii) any untrue statement or alleged untrue statement
of any material fact contained in the registration statement, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (iii) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, as such expenses are incurred, provided,
however, that the Stockholders will be liable hereunder in any
such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in reliance upon and based upon information
pertaining to the Stockholders, furnished by or for the
Stockholders in writing.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than
under this Section 10 and shall only relieve it from any
liability which it may have to such indemnified party under this
Section 10 if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with
counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof and the
approval by the indemnified party of the counsel chosen by the
indemnifying party, the indemnifying party shall not be liable to
such indemnified party under this Section 10 for any legal
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and
if the interests of the indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying party,
the indemnified party shall have the right to select a separate
counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as
incurred.
(d) In order to provide for just and equitable
contribution to joint liability in any case in which either (i) a
Stockholder exercises rights under this Agreement and makes a
claim for indemnification pursuant to this Section 10 but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding
the fact that this Section 10 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be
required on the part of the Stockholder in circumstances for
which indemnification is provided under this Section 10; then,
and in each such case, the Company and the Stockholders will
contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in proportion to the relative fault of the Company, on
the one hand, and the Stockholders, on the other hand; provided,
however, that, in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(e) The indemnities provided in this Section 10 shall
survive the transfer of any Shares by the Stockholder.
11. Reports Under Securities Exchange Act of 1934. With a
view to making available to each of the Stockholders the benefits
of Rule 144 promulgated under the Securities Act and any other
rule or regulation thereunder that may at any time permit any
such Stockholder to sell securities of the Company to the public
without registration, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) maintain registration of its Common Stock under
Section 12 of the Exchange Act;
(c) file in a timely manner all reports and other
documents required of the Company under the Securities Act and
the Exchange Act; and
(d) furnish to any such Stockholder, so long as the
Stockholder owns any Shares, forthwith upon request: (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such
other information as may be reasonably requested in availing the
Stockholder of any rule or regulation under the Securities Act
which permits the selling of any such securities without
registration or pursuant to such form.
12. Changes in Common Stock. If, and as often as, there is
any change in the Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the
provisions hereof so that the rights and privileges granted
hereby shall continue with respect to the Shares as so changed.
13. Stockholder's Conduct. With respect to any sale of
Shares covered by a registration statement, each Stockholder
understands and agrees as follows:
(a) Each Stockholder will carefully review the
information concerning him contained in any registration
statement and will promptly notify the Company if such
information is not complete and accurate in all respects,
including having properly disclosed any position, office or other
material relationship within the past three years with the
Company or its affiliates;
(b) Each Stockholder agrees to sell Shares only in the
manner set forth in (i) the applicable registration statement
(or in compliance with Section 5 hereof), (ii) the Affiliate
Agreement (as defined in the Merger Agreement) and (iii) Section
14;
(c) Each Stockholder agrees to comply with the anti-
manipulation rules under the Exchange Act in connection with
purchases and sales of securities of the Company during the time
any registration statement remains effective;
(d) Each Stockholder agrees to only sell Shares in a
jurisdiction after counsel for the Company has advised that such
sale is permissible under the applicable state securities or
"Blue Sky" laws;
(e) Each Stockholder agrees to comply with the
prospectus delivery requirements of the Securities Act;
(f) Each Stockholder agrees to promptly notify the
Company of any and all planned sales and completed sales of
Shares; and
(g) Each Stockholder agrees to suspend sales during
the periods when sales are to be suspended pursuant to Section 8.
(h) In connection with the registration of the Shares,
each Stockholder will furnish to the Company in writing such
information requested by the Company with respect to himself and
the proposed distribution by him as shall be necessary in order
to comply with federal and applicable state securities laws.
(i) Each Stockholder hereby agrees that he will not
sell, exchange, transfer, pledge, dispose or otherwise reduce his
risk relative to any Shares owned by him during the period which
begins on the date hereof and ends at such time as the Company
publicly announces financial results covering at least thirty
days of combined operations of the Company and KMI. The Company,
at its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates
representing the Shares, provided that such stop transfer orders
are consistent with the other provisions of this Agreement.
14. Selling Procedures.
(a) Each Stockholder will notify the Company of his
intention to sell Shares under any registration statement not
less than five (5) business days prior to the expected date of
such sale by faxing the "Takedown Request" attached hereto as
Exhibit A to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
During this period, the Company will review the prospectus to
determine if a suspension pursuant to Section 8 is necessary or
appropriate. If the Company does not notify the Stockholder of a
suspension pursuant to Section 8, the Stockholder may conclude
the proposed sale, on the proposed date of sale, strictly in
accordance with the Takedown Request.
(b) Each Stockholder will notify the Company of each
sale under any registration statement in accordance with the
Takedown Request within 24 hours of the sale by faxing the
"Notification of Sale" attached hereto as Exhibit B to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
Based on the information set forth on the Notification of Sale,
the Company will prepare or cause to be prepared the appropriate
notifications to its Transfer Agent to remove the legend
described in Section 4 from the Shares so sold.
15. Representations and Covenants. Each Stockholder hereby
represents and warrants to the Company as follows:
(a) THE STOCKHOLDER UNDERSTANDS THAT HIS INVESTMENT IN
THE SHARES INVOLVES RISK.
(b) THE STOCKHOLDER HAS CONSULTED HIS OWN ATTORNEY(S),
ACCOUNTANT(S) OR INVESTMENT ADVISOR(S) WITH RESPECT TO THE
INVESTMENT CONTEMPLATED HEREBY AND ITS SUITABILITY FOR THE
STOCKHOLDER. ANY SPECIFIC ACKNOWLEDGMENT SET FORTH BELOW WITH
RESPECT TO ANY STATEMENT OR INFORMATION FURNISHED TO THE
STOCKHOLDER SHALL NOT BE DEEMED TO LIMIT THE GENERALITY OF THIS
REPRESENTATION AND WARRANTY.
(c) The Stockholder understands that he must bear the
economic risk of this investment until such time as the Shares
are registered; that the Shares are not currently registered
under the Securities Act, and, therefore, cannot be resold unless
they are subsequently registered under the Securities Act or
unless an exemption from such registration is available; that the
Stockholder is purchasing the Shares with no present view toward
resale or other distribution thereof; and that the Stockholder
agrees not to resell or otherwise dispose of all or any part of
the Shares, except as permitted by law, including, without
limitation, any and all applicable provisions of the Merger
Agreement and this Agreement and any regulations under the
Securities Act and applicable state securities laws.
(d) The Stockholder has adequate means of providing
for his current needs and personal contingencies and has no need
for liquidity in connection with this investment in the Shares.
(e) The Stockholder has reviewed the representations
and warranties of the Company set forth in the Merger Agreement,
as well as the information provided to the Stockholder by the
Company pursuant to Section 5.05 of the Merger Agreement and has
consulted with his personal legal and financial advisors in
evaluating the merits and risks of the investment in the Shares.
(f) The Stockholder received an offer concerning the
Shares and first learned of this investment in the state or other
jurisdiction listed in the Stockholder's residence address on the
signature page hereto, and intends that the state securities laws
of that state or other jurisdiction alone govern this
transaction.
(g) The Stockholder hereby acknowledges receipt of the
documents described in Section 5.05 of the Merger Agreement,
which documents each Stockholder has reviewed. The Stockholder
further acknowledges and warrants that, prior to the execution of
this Agreement, he has had the opportunity to ask questions and
receive answers from the Company and KMI concerning the terms and
conditions of the transactions contemplated by the Merger
Agreement and the issuance of the Shares, and concerning any of
the documents identified above, and to obtain such additional
further information from the Company and KMI as he has deemed
necessary to verify the accuracy of the information contained in
the documents identified above or any other information furnished
to the Stockholder.
(h) The Stockholder has been advised that, as of the
date hereof, he may be deemed to be an "affiliate" of KMI, as the
term "affiliate" is used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission.
(i) The Stockholder understands that the
representations, warranties and covenants set forth herein will
be relied upon by KMI, the Company, the stockholders of the
Company and their respective counsel and accounting firms.
(j) The Stockholder hereby represents and warrants
that he has not sold, exchanged, transferred, pledged, disposed
or otherwise reduced his risk relative to any shares of KMI
common stock owned by him during the 30 day period preceding the
date hereof.
16. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns
of the parties hereto (including without limitation transferees
of any Shares, provided, that such transferee executes a
counterpart signature page to this Agreement), whether so
expressed or not.
(b) All notices and other communications which by any
provision of this Agreement are required or permitted to be given
shall be given in writing and shall be (a) mailed by first-class
or express mail, postage prepaid, (b) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by
mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party
(which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
if to the Company, to:
PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: William T. Sobo, Jr.
Senior Vice President and Chief
Financial Officer
Telecopy: (617) 487-9931
with a copy to:
William J. Schnoor, Jr.
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, MA 02110
Telecopy: (617) 248-7100
if to the Stockholders, to:
Clarence A. Kemper
51 Baskin Road
Lexington, MA 02173
P. Michael Masterson
217 Plymouth Road
Newton, MA 02161
Mark A. Lester
5 Grantland Road
Wellesley, MA 02181
Ronald Tetzlaff
3505 Goldenrod Drive
Alpharetta, GA 30202
Alan R. Parenteau
8 Captain Forbush Lane
Acton, MA 01720
Warren Handren
77 Winsor Avenue
Johnston, RI 02919
David Hyde
27 Katherine Way
Plaistow, NH 03865
Jon R. Voss
37 Hall Avenue
Somerville, MA 02144
with a copy to:
James E. Levin, Esq.
Carey & Levin
13 Water Street
Holliston, MA 01746
Telecopy: (508) 429-8444
if to any subsequent holder of Shares, to it at such
address as may have been furnished to the Company in
writing by such Stockholder;
or, in any case, at such other address or addresses as shall have
been furnished in writing to the Company (in the case of a
Stockholder) or to the Stockholders (in the case of the Company)
in accordance with the provisions of this paragraph. Notices
shall be deemed duly delivered three business days after being
sent by first class mail, postage prepaid, or one business day
after being sent via a reputable nationwide express mail service.
Notices delivered via any other means shall be deemed duly
delivered upon actual receipt by the individual for whom such
notice is intended. Any notice delivered to a party hereunder
shall be sent simultaneously, by the same means, to such party's
counsel as set forth above.
(c) This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be amended or modified, and
provisions hereof may be waived, with the written consent of the
Company and the holders of at least a majority of the outstanding
Shares.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PAREXEL International Corporation
By: Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: President and CEO
Clarence A. Kemper
Clarence A. Kemper
P. Micheal Masterson
P. Michael Masterson
Mark A. Lester
Mark A. Lester
Ronald Tetzlaff
Ronald Tetzlaff
Alan R. Parenteau
Alan R. Parenteau
Warren Handren
Warren Handren
David Hyde
David Hyde
Jon R. Voss
Jon R. Voss
[You must complete pages _____ of this Agreement]
CLARENCE A. KEMPER
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
P. MICHAEL MASTERSON
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
MARK A. LESTER
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
RONALD TETZLAFF
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
ALAN R. PARENTEAU
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
WARREN HANDREN
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
DAVID HYDE
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
JON R. VOSS
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
If the Stockholder is a natural person and is an accredited
investor described by category 12 or 13 (or both) set forth on
the attached Exhibit C, please check this box.
If the Stockholder has not checked the box above, please
check this box if at least one of the categories set forth on the
attached Exhibit C describes you.
Exhibit 4.4
ASSET PURCHASE AGREEMENT
dated as of
September 26, 1997
among
PAREXEL International Corporation
Perceptive Systems, Inc.
and Howard W. Foster
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.01. Definitions 1
ARTICLE II PURCHASE AND SALE 3
2.01. Purchase and Sale 3
2.02. Excluded Assets 5
2.03. Assumption of Liabilities 5
2.04. Excluded Liabilities 5
2.05. Assignment of Contracts and Rights 6
2.06. Purchase Price; Allocation of Purchase Price 7
2.07. Closing 7
2.08. Certificates for Parent Stock 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND FOSTER 9
3.01. Corporate Existence and Power 9
3.02. Authority 10
3.03. Governmental Authorization 10
3.04. Non-Contravention 10
3.05. Required Consents 10
3.06. Financial Statements 10
3.07. Absence of Certain Changes 11
3.08. Property and Equipment 12
3.09. Sufficiency of Purchased Assets 12
3.10. Title to Purchased Assets 12
3.11. No Undisclosed Material Liabilities 12
3.12. Litigation 13
3.13. Material Contracts 13
3.14. Licenses and Permits 14
3.15. Insurance Coverage 14
3.16. Compliance with Laws 14
3.17. Inventories 14
3.18. Receivables 14
3.19. Proprietary Rights 15
3.20. Products 16
3.21. Finders' Fees 16
3.22. Other Information 17
3.23. Environmental Compliance 17
3.24. Representations 17
3.25. Purchase for Investment 17
3.26. Consultants 17
3.27. Site Licenses 17
3.28 Source Code Licenses 17
3.29 Other Licenses 18
3.30 Resellers, Distributors, etc. 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 18
4.01. Organization and Existence 18
4.02. Corporate Authorization 18
4.03. Governmental Authorization 18
4.04. Non-Contravention 18
4.05. Common Stock 19
ARTICLE V COVENANTS OF SELLER 19
5.01. Conduct of the Business 19
5.02. Access to Information 19
5.03. Notices of Certain Events 20
5.04. Noncompetition and Nonsolicitation 20
5.05. Confidentiality 21
5.06. Trademarks; Tradenames 21
5.07. No Negotiation with Third Parties 22
5.08. Use of Proprietary Rights 22
5.09. Continuing Disclosure 22
ARTICLE VI COVENANTS OF BUYER 23
6.01. Confidentiality 23
6.02 Software Engineer 23
ARTICLE VII COVENANTS OF BOTH PARTIES 23
7.01. Best Efforts; Further Assurances 23
7.02. Certain Filings 24
ARTICLE VIII TAX MATTERS 24
8.01. Tax Definitions 24
8.02. Tax Matters 25
8.03. Tax Cooperation; Allocation of Taxes 25
ARTICLE IX EMPLOYEE BENEFITS 26
9.01. Employee Benefits Representations 26
9.02. No Third Party Beneficiaries 27
ARTICLE X CONDITIONS TO CLOSING 27
10.01. Conditions to the Obligations of Each Party 27
10.02. Conditions to Obligation of Buyer 28
10.03. Conditions to Obligations of Seller and Foster 29
ARTICLE XI SURVIVAL, INDEMNIFICATION 29
11.01. Survival 29
11.02. Indemnification 29
11.03. Environmental Indemnification 30
11.04. Procedures; No Waiver 30
ARTICLE XII TERMINATION 31
12.01. Grounds for Termination. 31
12.02. Effect of Termination 32
ARTICLE XIII MISCELLANEOUS 32
13.01. Notices 32
13.02. Amendments; No Waivers 33
13.03. Expenses 33
13.04. Successors and Assigns 33
13.05. Governing Law 33
13.06. Counterparts; Effectiveness 33
13.07. Entire Agreement 33
13.08. Bulk Sales Laws 34
13.09. Captions 34
13.10. Jurisdiction 34
13.11. Other Remedies; Specific Performance 34
Exhibits
Exhibit A -- Letter Agreement between Buyer and Howard W. Foster
Exhibit B -- Form of Assignment and Assumption Agreement and
Bill of Sale and General Assignment
Exhibit C -- Form of Assignment of Trademarks
Exhibit D -- Form of Assignment of Lease
Exhibit E -- Registration Rights Agreement between Buyer and
Seller
Schedules
Schedule 2.02 Excluded Assets
Schedule 2.03 Assumed Liabilities
Schedule 2.07(e) Software
Schedule 3.03 Governmental Authorization
Schedule 3.04 Non Contravention
Schedule 3.05 Required Consents
Schedule 3.06 Financial Statements
Schedule 3.08 Property and Equipment
Schedule 3.13 Material Contracts
Schedule 3.14 Licenses and Permits
Schedule 3.18 Receivables
Schedule 3.19 (a) and (b) Proprietary Rights
Schedule 3.26 Consultants
Schedule 3.27 Site Licenses
Schedule 3.29 Other Licenses
Schedule 3.30 Resellers, Distributors, etc.
Schedule 9.01 Employee Benefits
ASSET PURCHASE AGREEMENT
AGREEMENT dated as of September 26, 1997 among PAREXEL
International Corporation, a Massachusetts corporation ("Buyer"),
Perceptive Systems, Inc. a Colorado corporation doing business as
Hayden Image Processing Group ("Seller"), and Howard W. Foster,
sole stockholder of Seller ("Foster").
W I T N E S S E T H :
WHEREAS, Seller develops, produces and markets image
analysis and related software (including without limitation,
whether commercially available or under development, software
known as CHESHIRE and ALICE) and provides consulting and product
development services to clients (the "Business");
WHEREAS, Buyer desires to purchase substantially all of
the assets of the Business from Seller, and Seller desires to
sell substantially all of the assets of the Business to Buyer,
upon the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as
used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under
common control with such other Person.
"Ancillary Agreements" means the Letter Agreement between
Buyer and Foster attached hereto as Exhibit A, the Bill of Sale
and General Assignment in the form attached hereto as Exhibit B,
the Assignment of Trademarks in the form attached hereto as
Exhibit C, the Assignment of Lease in the form attached hereto as
Exhibit D and the Registration Rights Agreement in the form
attached hereto as Exhibit E.
"Balance Sheet" means the unaudited balance sheet of the
Business as of
June 30, 1997 found in Schedule 3.06.
"Balance Sheet Date" means June 30, 1997.
"Closing Date" means the date of the Closing.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset except for (a) mechanic's
materialmen's, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good
faith through appropriate proceedings, (c) purchase money liens
and securing rental payments under capital lease arrangements,
and (d) other liens arising in the ordinary course of business
and not incurred in connection with the borrowing of money.
"Material Adverse Change" means a material adverse change
in the business, assets, condition (financial or otherwise),
results of operations or prospects of the Business taken as a
whole.
"Material Adverse Effect" means a material adverse effect
on the business, assets, condition (financial or otherwise),
results of operations or prospects of the Business taken as a
whole.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Proprietary Rights" means all (A) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, re-examination,
utility, model, certificate of invention and design patents,
patent applications, registrations and applications for
registrations, (B) trademarks, service marks, trade dress, logos,
tradenames, service names and corporate names and registrations
and applications for registration thereof, (C) copyrights and
registrations and applications for registration thereof, (D) mask
works and registrations and applications for registration
thereof, (E) computer software, data and documentation, (F) trade
secrets and confidential business information, whether patentable
or nonpatentable and whether or not reduced to practice, know-
how, manufacturing and product processes and techniques, research
and development information, copyrightable works, financial,
marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and
information, (G) other proprietary rights relating to any of the
foregoing (including without limitation associated goodwill and
remedies against infringements thereof and rights of protection
of an interest therein under the laws of all jurisdictions) and
(H) copies and tangible embodiments thereof.
"Seller's Proprietary Rights" means all Proprietary Rights
relating to the Business and listed on Schedule 3.19(a) attached
hereto.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
Allocation Statement 2.06
Apportioned Obligations 8.03
Assumed Liabilities 2.03
Buyer Common Stock 2.06
Closing 2.07
Code 8.01
Contracts 2.01
Environmental Liabilities 3.23
ERISA 9.01
Excluded Assets 2.02
Excluded Liabilities 2.04
Financial Statements 3.06
Indemnified Party 11.04
Indemnifying Party 11.04
Loss 11.02
Permit 3.14
Petty Cash 2.01
Post-Closing Tax Period 8.01
Pre-Closing Tax Period 8.01
Purchased Assets 2.01
Purchase Price 2.06
Required Consent 3.05
Software 2.07
Taxes 8.01
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale. Upon the terms and subject to
the conditions of this Agreement, Buyer agrees to purchase from
Seller and Seller and Foster agree to sell, transfer, assign and
deliver, or cause to be sold, transferred, assigned and
delivered, to Buyer at Closing, free and clear of all Liens, all
of the assets, properties and business, other than the Excluded
Assets, of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned, held or used in
the conduct of the Business of Seller as the same shall exist on
the Closing Date, including without limitation all assets shown
on the Balance Sheet and not disposed of in the ordinary course
of business, and all assets of the Business acquired by Seller
and Foster between the Balance Sheet Date and the Closing Date
(the "Purchased Assets"), and including, without limitation, all
right, title and interest of Seller, its Affiliates and Foster
in, to and under such of the foregoing as are more specifically
described below:
(i) all real property and leases of, and other interests
in, real property, in each case together with all buildings,
fixtures, and improvements erected thereon;
(ii) all personal property and interests therein, including
machinery, equipment, furniture, office equipment,
communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property,
including without limitation the items listed on Schedule
3.08;
(iii) all raw materials, work-in-process, finished goods,
supplies and other inventories, wherever situated;
(iv) all rights under all contracts, agreements, leases,
licenses, sales and purchase orders and other instruments,
including without limitation the items listed on Schedule
3.13 (collectively, the "Contracts");
(v) all accounts, notes and other receivables of the
Seller;
(vi) all prepaid expenses and deposits including without
limitation ad valorem taxes, leases and rentals;
(vii) all of Seller's cash and cash equivalents on hand and
in banks as of the Closing Date and all petty cash located at
operating facilities of the Business ("Petty Cash");
(viii) all of Seller's rights, claims, credits, causes of
action or rights of set-off against third parties relating to
the Purchased Assets, including, without limitation,
unliquidated rights under manufacturers' and vendors'
warranties;
(ix) all of Seller's Proprietary Rights owned, licensed or
used in the Business including without limitation the items
listed on Schedule 3.19 (such software in source code and
object code forms, fully documented including any and all
related technical and user documentation);
(x) all transferable licenses, permits or other
governmental authorizations affecting, or relating in any way
to, the Business, including without limitation the items
listed on Schedule 3.14;
(xi) all books, records, files and papers, whether in hard
copy or computer format, including, without limitation,
engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of
present and former suppliers, lists of present and former
customers, personnel and employment records, and any
information relating to Taxes imposed on the Purchased
Assets; and
(xii) all right, title and interest of Seller and Foster in
or to any prototypes, enhancements, improvements, or other
tangible work product, technology or process developed,
created or otherwise acquired in connection with the design,
research and development, implementation, market research or
marketing of products of the Business; and
(xiii) all goodwill associated with the Business or the
Purchased Assets, together with the right to represent to
third parties that Buyer is the successor to the Business.
2.02. Excluded Assets. Buyer expressly understands and
agrees that Buyer is acquiring substantially all of the assets of
Seller and that the following assets and properties of Seller
(the "Excluded Assets") shall be excluded from the Purchased
Assets:
(i) rights under those contracts, agreements and
commitments listed on Schedule 2.02 and under this Agreement;
(ii) the right of Seller and Foster to receive the purchase
price; and
(iii) any Purchased Assets sold or otherwise disposed of in
the ordinary course of the operation of the Business and not
in violation of any provisions of this Agreement during the
period from the date hereof until the Closing Date.
2.03. Assumption of Liabilities. Upon the terms and
subject to the conditions of this Agreement, Buyer agrees,
effective at the time of Closing, to assume the following
liabilities (the "Assumed Liabilities"):
(i) all operating liabilities accrued on the Balance
Sheet; and
(ii) all liabilities arising out of or relating primarily
to the Business, and incurred in the ordinary course of
Business since the Balance Sheet Date, but only to the extent
listed on Schedule 2.03;
(iii) all liabilities and obligations of Seller arising
under the Contracts (other than liabilities or obligations
attributable to any failure by Seller to comply with the
terms thereof);
(iv) all obligations of Seller and Foster under that
certain Vectra Bank Building Lease by and among the Colorado
Building Group, Seller and Foster dated as of September 23,
1994 and extended by that certain letter agreement dated
September 27, 1996;
provided, however, that the foregoing Assumed Liabilities
shall be in the aggregate no greater than $5,000.
2.04. Excluded Liabilities. Notwithstanding any
provision in this Agreement or any other writing to the contrary,
Buyer is assuming only the Assumed Liabilities and is not
assuming any other liability or obligation of Seller or Foster or
any Affiliate of Seller (or any predecessor owner of all or part
of its business and assets) of whatever nature whether presently
in existence or arising or asserted hereafter. All such other
liabilities and obligations shall be retained by and remain
obligations and liabilities of Seller or its Affiliate (all such
liabilities and obligations not being assumed being herein
referred to as the "Excluded Liabilities"). Without limiting the
foregoing, none of the following shall be Assumed Liabilities for
the purposes of this Agreement:
(i) except to the extent of the specific reserves on the
Balance Sheet, any obligation or liability for Tax arising
from or with respect to the Purchased Assets or the operation
of the Business which is incurred in or attributable to any
Pre-Closing Tax Period;
(ii) except to the extent provided in Article IX, any
liabilities or obligations relating to employee benefits or
compensation arrangements existing as of the end of the day
on the day preceding the Closing Date, including, without
limitation, any liabilities or obligations under any of
Seller's employee benefit agreements, plans or other
arrangements listed on Schedule 9.01;
(iii) any liability or obligation for damages (whether based
on negligence, breach of warranty, strict liability or any
other theory) caused by or arising out of or resulting from,
directly or indirectly, the sale by Seller or its Affiliates
of any products or services prior to the Closing Date;
(iv) all liabilities and obligations relating to any claim,
dispute or litigation asserted or threatened or governmental
proceeding or investigation instituted or threatened, arising
out of, or in connection with, any alleged violation or
noncompliance by Seller of, or failure to perform any
obligations imposed upon Seller in its conduct of the
Business under any statute, rule, regulation or ordinance
pertaining to protection of the environment (including any
Environmental Law), employee or occupational safety and
health, wage and hour, Hazardous Substances, civil rights,
customs and export control and zoning, which alleged
violation, noncompliance or failure to perform occurred or
existed on or prior to the Closing Date, but only to the
extent of such pre-existing violation, noncompliance or
failure to perform;
(v) all liabilities and obligations relating to any
products manufactured or sold by the Business on or prior to
the Closing Date, including without limitation warranty
obligations and product liability claims;
(vi) any Environmental Liability;
(vii) any liability or obligation relating to an Excluded
Asset; and
(viii) Assumed Liabilities which in the aggregate exceed
$5,000, as permitted by Section 2.03.
2.05. Assignment of Contracts and Rights.
Notwithstanding, anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any
Purchased Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment
thereof, without consent of a third party thereto, would
constitute a breach or other contravention thereof or in any way
adversely affect the rights of Buyer or Seller thereunder.
Seller and Foster agree to use their commercially reasonable best
efforts (but without any payment of money by Seller or Buyer) to
obtain the consent of the other parties to any such Purchased
Asset or claim or right or any benefit arising thereunder for the
assignment thereof to Buyer as Buyer may reasonably request. If
such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights
of Seller thereunder so that Buyer would not in fact receive all
such rights, Seller and Buyer will cooperate in a mutually
agreeable arrangement under which Buyer would obtain the benefits
and assume the obligations thereunder in accordance with this
Agreement, including subcontracting, sub-licensing, or subleasing
to Buyer, or under which Seller or Foster would enforce for the
benefit of Buyer, with Buyer assuming Seller's obligations, any
and all rights of Seller or Foster against a third party thereto.
Seller or Foster will promptly pay to Buyer when received all
monies received by Seller under any Purchased Asset or any claim
or right or any benefit arising thereunder, except to the extent
the same represents an Excluded Asset. In such event, Seller,
Foster and Buyer shall, to the extent the benefits therefrom and
obligations thereunder have not been provided by alternate
arrangements satisfactory to Buyer, Seller and Foster, negotiate
in good faith an adjustment in the consideration paid by Buyer
for the Purchased Assets.
2.06. Purchase Price; Allocation of Purchase Price.
(a) The purchase price for the Purchased Assets (the "Purchase
Price") is (i) $200,000 to be paid in shares of common stock of
the Buyer, $.01 par value per share ("Buyer Common Stock"), and
issued at the Closing; such number of shares to be determined in
accordance with Section 2.07(a) below; (ii) the contingent
payments as provided for in Section 2.07(e); and (iii) the
assumption of the Assumed Liabilities.
(b) Seller and Buyer agree that $10,000 of the Purchase
Price shall be allocated as consideration for the covenant not to
compete set forth in Section 5.04 of this Agreement.
2.07. Closing. The closing (the "Closing") of the
purchase and sale of the Purchased Assets and the assumption of
the Assumed Liabilities hereunder shall take place at the offices
of Testa, Hurwitz & Thibeault, LLP, High Street Tower, 125 High
Street, Boston, Massachusetts 02110 at a time and on a date
mutually agreeable to Buyer, Seller and Foster as soon as
practicable after satisfaction of the conditions set forth in
Article X, but in no event later than September 30, 1997, or at
such other time or place as Buyer, Seller and Foster may agree.
At the Closing,
(a) Buyer shall deliver to Seller a stock certificate
representing the number of shares of Buyer Common Stock as is
determined by dividing $200,000 by the average of the last
reported sale price of the Buyer Common Stock on the Nasdaq
National Market on each of the ten (10) business days up to and
including the second business day preceding the Closing Date
(subject to appropriate adjustment in the event of a stock split,
reverse stock split, stock dividend or recapitalization by the
Company). The certificate shall be duly endorsed by the Buyer's
transfer agent and registered in the name of the Seller;
(b) Seller shall have delivered to Buyer via courier or by
hand all source code and object code of the software forming part
of the Purchased Assets, fully documented, including any and all
related technical and user documentation;
(c) Seller, Foster and Buyer shall enter into the
Ancillary Agreements and Seller and Foster shall deliver to Buyer
such bills of sale, endorsements, consents, assignments and other
good and sufficient instruments of conveyance and assignment (the
"Conveyance Documents") as the parties and their respective
counsel shall deem reasonably necessary or appropriate to vest in
Buyer all right, title and interest in, to and under the
Purchased Assets.
(d) Seller and Buyer shall also execute and deliver all
such instruments, documents and certificates as may be reasonably
requested by the other party that are necessary, appropriate or
desirable for the consummation at the Closing of the transactions
contemplated by this Agreement.
(e) In addition to the payment of stock issued on the
Closing Date as provided for in Section 2.07(a), Buyer shall
issue to Seller up to three (3) additional stock certificates
representing contingent payments from Buyer over the three year
period set forth below. The number of shares of Buyer Common
Stock issued with respect to each contingent payment will be
determined by dividing the dollar value of the contingent
payment, calculated as set forth below, by the average of the
last reported sale price of Buyer Common Stock on the Nasdaq
National Market on each of the ten (10) business days up to and
including the last day of each Annual Payment Period (as defined
below), subject to appropriate adjustment in the event of a stock
split, reverse stock split, stock dividend or recapitalization by
the Company. The dollar value of each contingent payment will be
calculated as a percentage of "net receipts" (as defined below)
collected by the Buyer during the period to which the payment
relates (the "Annual Payment Period") and attributable to all
licenses, and complete or partial sales or dispositions by the
Buyer of the software products listed on Schedule 2.07(e), and
their "upgrades" (as defined below), (collectively, the
"Software"), according to the following schedule:
During the period beginning with the Closing Date 7.0% of "net
and ending September 30, 1998 : receipts"
During the period beginning October 1, 1998 and 5.0% of "net
ending September 30, 1999: receipts"
During the period beginning October 1, 1999 and 3.0% of "net
ending September 30, 2000: receipts"
Such contingent payments will be paid to Seller along with a
statement indicating in detail sufficient for Seller to determine
the calculation of such payment, once per year, within 45 days of
the last day of each Annual Payment Period beginning with the
period ending September 30, 1998. For purposes of this
Section 2.07(e), "net receipts" shall mean all payments actually
received by the Buyer with respect to the Software (including,
but not limited to, royalties, licensing fees, and proceeds of
the complete or partial sale or other disposition of the
Software, but excluding consulting fees, maintenance fees or any
other service fees paid to Buyer in connection with the Software)
net of all sales tax or other similar amounts properly paid or
accrued by the Buyer with respect to such payments so received
and any amounts refunded or rebated by Buyer to payers of amounts
which might otherwise constitute "net receipts". Notwithstanding
anything in this Section 2.07 to the contrary at such time as
Buyer has issued Common Stock to Seller pursuant to this Section
2.07(e) with a value in the aggregate of $228,000, Buyer's
obligation to issue any additional shares of Common under this
Section 2.07(e) shall cease. Seller and Foster agree that Buyer
shall use its commercially reasonable best efforts to market and
distribute the Software and continue the sale and promotion of
the Software until at least September 30, 2000; provided,
however, Buyer shall have complete authority related to all
decisions with respect to pricing, shipment terms, return
policies, distribution discounts and all other marketing related
factors in connection with the marketing and distribution of the
Software and shall have no liability to Seller or Foster if
Buyer's commercially reasonable best efforts to market and
distribute the Software are unsuccessful or result in fewer sales
than Seller or Foster expect. The term "upgrades" shall mean any
modification, enhancement, improvement or version release of the
Software as may be generally commercially licensed by the Buyer
to third parties.
2.08. Certificates for Parent Stock. Each certificate
for Buyer Common Stock issued to the Seller pursuant to this
Agreement shall bear the following legend:
"The securities represented hereby have not
been registered under the Securities Act of
1933, as amended, and may not be sold,
transferred or otherwise disposed of except in
accordance with the terms thereof and unless
registered with the Securities and Exchange
Commission of the United States and the
securities regulatory authorities of certain
states or unless an exemption from such
registration is available."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND FOSTER
Seller and Foster hereby jointly and severally represent
and warrant to Buyer as of the date hereof and as of the Closing
Date that:
3.01. Corporate Existence and Power. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. Seller is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased
by it or the nature of its activities make such qualification
necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect. Seller has heretofore delivered to
Buyer true and complete copies of the corporate charter and
bylaws of Seller as currently in effect and no action has been
taken or authorized to amend any of such documents.
3.02. Authority. (a) The execution, delivery and
performance by Seller of this Agreement and each of the Ancillary
Agreements, and the consummation by Seller of the transactions
contemplated hereby and thereby are within Seller's corporate
powers and have been duly authorized by all necessary corporate
action on the part of Seller. This Agreement and each of the
Ancillary Agreements to which Seller is a party constitute valid
and binding agreements of Seller.
(b) Foster has the legal power, right and authority to
enter into and perform this Agreement, and to perform each of his
obligations hereunder. The execution, delivery and performance
of this Agreement by Foster does not contravene, or constitute a
default under, any provision of applicable law or regulation or
of any agreement, judgment, injunction, order, decree or any
other instrument binding upon Foster. This Agreement has been
duly executed and delivered by Foster and constitutes a valid and
binding obligation of Foster, enforceable in accordance with its
terms.
3.03. Governmental Authorization. Except as set forth on
Schedule 3.03, to the knowledge of Seller or Foster, the
execution, delivery and performance by Seller and Foster of this
Agreement and each of the Ancillary Agreements do not require any
action by or in respect of, or filing with, any governmental
body, agency, official or authority.
3.04. Non-Contravention. Except as set forth on Schedule
3.04, to the knowledge of Seller or Foster, the execution,
delivery and performance by Seller and Foster of this Agreement
and each of the Ancillary Agreements and the consummation of the
transactions contemplated hereby do not and will not
(i) contravene or conflict with the corporate charter or bylaws
of Seller, (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Seller
or the Business; (iii) assuming the receipt of all Required and
other Consents, constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right
or obligation of Seller or to a loss of any benefit relating to
the Business to which Seller is entitled under any provision of
any agreement, contract or other instrument binding upon Seller
or by which any of the Purchased Assets is or may be bound, or
any Permit (as defined below) or (iv) result in the creation or
imposition of any Lien on any Purchased Asset.
3.05. Required Consents. Schedule 3.05 sets forth each
agreement, contract or other instrument binding upon Seller or
Foster or any Permit requiring a consent or any consent that may
be required from any former employees or shareholders of Seller,
as a result of the execution, delivery and performance of this
Agreement and the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby (each such consent,
a "Required Consent").
3.06. Financial Statements. Seller has previously
furnished Buyer with a true and complete copy of the Balance
Sheet and the related unaudited statements of operations for the
Business taken as a whole for the years ended December 31, 1996,
the unaudited interim balance sheet relating to the Business for
the six months ended June 30, 1997, and the related unaudited
interim statement of operations for the Business taken as a whole
for the six months ended June 30, 1997, (collectively, the
"Financial Statements") of the Business. The Financial
Statements fairly present in all material respects the financial
position of the Business as of the dates thereof and its results
of operations for the period then ended. The Financial
Statements were prepared in accordance with the books and records
of the Seller and are attached hereto as Schedule 3.06.
3.07. Absence of Certain Changes. Since the Balance
Sheet Date, Seller has conducted the Business in the ordinary
course consistent with past practices, and there has not been:
(a) Any Material Adverse Change or any event, occurrence,
development or state of circumstances or facts which could
reasonably be expected to result in a Material Adverse
Change;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any Seller
ownership interest, except Seller may declare, set aside or
pay a cash dividend to Foster, provided, however, that Seller
maintains cash of at least $5,000 on and as of the Closing
Date;
(c) any incurrence, assumption or guarantee by Seller of
any indebtedness for borrowed money with respect to the
Business other than in the ordinary course of business and in
amounts and on terms consistent with past practices;
(d) any creation , assumption or other incurrence by
Seller of any Lien on any Purchased Asset;
(e) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the Business
or any Purchased Asset which, individually or in the
aggregate, has had or could reasonably be expected to have a
Material Adverse Effect;
(f) any transaction, contract, agreement or other
instrument entered into, or commitment made, by Seller
relating to the Business or any Purchased Asset (including
the acquisition or disposition of any assets) or any
relinquishment by Seller of any contract or other right, in
either case, material to the Business taken as a whole, other
than transactions and commitments in the ordinary course of
business consistent with past practices and those
contemplated by this Agreement;
(g) any change in any method of accounting or accounting
or collection practice by Seller with respect to the
Business;
(h) any (i) grant of any severance or termination pay to
any director, officer or employee of the Business,
(ii) entering into of any employment, deferred compensation
or other similar agreement (or any amendment to any such
existing agreement) with any employee of the Business,
(iii) change in benefits payable under an existing severance
or termination pay policies or employment agreements or
(iv) change in compensation, bonus or other benefits payable
to employees of the Business;
(i) any lease of real or personal property or any capital
expenditure, or commitment for a capital expenditure, for
additions or improvements to property, plant and equipment;
(j) any making of any loan, advance or capital
contributions to or investment in any Person;
(k) any change in the business or operations or in the
manner of conducting the business or operations of the Seller
other than changes in the ordinary course of business;
(l) any mortgage, pledge or subjection of any properties
or assets to any claim, Lien or liability, except claims,
Liens or liabilities for taxes not yet due;
(m) any write-down of the value of any inventory, or write-
off of any notes or accounts receivable or any portion
thereof as uncollectible, other than valuation reserves
established for inventory and receivables;
(n) any cancellation or release of any other debts or
claims, or waivers of any rights;
(o) any sale, transfer or conveyance of any property or
assets, except in the ordinary course of business consistent
with past practice;
(p) any disposition of, or lapse, or other failure to
preserve the exclusive rights of Seller to any Proprietary
Rights; or
(q) any agreement, whether in writing or otherwise, to
take any action described in this Section 3.07.
3.08. Property and Equipment. The Company has good title
to, or in the case of leased property has valid leasehold
interests in, all property and assets (whether real or personal,
tangible or intangible) used regularly in the conduct of the
Business . Except as disclosed on Schedule 3.08, none of such
properties or assets is subject to any Liens.
3.09. Sufficiency of Purchased Assets. The Purchased
Assets and the Excluded Assets together constitute, and on the
Closing Date will constitute, all of the assets or property
necessary to operate the Business.
3.10. Title to Purchased Assets. Upon consummation of
the transactions contemplated hereby, Buyer will have acquired
good and marketable title in and to, or a valid leasehold
interest in, each of the Purchased Assets, free and clear of all
Liens.
3.11. No Undisclosed Material Liabilities. To the
knowledge of Seller or Foster, there are no liabilities of the
Business of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed in any Schedule hereto or
provided for in the Balance Sheet; and
(ii) liabilities incurred in the ordinary course of
business consistent with past practices since the Balance
Sheet Date, which in the aggregate are not material to the
Business, taken as a whole.
3.12. Litigation. There is no action, suit, or
proceeding (or to the knowledge of Seller or Foster, any
investigation or basis therefor) pending against, or to the
knowledge of Seller or Foster, threatened against or affecting,
the Business or any Purchased Asset before any court or
arbitrator or any governmental body, agency, official or
authority.
3.13. Material Contracts. (a) Except for this
Agreement, any Ancillary Agreement entered into by Seller or
Foster in connection herewith, or the Contracts disclosed in
Schedule 3.13 or any other Schedule to this Agreement, with
respect to the Business, Seller is not a party to or subject to:
(i) any lease providing for annual rental;
(ii) any contract or the purchase of materials, supplies,
goods, services, equipment or other assets;
(iii) any sales, distribution or other similar agreement
providing for the sale by Seller of materials, supplies,
goods, services, equipment or other assets;
(iv) any partnership, joint venture or other similar
contract, arrangement or agreement;
(v) any contract relating to indebtedness for borrowed
money or the deferred purchase price of property (whether
incurred, assumed, guaranteed or secured by an asset), except
contracts relating to indebtedness incurred in the ordinary
course of business;
(vi) any license agreement, franchise agreement or
agreement in respect of similar rights granted to or held by
Seller;
(vii) any agency, dealer, sales representative or other
similar agreement;
(viii) any agreement, contract or commitment that
substantially limits the freedom of Seller to compete in any
line of business or with any Person or in any area or to own,
operate, sell, transfer, pledge or otherwise dispose of or
encumber any Purchased Asset or that would so limit the
freedom of the Buyer after the Closing Date;
(ix) any agreement, contract or commitment which is or
relates to an agreement with or for the benefit of any
Affiliate of Seller; or
(x) any other agreement, contract or commitment not made
in the ordinary course of business which is material to the
Business taken as a whole.
(b) Each Contract disclosed in any Schedule to this
Agreement or required to be disclosed pursuant to Section 3.13(a)
is valid and binding agreement of Seller and is in full force and
effect, and neither Seller nor, to the knowledge of Seller and
Foster, any other party thereto is in default in any material
respect under the terms of any such Contract, nor, to the
knowledge of Seller and Foster, has any event or circumstance
occurred that, with notice or lapse of time or both, would
constitute any event of default thereunder.
3.14. Licenses and Permits. To the knowledge of Seller
and Foster, Schedule 3.14 correctly describes each license,
franchise, permit or other similar authorization affecting, or
relating in any way to, the Business, together with the name of
the government agency or entity issuing such license or permit
(the "Permits"). Such Permits are valid and in full force and
effect and, assuming the related Required Consents have been
obtained prior to the Closing Date, are transferable by Seller
and will not be terminated or impaired or become terminable as a
result of the transactions contemplated hereby. Upon
consummation of such transactions, Buyer will, assuming the
related Required Consents have been obtained prior to the Closing
Date, have all of the right, title and interest in all the
Permits.
3.15. Insurance Coverage. Seller maintains no insurance
coverage with respect to the Purchased Assets, the business and
operations of the Business and its employees.
3.16. Compliance with Laws. Seller is not in violation
of, has not violated, and to Seller's and Foster's knowledge is
not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation
of, any law, rule, ordinance or regulation, or judgment, order or
decree entered by any court, arbitrator or governmental
authority, domestic or foreign, applicable to the Purchased
Assets or the conduct of the Business, except for violations that
have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.17. Inventories. The Seller has no inventories.
3.18. Receivables. Except as set forth on Schedule 3.18,
all accounts, notes receivable and other receivables (other than
receivables collected since the Balance Sheet Date) reflected on
the Balance Sheet are, and all accounts and notes receivable
arising from or otherwise relating to the Business at the Closing
Date will be, valid, genuine and fully collectible in the
aggregate amount thereof, subject to normal and customary trade
discounts. All accounts, notes receivable and other receivables
arising out of or relating to the Business at the Balance Sheet
Date have been included in the Balance Sheet.
3.19. Proprietary Rights.
(a) Schedule 3.19(a) contains a list of all of
Seller's Proprietary Rights, including but not limited to: (i)
computer software, data and documentation; (ii) patents and
patent applications; (iii) trademarks, tradenames and service
marks and registrations thereof and applications therefor; (iv)
registered copyrights and applications for copyright
registration; and (v) logos; as well as licenses relating to any
of the foregoing. Schedule 3.19(a) identifies the owner of each
item listed thereon and, in the case of registrations and
applications, the application or registration number and date.
(b) Seller or Foster owns or has the right to use all
of Seller's Proprietary Rights. Upon execution and delivery by
Seller and Foster to Buyer of the instruments of conveyance
contemplated by this Agreement, each item of Seller's Proprietary
Rights will be owned or available for use by Buyer on identical
terms and conditions immediately following the Closing, except as
otherwise indicated on Schedule 3.19(b). Seller has taken
reasonable measures to protect the proprietary nature of Seller's
Proprietary Rights and to maintain in confidence the trade
secrets and confidential information that it owns or uses in the
Business. To Seller's and Foster's knowledge, no other Person
has any rights to any item of Seller's Proprietary Rights or has
any rights to any of Seller's Proprietary Rights, except that the
items of Seller's Proprietary Rights identified on Schedule
3.19(a) as licensed to Seller are owned by the respective owners
identified on Schedule 3.19(a), and, to Seller's or Foster's
knowledge, no other Person is infringing, violating or
misappropriating any of Seller's Proprietary Rights, except as
otherwise indicated on Schedule 3.19(b).
(c) Except as set forth in Schedule 3.19(b), to
Seller's knowledge, none of the activities or business presently
conducted by the Business infringes or violates, or constitutes a
misappropriation of, any Proprietary Rights of any other person
or entity. Except as set forth in Schedule 3.19(b), the Seller
has not received any complaint, claim or notice alleging any such
infringement, violation or misappropriation.
(d) Except as set forth in Schedule 3.19(b), with
respect to each item of Seller's Proprietary Rights:
(i) Seller possesses all right, title and
interest in and to such item;
(ii) such item is not subject to any outstanding
judgment, order, decree, stipulation, injunction or any
other encumbrance; and
(iii) Neither Seller nor Foster has agreed to
indemnify any person or entity for or against any
infringement, misappropriation or other conflict with
respect to such item.
(e) Schedule 3.19(a) also identifies each item of
Seller's Proprietary Rights used in the operation of the Business
that is owned by a party other than Seller. All licenses or
other agreements pursuant to which Seller uses such items are
listed on Schedule 3.19(a). Except as set forth in Schedule
3.19(b), with respect to each such item:
(i) the license or other agreement, covering such
item is legal, valid, binding, enforceable and in full
force and effect with respect to Seller and Foster,
and, to Seller's and Foster's knowledge, with respect
to every other party thereto;
(ii) except as set forth in Schedule 3.19(b), each
such license or other agreement to which Seller or
Foster is a party is assignable by Seller or Foster to
Buyer without the consent or approval of or any payment
to any party, and all such licenses and other
agreements will continue to be legal, valid, binding,
enforceable and in full force and effect immediately
following the Closing in accordance with the terms
thereof as in effect immediately prior to the Closing,
and the consummation of the transactions contemplated
herein will not conflict with, result in a violation or
breach of or constitute a default under (or would
result in a violation, breach or default with the
giving of notice or the passage of time or both) any
such license or other agreement;
(iii) except as set forth in Schedule 3.19(b),
neither Seller or Foster, nor, to Seller's or Foster's
knowledge, any other party is in breach or default
under any such license or other agreement, and no event
has occurred which, with notice and/or lapse of time,
would constitute such a breach or default or permit
termination, modification or acceleration thereunder;
(iv) to Seller's and Foster's knowledge, the
underlying item of Seller's Proprietary Rights is not
subject to any outstanding judgment, order, decree,
stipulation or injunction; and
(v) Seller or Foster has not agreed to indemnify
any Person for or against any interference,
infringement, misappropriation or other conflict with
respect to such item.
3.20. Products. Each of the products produced or sold by
Seller in connection with the Business (i) is, and at all times
has been, in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations
and (ii) is, and at all relevant times has been, fit for the
ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmation
of fact made on the container or liable for such products or in
connection with its sale. To Seller's or Fosters' knowledge,
there is no design defect with respect to any of such products.
3.21. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of Seller or Foster who might
be entitled to any fee or commission from Buyer or Seller or any
of their respective Affiliates upon consummation of the
transactions contemplated by this Agreement.
3.22. Other Information. To Seller's or Foster's
knowledge, none of the documents or information delivered to
Buyer in connection with the transactions contemplated by this
Agreement and the Ancillary Agreements contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.
3.23. Environmental Compliance. (i) Seller and Foster
have materially complied with all applicable foreign, national,
federal, state and/or local laws (including without limitation
case law, rules, regulations, orders, judgments, decrees,
permits, licenses and governmental approvals) that are intended
to protect the environment and/or human health or safety
(collectively, "Environmental Laws"); (ii) neither Seller nor
Foster has handled, generated, used, stored, transported or
disposed of any substance or waste which is regulated by
Environmental Laws, except for reasonable amounts of ordinary
office supplies and/or office-cleaning supplies which have been
handled in compliance with Environmental Laws; and (iii) to the
knowledge of Seller or Foster, there are no "Environmental
Liabilities." For purposes of this Agreement, "Environmental
Liabilities" are any liabilities which (y) arise out of or in any
way relate to Seller or any real estate at any time owned, used
or leased by Seller, or Seller's or Foster's use or ownership
thereof, whether vested or unvested, contingent or fixed, actual
or potential, and (z) arise from or relate to actions occurring
(including any failure to act) or conditions existing on or
before the Closing Date.
3.24. Representations. The representations and
warranties of Seller and Foster contained in this Agreement, as
modified by the corresponding schedules hereto, disregarding all
qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, are true and correct with
only such exceptions as would not in the aggregate reasonably be
expected to have a Material Adverse Effect.
3.25. Purchase for Investment. The Seller is acquiring
the shares of Buyer Common Stock for investment for its own
account and not with a view to, or for sale in connection with,
any distribution thereof. The Seller agrees that the shares of
Buyer Common Stock acquired by the Seller may not be sold,
transferred or otherwise disposed of unless such shares are
registered with the Securities and Exchange Commission and the
securities regulatory authorities of certain states or unless an
exemption from such registration is available.
3.26. Consultants. Except as set forth on Schedule 3.26,
there have been no consultants hired by Seller or employed by
Seller in connection with the Business.
3.27. Site Licenses. Except as set forth on Schedule
3.27, there have been no site licenses granted in connection with
the Business by Seller to any third party.
3.28. Source Code Licenses. There have been no source
code licenses of the core module granted by Seller of any
Software manufactured and developed in connection with the
Business.
3.29. Other Licenses. Except as set forth on Schedule
3.29, there have been no source code licenses of task, tools and
reader software modules granted by Seller in connection with the
Business.
3.30. Resellers, Distributors, etc. Except as set forth
on Schedule 3.30, there have been no distributors,
representatives or resellers of any software used in connection
with the Business and purchased by the Buyer. Furthermore,
except for the Seller, no other Person is authorized or licensed
to distribute source code, developed or used in connection with
the Business, to a third party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warranties to Seller that:
4.01. Organization and Existence. Buyer is a corporation
duly incorporated, validly existing and in good standing under
the laws of Massachusetts and has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
4.02. Corporate Authorization. The execution delivery
and performance by Buyer of this Agreement and of each of the
Ancillary Agreements and the consummation by Buyer of the
transactions contemplated hereby and thereby are within the
corporate powers of Buyer and have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement
and each of the Ancillary Agreements to which Buyer is a party
constitute valid and binding agreements of Buyer.
4.03. Governmental Authorization. The execution,
delivery and performance by Buyer of this Agreement and each of
the Ancillary Agreements require no action by or in respect of,
or filing with, any governmental body, agency, official or
authority.
4.04. Non-Contravention. The execution and delivery of
this Agreement by the Buyer, the performance by the Buyer of its
obligations under this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i)
contravene or conflict with the corporate charter or bylaws of
the Buyer, (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the
Buyer; (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or
obligation of the Buyer or to a loss of any benefit to which the
Buyer is entitled under any provision of any agreement, contract
or other instrument binding upon the Buyer or any permit held by
the Buyer or (iv) assuming the receipt of all required consents,
result in the creation or imposition of any Lien on any asset of
the Buyer.
4.05. Common Stock. Buyer covenants and agrees that the
Common Stock to be delivered to Seller in connection with this
Agreement will, at the time of such delivery, be validly issued
and outstanding and be fully paid and nonassessable.
ARTICLE V
COVENANTS OF SELLER AND FOSTER
Seller and Foster jointly and severally agree that:
5.01. Conduct of the Business. From the date hereof
until the Closing Date, Seller shall conduct the Business in the
ordinary course consistent with past practice, use its best
efforts to preserve intact the business organization and
relationships with third parties of the Business, and to keep
available the services of the present employees of the Business.
Without limiting the generality of the foregoing, from the date
hereof until the Closing Date, Seller will not:
(a) merge or consolidate with any other Person or
acquire a material amount of assets from any other Person;
(b) sell, lease, license or otherwise dispose of any
Purchased Assets except (i) pursuant to existing contracts or
commitments and (ii) in the ordinary course consistent with
past practice;
(c) declare, set aside or pay any dividend or make any
other distribution of assets of any kind whatsoever with
respect to any Seller ownership interests, except that Seller
may declare, set aside or pay to Foster a cash dividend
provided, however, Seller maintains cash of at least $5,000
on and as of the Closing Date;
(d) adopt or propose any change in its constitutional
documents; or
(e) agree or commit to do any of the foregoing.
Seller will not (i) take or agree or commit to take any action
that would make any representation and warranty of Seller
hereunder inaccurate in any respect at, or as of any time prior
to, the Closing Date or (ii) omit or agree or commit to omit to
take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
5.02. Access to Information. From the date hereof until
the Closing Date, Seller (a) will give Buyer, its counsel,
financial advisors, financing sources, auditors and other
authorized representatives full access to the offices,
properties, books and records of Seller related to the Business,
(b) will furnish to Buyer, its counsel, financial advisors,
financing sources, auditors and other authorized representatives
such financial and operating data and other information relating
to the Business as such Persons may reasonably request and
(c) will instruct the employees, counsel and financial advisors
of Seller to cooperate with Buyer in its investigation of the
Business; provided that no investigation pursuant to this Section
shall affect any representation or warranty given by Seller
hereunder; and provided further that any investigation pursuant
to this Section shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of
Seller.
5.03. Notices of Certain Events. Seller shall promptly
notify Buyer of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise
affecting Seller or Foster or the Business that, if pending
on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.12 or that relate
to the consummation of the transactions contemplated by this
Agreement.
5.04. Noncompetition and Nonsolicitation. (a) Seller and
Foster agree that for a period of one (1) full year from the
Closing Date, neither Seller, Foster nor any of their respective
Affiliates shall:
(i) without the Buyer's prior written consent, directly or
indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent
contractor, unpaid volunteer or stockholder of any company or
business, engage in any business activity which is or may be
directly or indirectly in competition with any of the
products or services developed, marketed, licensed,
distributed, planned or sold by Seller or Buyer. The
ownership by Seller or Foster of not more than two percent of
the shares of stock of any corporation having a class of
equity securities actively traded on a national securities
exchange or on Nasdaq shall not be deemed, in and of itself,
to violate the prohibitions of this paragraph.
(ii) solicit, divert or take away, directly or indirectly,
whether alone or as a sole proprietor, partner, officer,
director, consultant, employee, joint venturer, agent,
representative, unpaid volunteer or independent contractor,
whether for the Seller's or Foster's own interest or for the
interest of any other person or entity, existing customers or
business of Seller or Buyer or hire or attempt to hire, or
solicit, receive or accept the performance of services by, or
discuss with any employee of Seller or Buyer the employment
of such employee by, any company, business organization or
any other entity that develops, licenses, produces or
manufactures any product or provides services that directly
or indirectly compete with those developed, produced,
licensed, manufactured or marketed by Seller or Buyer.
(b) If any provision contained in this Section shall for
any reason by held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Section, but this Section
shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants
contained herein is held to cover a geographic area or to be for
a length of time which is not permitted by applicable law, or in
any way construed to be too broad or to any extent invalid, such
provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or
enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform this Section
to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater
than those contained herein) as shall be valid and enforceable
under such applicable law. Seller acknowledges that Buyer would
be irreparably harmed by any breach of this Section and that
there would be no adequate remedy at law or in damages to
compensate Buyer for any such breach. Seller agrees that Buyer
shall be entitled to injunctive relief requiring specific
performance by Seller of this Section, and Seller consents to
the entry thereof.
5.05. Confidentiality. Seller and Foster will hold, and
will use its or his commercially reasonable best efforts to cause
Seller's officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information concerning Buyer or the Business furnished to Seller
or Foster in connection with the transactions contemplated by
this Agreement, and (after the Closing Date) all confidential
documents and information concerning Seller, except to the extent
that such information can be shown to have been (i) previously
known on a nonconfidential basis by Seller or Foster, (ii) in the
public domain through no fault of Seller or Foster or (iii) later
lawfully acquired by Seller or Foster from sources other than
Seller or Buyer; provided that Seller may disclose such
information to Seller's officers, directors, employees,
accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement
so long as such persons are informed by Seller or Foster of the
confidential nature of such information and are directed by
Seller or Foster to treat such information confidentially. The
obligation of Seller and Foster to hold any such information in
confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the
confidentiality of their own similar information but in no event
less than a reasonable degree of care. If this Agreement is
terminated, Seller and Foster will, and will use their best
efforts to cause Seller's officers, directors, employees,
accountants, counsel, consultants, advisors and agents to,
destroy or deliver to Buyer, upon request, all documents and
other materials, and all copies thereof, obtained by Seller or
Foster, or on their behalf from Buyer in connection with this
Agreement that are subject to such confidence.
5.06. Trademarks; Tradenames. As soon as practicable
after the Closing Date, Seller shall eliminate the use of all of
the trademarks, tradenames, service marks and service names used
in the Business, in any of their forms or spellings, on all
advertising, stationery, business cards, checks, purchase orders
and acknowledgments, customer agreements and other contracts and
all business documents.
5.07. No Negotiation with Third Parties. From the date
hereof until the Closing, Seller and Foster agree not to,
directly or indirectly, through agent, representative,
stockholder or otherwise: (i) solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept or
consider, any proposal of any third party relating to an
investment in Seller or the acquisition of Seller, its capital
stock, its assets (or rights thereto) or its business, in whole
or in part, whether through direct purchase, merger,
consolidation or business combination or licensing transaction
(all such transactions being referred to herein as "Acquisition
Proposals"); (ii) disclose to any third party any non-published
information concerning Seller, its business, or financial
condition in connection with an acquisition or investment in
Seller, provided, however; Seller may disclose such information
to its accountants and legal counsel, or (iii) withdraw their
intention to engage in a transaction with Buyer. If Seller or
Foster or any of Seller's employees, stockholders, agents, or
representatives receive any unsolicited inquiry (however
preliminary), offer or proposal, Seller or Foster shall promptly
notify Buyer.
5.08. Use of Proprietary Rights. Seller and Foster shall
not use any source materials (any source code, algorithms,
computer program designs, subroutines, system specifications and
other technical information relating to the development and
architecture of the software included in the Purchased Assets and
the design, configuration, programming or protocol relating to
such software) transferred as part of the Purchased Assets for
its own benefit, or for the benefit of others, except, in the
case of Foster who is a natural person, in his capacity as an
employee of Buyer or for inadvertent and incidental uses as may
be due to memories related to aspects of such source materials.
5.09. Continuing Disclosure. Until the Closing, Seller
and Foster shall have the continuing obligation promptly to
advise Buyer with respect to any matter hereafter arising or
discovered that, if existing or known at the date of this
Agreement, would have been required to be set forth or described
in a schedule to this Agreement, or that constitutes a breach or
prospective breach of this Agreement by Seller or Foster. The
delivery of any such notice shall not affect Buyer's remedies
hereunder.
ARTICLE VI
COVENANTS OF BUYER
Buyer agrees that:
6.01. Confidentiality. Prior to the Closing Date and
after any termination of this Agreement, Buyer and its Affiliates
will hold, and will use their commercially reasonable best
efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Business or
Seller furnished to Buyer or its Affiliates in connection with
the transactions contemplated by this Agreement, except to the
extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Buyer, (ii) in
the public domain through no fault of Buyer or (iii) later
lawfully acquired by Buyer from sources other than Seller;
provided that Buyer may disclose such information to its
officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such
persons are informed by Buyer of the confidential nature of such
information and are directed by Buyer to treat such information
confidentially. The obligation of Buyer and its Affiliates to
hold any such information in confidence shall be satisfied if
they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own
similar information but in no event less than a reasonable degree
of care. If this Agreement is terminated, Buyer and its
Affiliates will, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to
Seller, upon request, all documents and other materials, and all
copies thereof, obtained by Buyer or its Affiliates or on their
behalf from Seller in connection with this Agreement that are
subject to such confidence.
6.02. Software Engineer Support. Following the closing,
the Buyer agrees to hire a full-time software engineer and make
such engineer available to support the Software purchased by the
Buyer.
ARTICLE VII
COVENANTS OF BOTH PARTIES
The parties hereto agree that:
7.01. Best Efforts; Further Assurances. (a) Subject to
the terms and conditions of this Agreement, each party will use
its commercially reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Seller and Buyer each agree to execute and deliver such other
documents, certificates, agreements and other writings and to
take such other actions as may be necessary in order to
consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Buyer good and
marketable title to the Purchased Assets.
(b) Seller hereby constitutes and appoints, effective as
of the Closing Date, Buyer and its successors and assigns as the
true and lawful attorney of Seller with full power of
substitution in the name of Buyer or in the name of Seller, but
for the benefit of Buyer (i) to collect for the account of Buyer
any items of Purchased Assets and (ii) to institute and prosecute
all proceedings which Buyer may in its sole discretion deem
proper in order to assert or enforce any right, title or interest
in, to or under the Purchased Assets, and to defend or compromise
any and all actions, suits or proceedings in respect of the
Purchased Assets. Buyer shall be entitled to retain for its
account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof.
7.02. Certain Filings. Seller and Buyer shall cooperate
with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and (b) in taking
such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
ARTICLE VIII
TAX MATTERS
8.01. Tax Definitions. The following terms, as used
herein, have the following meanings:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the close of business on the date
preceding the Closing Date.
"Taxes" means all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs duties,
or other Taxes, fee, assessments or other charges of any kind
whatsoever, together with any interest or any penalty, addition
to tax or additional amount imposed by any governmental authority
(foreign or domestic), and the term "Tax" means any one of the
foregoing taxes. The term "Returns" as used herein, means all
returns, declarations, reports, statements and other documents
required to be filed in respect of Taxes, and "Return" means any
one of the foregoing Returns.
8.02. Tax Matters. Seller and Foster jointly and
severally hereby represent and warrant to Buyer that:
(a) Seller has timely paid all Taxes, and all interest and
penalties due thereon and payable by it, for the Pre-Closing Tax
Period which will have been required to be paid on or prior to
the Closing Date.
(b) Seller has established, in accordance with generally
accepted accounting principles applied on a basis consistent with
that of preceding periods, adequate reserves for the payment of,
and will timely pay all Tax liabilities, assessments, interest
and penalties which arise from or with respect to the Purchased
Assets or the operation of the Business and are incurred in or
attributable to the Pre-Closing Tax Period.
(c) Seller has filed any and all necessary elections and
has received confirmation that Seller is an "S Corporation" and
has been an "S Corporation" (within the meaning of Section
1361(a)(1)) at all times from inception through the Closing Date.
Foster has timely paid (or will pay) all Taxes arising from or
with respect to the Purchased Assets or the operation of the
Business, the nonpayment of which would result in a Lien on any
Purchased Asset, would otherwise affect the Business or would
result in Buyer becoming liable therefor.
(d) There has not been any audit of any Return filed by
the Seller with respect to, or which may relate to, items of
income, gain, deduction, loss or credit of Seller, and no such
audit of Seller is in progress and Foster has not received notice
from any Tax authority that any such audit is contemplated or
pending.
8.03. Tax Cooperation; Allocation of Taxes. (a) Buyer
and Seller agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information
and assistance relating to the Purchased Assets and the Business
as is reasonably necessary for the filing of all Tax returns, and
making of any election related to Taxes, the preparation for any
audit by any taxing authority, and the prosecution or defense of
any claim, suit or proceeding relating to any Tax return. Seller
and Buyer shall cooperate with each other in the conduct of any
audit or other proceeding related to Taxes involving the Business
and each shall execute and deliver such powers of attorney and
other documents as are necessary to carry out the intent of this
paragraph (a) of Section 8.03.
(b) All real property taxes, personal property taxes and
similar ad valorem obligations levied with respect to the
Purchased Assets for a taxable period which includes (but does
not end on) the Closing Date (collectively, the "Apportioned
Obligations") shall be apportioned between Seller and Buyer as of
the Closing Date based on the number of days of such taxable
period included in the Pre-Closing Tax Period and the number of
days of such taxable period included in the Post-Closing Tax
Period. Seller shall be liable for the proportionate amount of
such taxes that is attributable to the Pre-Closing Tax Period.
Within 90 days after the Closing, Seller and Buyer shall present
a statement to the other setting forth the amount of
reimbursement to which each is entitled under this
Section 8.03(b) together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other
within 10 days after delivery of such statement. Thereafter,
Seller shall notify Buyer upon receipt of any bill for real or
personal property taxes relating to the Purchased Assets, part or
all of which are attributable to the Post-Closing Tax Period, and
shall promptly deliver such bill to Buyer who shall pay the same
to the appropriate taxing authority, provided that if such bill
covers the Pre-Closing Tax Period, Seller shall also remit prior
to the due date of assessment to Buyer payment for the
proportionate amount of such bill that is attributable to the Pre-
Closing Tax Period. If either Seller or Buyer shall thereafter
make a payment for which it is entitled to reimbursement under
this Section 8.03(b), the other party shall make such
reimbursement promptly but in no event later than 30 days after
the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along
with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement. Any payment required
under this Section and not made within 10 days of delivery of the
statement shall bear interest at the rate per annum determined,
from time to time, under the provisions of Section 6621(a)(2) of
the Code for each day until paid.
(c) Any transfer, documentary, sales, use or other Taxes
assessed upon or with respect to the transfer of the Purchased
Assets to Buyer and any recording or filing fees with respect
thereto shall be the responsibility of Seller.
(d) The parties shall treat for all United States federal
income tax purposes the transaction evidenced by this Agreement
as a reorganization within the meaning of 368(a)(i)(c) of the
Code.
ARTICLE IX
EMPLOYEE BENEFITS
9.01. Employee Benefits Representations. Seller and Foster
hereby represent and warrant to Buyer that:
(a) Seller does not maintain, administer or contribute to,
nor did Seller at any time in the past maintain, administer or
contribute to, any (A) employee pension benefit plan (as defined
in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")); (B) employee welfare benefit plan
(as defined in Section 3(1) of ERISA; or (C) benefit arrangement,
including but not limited to a contract, arrangement or policy
providing for severance, insurance coverage (including any self-
insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.
(b) No employee of the Seller will become entitled to any
bonus, retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated
hereby.
(c) Except as disclosed in Schedule 9.01 hereto, there are
no oral or written agreements or other arrangements with respect
to present or former employees or consultants to which Seller is
a party, or by which Seller is bound, and the employment of each
employee of Seller is at-will.
9.02. No Third Party Beneficiaries. No provision of this
Article shall create any third party beneficiary or other rights
in any employee or former employee (including any beneficiary or
dependent thereof) of Seller in respect of continued employment
(or resumed employment) with either Buyer or the Business or any
of their Affiliates and no provision of this Article IX shall
create any such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any
benefit plan or arrangement that may be established by Buyer or
any of its Affiliates. No provision of this Agreement shall
constitute a limitation on rights to amend, modify or terminate
after the Closing Date any such plans or arrangements of Buyer or
any of its Affiliates.
ARTICLE X
CONDITIONS TO CLOSING
10.01. Conditions to the Obligations of Each Party. The
obligations of Buyer, Seller and Foster to consummate the Closing
are subject to the satisfaction or waiver of the following
conditions:
(a) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit,
alter, prevent or materially delay the Closing shall have
been instituted by any Person before any court, arbitrator or
governmental body, agency or official and be pending.
(c) Each of Buyer, Seller and Foster shall have executed
and delivered to the other each of the Ancillary Agreements
to be entered into at Closing, in each case substantially in
the form attached as an Exhibit to this Agreement.
(d) All actions by or in respect of or filings with any
governmental body, agency, official or authority required to
permit the consummation of the Closing shall have been
obtained.
10.02. Conditions to Obligation of Buyer. The obligation
of Buyer to consummate the Closing is subject to the satisfaction
or waiver of the following further conditions:
(a)(i) Seller and Foster shall have performed in all
material respects all of their respective obligations hereunder
required to be performed by them at or prior to the Closing Date,
(ii) the representations and warranties of Seller contained in
this Agreement as of the date hereof shall be true and correct in
all material respects at and as of the Closing Date as if made at
and as of such date and (iii) Buyer shall have received
certificates signed by the President of Seller and Foster to the
foregoing effect.
(b) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall restrain, prohibit
or otherwise interfere with the effective operation or enjoyment
by Buyer of all or any material portion of the Purchased Assets.
(c) Execution and delivery of other relevant agreements,
including non-compete, employment agreements, trademark or
software licenses, leases, supply, service or administrative
agreements or other transition agreements.
(d) Seller shall have received all Required Consents, all
consents required under and referred to in Section 2.05, and all
consents, authorizations or approvals from the governmental
agencies referred to in Section 3.03, in each case in form and
substance reasonably satisfactory to Buyer, and no such consent,
authorization or approval shall have been withdrawn.
(e) Buyer shall have received such closing documents as it
may reasonably request, all in form and substance reasonably
satisfactory to Buyer.
(f) Assumed Liabilities shall be in the aggregate no
greater than $5,000.
(g) Buyer shall have physically received all source code
and object code of all software forming part of the Purchased
Assets, fully documented, including all related technical and
user documentation.
(h) Buyer shall have physically received a bank check in
an amount equal to all of Seller's cash, petty cash and cash
equivalents on hand and in banks, such amount to be not less than
$5,000 in the aggregate.
(i) Seller and Foster shall have executed and delivered
each of the Ancillary Agreements to be entered into by each of
them at the closing, in each case substantially in the form
attached as an exhibit to this Agreement.
(j) Buyer shall have received all proper authorization to
enter into this Agreement and the Ancillary Agreements.
10.03. Conditions to Obligations of Seller and Foster.
The obligation of Seller and Foster to consummate the Closing is
subject to the satisfaction or waiver of the following further
conditions:
(a) (i) Buyer shall have performed in all material respect
all of its obligations hereunder required to be performed by it
at or prior to the Closing Date, (ii) the representations and
warranties of Buyer contained in this Agreement as of the date
hereof and in any certificate or other writing delivered by
Seller pursuant hereto shall be true and correct in all material
respects at and as of the Closing Date, as if made at and as of
such date and (iii) Seller shall have received a certificate
signed by the Chief Financial Officer of Buyer to the foregoing
effect.
(b) Execution and delivery of other relevant agreements,
including non-compete, employment agreements, trademark or
software licenses, leases, supply, service or administrative
agreement or other transition agreements.
(c) Buyer shall have received all consents, authorizations
or approvals from governmental agencies referred to in
Section 4.03, in each case in form and substance reasonably
satisfactory to Seller, and no such consent, authorization or
approval shall have been removed.
(d) Seller shall have received all other closing documents
it may reasonably request, all in form and substance reasonably
satisfactory to Seller.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in
this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the
Closing until the third anniversary of the Closing Date or (i) in
the case of Sections 5.04 and 5.05, for the period set forth
therein, (ii) in the case of Sections 5.05 and 6.01,
indefinitely; and (iii) in the case of the covenants, agreements,
representations and warranties contained in Articles VIII or IX,
until expiration of the applicable statutory period of
limitations (giving effect to any waiver, mitigation or extension
thereof), if later. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of
which indemnity may be sought under Sections 11.02 or 11.03 shall
survive the time at which it would otherwise terminate pursuant
to the preceding sentence, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been
given to the party against whom such indemnity may be sought
prior to such time.
11.02. Indemnification. (a) Seller and Foster hereby
jointly and severally indemnify Buyer and its directors,
officers, stockholders and Affiliates against and agrees to hold
each of them harmless from any and all damage, loss, liability
and expense (including, without limitation, reasonable expenses
of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively,
"Loss") incurred or suffered by Buyer or any of its directors,
officers, stockholders and Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by Seller and Foster
pursuant to this Agreement (determined without regard to any
materiality qualification contained in any representation,
warranty or covenant giving rise to the claim for indemnity
hereunder and whether or not discovered by Buyer prior to
Closing); or
(ii) the failure of Seller to assume full responsibility
for any Excluded Liability or any obligation or liability of
the Business relating to the Excluded Assets; provided
however that Seller and Foster shall not be liable under this
Section 11.02(a) unless the aggregate amount of Loss with
respect to all matters referred to in this Section 11.02(a)
exceeds $10,000; provided, further, that once the Loss
exceeds $10,000, the Buyer shall be entitled to
indemnification for the full amount of such Loss. The
maximum liability of the Seller and Foster, in the aggregate,
pursuant to this Section 11.02(a) shall be $190,000 plus the
dollar value of all contingent payments calculated and issued
to the Seller pursuant to Section 2.07(e).
(b) Buyer hereby indemnifies Seller and Foster, their
respective agents and affiliates against and agrees to defend
and hold them harmless from any and all Loss incurred or
suffered arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by
Buyer pursuant to this Agreement. The maximum liability of
the Buyer pursuant to this Section 11.02(b) shall be $190,000
plus the dollar value of all contingent payments calculated
and issued to the Seller pursuant to Section 2.07(e).
11.03. Environmental Indemnification. On the terms and
subject to the conditions of this Article XI, Seller hereby
agrees to indemnify, defend and hold harmless Buyer and its
directors, officers, stockholders and affiliates from and against
any and all Losses (including reasonable expenses of
investigation (including, but not by way of limitation,
investigation by engineers, environmental consultants and similar
technical personnel)) incurred or suffered by Buyer or any of its
directors, officers, stockholders and Affiliates arising out of,
in respect of or in connection with Environmental Liabilities.
11.04. Procedures; No Waiver. (a) The party seeking
indemnification under Section 11.02 or 11.03 (the "Indemnified
Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion
of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under such
Section. The Indemnifying Party may, and at the request of the
Indemnified Party shall, participate in and control the defense
of any such third party suit, action or proceeding at its own
expense. The Indemnifying Party shall not be liable under
Section 11.02 or 11.03 for any settlement effected without its
consent of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.
(b) No waiver of a closing condition by either Buyer or
Seller shall limit its rights under Section 11.02.
ARTICLE XII
TERMINATION
12.01. Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller, Foster and
Buyer;
(ii) by either Seller or Buyer if the Closing shall not
have been consummated on or before 11:59 p.m., Boston time,
on September 30, 1997; provided, however, that the right to
terminate this Agreement under this Section 12.01 shall not
be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(iii) by either Seller or Buyer if there shall be any law or
regulation that makes the consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of
any court or governmental body having competent jurisdiction;
(iv) by Buyer, if there shall have occurred any Material
Adverse Change in the financial condition, results of
operations, business, properties, assets or operations of
Seller since the date of this Agreement;
(v) by Buyer, upon breach of any representation, warranty,
covenant or agreement on the part of Seller or Foster set
forth in this Agreement, or if any representation or warranty
of Seller or Foster shall have become untrue, in either case
such that the conditions set forth in Section 10.02(a) would
not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become
untrue;
(vi) by Seller, upon a breach of any representation,
warranty, covenant or agreement on the part of Buyer set
forth in this Agreement, or if any representation or warranty
of Buyer shall have become untrue, in either case such that
the conditions set forth in Section 10.03(a) would not be
satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue.
The party desiring to terminate this Agreement pursuant to
this Section 12.01 shall give notice of such termination to the
other party.
12.02. Effect of Termination. If this Agreement is
terminated as permitted by Section 12.01, such termination shall
be without liability of either party (or any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful failure of
either party to fulfill a condition to the performance of the
obligations of the other party or to perform a covenant of this
Agreement or from a willful breach by either party to this
Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by the other party as a result of
such failure or breach. The provisions of Sections 6.01 and
13.03 shall survive any termination hereof pursuant to
Section 12.01.
ARTICLE XIII
MISCELLANEOUS
13.01. Notices. All notices, requests and other
communications to either party hereunder shall be in writing
(including telex, telecopy or similar writing) and shall be
given,
if to Buyer, to:
PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: William T. Sobo, Jr.
Telecopy: (617) 487-9931
with a copy to:
William J. Schnoor, Jr.
Testa, Hurwitz & Thibeault, LLP
High Street Tower, 125 High Street
Boston, MA 02110
Telecopy: (617) 248-7100
if to Seller, to:
Perceptive Systems, Inc.
P.O. Box 654
Boulder, CO 80306-0654
Attention: Mr. Howard Foster
Telecopy:
with a copy to:
Robert W. Planchard, Esq.
Holland & Hart
1050 Walnut Street
Suite 500
Boulder, CO 80302
Telecopy: (303) 473-2720
if to Foster, to:
Mr. Howard Foster
1333 Wildwood Court
Boulder, CO 80303
or such other address or addresses as may be specified by
written notice given in accordance with this provision.
13.02. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Closing Date if,
and only if, such amendment or waiver is in writing and signed by
the Buyer, Seller and Foster,
(b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
13.03. Expenses. Except as otherwise provided herein,
all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense;
provided, however, all costs and expenses incurred by Seller
shall be paid or reimbursed by Foster.
13.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer
any of his or its rights or obligations under this agreement
without the consent of the other parties hereto.
13.05. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of the Commonwealth of
Massachusetts, without regard to the conflicts of law rules of
such state.
13.06. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
13.07. Entire Agreement. This Agreement (including the
exhibits and schedules hereto) and the Ancillary Agreements
between Seller, Foster and Buyer constitute the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth
herein has been made or relied upon by either party hereto.
Neither this Agreement, nor the Ancillary Agreements, nor any
provision hereof or thereof, is intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
13.08. Bulk Sales Laws. Buyer and Seller each hereby
waive compliance by Seller with the provisions of the "bulk
sales", "bulk transfer" or similar laws of any state. Seller
agrees to indemnify and hold Buyer harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred
by Buyer or any of its Affiliates as a result of any failure to
comply with any such "bulk sales", "bulk transfer" or similar
laws.
13.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
13.10. Jurisdiction. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the
federal courts of the Commonwealth of Massachusetts, and each of
the parties hereby consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or
proceeding and waives any obligation to venue laid therein.
Process in any such action or proceeding may be served on any
party anywhere in the world, whether within or without the
Commonwealth of Massachusetts.
13.11. Other Remedies; Specific Performance. Any and
all remedies herein expressly conferred upon a party will be
deemed cumulative and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by
a party of any one remedy will not preclude the exercise of any
other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto here caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
PAREXEL INTERNATIONAL CORPORATION
By: Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: President and CEO
PERCEPTIVE SYSTEMS, INC.
By: Howard W. Foster
Name: Howard Foster
Title: President
425MTH6463/27.461607-1
EXHIBIT 5.1
January 15, 1998
PAREXEL International
Corporation
195 West Street
Waltham, MA 02154
RE: Registration Statement on Form S-3
Relating to 295,944 shares of Common Stock
Dear Sir or Madam:
We are counsel to PAREXEL International Corporation, a
Massachusetts corporation (the "Company"), and have
represented the Company in connection with the preparation
and filing of the Company's Registration Statement on Form S-
3 (the "Registration Statement"), covering the resale to the
public of up to 295,944 shares of the Company's Common
Stock, $.01 par value per share, by certain stockholders of
the Company (the "Shares").
We have reviewed the corporate proceedings taken by the
Board of Directors of the Company with respect to the
authorization and issuance of the Shares. We have also
examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all
corporate records, documents, agreements or other
instruments of the Company and have made all investigations
of law and have discussed with the Company's officers all
questions of fact that we have deemed necessary or
appropriate.
Based upon and subject to the foregoing, we are of the
opinion that the Shares are legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as
Exhibit 5.1 to the Registration Statement and to the
reference to our firm in the Prospectus contained in the
Registration Statement under the caption "Legal Matters."
Very truly yours,
/s/ Testa, Hurwitz &
Thibeault, LLP
Testa, Hurwitz &
Thibeault, LLP
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the use in the Prospectus
constituting part of this Registration Statement on Form S-
3 of our report dated August 16, 1997, except as to the
Note 16 and pooling of interests with Kemper-Masterson, Inc., which is
as of December 1, 1997, relating to the supplemental
financial statements of PAREXEL International Corporation,
which appears in such Prospectus. We also consent to the
incorporation by reference in the Prospectus constituting
part of the Registration Statement Form S-3 of our report
dated August 16, 1997, related to the consolidated
financial statements of PAREXEL International Corporation,
which appears on page 34 of PAREXEL International
Corporation's Annual Report to Stockholders, which is
incorporated by reference in its 1997 Annual Report on
Form 10-K. We also consent to references to us under the
heading `Experts" and "Selected Supplemental Consolidated
Financial Data" in such Prospectus. However, it should be
noted that Price Waterhouse LLP has not prepared or
certified such "Selected Supplemental Consolidated
Financial Data."
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 20, 1998
EXHIBIT 11.1
PAREXEL INTERNATIONAL CORPORATION
STATEMENT RE COMPUTATION OF NET INCOME (LOSS) COMMON
SHARE (in thousands, except per share data)
Three
months
ended
Septe
mber
30
Year
ended
June 30,
1997 1996 1995 1997 1996
Net Income (loss) $11,037 $4,693 ($10,671) $3,841 $1,985
Weighted average
common shares
outstanding: 18,957 13,395 2,175 20,552 17,261
a. Shares attributable to
common stock outstanding
b. Shares attributable to
common stock options and
preferred warrants pursuant
to APB 15, paragraph 38(b) - - - - -
c. Shares attributable to
common stock options
pursuant to SAB 83 540 685 621 515
Weighted average common
shares outstanding - - 2 - -
Net income (loss) per share 19,497 14,080 2,177 21,173 17,776
$0.57 $0.33 ($4.90) $0.18 $0.11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
FINANCIAL DATA SCHEDULE
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD END> JUN-30-1997
<CASH> 30,359
<SECURITIES> 66,891
<RECEIVABLES> 69,047
<ALLOWANCES> 2,986
<INVENTORY> 0
<CURRENT ASSETS> 175,417
<PP&E> 43,758
<DEPRECIATION> 15,536
<TOTAL ASSETS> 205,501
<CURRENT LIABILITIES> 64,541
<BONDS> 0
0
0
<COMMON> 205
<OTHER-SE> 138,959
<TOTAL-LIABILITY-AND-EQUITY> 205,501
<SALES> 0
<TOTAL-REVENUES> 170,355
<CGS> 0
<TOTAL COSTS> 115,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,617
<INTEREST EXPENSE> 212
<INCOME-PRETAX> 17,298
<INCOME-TAX> 6,261
<INCOME-CONTINUING> 11,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,037
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
</TABLE>
