-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CGMUrOfJi72lvjcnZ2ROs483TRVRil/Gxo49LIG4cW/E3Bm/5adiPpkg3FQw0QAl M8k3ditLgwewwZT5KD6ncg== 0000950135-97-000126.txt : 19970115 0000950135-97-000126.hdr.sgml : 19970115 ACCESSION NUMBER: 0000950135-97-000126 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAREXEL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000799729 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 042776269 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19751 FILM NUMBER: 97505624 BUSINESS ADDRESS: STREET 1: 195 WEST ST CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6174879900 MAIL ADDRESS: STREET 1: 195 WEST ST CITY: WALTHAM STATE: MA ZIP: 02154 S-3 1 PAREXEL INTERNATIONAL CORPORATION 1 As filed with the Securities and Exchange Commission on January 14, 1997 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 Jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation organization) Classification Code Number) Identification Number)
--------------- 195 WEST STREET WALTHAM, MASSACHUSETTS 02154 (617) 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 (617) 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 each Amount to be Proposed maximum Proposed maximum Amount of class of securities to be registered registered offering price per aggregate offering registration fee share(1) price(1) (2) ------------------------------------------------------------------------------------------------------------------------------ Common Stock, $.01 par value 330,652 shares $48.31 $15,973,798.12 $4,840.55 ============================================================================================================================== (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 Exchange 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 9, 1997.
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. 2 SUBJECT TO COMPLETION, DATED JANUARY 14, 1997 PROSPECTUS 330,652 Shares PAREXEL INTERNATIONAL CORPORATION Common Stock This prospectus relates to the resale of up to 330,652 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of PAREXEL International Corporation ("PAREXEL" or the "Company") which may be offered hereby from time to time by any or all of the selling stockholders of the Company named herein (collectively, the "Selling Stockholders"). The Selling Stockholders may resell the Shares from time to time 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 these transactions by reselling the Shares to or through broker-dealers, who may receive compensation in the form of discounts or commissions from the Selling Stockholders or from the purchasers of the Shares for whom the broker-dealers may act as an agent or to whom they may sell as principal, or both. 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). On August 22, 1996, the Company entered into a stock purchase agreement with the stockholders of State and Federal Associates, Inc. ("S&FA") pursuant to which the Company purchased all outstanding shares of capital stock of S&FA with shares of Common Stock of the Company. The shares of Common Stock offered hereby by the Selling Stockholders were acquired by such stockholders upon the closing of the acquisition of S&FA. In connection with the public offering of Common Stock by the Company in December 1996, each Selling Stockholder, other than Robert Raven, agreed with the representatives of the underwriters of the offering not to sell or otherwise transfer any shares of Common Stock of the Company owned by such Selling Stockholder until March 6, 1997. See "Selling Stockholders." The Common Stock of the Company is quoted on the Nasdaq National Market under the symbol "PRXL". On January 13, 1997, the last reported sale price for the Common Stock on the Nasdaq National Market was $48 1/4 per share. ------------------ SEE "RISK FACTORS," ON PAGE 6, 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 , 1997 3 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 Northwestern Atrium 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 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 necessarily summaries of such documents, 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 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 (617) 487-9900. PAREXEL is a registered service mark of the Company. 2 4 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, 1996. 2. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. 3. 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. 3 5 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." THE COMPANY PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading contract research organization ("CRO"), providing clinical research and development services to the worldwide pharmaceutical and biotechnology industries. The Company believes it is the fourth largest CRO, based on estimated annual net revenue, and one of only a few CROs capable of providing a full range of clinical services on a global basis. The Company complements the research and development departments of pharmaceutical and biotechnology companies by offering high quality clinical research services to the client and reducing drug development time and cost. In addition, the Company's integrated services and extensive information technology capabilities, coupled with its broad experience and expertise in global drug development, provide clients with a variable cost alternative to the fixed costs associated with internal drug development. The Company offers a full complement of clinical research and development services, including designing, initiating and monitoring clinical trials, managing and analyzing clinical data and consulting on regulatory affairs. PAREXEL's integrated information systems and worldwide network of offices enable the Company to provide high-quality comprehensive services on a global basis. The Company has provided clinical research and development services in North America since 1985, in Europe since 1989, in Japan since May 1995 and in Australia since December 1995. The CRO industry derives substantially all of its revenue from the pharmaceutical and biotechnology industries. In 1995, the global pharmaceutical and biotechnology industries spent an estimated $33.0 billion on research and development, of which the Company estimates $15.2 billion was spent on the type of services offered by the Company. Of this amount, $2.6 billion was outsourced to CROs. The Company believes that the following trends will cause the CRO industry to continue to grow: (i) many pharmaceutical companies, in response to margin pressures, are seeking to reduce the high fixed costs associated with peak-load staffing for drug development by relying on a combination of internal resources and CROs; (ii) 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; (iii) as consolidation in the pharmaceutical industry continues, many pharmaceutical companies aggressively manage costs by reducing jobs and outsourcing to variable-cost CRO's in an effort to reduce the fixed costs associated with internal drug development; (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 data management expertise and global presence; 4 6 (v) 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; and (vi) 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. PAREXEL's objective is to maintain and enhance its position as a leading CRO by providing a full range of clinical services on a global basis. The Company addresses all aspects of clinical research and development with a flexible approach that 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. PAREXEL continues to devote significant resources developing information systems designed to allow the Company to more effectively manage its business operations and deliver services to its clients. The Company will continue to invest in improvements in information technology and consider acquisitions of complementary businesses in order to enhance its competitive position and its level of service. S&FA is a Washington, D.C. based provider of consulting services to the healthcare and pharmaceutical industries. The acquisition of SF&A broadens the Company's portfolio of consulting services, specifically in the area of health economics. The Company, through S&FA, provides health economics services that enable regulators, health care provides and third parties to assess the pricing and cost effectiveness of new medical therapies. S&FA provides empirical economic data and demonstration of cost effectiveness in development programs. S&FA economists document critical economic advantages of the new drug design and execute an integrated research program to support both regulatory approval and post-approval pricing, marketing and reimbursement strategies, marketing analyses and hotline services. 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 (617) 487-9900. THE OFFERING This Prospectus relates to the resale of 330,652 shares of Common Stock of the Company received by the Selling Stockholders on the closing of the acquisition of all outstanding shares of capital stock of S&FA by the Company. Such shares may be offered hereby from time to time by any or all of the Selling Stockholders. The Company will not receive any of the proceeds from the resale of the shares of Common Stock by the Selling Stockholders. 5 7 RISK FACTORS In addition to the other information in this Prospectus, the following risk factors should be considered carefully in evaluating the Company and its business before purchasing the shares of Common Stock offered hereby. 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, insufficient patient enrollment or investigator recruitment or production problems resulting in shortages of the drug. In addition, the Company believes that several factors, including the potential adverse impact of health care reform, 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 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 and progress of significant projects, exchange rate fluctuations, the mix of services offered, the opening of new offices, the costs associated with integrating acquisitions and the start-up costs incurred in connection with the introduction of new products and services. In addition, during the third quarter of fiscal 1993 and 1995, the Company's results of operations were affected by a non-cash restructuring charge and a non-cash write-down due to the impairment of long-lived assets, 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 clinical trials 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 and biotechnology companies to outsource large clinical research projects. A reversal or slowing of this trend would have a material adverse effect on the Company. The Company believes that concentrations of business in the CRO industry are not uncommon. The Company has experienced such concentration in the past and may experience such concentration in 6 8 future years. No client accounted for 10% or more of consolidated net revenue in fiscal 1994, 1995 or 1996. In fiscal 1994, 1995 and 1996, the Company's top five clients accounted for 29.8%, 25.2% and 32.0%, respectively, of the Company's consolidated net revenue. The loss of business from a significant client could have a material adverse effect on the Company. 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. 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. POTENTIAL ADVERSE IMPACT OF HEALTH CARE REFORM Numerous governments have recently 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 undertaken health care reform. For example, German health care reform legislation (the "Seehofer Gesetz"), which was implemented on January 1, 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. 7 9 COMPETITION; CRO INDUSTRY CONSOLIDATION The Company primarily competes against in-house departments of pharmaceutical companies, full service CROs and, to a lesser extent, universities and teaching hospitals. Some of these competitors have substantially greater capital, technical and other resources than the Company. CROs generally compete on the basis of previous experience, medical and scientific expertise in specific therapeutic areas, the quality of contract research, the ability to organize and manage large-scale trials on a global basis, the ability to manage large and complex medical databases, the ability to provide statistical and regulatory services, the ability to recruit investigators, 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. There can be no assurance that the Company will be able to compete favorably in these areas. The CRO industry is highly fragmented, with participants ranging from several hundred small, limited-service providers to several large, full-service CROs with global operations. 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 as a trend by pharmaceutical companies of outsourcing among fewer CROs has led to heightened competition for CRO contracts. 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 10 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. In fiscal 1993 and 1995, the Company's results of operations were materially and adversed affected by write-offs associated with the Company's acquired German operations. 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, including four since June 1, 1996, 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 8 10 products of the acquired companies, the difficulty of operating new (albeit related) businesses, 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 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 most 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. In addition, the cost of recruiting skilled personnel has increased and there can be no assurance that such costs will not continue to rise. POTENTIAL LIABILITY; POSSIBLE INSUFFICIENCY OF INSURANCE Clinical research services involve the testing of new drugs on 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 36.0%, 40.2%, 38.4% and 33.8% of the Company's net revenue for fiscal 1994, 1995 and 1996 and the three months ended September 30, 1996, respectively, were 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 9 11 Company's results of operations. The Company does not currently hedge against the risk of exchange rate fluctuations. VOLATILITY OF STOCK PRICE The market price of the Company's Common Stock is 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. 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. See "Description of Capital Stock." 10 12 USE OF PROCEEDS The Company will not receive any proceeds from the resale of 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. PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "PRXL." Public trading of the Common Stock commenced on November 22, 1995. Prior to that time, there was no public market for the Company's Common Stock. The following table sets forth the high and low sale prices for the Common Stock as reported by Nasdaq for the periods indicated:
HIGH LOW ---- --- FISCAL YEAR ENDED JUNE 30, 1996: Second quarter (from November 22, 1995) .... $36 $18 3/4 Third quarter .............................. 44 1/2 26 Fourth quarter ............................. 55 3/4 37 1/2 FISCAL YEAR ENDED JUNE 30, 1997: First quarter .............................. $63 $31 Second quarter ............................. 63 3/4 45 3/4 Third quarter (through January 13, 1997) ... 51 1/4 46 3/4
On January 13, 1997, the last reported sale price of the Common Stock on the Nasdaq National market, was $48 1/4 per share. As of January 13, 1997, there were approximately 67 stockholders of record of the Common Stock. The Company believes that most of its stock (other than shares held by its officers and directors) is held in street names through one or more nominees. In November 1995, in connection with its initial public offering, the Company paid a cash dividend of approximately $940,000 on certain series of its Preferred Stock, which were subsequently converted into Common Stock. The Company has never paid or declared any dividends on its Common Stock and does not anticipate paying any cash dividends in the foreseeable future. The Company currently intends to retain future earnings to fund the development and growth of its business. 11 13 SELLING STOCKHOLDERS The Shares are to be offered by and for the respective accounts of the Selling Stockholders. The number of Shares which each Selling Stockholder may offer is as follows:
SHARES SHARES OFFERED ------ -------------- OWNED PURSUANT TO THIS SHARES OWNED AFTER ----- ---------------- ------------------ BEFORE OFFERING PROSPECTUS OFFERING(2) --------------- ---------- ----------- SELLING STOCKHOLDERS NUMBER PERCENT (1) NUMBER PERCENT (1) NUMBER PERCENT (1) - -------------------- ------ ----------- ------ ----------- ------ ----------- Martin J. Miller 216,468 2.2 216,468 2.2 0 * Howard M. Tag 21,052 * 21,052 * 0 * Peter B. Malamis 2,874 * 2,874 * 0 * Laurie G. Hughes 1,663 * 1,663 * 0 * Robert F. Raven 88,595 * 88,595 * 0 * ------------------------------------------------------------------------------------------- TOTAL 330,652 330,652 0 ------------------------------------------------------------------------------------------- - ---------------------- *Less than 1% of the outstanding Common Stock. (1) As of January 13, 1997, there were 9,719,484 shares of Common Stock outstanding. (2) Assuming all shares offered pursuant to this Prospectus are sold.
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. All of the Selling Stockholders acquired their shares in connection with the sale of all the outstanding capital stock of State and Federal Associates, Inc. ("S&FA") to the Company pursuant to a Purchase Agreement (the "Purchase Agreement") dated August 22, 1996. Approximately 38,528 of the shares of Common Stock issued pursuant to the Purchase Agreement have been placed in escrow until the earlier of (i) August 22, 1997 or (ii) the issuance of the audit report relating to the Company's financial statements for the fiscal year ended June 30, 1997. The shares that have been placed in escrow will be used to satisfy any indemnification claims brought by the Company based on a breach of any of the representations or warranties of S&FA or the Selling Stockholders set forth in the Purchase Agreement. Martin J. Miller was a Director, Chairman of the Board and President; Howard M. Tag was Vice President, Secretary and a Director and Peter B. Malamis was a Director of S&FA until they each resigned such positions on August 22, 1996. Mr. Miller, Mr. Tag, Mr. Malamis and Ms. Hughes continue to be employees of S&FA. Pursuant to a Registration Rights Agreement (the "Registration Rights Agreement") dated August 22, 1996, 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." Each Selling Stockholder represented in the Registration Rights Agreement that he or she was purchasing the Shares from the Company without any present intention of effecting a distribution of those Shares. In recognition of the fact, however, that investors may want to be able to resell their shares 12 14 when they consider appropriate, the Company has filed with the Commission a Registration Statement on Form S-3 (of which this Prospectus is a part) with respect to the of the Shares by the Selling Stockholders from time to time. In addition, in connection with the public offering of Common Stock by the Company in December 1996, each Selling Stockholder, with the exception of Mr. Raven, agreed not to sell or otherwise transfer any shares of Common Stock of the Company owned by such Selling Stockholders until March 6, 1997. 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 resale of all Shares pursuant to the Registration Statement or August 22, 1999. The Registration Rights Agreement entered into by the Company and the Selling Stockholders provides 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 Stockholders. Similarly, the Registration Rights Agreement provides 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 Stockholders. 13 15 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 13, 1997, there were 9,719,484 shares of Common Stock outstanding and held of record by 67 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. There are no shares of Preferred Stock outstanding. 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. 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 14 16 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. 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 15 17 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 The First National Bank of Boston. 16 18 PLAN OF DISTRIBUTION The Shares offered hereby may be resold 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. The distribution of the Shares by the Selling Stockholders is 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 the Selling Stockholders 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. In addition, the Selling Stockholders may resell their Shares covered by this Prospectus 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 sale 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 Shares may be deemed to be underwriters and any commissions received by them and any profit on the resale of Shares positioned by them might be deemed to be underwriting discounts and commissions within the meaning of the Securities Act, in connection with such resaless. The Company will inform the Selling Stockholders that the antimanipulation rules under the Securities Exchange Act of 1934 (Rule 10b-5 and 10-6) 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." 17 19 LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company and the Selling Stockholders by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. EXPERTS The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of PAREXEL International Corporation for the year ended June 30, 1996, have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 18 20 ================================================================================ No dealer, sales representative or any other person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the company, any 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 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.................................. 6 Use of Proceeds............................... 11 Price Range of Common Stock and Dividend Policy.......................... 11 Selling Stockholders.......................... 12 Description of Capital Stock.................. 14 Plan of Distribution.......................... 17 Legal Matters................................. 18 Experts....................................... 18 ================================================================================ ================================================================================ 330,652 Shares PAREXEL International Corporation Common Stock ----------------------- PROSPECTUS , 1997 ------------------------ ================================================================================ 21 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Estimated expenses (other than underwriting discounts and commissions) payable in connection with the sale of the Common Stock offered hereby are as follows: Registration fee................................................... $ 4,840.55 Legal fees and expenses............................................ 20,000.00 Accounting fees and expenses....................................... 5,000.00 ---------- Total......................................................... $29,840.55 ==========
The Company will bear all expenses shown above. 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 9 of the Registration Rights Agreement among the Company and the Selling Stockholders, filed as Exhibit 4.3 of 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 (the "Act"). II-1 22 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 Purchase Agreement dated as of August 22, 1996 between the Company, State and Federal Associates, Inc., S&FA of Alexandria Partnership, Martin J. Miller, Howard Tag, Peter Malamis and Laurie Hughes. 4.3 Registration Rights Agreement dated as of August 22, 1996 between the Company, Martin J. Miller, Robert F. Raven, Howard Tag, Peter Malamis, Laurie Hughes and S&FA of Alexandria Partnership. 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP. 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). II-2 23 ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a)(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 this 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 a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) For the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. 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 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to 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 other offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 24 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 , as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Waltham, Massachusetts, on the 14th day of January, 1997. 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, the Registration Statement on Form S-3 filed herewith, any registration statement relating to this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, (a "Rule 462(b) Registration Statement") and any and all pre-effective and post-effective amendments to said Registration Statement on Form S-3 or Rule 462(b) Registration Statement, 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 by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE(S) DATE ---------- -------- ---- /s/ Josef H. von Rickenbach President, Chief Executive January 14, 1997 - ------------------------------------------------- Officer and Chairman (principal Josef H. von Rickenbach executive officer) /s/ William T. Sobo, Jr. Vice President and Treasurer January 14, 1997 - ------------------------------------------------- (principal financial and William T. Sobo, Jr. accounting officer) /s/ A.Dana Callow, Jr. Director January 14, 1997 - ------------------------------------------------- A. Dana Callow, Jr.
II-4 25 /s/ Patrick J. Fortune Director January 14, 1997 - ------------------------------------------------- Patrick J. Fortune /s/ Werner M. Herrmann Director January 14, 1997 - ------------------------------------------------- Werner M. Herrmann /s/ Peter Barton Hutt Director January 14, 1997 - ------------------------------------------------- Peter Barton Hutt /s/ James A. Saalfield Director January 14, 1997 - ------------------------------------------------- James A. Saalfield
II-5 26 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 Purchase Agreement dated as of August 22, 1996 between the Company, State and Federal Associates, Inc., S&FA of Alexandria Partnership, Martin J. Miller, Howard Tag, Peter Malamis and Laurie Hughes. 4.3 Registration Rights Agreement dated as of August 22, 1996 between the Company, Martin J. Miller, Robert F. Raven, Howard Tag, Peter Malamis, Laurie Hughes and S&FA of Alexandria Partnership. 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP. 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).
EX-4.2 2 PURCHASE AGREEMENT 1 EXHIBIT 4.2 ----------- ------------------------------------------------------ PURCHASE AGREEMENT AMONG STATE AND FEDERAL ASSOCIATES, INC., THE STOCKHOLDERS LISTED ON THE SIGNATURE PAGES HERETO, S&FA OF ALEXANDRIA PARTNERSHIP AND PAREXEL INTERNATIONAL CORPORATION Dated as of August 22, 1996 ------------------------------------------------------ 2 TABLE OF CONTENTS PAGE ---- ARTICLE I -- DEFINITIONS......................................................1 1.01. Definitions.........................................................1 ARTICLE II -- PURCHASE AND SALE...............................................6 2.01. Purchase and Sale...................................................6 2.02. Closing.............................................................6 ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY, SELLERS AND THE PARTNERSHIP...................................7 3.01. Corporate Existence and Power.......................................8 3.02. Corporate Authorization.............................................8 3.03. Governmental Authorization; Consents................................8 3.04. Non-Contravention...................................................8 3.05. Capitalization......................................................9 3.06. Subsidiaries........................................................9 3.07. Financial Statements................................................9 3.08. Absence of Certain Changes.........................................10 3.09. Property and Equipment.............................................11 3.10. No Undisclosed Material Liabilities................................13 3.11. Litigation.........................................................14 3.12. Material Contracts.................................................14 3.13. Insurance Coverage.................................................15 3.14. Compliance with Laws; No Defaults..................................15 3.15. Finders, Fees......................................................16 3.16. Intellectual Property..............................................16 3.17. Inventories........................................................17 3.18. Receivables........................................................17 3.19. Taxes..............................................................18 3.20. Employees..........................................................20 3.21. Environmental Compliance...........................................21 3.22. Customers and Suppliers............................................24 3.23. Transactions with Affiliates.......................................24 3.24. Bank Accounts; Powers of Attorney..................................24 3 3.25. Other Information..................................................24 3.26. Intercompany Arrangements..........................................25 3.27. Representations....................................................25 ARTICLE IV -- ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS...................................................25 4.01. Title to and Validity of Shares....................................25 4.02. Authority..........................................................26 4.03. Power To Act as Trustee or Executor................................26 4.04. Access to Information; Accredited Investor Representation..........26 4.05. Purchase for Investment............................................27 ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF BUYER.........................27 5.01. Organization and Existence.........................................27 5.02. Corporate Authorization............................................27 5.03. Governmental Authorization.........................................27 5.04. Non-Contravention..................................................28 5.05. Finders' Fees......................................................28 5.06. Purchase for Investment............................................28 5.07. Litigation.........................................................28 5.08. SEC Filings........................................................28 5.09. Buyer Stock........................................................29 ARTICLE VI -- COVENANTS OF THE COMPANY, SELLERS AND THE PARTNERSHIP....................................................29 6.01. Resignations.......................................................29 6.02. Confidentiality....................................................29 6.03. Affiliate Agreements...............................................30 6.04. Tax Covenants......................................................30 6.05. [Intentionally Omitted]............................................31 6.06. Covenant of the Partnership........................................31 6.07. Approval of Parachute Payments.....................................31 6.08. Reorganization Status..............................................31 6.09. Sale or Exchange Status.............................................31 6.10. Satisfaction of Buyer's Withholding Obligation......................31 ARTICLE VII -- COVENANTS OF BUYER............................................32 4 7.01. Confidentiality....................................................32 7.02. Access.............................................................33 7.03. Resale Registration Statement......................................33 7.04. Annual Report on Form 10-K.........................................34 7.05. Affiliate Agreements...............................................34 7.06. Bonuses............................................................34 7.07. Historical Bonuses.................................................34 7.08. Vacation...........................................................34 7.09. Reorganization Status..............................................34 7.10. Business Continuity................................................35 ARTICLE VIII -- COVENANTS OF ALL PARTIES.....................................35 8.01. Best Efforts.......................................................35 8.02. Certain Filings....................................................35 8.03. Public Announcements...............................................35 8.04. Pooling............................................................36 ARTICLE IX -- EMPLOYEE BENEFITS..............................................36 9.01. Employee Benefits Definitions......................................36 9.02. ERISA Representations..............................................37 9.03. No Third Party Beneficiaries.......................................38 ARTICLE X -- CONDITIONS TO CLOSING...........................................39 10.01. Conditions to the Obligations of Each Party.......................39 10.02. Conditions to Obligation of Buyer.................................40 10.03. Conditions to Obligation of Sellers...............................42 ARTICLE XI -- SURVIVAL; INDEMNIFICATION......................................44 11.01. Survival..........................................................44 11.02. Indemnification...................................................44 11.03. Procedures........................................................46 ARTICLE XII -- [Intentionally Omitted].......................................46 ARTICLE XIII -- [Intentionally Omitted]......................................46 5 ARTICLE XIV -- MISCELLANEOUS.................................................46 14.01. Notices...........................................................46 14.02. Amendments; No Waivers............................................48 14.03. Expenses..........................................................48 14.04. Successors and Assigns............................................49 14.05. Further Assurances................................................49 14.06. Governing Law.....................................................49 14.07. Counterparts; Effectiveness.......................................49 14.08. Entire Agreement..................................................49 14.09. Captions..........................................................49 14.10. Jurisdiction......................................................49 Schedules - --------- Schedule 2.01 List of Stockholders Schedule 3.07 Financial Statements Schedule 3.08 Absence of Certain Changes Schedule 3.10 Liabilities Schedule 3.11 Litigation Schedule 3.12 Material Contracts Schedule 3.13 Insurance Schedule 3.14 Permits Schedule 3.16 Intellectual Property Schedule 3.19 Tax Schedule 3.20 Employees Schedule 3.21 Environmental Matters Schedule 3.22 Customers and Suppliers Schedule 3.23 Transactions with Affiliates Schedule 3.24 Bank Accounts Schedule 3.26 Intercompany Arrangements Schedule 4.01 Title to Shares Schedule 5.03 Consents and Approvals Schedule 7.06 Bonuses Schedule 7.07 Historical Bonuses Schedule 7.08 Vacation Benefits Schedule 9.02 Employee Plans Schedule 10.03 Release of personal Guarantees 6 Exhibits - -------- Exhibit A. Affiliate Agreements Exhibit B. [Intentionally Omitted] Exhibit C. [Intentionally Omitted] Exhibit D. Escrow Agreement Exhibit E. [Intentionally Omitted] Exhibit F. Real Estate Conveyance Documents Exhibit G. Registration Rights Agreement 7 -1- PURCHASE AGREEMENT AGREEMENT dated as of August 22, 1996 among State and Federal Associates, Inc., a Virginia corporation (the "Company"); the stockholders of the Company listed on the signature pages hereto (the "Sellers"); S&FA of Alexandria Partnership, a Virginia general partnership (the "Partnership"); and PAREXEL International Corporation, a Massachusetts corporation ("Buyer"). W I T N E S S E T H : WHEREAS, Buyer desires to purchase from Sellers all of the outstanding shares of capital stock of the Company owned by them and set forth on SCHEDULE 2.01 (the "Shares"); WHEREAS, each Seller desires to sell to Buyer all of the Shares owned by such Seller; and WHEREAS, the Partnership desires to convey to Buyer or the Company, at the discretion of Buyer, certain real estate owned by the Partnership; NOW, THEREFORE, the parties hereto 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. "AFFILIATE AGREEMENTS" means the agreements described in Sections 6.09 and 7.05, a form of each of which is attached as EXHIBIT A. "ANCILLARY AGREEMENTS" means the Escrow Agreement, Affiliate Agreements, Registration Rights Agreement and Real Estate Conveyance Documents. 8 -2- "BALANCE SHEET" means the balance sheet of the Company as of June 30, 1996 referred to in Section 3.07. "BALANCE SHEET DATE" means June 30, 1996. "BUYER STOCK" means the number of shares of common stock, $.01 par value per share ("Buyer Common Stock"), of Buyer as is determined by dividing $20,000,000 by the average of the last reported sale price of the common stock of the Buyer on the Nasdaq National Market for the 26 trading days ending the second trading day immediately preceding the Closing Date (subject to appropriate adjustment in the event of a stock split or reverse stock split) (the "Market Price"). On the Closing Date, the Market Price, as calculated pursuant to this paragraph, will be $42.07. "BUYER'S COUNSEL" means the law firm of Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts. "CLOSING DATE" means the date of the Closing. "COMMON STOCK" means the common stock, $.01 par value, of the Company. "CODE" means the Internal Revenue Code of 1986, as amended. "ESCROW AGENT" means the escrow agent that is a signatory to the Escrow Agreement. "ESCROW AGREEMENT" means the Escrow Agreement among Sellers, Buyer and the Escrow Agent in the form set forth in EXHIBIT D. "INTELLECTUAL PROPERTY RIGHT" 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, 9 -3- 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. "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. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, assets, condition (financial or otherwise), results of operations or prospects of the Company. "MILLER" means Martin Miller, one of the Sellers. "1934 ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "OPTION CONVERSION RATIO" means 0.60. "OPTION SHARES" means the Shares designated on SCHEDULE 2.01 issued as incentive shares in connection with the Company's Non-Qualified Stock Option Plan. "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. "RAVEN" means Robert F. Raven, an equity holder of the Company who is selling the Raven Shares to Buyer on the date hereof pursuant to the terms of a separate Purchase Agreement (the "Raven Purchase Agreement"). "RAVEN BUYER STOCK" means the number of shares of Buyer Common Stock of the Buyer to be issued to Raven pursuant to that certain Raven Purchase Agreement (excluding shares of Buyer Common Stock to be issued pursuant to the Real Estate Conveyance Documents) calculated as follows: (a) the total dollar amount owed to Raven in accordance with the provisions of that certain Redemption Agreement dated as of January 3, 1996 by and 10 -4- between the Company and Raven (the "Redemption Agreement") divided by the Market Price, rounded to the nearest whole share. "RAVEN SHARES" means the shares of Common Stock owned by Raven, subject to the terms of the Redemption Agreement. "REAL ESTATE CONVEYANCE DOCUMENTS" means the documents required by Buyer to effectuate the conveyance to the Company or Buyer, as designated by Buyer, the fee title to condominium units 160, 170 and 600 located at 1101 King Street, Alexandria, Virginia (the "Purchase Real Estate") in accordance with the provisions of Section 3.09 and Article 10 in the form of EXHIBIT F. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement between Sellers and Buyer in the form of EXHIBIT G. "SELLERS' COUNSEL" means the law firm of Baker & McKenzie, Washington, D.C. "SHARE CONVERSION RATIO" means 37.048966. "SHAREHOLDER SHARES" means the Shares designated on SCHEDULE 2.01 owned as of the Closing Date without any vesting restrictions. "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. (b) Each of the following terms is defined in the Section set forth opposite such term: Term Section ---- ------- Benefit Arrangement 9.01 Closing 2.02 Company Securities 3.05 Damages 11.02 Employee Plans 9.01 ERISA 9.01 11 -5- ERISA Affiliate 9.01 Escrow Shares 2.02 Financial Statements 3.07 Hazardous Substance 3.21 Indemnified Party 11.03 Indemnifying Party 11.03 Indemnitees 13.03 Multiemployer Plan 9.01 Partnership Stock 2.02 Purchase Price 2.01 Release 3.21 Permit 3.14 Tax 3.19 Tax Authority 3.19 Tax Return 3.19 12 -6- ARTICLE II PURCHASE AND SALE 2.01. PURCHASE AND SALE. Upon the terms and subject to the conditions of this Agreement, each Seller, severally but not jointly, shall sell to Buyer, and Buyer shall purchase from each such Seller, at the Closing, that number of Shares as is set forth opposite such Seller's name on SCHEDULE 2.01. The aggregate purchase price (a) for each Seller with respect to their Shareholder Shares, to be paid in shares of Buyer Stock, shall be equal to the number of Shareholder Shares owned by such Seller multiplied by the Share Conversion Ratio, rounded to the nearest whole share, (b) for each Seller with respect to their Option Shares, to be paid in shares of Buyer Stock, shall be equal to the number of Option Shares owned by such Seller multiplied by the product of (i) the Option Conversion Ratio and (ii) the Share Conversion Ratio, rounded to the nearest whole share, and (c) for Raven (to be set forth in the Raven Purchase Agreement), to be paid in shares of Buyer Stock, shall be equal to the Raven Buyer Stock (in each instance, such shares of Buyer Stock being referred to as the "Purchase Price"). Raven shall acknowledge in the Raven Purchase Agreement that the sale by Raven of Shares held by Scott G. Adams ("Adams"), as escrow agent under the Redemption Agreement, and the payment to Raven under the Raven Purchase Agreement shall constitute full payment, satisfaction and discharge of the obligations of Raven and the Company under the Redemption Agreement. The Purchase Price shall be paid as provided in Section 2.02. 2.02. CLOSING. The closing (the "Closing") of the purchase and sale of the Shares hereunder shall take place at the offices of Sellers' Counsel in Washington, D.C. or such other location as the parties may mutually agree upon as soon as possible, but in no event later than 10 business days after satisfaction of the conditions set forth in Article X, or at such other time or place as Buyer and Sellers may agree. At the Closing, (a) Buyer shall deliver to each Seller certificates representing the number of shares of Buyer Stock equal to ninety and one-tenth percent (90.1%) of the shares of Buyer Stock to which such holder is entitled pursuant to Section 2.01 hereof (rounded up to the nearest whole number of shares). (b) Buyer shall deliver to the Escrow Agent certificates representing the number of shares of Buyer Stock equal to nine and nine-tenths percent (9.9%) of the shares of Buyer Stock to which each Seller is entitled pursuant to Section 2.01 hereof (rounded 13 -7- down to the nearest whole number of shares) (the "Escrow Shares"), to be held by the Escrow Agent in accordance with the Escrow Agreement. (c) Sellers shall deliver to Buyer certificates for the Shares duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto. (d) The appropriate parties shall enter into the Ancillary Agreements. (e) The Partnership will convey the Purchase Real Estate in accordance with Section 3.09 and Article 10, for a total consideration of $2,513,421.14 and the Buyer shall pay in full or assume all of the obligations encumbering the Purchase Real Estate (in the aggregate amount of $2,313,421.14) and issue to the Partnership 4,754 shares of Buyer Common Stock (the "Partnership Stock"), in accordance with the terms of the Real Estate Conveyance Documents. Buyer and the Partnership shall each bear the respective expenses directly related to the transfer of the Purchase Real Estate as set forth in the Settlement Sheet referred to in Section 10.01. (f) Buyer, Raven and Adams, as escrow agent for shares owned by Raven, shall execute and deliver the Raven Purchase Agreement. (g) The parties shall execute and deliver any other instruments, documents and certificates that are required to be delivered pursuant to this Agreement or as may be reasonably requested by any party in order to consummate the transactions contemplated by this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY, SELLERS AND THE PARTNERSHIP The Company and each Seller (but only the Partnership with respect to Sections 3.09 and 3.14(d) to the extent and only to the extent those sections relate to the Purchase Real Estate) hereby jointly and severally represent and warrant to Buyer as of the date hereof and as of the Closing Date that: 14 -8- 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 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 Buyer true and complete copies of the corporate charter and by-laws of the Company as currently in effect. 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 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, enforceable in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, and by general equitable principles. 3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS. (a) The execution, delivery and performance by the Company of this Agreement require no action by or in respect of, or filing with, any governmental body, agency, official or authority. (b) 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, delivery and performance of this Agreement by the Company or the consummation of the transactions contemplated hereby. 3.04. NON-CONTRAVENTION. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or conflict with the corporate charter or by-laws 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 15 -9- 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 50,000 shares of common stock. As of the date hereof, there were outstanding 18,856 shares of Common Stock, including 845 shares of Common Stock issued pursuant to the Company's Non-Qualified Stock Option Plan dated January 1, 1990. There are no outstanding employee stock options or any other outstanding options to purchase any shares of 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 Sellers (subject only to the vesting restrictions on the Option Shares) and Raven (subject to the provisions of the Redemption Agreement) as shown on SCHEDULE 2.01. Except as set forth in this Section, 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"). Other than the Redemption Agreement, 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. 3.07. FINANCIAL STATEMENTS. The Company has previously furnished Buyer with a true and complete copy of (i) the balance sheets of the Company as of December 31, 1993, 1994 and 1995, and the statements of operations, cash flows and changes in stockholders' equity of the Company for the respective fiscal years then ended, as audited by Ross Langan & McKendree, and (ii) the unaudited balance sheet of the Company as of June 30, 1996 and the statements of income, cash flows and changes in stockholders' equity of the Company for the interim periods ended June 30, 1996, (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, cash flows 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 except as otherwise stated therein and, with respect to the unaudited interim financial 16 -10- statements, for the omission of footnote disclosures and, to the extent consistent with generally accepted accounting principles, for normally recurring year-end audit adjustments. 3.08. ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 3.08 or as required by this Agreement, 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) to the best knowledge of the Company and each Seller after reasonable inquiry of appropriate Company personnel, 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) except as set forth in the Redemption Agreement, 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 incurrence, assumption or guarantee by the Company of any indebtedness for borrowed money; (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; 17 -11- (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; or (k) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representation thereof to organize any employees of the Company, which employees were not subject to a collective bargaining agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Company. 3.09. PROPERTY AND EQUIPMENT. (a) The Company has good and marketable title to, or in the case of leased property has valid leasehold interests in, all personal property and assets (whether tangible or intangible) reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practices, and a valid leasehold interest in leased real property and the Buyer has, or will have, as of the Closing Date, good and clear record and marketable fee title to the Purchase Real Estate and all real property owned currently by the Company (collectively, "Owned Real Estate") subject only to such matters as are listed in the title insurance policies described in Section 10.02 ("Permitted Exceptions"). None of such properties or assets is subject to any Liens, except: (i) Liens disclosed on the Balance Sheet; (ii) 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); (iii) 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; or 18 -12- (iv) Permitted Exceptions (as to Owned Real Estate). (b) There are no developments affecting any of such properties or assets pending or, to the knowledge of Sellers or the Company threatened, which might materially detract from the value of such property assets, materially interfere with any present or intended use of any such property or assets or materially adversely affect the marketability of or title to such properties or assets. (c) The real and personal property and equipment owned or leased by the Company and the Purchase Real Estate, have no material defects, are in good operating condition and repair (ordinary wear and tear excepted), and are substantially adequate for the uses to which they are being put. (d) The assets owned or leased by the Company, or which it otherwise has the right to use, constitute all of the assets held for use or used in connection with the business of the Company and are generally adequate to conduct such business as currently conducted. (e) Except as set forth on SCHEDULE 3.09, there exist no violations of, or defaults under, the Declaration of 1101 King Street Condominium recorded with the land records of the City of Alexandria, Virginia in Book 1194 at Page 669 (the "Declaration") and any Plats, Bylaws, Maintenance Agreements and any other documents attached thereto or referred to therein, and any amendments thereof, or under the rules and regulations promulgated thereunder (collectively, the "Condominium Documents"), with respect to the Purchase Real Estate. The Partnership has, and will have, as of the Closing Date, complied in all respects with the requirements of the Condominium Documents and of all laws, regulations, ordinances and the like relating to the Purchase Real Estate and the transfer thereof to the Buyer. (f) All charges, assessments, fees, expenses, costs or other amounts (collectively, "Charges") due with respect to the Purchase Real Estate under the Condominium Documents are current and shall be paid in full as of the Closing together any fines, interest or penalties related thereto. The Company, the Partnership and the Sellers have not received notice and have no knowledge of any pending or proposed special assessments or other charges with respect to the Purchase Real Estate. To the best of the Company's, the Partnership's and the Seller's knowledge, no unit owner under the condominium created by the Declaration has failed to pay any charges, assessments, fees or costs beyond sixty days after the date such amount is due. There are no Charges applicable 19 -13- to the Purchase Real Estate, pending, proposed, or actual, except as set forth in the Certificate of Resale or the Certificate of Expenses referred to in Section 10.02. (g) Except as set forth on SCHEDULE 3.09, all leases and subleases with respect to the Purchase Real Estate have been filed with the Board of Directors of the Condominium as required under the Condominium Documents and conform with the requirements thereof. (h) The Owned Real Estate and leased real property are in compliance with all applicable local zoning ordinances relating to the uses to which such properties are currently used, and neither the Company, the Partnership nor the Sellers have received any notice of violation from the applicable local zoning authorities with respect to any of such properties. (i) The 1996 Condominium budget, the tax bills, and the Declaration which were previously provided to Buyer by Sellers are true and complete copies thereof and Sellers, the Company and the Partnership have previously delivered to Buyer copies of all documents, budgets and bills relating to the Purchase Real Estate, which any of them has in its, or its counsel's, possession. (j) All costs for utilities during normal business hours for the Purchase Real Estate are included within monthly condominium fees and none are billed separately. (k) There are no Limited Common Areas or Reserved Common Areas (as defined in the Condominium Documents) affecting the Purchase Real Estate except for a balcony attached to Unit 600 for which there are currently no separate Charges. (l) There are no leases, subleases or other occupancy agreements (collectively, "Leases") affecting the Purchase Real Estate except as set forth in SECTION 3.12, true and complete copies of which have been previously provided by Sellers to Buyer. All information previously provided by Sellers to Buyer concerning rentals, escalations and other charges due or payable under any Leases is true, accurate and complete in all respects. (m) There are no agreements for parking spaces, used or to be used, in connection with any Owned Real Estate or any leased real property except for month-to-month arrangements terminable at will, at the current rate of $70.00 per month per space. 3.10. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth in SCHEDULE 3.10, there are no liabilities of the Company of any kind whatsoever, whether accrued, contingent, 20 -14- absolute, determined or determinable, 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 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. Except as set forth in SCHEDULE 3.11, there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Sellers threatened against or affecting, the Company or any of its owned or leased 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 or any other schedule to this Agreement, the Company is not a party to or subject to: (i) any lease providing for annual rentals of $15,000 or more; (ii) any contract for the purchase of materials, supplies, goods, services, equipment or other assets providing for annual payments by the Company of $15,000 or more; (iii) any sales, distribution or other similar agreement providing for the sale by the Company of materials, supplies, goods, services, equipment or other assets providing for annual payments to the Company of $15,000 or more; (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 any asset), except contracts relating to indebtedness incurred in the ordinary course of business in an amount not exceeding $15,000; 21 -15- (vi) any license agreement, franchise agreement or agreement in respect of similar rights granted to or held by the Company; (vii) any agency, dealer, sales representative or other similar agreement; (viii) 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; or (ix) any other contract or commitment 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 Sellers, 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 Buyer a list of, and true and complete copies of, all insurance policies and fidelity bonds 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 or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums payable under all such policies and bonds have been paid and the Company is otherwise in full compliance with the terms and conditions of all such policies and bonds. Except as set forth in SCHEDULE 3.13, such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since the Company's inception and remain in full force and effect. Such policies of insurance and bonds are of the type and in amounts customarily carried by Persons conducting businesses similar to those of the Company. Neither the Company nor any of the Sellers knows of any threatened termination of, or premium increase with respect to, any of such policies or bonds. 3.14. COMPLIANCE WITH LAWS; NO DEFAULTS. (a) The Company is not in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances or regulations except 22 -16- 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 and none of such licenses or permits will be terminated or impaired or become terminable as a result of the transactions contemplated hereby, except to the extent such termination or impairment would not have a Material Adverse Effect. (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. (d) Except as otherwise set forth on SCHEDULE 3.14, all Owned Real Estate and leased real property is in compliance with (i) all applicable federal, state and local laws, regulations, ordinances, orders and the like; (ii) all condominium documents relating thereto and (iii) all Permitted Exceptions. 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 Sellers or the Company who might be entitled to any fee or commission from Buyer, 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 is recognized without regard to registration or has been issued or registered or in which an application for such issuance or 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. 23 -17- (b)(i) The Company during the three years preceding the date of this Agreement has not been sued or 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, and (ii) except as set forth in SCHEDULE 3.16, the Company and Sellers have no knowledge of any other claim or infringement by the Company, and no knowledge of any continuing infringement by any other Person of any Intellectual Property Rights. No Intellectual Property Right is subject to any outstanding order, judgment, decree, stipulation or agreement of which the Company or Sellers are aware or to which the Company is a party 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 processes and formulae, research and development results and other know-how of the Company, the value of which to the Company is contingent upon maintenance of the confidentiality thereof, has, to the knowledge of the Company or the Sellers, been disclosed by the Company to any Person other than employees, representatives and agents of the Company who are parties to confidentiality agreements with the Company. (d) To the knowledge of the Company and Sellers, no third party has asserted any claim, or has any reasonable basis to assert any valid 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) Except as set forth on SCHEDULE 3.16, no such Intellectual Property Rights have been registered with any governmental authority. (f) Except as set forth on SCHEDULE 3.16 and except for licenses to use the Company's products granted by the Company in the ordinary course of its business to third parties, the Company owns or has the exclusive right to use, sell, license or dispose of, and has the exclusive right to bring actions for the infringement of, all Intellectual Property Rights necessary or required for the conduct of its business as presently conducted. 24 -18- (g) The execution, delivery and performance of this Agreement and the consummation of the other transactions contemplated hereby will not breach, violate or conflict with any instrument or agreement governing any Intellectual Property Right, will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any Intellectual Property Right or in any way impair the right of the Company to sue, sell, license or dispose of, or to bring any action for other infringement of, any Intellectual Property Right or portion thereof. (h) Except as set forth in SCHEDULE 3.16, 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 or as proposed to be conducted. To the knowledge of the Company and Sellers, 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 or to be conducted by the Company. Except as set forth in SCHEDULE 3.16, 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 does not have any inventory. 3.18. RECEIVABLES. 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 arising in the normal course of the Company's business. All accounts, notes receivable and other receivables of the Company at the Balance Sheet Date have been included in the Balance Sheet. 25 3.19. Taxes. ----- (a) "TAX" means any federal, state, local, foreign net income, alternative or add-on minimum tax, estimated, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital profits, lease, service, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount with respect thereto. "TAX RETURN" means any return, declaration, report, statement, claim for refund, or information statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TAX AUTHORITY" means any governmental authority responsible for the imposition of any Tax. (b) The Company has timely filed all Tax Returns required to be filed and has timely 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 Tax Returns were complete and correct in all material respects, and such Tax Returns correctly reflected the facts regarding the income, business, assets, operations, activities, status and other matters of the Company and any other information required to be shown thereon. 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. No issues have been raised (and are currently pending) by any Tax Authority in connection with any of such Tax Returns. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return, and the Company has not waived any statute of limitation with respect to any Tax or agreed to any extension of time with respect to a Tax assessment or deficiency. 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 Balance Sheet (as adjusted through the Closing Date in accordance with the past custom and practice of the Company) or are being contested and an adequate reserve therefor has been established and is fully reflected in such Balance Sheet. All material elections with respect to Taxes affecting the Company, as of the date hereof, are set forth in SCHEDULE 3.19. Other than the Option Shares, 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 the payment of any "excess parachute payments" within the meaning of Section 280G of the Code (without regard to the exceptions set forth in Sections 280G(b)(4) 26 -20- and 280G(b)(5) of the Code). The Company has not agreed to make any adjustment under Section 481(a) of the Code (or any corresponding provision of state, local or foreign Tax law) by reason of a change in accounting method or otherwise. All Taxes that have been withheld (or any such Taxes that were required to be withheld) by or on behalf of the Company from any amounts payable to any Person have been timely remitted to the appropriate Tax Authority. The Company is not, and has not been, a U.S. real property holding company (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. No claim has ever been made by a Tax Authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to Tax in that jurisdiction. The Company has not participated in an international boycott as defined in Section 999 of the Code. No portion of the Purchase Price is subject to the Tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law. The Company is not a party to any joint venture, partnership, or other arrangement or contract which could be treated as a partnership for federal income tax purposes. 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 and such foreign country. (c) The Company has never filed a consent pursuant to Section 341(f) of the Code, relating to collapsible corporations. The Company is not a party to any Tax sharing or similar agreement. Except as set forth in SCHEDULE 3.19, the Company has never been a member of a group filing a consolidated federal income Tax Return, and the Company does not have any liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any corresponding provision of state, local or foreign Tax law), as a transferee or successor, by contract, or otherwise. The Company has no net operating losses or other tax attributes presently subject to limitation under Sections 382, 383 or 384 of the Code, or the federal consolidated return regulations. (d) There are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. The Company's liability for Taxes not yet due or payable does not exceed the reserve for actual Taxes (as opposed to any reserve for deferred Taxes established to reflect timing differences between book and Tax income) as shown on the Balance Sheet, and will not exceed such reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing their Tax Returns. (e) SCHEDULE 3.19 hereto contains a list of all jurisdictions (whether foreign or domestic) to which any Tax is properly payable by the Company. 27 -21- 3.20. EMPLOYEES. SCHEDULE 3.20 sets forth a true and complete list of (a) the names, titles, annual salaries and other compensations 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 a Seller that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement or otherwise. Except as set forth in SCHEDULE 3.20: (a) the Company is not a party to or otherwise bound by any employment agreement; (b) there are no grievances, disputes or controversies pending or, to the best knowledge of the Company and Sellers, threatened between the Company and any of its present or former employees or independent contractors or any person or entity representing any such employee or independent contractor, and the Company is not currently subject to any claims by present or former employees or independent contractors, including, without limitation, claims for wages, salaries, commissions or benefits; (c) the Company has not encountered any organizational efforts or demands for collective bargaining by any labor union or labor organization or been a party to any collective bargaining or labor agreement; and (d) on or before the date hereof, the Company paid or otherwise made provisions for payment of all amounts due to all of its present or former employees and independent contractors, including, without limitation, straight time and overtime pay, vacation and sick pay, fringe (other than pension) benefits, severance pay and disability payments, and the Company has paid over to the appropriate Governmental agencies or other appropriate persons or entities all withheld taxes, social security and other payments due or accrued through the date hereof. 3.21. Environmental Compliance. ------------------------ (a) ENVIRONMENTAL DEFINITIONS. The following terms, as used herein, have the following meanings: "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign statutes, laws (including common or case law), regulations, ordinances, rules, judgments, judicial decisions, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements, or other governmental approvals or restrictions, whether now or hereinafter in effect, relating to human health, the environment or to emissions, discharges or Releases of Hazardous Substances into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, 28 -22- processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Substances or the assessment, removal, containment or remediation thereof. "ENVIRONMENTAL LIABILITIES" means all liabilities of the Company, whether vested or unvested, contingent or fixed, actual or potential, known or unknown, which (i) arise under or relate to articles covered by Environmental Laws or arise in connection with or relate to any matter disclosed or required to be disclosed in SCHEDULE 3.21 and (ii) arise from or relate in any way to actions occurring or conditions existing before the Closing Date. "HAZARDOUS SUBSTANCE" means any and all pollutants and contaminants, and any and all toxic, caustic, radioactive, biohazardous or otherwise hazardous substance or waste that is regulated under Environmental Laws including petroleum, its derivatives, by-products and other hydrocarbons. "REGULATED ACTIVITY" means any treatment, storage, recycling, transportation or disposal of any Hazardous Substance. "RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including, without limitation, the abandonment or discarding of barrels, containers, or other receptacles containing any Hazardous Substance). (b) ENVIRONMENTAL REPRESENTATIONS. Except as disclosed on SCHEDULE 3.21: (i) No notice, notification, demand, request for information, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending, or to the Company's or a Seller's knowledge, threatened by any governmental or other entity with respect to any (A) alleged violation by the Company of any Environmental Law or liability thereunder, (B) alleged failure by the Company to have any permit, certificate, license, approval, registration or authorization required under any Environmental Law, (c) Regulated Activity or (D) treatment, storage, recycling, or Release of Hazardous Substance. (ii) (A) The Company has not handled any Hazardous Substance on any property now or previously owned or leased by it; (B) no polychlorinated biphenyls or urea formaldehyde is or has been present at any property now or previously owned or leased by the Company; (C) no asbestos is or has been 29 -23- present at any property now or previously owned or leased by the Company; (D) there are no underground storage tanks for Hazardous Substances, active or abandoned, at any property now or previously owned or leased by the Company; (E) no Hazardous Substance has been Released at, or under any property now or previously owned or leased by the Company and (F) no Hazardous Substance has been Released or is present, in a reportable or threshold planning quantity, where such a quantity has been established by statute, ordinance, rule, regulation or order, at, on or under any property now or previously owned or leased by the Company. (iii) The Company has not transported or arranged for the transportation (directly or indirectly) of any Hazardous Substance to any location which is listed or proposed for listing under CERCLA, or on any similar state list or which is the subject of Federal, state or local enforcement actions or other investigations which may lead to claims against Buyer for clean-up costs, remedial work, damages to natural resources or for personal injury claims, including, but not limited to, claims under CERCLA. (iv) No oral or written notification of a Release of a Hazardous Substance has been filed by or on behalf of the Company and no property now or previously owned or leased by the Company is listed or, to the Company's or a Seller's knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA or on any similar state list of sites requiring investigation or clean-up. (v) There are no environmental Liens on any of the Company's assets or on any property now or previously owned or leased by the Company, and no governmental actions have been taken or are in process that could subject any of such assets or property to such Liens. The Company would not be required to place any notice or restriction relating to the presence of Hazardous Substances at any property used in connection with the operation of its business in any deed to such property. (vi) There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or which are in the possession of the Company in relation to any property or facility now or previously owned or leased by the Company which have not been delivered to Buyer at least five (5) business days prior to the date hereof. 30 -24- 3.22. CUSTOMERS AND SUPPLIERS. The Company has not received notice from or is otherwise aware that any customer or 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. All of the persons and entities to which the Company is currently providing consulting or other services, or is currently proposing to provide consulting or other services, for which services the Company has received or expects to receive revenues in excess of $10,000, are set forth on SCHEDULE 3.22. Neither the Company nor Sellers have any reason to believe that the Company's business relationships with any person or entity listed on SCHEDULE 3.22 are unsatisfactory or are to be terminated, whether as a result of the sale of the Company to Buyer or otherwise. SCHEDULE 3.22 sets forth the amounts the Company has received as of the date hereof as prepayments. 3.23. TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE 3.23, there are no loans, leases, royalty agreements or other continuing transactions between the Company and any Seller, any Affiliate of any Seller, or any member of any Seller's family. Except as set forth in SCHEDULE 3.23, to the knowledge of the Company and Sellers, none of the officers or directors of the Company or Sellers (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 employee, officer, director or stockholder of the Company. 3.24. BANK ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.24 sets forth a true and complete list of (a) all bank accounts, money market accounts and safe deposit boxes of the Company and all Persons who are signatories thereunder or who have access thereto, (b) the names of all Persons holding general or special powers of attorney from the Company and a summary of the terms thereof and (c) all Company credit cards and all credit accounts in the Company's name which have been approved by the Company or of which the Company or any Seller is aware. 3.25. OTHER INFORMATION. None of the documents or information delivered to Buyer by or under the direction of any of the Sellers 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. 31 -25- The financial projections relating to the Company for the year ending December 31, 1996 delivered to Buyer at the Closing constitute the Company's best estimate of the information purported to be shown therein, and neither the Company nor any Seller is aware of any fact or information that would lead it to believe that such projections are incorrect or misleading in any material respect. 3.26. INTERCOMPANY ARRANGEMENTS. The Company does not own any note, bond, debenture or other indebtedness, or is not otherwise a creditor, of any Seller or any of its Affiliates. Since the Balance Sheet Date there has not been any payment by the Company to such Seller or any of its Affiliates, charge by Seller or any of its Affiliates to the Company or other transaction between the Company and such Seller and any of its Affiliates, except in any such case in the ordinary course of business of the Company consistent with past practice or as set forth in SCHEDULE 3.26 or as contemplated by this Agreement. 3.27. REPRESENTATIONS. The joint representations and warranties of the Company and Sellers contained in this Agreement, 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. ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller, severally but not jointly, represents and warrants to, and agrees with, Buyer as follows: 4.01. TITLE TO AND VALIDITY OF SHARES. Such Seller now has, and on the Closing Date will have, good and marketable title to and unrestricted power to vote and sell the Shares designated as owned by such Seller opposite such Seller's name on SCHEDULE 2.01, free and clear of any Lien and, upon purchase and payment therefor and delivery to Buyer thereof in accordance with the terms of this Agreement, Buyer will obtain good and marketable title to such Shares free and clear of any Lien. All Shares owned by such Seller have been duly authorized and validly issued and are fully paid and non-assessable. All Shares to be sold by such Seller are registered in the name of such Seller. 32 -26- 4.02. AUTHORITY. Such Seller 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 such Seller (a) require no action by or in respect of, or filing with, or consent of, any governmental body, agency or official or any other Person and (b) do 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 Seller. This Agreement has been duly executed and delivered by such Seller and constitutes a valid and binding obligation of such Seller, enforceable in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, and by general equitable principles. 4.03. POWER TO ACT AS TRUSTEE OR EXECUTOR. If such Seller is serving as trustee or executor with respect to its Shares, such Seller is duly authorized and empowered by the instruments creating such trust or trusts or by the will of which such Seller is acting as executor and under applicable law to enter into this Agreement with respect to the Shares held by such Seller and to consummate the transactions contemplated herein. 4.04. Access to Information; Accredited Investor Representation. --------------------------------------------------------- (a) Each Seller acknowledges that all documents, records and books pertaining to the investment in the Buyer Stock have been made available for inspection by him, his attorney, accountant, purchaser representative and tax advisor (collectively, the "Advisors") and that the Seller has carefully reviewed and understands the information contained therein; (b) Each Seller and the Advisors have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of Buyer concerning the offer and sale of the Buyer Stock and all such questions have been answered to the full satisfaction of the Seller and his Advisors; (c) In evaluating the suitability of an investment in the Buyer, each Seller has not relied upon any representation or other information (oral or written) other than as contained in documents or answers to questions so furnished to the Seller or his Advisors by the Buyer; (d) Each Seller, together with the Advisors, has such knowledge and experience in financial, tax and business matters so as to enable him to utilize the information made available to him in connection with the purchase of the Buyer Stock to 33 -27- evaluate the merits and risks of an investment in the Buyer Stock and to make an informed investment decision with respect thereto; (e) Each Seller has adequate means of providing for his current needs and foreseeable contingencies and has no need for his investment in the Buyer Stock to be liquid; (f) Each Seller acknowledges that he or she has previously received each SEC Report (as hereinafter defined) and has had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of Buyer concerning such documents, and all such questions have been answered to the full satisfaction of the Seller and his Advisors. 4.05. PURCHASE FOR INVESTMENT. Each Seller is acquiring the shares of Buyer Stock for investment for his own account and not with a view to, or for sale in connection with, any distribution thereof. Each Seller agrees that the shares of Buyer Stock acquired by such 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. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to the Company and Sellers that: 5.01. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth 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. 5.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby are within the corporate powers of Buyer and have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement constitutes a valid and binding agreement of Buyer. 5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by Buyer of this Agreement require no action by or in respect of, or filing with, any governmental 34 -28- body, agency, official or authority other than compliance with any applicable requirements of the 1934 Act. 5.04. NON-CONTRAVENTION. The execution, delivery and performance by Buyer of this Agreement do not and will not (i) contravene or conflict with the corporate charter or by-laws of Buyer or (ii) assuming compliance with the matters referred to in Section 4.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order or decree binding upon Buyer. 5.05. FINDERS' FEES. Except for Chestnut Partners, Inc., whose fees will be paid by Buyer, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission from the Company or any Affiliate thereof upon consummation of the transactions contemplated by this Agreement. 5.06. PURCHASE FOR INVESTMENT. Buyer is purchasing the Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof. 5.07. LITIGATION. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer 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. 5.08. SEC FILINGS. Buyer has made available to the Sellers a correct and complete copy of each report, schedule, registration statement and definitive proxy statement filed by Buyer with the Securities Exchange Commission ("SEC") on or after November 22, 1995 (the "SEC Reports") which are all the forms, reports and documents required to be filed by Buyer with the SEC since November 22, 1995. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the 1934 Act or the Securities Act of 1933, as amended (the "1933 Act"), as the case may be, and the rules and regulations of the SEC applicable thereto and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the SEC Reports complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, had been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be 35 -29- indicated in the notes thereto or, in the case of the unaudited statements, as permitted by the SEC) and each fairly presented the consolidated financial position of Buyer and its consolidated subsidiaries in all material respects as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated (subject, in the case of the unaudited interim financial statements, to normal audit adjustments, which were not and are not expected, individually or in the aggregate, to be material in amount). Except as disclosed in the SEC Reports, (a) Buyer and its subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice and (b) there has not been any transaction, commitment, dispute or other event or condition (financial or otherwise) of any character (whether or not in the ordinary course of business), individually or in the aggregate, having or which could reasonably be expected to have a Material Adverse Effect on Buyer. 5.09. BUYER STOCK. The authorized capital stock of Buyer consists of 25,000,000 shares of common stock, of which 7,873,804 shares are issued and outstanding as of July 31, 1996, and 5,000,000 shares of Preferred Stock, of which no shares are issued or outstanding. The Buyer Stock to be issued to the Sellers, when issued, sold and delivered in accordance with the terms of this Agreement, will be duly and validly issued, fully paid, non-assessable, not subject to any preemptive rights and free and clear of all liens, claims and encumbrances. ARTICLE VI COVENANTS OF THE COMPANY, SELLERS AND THE PARTNERSHIP The Company and each Seller agree that: 6.01. RESIGNATIONS. The Company will deliver to Buyer the resignations of all officers and directors of the Company from their positions as officers and/or directors with the Company at or prior to the Closing Date, unless otherwise specified by Buyer. 6.02. CONFIDENTIALITY. Sellers and their Affiliates will hold, and will use their 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 36 -30- and information concerning Buyer furnished to Sellers 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 Sellers, (ii) in the public domain through no fault of Sellers or (iii) later lawfully acquired by Sellers from sources other than the Company or Buyer; PROVIDED that Sellers 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 Sellers of the confidential nature of such information and are directed by Sellers to treat such information confidentially. The obligation of Sellers 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. 6.03. AFFILIATE AGREEMENTS. The Company shall deliver to Buyer on or prior to the Closing Date a letter from Seller's Counsel, satisfactory in form and substance to Buyer'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 Buyer Stock pursuant to the transactions contemplated by this Agreement (each such person being referred to as a "Company Affiliate"). The Company shall cause each of the Company Affiliates to execute and deliver to Buyer on the Closing Date, a written agreement (the "Affiliate Agreement") satisfactory to Buyer and substantially in the form of EXHIBIT A 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 Buyer 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 such Seller shall provide Buyer with an opinion of counsel satisfactory to Buyer 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 Buyer Stock until Buyer shall have publicly released financial results covering a period of at least 30 days of combined operations of Buyer and the Company. 6.04. TAX COVENANTS. The Company and the Sellers shall provide Buyer with a clearance certificate or similar document(s) which may be required by any state Taxing 37 -31- Authority in order to mitigate, reduce or relieve any obligations of Buyer to withhold any portion of the Purchase Price. The Company will pay when due any and all sales, use, transfer and documentary taxes and recording and filing fees incurred in connection with the transactions contemplated by this Agreement. 6.05. [Intentionally Omitted] 6.06. COVENANT OF THE PARTNERSHIP. The Partnership covenants and agrees to take such action as shall be necessary to cause the Purchase Real Estate to be conveyed on the Closing Date in accordance with the provisions of the Real Estate Conveyance Documents. The Partnership further agrees to indemnify and hold Buyer and the Company harmless against any commission which may become payable by the Partnership upon the conveyance of the Purchase Real Estate to Buyer pursuant to the Real Estate Conveyance Documents. 6.07. APPROVAL OF PARACHUTE PAYMENTS. With respect to all payments that would possibly constitute "excess parachute payments" (within the meaning of Section 280G of the Code) but for the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code, the Company shall obtain the shareholder approval described in Section 280G(b)(5)(B) of the Code. 6.08. REORGANIZATION STATUS. Each Seller shall consistently treat for all United States federal income tax purposes Buyer's purchase of Shares from Sellers in exchange for Buyer Stock that is described in Section 2.01 hereof as a reorganization, within the meaning of Section 368(a)(1)(B) of the Code (the "B Reorganization"), and each Seller shall determine its United States federal income tax attributes of the Buyer Stock that is received in accordance with Section 358(a) and Section 1223(1) of the Code. 6.09. SALE OR EXCHANGE STATUS. The Partnership (and each partner of the Partnership) shall consistently treat for all United States federal income tax purposes Buyer's purchase of the Purchase Real Estate from the Partnership that is described in Section 2.02(e) hereof as a sale or exchange, within the meaning of Section 1001 of the Code, which is separate and apart (although concurrent with) the B Reorganization. 6.10. SATISFACTION OF BUYER'S WITHHOLDING OBLIGATION. Each of the Sellers other than Miller covenant and agree that he or she shall pay to the Buyer, in immediately available funds (through wire transfer or federal funds check) not later than 12:00 noon, Eastern Standard Time, on the Lapse Date (as defined below), the federal, state, local and foreign tax withholding amounts attributable to the Buyer Stock issued to him or her with respect to 38 -32- 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 Buyer and its accountants. Each of the Sellers other than Miller agree 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 Buyer 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 6.10, Lapse Date shall mean the first business day following the date the Buyer 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 BUYER Buyer agrees that: 7.01. CONFIDENTIALITY. Prior to the Closing Date and after any termination of this Agreement, Buyer and its Affiliates will hold, and will use their 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 Company 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 the Company; 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. 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 39 -33- documents and other materials, and all copies thereof, obtained by Buyer or its Affiliates or on their behalf from a Seller, the Company in connection with this Agreement that are subject to such confidence. 7.02. ACCESS. The Company, on and after the Closing Date, will afford promptly to Sellers and their agents reasonable access to their properties, books, records, employees and auditors to the extent necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date. Sellers will hold, and will use their best efforts to cause their 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 provided to it pursuant to this Section 7.02. 7.03. RESALE REGISTRATION STATEMENT. Buyer agrees to cause a registration statement on Form S-3 under the Securities Act relating to the resale of the Buyer Stock and the Partnership Stock (collectively, the "Registrable Shares") to be filed pursuant to the Registration Rights Agreement as soon as practicable following the date on which the Buyer is eligible to use such Form S-3, and in any event no later than January 15, 1997, and agrees to use commercially reasonable efforts to (i) have such registration statement declared effective as soon as practicable thereafter and (ii) maintain the effectiveness of such registration statement until the earlier of three (3) years from the Closing Date and the date on which all Registrable Shares have been sold by Sellers; provided, however, that Buyer shall not be required to take any action to cause such registration statement to be declared effective by the Securities and Exchange Commission at any time prior to the publication by Buyer of financial results including at least thirty (30) days' post-closing combined operating results of Buyer and the Company. In the event that at the time the filing of such registration statement is undertaken or required to be undertaken, Buyer fails to qualify for use of Form S-3 for purposes of registering for resale the Registrable Shares, Buyer shall cause a registration statement on Form S-1 to be filed as soon as practicable thereafter and to use commercially reasonable efforts to (i) have such registration statement declared effective as soon as practicable and (ii) maintain the effectiveness of such registration statement until the earlier of (a) three (3) years from the Closing Date, (b) the date on which all Registrable Shares have been sold by Sellers and (c) the date as of which Buyer qualifies for use of Form S-3 and such registration statement shall have been converted into a registration statement on Form S-3. 40 -34- 7.04. ANNUAL REPORT ON FORM 10-K. Buyer agrees to file in a timely manner all reports and other documents required of the Company under the 1934 Act, including, without limitation, its Annual Report on Form 10-K for the fiscal year ended June 30, 1996. 7.05. AFFILIATE AGREEMENTS. Buyer shall use its best efforts to cause each person who, at the date of this Agreement, Buyer believes may be deemed to be "affiliates" of Buyer 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 "Buyer Affiliate"), to execute and deliver (i) on the date of this Agreement and (ii) on the Closing Date, an Affiliate Agreement substantially in the form of EXHIBIT A hereto. 7.06. BONUSES. With respect to each individual who is a full-time employee of the Company on the Closing Date, and remains an employee of the Company until December 31, 1996, Buyer shall cause the Company to (a) pay a bonus for the year ending December 31, 1996 and (b) make a contribution for the year ending December 31, 1996 to such employee's pension plan in such amounts and at such amounts and at such times as shall be consistent with the past practices of the Company, as set forth on SCHEDULE 7.06; provided, however, that in the event that the Company realizes levels of income and expenses for the year ending December 31, 1996 comparable to those realized in 1995, the bonus payments and pension plan contributions required hereby for 1996 shall not be less than (either in the aggregate or with respect to amounts paid to specific employees) the bonuses and pension plan contributions made by the Company in 1995. 7.07. HISTORICAL BONUSES. On the Closing Date, each of Martin J. Miller, Howard Tag, Peter Malamis, Laurie Hughes and Mary Ann Lloyd shall be paid their accrued bonuses of the Company, as set forth on SCHEDULE 7.07. 7.08. VACATION. Following the Closing, Buyer shall cause the Company to continue to make available to employees of the Company vacation benefits consistent with the policies of the Company in effect on the Closing Date, as set forth on SCHEDULE 7.08, subject to such modifications (which modifications shall not effect vacation through December 31, 1996) as the Board of Directors of the Company deems appropriate. SCHEDULE 7.08 also sets forth all accrued but unused vacation days of the Company's employees as of June 30, 1996. 7.09. REORGANIZATION STATUS. Buyer shall consistently treat for all United States federal income tax purposes Buyer's purchase of Shares from Sellers and Raven in exchange for Buyer Stock that is described in Section 2.01 hereof as a reorganization, within the meaning 41 -35- of Section 368(a)(1)(B) of the Code (the "B Reorganization"), and Buyer shall determine its United States federal income tax attributes of the acquired Shares in accordance with Section 362(b) and Section 1223(2) of the Code. In addition, Buyer shall consistently treat for all United States federal income tax purposes Buyer's purchase of the Purchase Real Estate from the Partnership that is described in Section 2.02(e) hereof as a sale or exchange, within the meaning of Section 1001 of the Code, which is separate and apart (although concurrent with) the B Reorganization. 7.10. BUSINESS CONTINUITY. Buyer shall continue to conduct the historic business of the Company and shall continue to use the historic assets of the Company in a business. 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 its 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. Sellers 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 or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement. 8.02. CERTAIN FILINGS. The Company, Sellers and Buyer 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 parties agree to consult with each other 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 42 -36- 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. 8.04. POOLING. Sellers, the Company and Buyer 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, having 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 Sellers 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. 43 -37- 9.02. ERISA REPRESENTATIONS. The Company and each Seller, jointly and severally, hereby represent and warrant to Buyer that: (a) SCHEDULE 9.02 lists each Employee Plan that covers any employee of the Company, copies or descriptions of all of which have previously been made available or furnished to Buyer. With respect to each Employee Plan, the Company has provided a copy of each of Employee Plans and related plan documents (including trust documents and insurance policies or contracts), with respect to each Employee Plan subject to ERISA reporting requirements, copies of the Form 5500 reports filed for the last three plan years, and an accurate summary description of such plan. The Company has provided Buyer 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 Buyer. (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 Business. (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 Employee Plan is a Multiemployer Plan and no Employee Plan is subject to Title IV of ERISA. The Company and its Affiliates have not incurred any liability under Title IV or ERISA arising in connection with the termination of any plan covered or previously covered by Title IV of ERISA. (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 Buyer copies of the most recent Internal Revenue Service determination letters with respect to each such plan as to its qualified status under the Code, including all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation. 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. 44 -38- (g) Each Employee Plan and each Benefit Arrangement has been maintained in 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 or as set forth in SCHEDULE 9.02. (i) Except as set forth in SCHEDULE 9.02 or as provided elsewhere herein, 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 Buyer prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of its 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 fiscal year ended prior to the date hereof. (j) Except as set forth in SCHEDULE 9.02, 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. (k) 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. (l) Except as set forth in SCHEDULE 9.02 or this Agreement, 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. (m) The Company does not have, nor is it reasonably expected to have, any liability under Title IV of ERISA. 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 45 -39- 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 Buyer or any of its Affiliates. Subject to the provisions of Section 7.06 hereof, 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 Buyer, the Company and Sellers to consummate the Closing are subject to the satisfaction 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) Each other party shall have executed and delivered each of the Ancillary Agreements to be entered into by it at Closing, in each case substantially in the form attached as an exhibit to this Agreement. (c) 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. (d) The transfer to the Company (or Buyer, as designated by Buyer) of good and clean record and marketable title to the Purchase Real Estate subject only to the Permitted Exceptions shall have been consummated. (e) There shall have been obtained the consent of the landlord, if required, with respect to any leased real property. (f) There shall have been obtained the consent of applicable condominium associations. 46 -40- (g) Agreement as to a settlement sheet setting forth all costs, expenses and closing adjustments relating to the conveyance of the Purchase Real Estate. (h) Satisfaction of all requirements for the issuance of the title insurance policy described in Section 10.02. (i) [Intentionally Omitted.] 10.02. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions: (a)(i) the Company and each Seller shall have performed in all material respects all of his or its obligations hereunder required to be performed on or prior to the Closing Date, (ii) the representations and warranties of the Company and each Seller contained in this Agreement at the time of its execution and delivery and in any certificate or other writing delivered by the Company or a Seller 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) Buyer shall have received a certificate signed by the President of the Company and by each Seller 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 Buyer 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) Buyer shall have received an opinion of Sellers' Counsel, dated the Closing Date, to the effect specified on EXHIBIT G and with respect to such other matters as Buyer may reasonably request. In rendering such opinion, such counsel may rely upon certificates of public officers, as to matters governed by the laws of jurisdictions other than Virginia or the federal laws of the United States of America, upon opinions of counsel reasonably satisfactory to Buyer, 47 -41- copies of which shall be contemporaneously delivered to Buyer, and as to matters of fact, upon certificates of officers of Seller and the Company. (d) Each of the Sellers 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) Buyer 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 Buyer. (f) Price Waterhouse LLP shall have delivered to Buyer 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, Ross Langan & McKendree shall have delivered to the Company its written representation that it has no basis for believing that the Company has taken any action or agreed to take any action which would prevent Buyer from accounting for the business combination as a "pooling of interests", and Buyer 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 Buyer a properly executed statement in a form reasonably requested by Buyer for purposes of satisfying Buyer's obligations under Treasury Regulation [Section]1.1445-2(c)(3). (h) Sellers shall have provided Buyer at Buyer's expense, the following, which shall each be satisfactory to Buyer: (i) An owner's title insurance policy issued by Chicago Title Insurance Corporation, for all of the Purchase Real Estate; and (ii) A certificate listing Buyer as owner of the Purchase Real Estate on the master fire insurance policy for the entire Condominium containing the Purchase Real Estate and any other insurance policies set forth in Sections 6.1-6.4 of the Condominium Bylaws. 48 -42- (i) Sellers shall have provided to Buyer, at Sellers' expense, the following, which shall each be satisfactory to Buyer: (i) A properly executed Certificate of Resale for the Purchase Real Estate in the form attached to the Declaration as Exhibit A with respect to each of the units comprising the Purchase Real Estate; (ii) A so-called "Condominium Resale Package" with respect to each of the units comprising the Purchase Real Estate; (iii) A statement with respect to each of the units comprising the Purchase Real Estate from the Board of Directors of the Condominium as described in Section 5.2 of the Condominium Bylaws; (iv) Blueprints and recorded plans for each unit comprising the Purchase Real Estate; (v) An estoppel letter from the landlord for real property leased by the Company verifying that such leases are in good standing and that no defaults or events which could lead to a default are outstanding; (vi) An insurance certificate for all leased real property; (vii) All Real Estate Conveyance Documents; and (viii) A written appraisal of the fair market value of the Purchase Real Estate as of a date within 30 days prior to the Closing Date from an appraisal firm satisfactory to Buyer which appraisal concludes that the fair market value of the Purchase Real Estate is in excess of the sum of (i) the principal and accrued interest on the mortgage which encumbers said property plus (ii) the expenses in connection with the transfer of the Purchase Real Estate plus (iii) the fair market value of the Partnership Stock tendered pursuant to Section 2.02(e) hereof. 10.03. CONDITIONS TO OBLIGATION OF SELLERS. The obligation of Sellers to consummate the Closing is subject to the satisfaction of the following further conditions: (a)(i) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing 49 -43- Date, (ii) the representations and warranties of Buyer contained in this Agreement at the time of its execution and delivery and in any certificate or other writing delivered by Buyer 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) Sellers shall have received a certificate signed by the Chief Financial Officer of Buyer 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) Sellers shall have received an opinion of Buyer's Counsel, dated the Closing Date, to the effect specified in Sections 5.01 through 5.04 and 5.07 and with respect to such other matters as Sellers shall reasonably request. In rendering such opinion, such counsel may rely upon certificates of public officers, as to matters governed by the laws of jurisdictions other than Massachusetts or the federal laws of the United States of America, upon opinions of counsel reasonably satisfactory to Seller, copies of which shall be contemporaneously delivered to Seller, and as to matters of fact, upon certificates of officers of Buyer. (d) Buyer shall have executed and delivered each of the Ancillary Agreements to be entered into by it at the Closing, in each case substantially in the form attached as an exhibit to this Agreement. (e) Sellers 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. (f) Miller and Raven shall have received evidence satisfactory to them of the release of any personal guarantees by such persons of any loan or mortgage obligations of the Partnership with respect to the Purchase Real Estate, all of which are set forth on Schedule 10.03. (g) The Company shall have repaid Miller the principal balance and accrued and unpaid interest (totaling $199,767.74) on those demand promissory notes in the face amount of $188,300. 50 -44- (h) Sellers shall have received an opinion of Sellers' Counsel and the Company shall have received an opinion of Buyer's Counsel, dated the Closing Date, to the effect that the Buyer's purchase of Shares from Sellers and Raven in exchange for Buyer Stock that is described in Section 2.01 hereof will be treated as a tax-free reorganization as described in Section 368 of the Code. ARTICLE XI SURVIVAL; INDEMNIFICATION 11.01. SURVIVAL. The covenants contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith 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 Buyer's financial statements for the fiscal year ended June 30, 1997, and (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 Seller, jointly and severally, hereby indemnifies Buyer, its subsidiaries and its directors, officers, agents and affiliates and, effective at the Closing, without duplication, the Company (collectively the "Buyer 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 but excluding indirect or consequential damages) ("Damages") incurred or suffered by Buyer or the Company arising out of any misrepresentation or breach of warranty, covenant or agreement made or to be performed by the Company or a Seller pursuant to this Agreement (collectively, the "Claims"). (b) Unless and until the Damages incurred by the Buyer Group exceed $50,000, Buyer shall not be entitled to indemnification under this Section 11.02; provided, however, that once the damages exceed $50,000, the Buyer Group shall be entitled to indemnification for the full amount of such Damages. The maximum liability of each Seller 51 -45- pursuant to paragraph (a) of this Section 11.02 shall be the amount of the Purchase Price received by such Seller represented by the Escrow Shares. (c) Sellers shall have no right of indemnification, contribution or subrogation against the Company with respect to any indemnification by any Seller or Sellers under this Section 11.02 if the transactions contemplated by this Agreement are consummated. (d) Buyer's claims for indemnification pursuant to paragraph (a) above shall be satisfied solely from the shares of Buyer Stock held in escrow pursuant to Section 2.02 (the "Escrow Shares") as follows: (i) Promptly after the earlier to occur of (a) the delivery by Price Waterhouse LLP of its report on Buyer's financial statements for the fiscal year ended June 30, 1997, or (b) the one (1) year anniversary of the Closing Date, the Escrow Shares shall be distributed to the Sellers, except that the portion of the Escrow Shares having a fair market value as of the Closing Date most nearly equal to the Damages incurred by the Buyer as to which a Claim shall have been previously and duly delivered to Sellers, shall continue to be withheld in escrow. The amount of such Damages shall be based upon a written certification of the Chief Executive Officer of Buyer to Sellers as to the amount of Damages incurred, together with supporting documentation. If Sellers disagree that a Claim has arisen or with the amount of Damages set forth in such certificate, and if Sellers and Buyer cannot reach a mutually satisfactory understanding with regard to the existence of a Claim or the amount of Damages within five (5) business days after delivery of the certificate to Sellers, 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 Escrow Shares not so withheld shall be distributed to Sellers; (ii) The Escrow Shares not so distributed to Sellers pursuant to subsection 11.02(d)(i) shall be retained 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, Buyer shall distribute to Sellers that amount of the Escrow Shares having a value as of the Closing Date in excess of 100% of the aggregate amounts of the remaining Damages incurred as determined above. (e) Buyer hereby indemnifies each Seller, its 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 52 -46- warranty, covenant or agreement made or to be performed by Buyer pursuant to this Agreement, such indemnity obligations to be satisfied by the Buyer by issuing shares of its common stock having a value, as of the Closing Date, equal to the amount of such Damages, provided, however, that such amount shall in no event exceed $1,000,000. (f) Under no circumstances shall any Seller be required to compensate Buyer or the Buyer Group with respect to any Damages incurred by the Buyer Group in excess of the value of such Seller's interest in the Escrow Shares. 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 of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder. ARTICLE XII [Intentionally Omitted] ARTICLE XIII [Intentionally Omitted] ARTICLE XIV MISCELLANEOUS 14.01. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given, 53 -47- if to Buyer, to: PAREXEL International Corporation 195 West Street Waltham, MA 02154 Attn: William T. Sobo, Jr. with a copy to: William J. Schnoor, Jr., Esq. Testa, Hurwitz & Thibeault, LLP High Street Tower 125 High Street Boston, MA 02110 Telecopy: (617) 248-7100 if to the Company, to: State and Federal Associates, Inc. 1101 King Street, Suite 600 Alexandria, VA 22314 Telecopy: (703) 683-2239 with a copy to: Thomas J. Egan, Jr., Esq. Baker & McKenzie 815 Connecticut Avenue, N.W., Suite 900 Washington, D.C. 20006 Telecopy: (202) 452-7073 if to a Seller: at his or her address shown in SCHEDULE 2.01 54 -48- if to the Partnership, to: S&FA of Alexandria Partnership 1101 King Street, Suite 600 Alexandria, VA 22314 Telecopy: (703) 683-2239 if to Adams, to: Scott G. Adams, Esq., C.P.A. Adams & Associates P.O. Box 100 10 Oak Street Boothbay Harbor, ME 04538 Telecopy: (207) 633-4911 14.02. 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 Buyer, the Company and Sellers. (b) No failure or delay by any 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. 14.03. EXPENSES. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 14.04. 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, except that Buyer may transfer or assign, in whole or from time to time in part, to one or more of its Affiliates, the right to purchase all or a portion of the Shares, but no such transfer or assignment will relieve Buyer of its obligations hereunder, and Buyer may collaterally assign 55 -49- its rights to receive payments pursuant to Article XI hereof or pursuant to the Escrow Agreement. 14.05. FURTHER ASSURANCES. From time to time after the Closing, (a) at the request of Buyer and without further consideration, Sellers will execute and deliver to Buyer such other documents, and take such other action, as Buyer may reasonably request in order to consummate more effectively the transactions contemplated hereby and to vest in Buyer good, valid and marketable title to the Shares and (b) at the request of Sellers and without further consideration, Buyer will execute and deliver to Sellers such other documents, and take such other action, as Sellers may reasonable request in order to consummate more effectively the transactions contemplated hereby. 14.06. 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 Commonwealth. 14.07. 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. 14.08. ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and 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. 14.09. CAPTIONS. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 14.10. 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. 56 -50- 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/ William T. Sobo, Jr. -------------------------------------- Title: Vice President and Chief Financial Officer STATE AND FEDERAL ASSOCIATES, INC. By /s/ Martin J. Miller -------------------------------------- Title: President /s/ Martin J. Miller ----------------------------------------- Martin J. Miller /s/ Howard Tag ----------------------------------------- Howard Tag /s/ Peter Malamis ----------------------------------------- Peter Malamis /s/ Laurie Hughes ----------------------------------------- Laurie Hughes S&FA OF ALEXANDRIA PARTNERSHIP By: /s/ Martin Miller -------------------------------------- Martin Miller as a General Partner By: /s/ Robert F. Raven -------------------------------------- Robert F. Raven as a General Partner EX-4.3 3 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.3 REGISTRATION RIGHTS AGREEMENT AGREEMENT dated as of August 22, 1996 among and PAREXEL International Corporation, a Massachusetts corporation (the "Company") and the stockholders of the Company listed on the signature pages hereto (the "Stockholders"). W I T N E S S E T H : WHEREAS, pursuant to the Purchase Agreement of even date herewith (the "Purchase Agreement"), among the Company, the Stockholders and others, the Company is acquiring all of the issued and outstanding shares of capital stock of State and Federal Associates, Inc., a Virginia corporation ("SF&A"). WHEREAS, in connection therewith, each Stockholder is acquiring 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 Purchase Agreement and pursuant to the Real Estate Conveyance Documents (as such term is defined in the Purchase Agreement), including any shares of Common Stock received in accordance with the provisions of the Purchase Agreement and the Real Estate Conveyance Documents and transferred from S&FA of Alexandria Partnership to its partners, at such time as such transfers are permitted. "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 similar 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. 2 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any similar 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 10. 2. SECURITIES ACT MATTERS. Each Stockholder acknowledges and agrees 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. Each Stockholder recognizes and acknowledges that such claims of exemption are based, in part, upon each Stockholder's representations contained in this Agreement. Each Stockholder further recognizes and acknowledges 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. Each Stockholder recognizes and acknowledges that Rule 144 or any other exemption promulgated under the Securities Act (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 each Stockholder recognizes and acknowledges that, in the absence of the availability of Rule 144 or any other exemption under the Securities Act, 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, none of which may be available for resale of the Shares. Each Stockholder recognizes and acknowledges 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. 3. RESTRICTIVE LEGEND. Each certificate representing Shares shall, except as otherwise provided in this Section 3 or in Section 4, 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. 4. NOTICE OF PROPOSED TRANSFER. Prior to the third anniversary of the Closing Date (as that term is defined in the Purchase Agreement), each Stockholder shall give written notice to the Company of his or her intention to effect any proposed transfer of any Shares. Prior to the S-3 Registration Statement or the S-1 Registration Statement (as hereinafter defined) becoming 3 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 or her notice. Each certificate for Shares transferred as above provided shall bear the legend set forth in Section 3, 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) or (ii) 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. Upon the effectiveness of the S-3 Registration Statement or the S-1 Registration Statement and upon receipt by the Company of the aforementioned notice of the Stockholder's proposed transfer, the Company shall cause the legend described in Section 3 to be removed from such Stockholder's certificate. 5. REQUIRED REGISTRATION ON FORM S-3. Subject to the provisions set forth below, the Company agrees to use commercially reasonable efforts to (i) cause a registration statement on Form S-3 under the Securities Act (the "S-3 Registration Statement") relating to the resale of the Shares to be filed as soon as practicable following the date on which the Company is eligible to use such Form S-3, and in any event no later than January 15, 1997; and (ii) cause the S-3 Registration Statement to become effective no earlier than the expiration date of the Pooling Restricted Period (as hereinafter defined) and thereafter remain effective until the earlier of (A) the third (3rd) anniversary of the Closing Date (as defined in the Purchase Agreement) (the "Distribution Period") 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 the S-3 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 S&FA (the "Pooling Restricted Period"), and PROVIDED FURTHER, HOWEVER, that the Company may suspend sales at any time under the S-3 Registration Statement immediately upon notice to each of the Stockholders at their last known addresses, for any of the reasons and for the time periods set forth in Section 7. In the event that at the time the filing of such registration statement is undertaken or required to be undertaken, the Company fails to qualify for use of Form S-3 for purposes of registering for resale the Shares, the Company shall cause a registration statement on Form S-1 to be filed as soon as practicable thereafter and to use commercially reasonable efforts to (i) have such registration statement declared effective as soon as practicable and (ii) maintain the effectiveness of such registration statement until the earlier of (a) three (3) years from the Closing Date, (b) the date on which all Shares have been sold by the Stockholders and (c) the date as of which the Company qualifies for use of Form S-3 and such registration statement shall have been converted into a registration statement on Form S-3. Any registration statement filed or required to be filed by the Company pursuant to this Section 5 shall be referred to herein as the "Registration Statement." 6. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of Section 5 to use commercially reasonable efforts to effect the registration of any Shares under the Securities Act, the Company will, as expeditiously as possible: 4 (a) prepare and file with the Commission such amendments and supplements to the Registration Statement, and the prospectuses used in connection therewith, as may be necessary to comply with the Securities Act; (b) furnish to each Stockholder such number of copies of the Registration Statement and each such amendment and supplement thereto (in each case including exhibits) and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Shares covered by the Registration Statement; (c) register or qualify the Shares covered by the 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 Registration Statement subject to quotation on the Nasdaq National Market or listed on any exchange on which shares of Common Stock are traded; and (e) promptly notify each Stockholder (at their last known addresses) (i) of the effective date of the Registration Statement and the date when any post-effective amendment to the 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 the Registration Statement, or (iii) of the end of any suspension under Section 7. (f) upon receipt of a notice of proposed transfer by the Stockholder, notify the Stockholder of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of the Stockholder prepare and furnish to the Stockholder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. 7. Suspension. ---------- (a) The rights of the Stockholders to distribute the Shares pursuant to this Agreement and the S-3 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; 5 (ii) the Company is about to make a normal course disclosure containing 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, would not be appropriate for disclosure 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 7(a)(i), to a period 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 7(a)(ii), to a period of not more than three (3) business days; (iii) under Section 7(a)(iii), 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 earlier of: (A) the public disclosure of the transaction and the making of all required filings under the Securities Act or Exchange Act, or (B) the date on which discussions regarding the acquisition are terminated; (iv) under Section 7(a)(iii), 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; and (v) under Section 7(a)(iv), to a period beginning on the day that notice of a suspension is given to the Stockholders and ending on the date which is 30 days after the beginning of the suspension, provided, however, that the Company shall not avail itself of the suspension rights contained in Section 7(a)(iv) more than once in every six (6) month period commencing on the date of effectiveness of the Registration Statement. 8. 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 6 the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs of issuance, but excluding any Selling Expenses (as hereinafter defined), are called "REGISTRATION EXPENSES". All underwriting discounts (if any) and selling commissions applicable to the sale of the Shares covered by the S-3 Registration Statement, as well as all professional service fees incurred by the Stockholders, are called "SELLING EXPENSES". The Company will pay all Registration Expenses in connection with the preparation and filing of the S-3 Registration Statement. All Selling Expenses shall be borne by the Stockholders in proportion to the number of Shares sold by each. The Company shall not be obligated to pay any Registration Expenses in connection with the preparation and filing of the S-3 Registration Statement if such registration statement is withdrawn, delayed or abandoned for any reason by the Stockholders. 9. Indemnification and Contribution. -------------------------------- (a) In connection with the registration of the Shares under the Securities Act pursuant to Section 5, the Company will indemnify and hold harmless each Stockholder and each other person, if any, who controls such Stockholder within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Stockholder 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, proceedings or settlements 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 5, 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 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, PROVIDED, HOWEVER, that the Company will not be liable in any such case 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 in writing by any such Stockholder or any such controlling person for use in such Registration Statement. (b) In connection with the registration of the Shares under the Securities Act pursuant to Section 5, each Stockholder, severally and not jointly, 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 and each director of the Company, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer or director may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions, proceedings or settlements in respect thereof) arise out of or are based upon (i) the failure of such Stockholder to 7 comply with the provisions of Section 12 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 arise out of or are based upon 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 and director for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, PROVIDED, HOWEVER, that such Stockholder 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 such Stockholder, furnished in writing by or for such Stockholder for use in such registration statement, PROVIDED, FURTHER, HOWEVER, that the liability of each Stockholder hereunder shall be limited to the proceeds received by such Stockholder from the sale of the Shares covered by such registration statement; and PROVIDED, FURTHER, HOWEVER, that the obligations of the Stockholder hereunder shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Stockholder. (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 9 and shall only relieve it from any liability which it may have to such indemnified party under this Section 9 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 9 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) any Stockholder exercising rights under this Agreement makes a claim for indemnification pursuant to this Section 9 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 8 case notwithstanding the fact that this Section 9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such Stockholder in circumstances for which indemnification is provided under this Section 9; then, and in each such case, the Company and such Stockholder 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 each Stockholder, severally, on the other hand; PROVIDED, HOWEVER, that, in any such case, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation and no such indemnifying party will be required to contribute any amount in excess of the public offering price of all shares offered by it pursuant to such registration statement. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) The indemnities provided in this Section 9 shall survive the transfer of any Shares by such Stockholder. 10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making available to 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 a 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 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 any 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. 11. 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 9 adjustment shall be made inthe provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Shares as so changed. 12. STOCKHOLDERS' CONDUCT. With respect to any sale of Shares covered by the Registration Statement, each Stockholder understands and agrees as follows: (a) Each Stockholder will carefully review the information concerning him or her contained in the 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 Registration Statement (or in compliance with Section 4 hereof), (ii) the Affiliate Agreement (as defined in the Purchase Agreement) and (iii) Section 13; (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 the 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 Exchange Act; (f) Prior to the third anniversary of the Closing Date, 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 7. (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 themselves and the proposed distribution by them as shall be necessary in order to assure compliance with federal and applicable state securities laws. (i) Each Stockholder hereby agrees that he or she will not sell, exchange, transfer, pledge, dispose or otherwise reduce his or her risk relative to any Shares owned by him or her 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 S&FA. 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 the Agreement. 10 13. Selling Procedures. ------------------ (a) Each Stockholder will notify the Company of his or her intention to sell Shares under the S-3 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: Heather M. Stone Phone: (617) 248-7238 Facsimile: (617) 248-7100 During this period, the Company will review the prospectus to determine if a suspension pursuant to Section 7 is necessary or appropriate. If the Company does not notify the Stockholder of a suspension pursuant to Section 7, the Stockholder may conclude the proposed sale, on the proposed date of sale, strictly in accordance with the Takedown Request. (b) Prior to the third anniversary of the Closing Date, each Stockholder will notify the Company of each sale under the 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: Heather M. Stone Phone: (617) 248-7238 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 3 from the Shares so sold. 14. REPRESENTATIONS AND COVENANTS. Each Stockholder hereby represents and warrants to the Company as follows: (a) EACH STOCKHOLDER UNDERSTANDS THAT HIS OR HER INVESTMENT IN THE SHARES INVOLVES RISK. (b) EACH STOCKHOLDER HAS CONSULTED HIS OR HER OWN ATTORNEY, ACCOUNTANT OR INVESTMENT ADVISOR WITH RESPECT TO THE INVESTMENT CONTEMPLATED HEREBY AND ITS SUITABILITY FOR SUCH STOCKHOLDER. ANY SPECIFIC ACKNOWLEDGMENT SET FORTH BELOW WITH 11 RESPECT TO ANY STATEMENT OR INFORMATION FURNISHED TO THE STOCKHOLDERS SHALL NOT BE DEEMED TO LIMIT THE GENERALITY OF THIS REPRESENTATION AND WARRANTY. (c) The Company has made available to each Stockholder, during the course of this transaction and prior to the acquisition of the Shares, the opportunity to ask questions of and receive complete and correct answers from representatives of the Company concerning the terms and conditions of the Shares and to obtain any additional information relating to the financial condition and business of the Company. (d) Each Stockholder understands that he or she 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 such Stockholder is purchasing the Shares with no present view toward resale or other distribution thereof; and that each 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 Purchase Agreement and this Agreement and any regulations under the Securities Act and applicable state securities laws. (e) Each Stockholder has adequate means of providing for his or her current needs and personal contingencies and has no need for liquidity in connection with this investment in the Shares. (f) Each Stockholder has reviewed the representations and warranties of the Company set forth in the Purchase Agreement and has consulted with his or her personal legal and financial advisors in evaluating the merits and risks of the investment in the Shares. (h) Each Stockholder received an offer concerning the Shares and first learned of this investment in the state or other jurisdiction listed in such Stockholder's residence address on the signature page hereto, and intend that the state securities laws of that state or other jurisdiction alone govern this transaction. (i) Each Stockholder acknowledges and warrants that, prior to the execution of this Agreement, he or she has had the opportunity to ask questions and receive answers from the Company and S&FA concerning the terms and conditions of the transactions contemplated by the Purchase 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 S&FA as he or she has deemed necessary to verify the accuracy of the information contained in the documents identified above or any other information furnished to the Stockholders. (j) Each Stockholder has been advised that, as of the date hereof, he or she may be deemed to be an "affiliate" of S&FA, as the term "affiliate" is used in and for purposes of Accounting Series Releases 130 and 135, as amended, of the Commission. 12 (k) Each Stockholder understands that the representations, warranties and covenants set forth herein will be relied upon by S&FA, other stockholders of S&FA, the Company, the stockholders of the Company and their respective counsel and accounting firms. (l) Each Stockholder hereby represents and warrants that he or she has not sold, exchanged, transferred, pledged, disposed or otherwise reduced his or her risk relative to any shares of S&FA common stock owned by him or her during the 30 day period preceding the date hereof. 15. 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, at 195 West Street, Waltham, Massachusetts 02154, Attention: William T. Sobo, Jr., Chief Financial Officer, with a copy to Testa, Hurwitz & Thibeault, LLP, 125 High Street, High Street Tower, Boston, Massachusetts 02110, Attn: William J. Schnoor, Jr.; if to any other party hereto, at the address of such party set forth on the signature page hereto, with a copy to Baker & McKenzie, 815 Connecticut Avenue, N.W., Suite 900, Washington, D.C. 20006, Attn: Thomas J. Egan, Jr., Esq.; if to any subsequent Stockholder 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. 13 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. 14 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/ William T. Sobo ---------------------------- Name: William T. Sobo -------------------------- Title: V.P. and CFO -------------------------- /s/ Martin J. Miller --------------------------------- Martin J. Miller /s/ Robert F. Raven --------------------------------- Robert F. Raven /s/ Howard Tag --------------------------------- Howard Tag /s/ Peter Malamis --------------------------------- Peter Malamis /s/ Laurie Hughes --------------------------------- Laurie Hughes S&FA OF ALEXANDRIA PARTNERSHIP By:/s/ Martin Miller ------------------------------ Martin Miller as General Partner By:/s/ Robert F. Raven ------------------------------ Robert F. Raven as General Partner [You must complete pages 15-16 of this Agreement] 15 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: USA - ------------------------------------------------ Social Security or Taxpayer I.D. No.: ------------ 16 17 18 19 20 21 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. [ ] 22 Exhibit A to Registration Rights Agreement -------------------------------- TAKEDOWN REQUEST The undersigned Stockholder intends to offer and sell to the public Shares of PAREXEL International Corporation registered under a certain Registration Statement on Form S-3, File No. 333-_______. - ----------------------------------------------------------------------------------------------------------------
Name, Address, Telephone Number and Facsimile Number of Number of Proposed Name, Address, Telephone Number Agent, Broker-Dealer or Number of Shares to be Date and Facsimile Number of Stockholder Underwriter Shares Owned Sold of Sale* - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- * MUST BE AT LEAST FIVE (5) BUSINESS DAYS AFTER THE DATE HEREOF.
Other Information: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The undersigned Stockholder agrees to provide all information and materials and to take all actions as may be required in order for PAREXEL International Corporation to comply with all applicable securities laws. ------------------------ Signature of Stockholder ------------------------ Print Name ------------------------ Date ALL TAKEDOWN REQUESTS SHOULD BE FORWARDED BY FACSIMILE TO: TESTA, HURWITZ & THIBEAULT, LLP 125 HIGH STREET HIGH STREET TOWER BOSTON, MASSACHUSETTS 02110 ATTN: HEATHER M. STONE PHONE: (617) 248-7238 FACSIMILE: (617) 248-7100 AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO A PROPOSED SALE 23 Exhibit B to Registration Rights Agreement -------------------------------- NOTIFICATION OF SALE The undersigned Stockholder sold to the public Shares of PAREXEL International Corporation registered under a certain Registration Statement on Form S-3, File No. 333-_______, as follows. - ----------------------------------------------------------------------------------------------------------------
Name, Address, Telephone Number and Facsimile Number of Number of Proposed Name, Address, Telephone Number Agent, Broker-Dealer or Number of Shares to be Date and Facsimile Number of Stockholder Underwriter Shares Owned Sold of Sale* - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------
Other Information: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ------------------------ Signature of Stockholder ------------------------ Print Name ------------------------ Date ALL TAKEDOWN REQUESTS SHOULD BE FORWARDED BY FACSIMILE TO: TESTA, HURWITZ & THIBEAULT, LLP 125 HIGH STREET HIGH STREET TOWER BOSTON, MASSACHUSETTS 02110 ATTN: HEATHER M. STONE PHONE: (617) 248-7238 FACSIMILE: (617) 248-7100 WITHIN 24 HOURS FOLLOWING A SALE 24 Exhibit C to Registration Rights Agreement -------------------------------- 1. A bank (as defined in Section 3(a)(2) of the Securities Act) or a savings and loan association or other institution (as defined in Section 3(a)(5)(A) of the Securities Act), whether acting in regard to this investment in its individual or a fiduciary capacity. 2. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934. 3. An insurance company (as defined in Section 2(13) of the Securities Act). 4. An investment company registered under the Investment Company Act. 5. A business development company (as defined in Section 2(a)(48) of the Investment Company Act). 6. A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958. 7. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if the plan has total assets in excess of $5,000,000. 8. An employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 (an "ERISA Plan") whose decision to purchase the Interest was made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company or registered investment adviser. 9. An ERISA Plan with total assets in excess of $5,000,000 or, if a self-directed ERISA Plan, with investment decisions made solely by persons that are "accredited investors." 10. A private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940). 11. An organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, corporation, Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Interest, with total assets in excess of $5,000,000. 12. A natural person whose net worth (either individually or jointly with such person's spouse) at the time of the Closing exceeds $1,000,000. 13. A natural person who had an individual income in excess of $200,000 or joint income with such person's spouse in excess of $300,000 in each of the last two calendar years and who reasonably expects to reach the same income level in the current calendar year. 25 14. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Interest, whose purchase of the Interest is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act. 15. An entity in which all of the equity owners fit into at least one of the categories listed under paragraphs 1-14 above. EX-5.1 4 OPINION OF TESTA, HURWITZ & THIBEAULT, LLP 1 EXHIBIT 5.1 January 14, 1997 PAREXEL International Corporation 195 West Street Waltham, MA 02154 RE: Registration Statement on Form S-3 Relating to 330,652 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 330,652 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 EX-23.1 5 CONSENT OF INDEPENDENT ACCOUNTANTS 1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated August 22, 1996, which appears on page 33 of the 1996 Annual Report to Shareholders of PAREXEL International Corporation, which is incorporated by reference in PAREXEL's Annual Report on Form 10-K for the year ended June 30, 1996. We also consent to the application of such report to the Financial Statement Schedule for the three years ended June 30, 1996 listed under Item 14(a) of PAREXEL International Corporation's Annual Report on Form 10-K for the year ended June 30, 1996 when such schedule is read in conjunction with the financial statements referred to our report. The audit referred to in such report also included this Financial Statement Schedule. We also consent to the reference to us under the heading "Experts" in such Prospectus. PRICE WATERHOUSE LLP Boston, Massachusetts January 14, 1997 -----END PRIVACY-ENHANCED MESSAGE-----