EXHIBIT 10.3
CHANGE OF CONTROL/SEVERANCE AGREEMENT
This CHANGE OF CONTROL/SEVERANCE AGREEMENT, dated as of December 16, 2005
by and between PAREXEL International Corporation (together with all subsidiaries
or affiliates hereinafter referred to as the "Company") and Xxxxxxx X. Xxxxxxx
(the "Executive").
WHEREAS, the Executive has been hired as a senior executive of the Company
and is expected to make major contributions to the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to render services to the Company
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive agree
as follows:
1. TERMINATION WITHOUT CAUSE.
(a) In the event the Company terminates the Executive's employment with
the Company without Cause (as such term is defined in Section 4(c) below) prior
to July 1, 2007, the Company shall pay to the Executive lump sum amounts (net of
any required withholding) equal to (i) twelve (12) months of monthly base salary
(at the highest monthly base salary rate in effect for the Executive in the
twelve month period prior to the termination of his employment)("Base
Salary")(which shall be paid within ten business days following the Executive's
last date of employment), plus (ii) the pro rata share of the bonus that would
otherwise have been payable to the Executive pursuant to the Company's
Performance Bonus Plan (the "PBP") during the year in which the termination
occurs had his employment not been terminated by the Company, based on bonus
arrangements in effect at any time during the twelve month period immediately
prior to the termination of his employment, such pro rata share to be calculated
from the beginning of the fiscal year in which the termination occurs through
the date of termination (which shall be paid within ten business days after the
payment of bonuses, if any, to the Company's executive officers pursuant to the
PBP for the year in which the termination occurred); provided, however, that
such pro rata bonus shall only be payable to the extent of, and in accordance
with, (i) the Company's determination that the Company's and the Executive's PBP
performance goals have been satisfied, and (ii) the Company's determination to
pay bonuses to its executive officers, for the year in which the termination
occurs.
(b) In the event the Company terminates the Executive's employment with
the Company without Cause (as such term is defined in Section 4(c) below) on or
after July 1, 2007 but before July 1, 2008 (the "Expiration Date"), the Company
shall pay to the Executive lump sum amounts (net of any required withholding)
equal to (i) the aggregate Base Salary the Executive would have earned between
the date of termination of his employment and the
Expiration Date had his employment not been terminated by the Company (which
shall be paid within ten business days following the Executive's last date of
employment), plus (ii) the pro rata share of the bonus that would otherwise have
been payable to the Executive pursuant to the PBP during the year in which the
termination occurs had his employment not been terminated by the Company, based
on bonus arrangements in effect at any time during the twelve month period
immediately prior to the termination of his employment, such pro rata share to
be calculated from the beginning of the fiscal year in which the termination
occurs through the date of termination (which shall be paid within ten business
days after the payment of bonuses, if any, to the Company's executive officers
pursuant to the PBP for the year in which the termination occurred); provided,
however, that such pro rata bonus shall only be payable to the extent of, and in
accordance with, (i) the Company's determination that the Company's and the
Executive's PBP performance goals have been satisfied, and (ii) the Company's
determination to pay bonuses to its executive officers, for the year in which
the termination occurs.
(c) The Executive shall not be entitled to any payments under this Section
1 in the event his employment is terminated by the Company on or after the
Expiration Date.
2. TERMINATION PRIOR TO A CHANGE OF CONTROL.
(a) Notwithstanding the provisions of Section 1 above, if, within nine
months prior to a Change of Control (as such term is defined in Section 4(b)
below) and subsequent to the commencement of substantive discussions that
ultimately result in the Change of Control, and prior to the Expiration Date,
the Company terminates the Executive's employment with the Company without Cause
(as such term is defined in Section 4(c) below), the Company shall:
(1) (x) If the Executive was terminated prior to July 1, 2007, pay to
the Executive, within ten (10) business days following the Change of
Control, a lump sum amount (net of any required withholding) equal
to: (i) twelve (12) months of Base Salary, plus (ii) the target
bonus that could have been payable to the Executive (assuming
continued employment) during the year in which the termination of
employment occurs based on bonus arrangements in effect at any time
during the twelve month period immediately prior to the termination
of his employment; or
(y) If the Executive was terminated on or after July 1, 2007 but
before the Expiration Date, pay to the Executive lump sum amounts
(net of any required withholding) equal to: (i) the aggregate Base
Salary the Executive would have earned between the date of
termination of his employment and the Expiration Date had his
employment not been terminated by the Company (to be paid within ten
(10) business days following the Change of Control), plus (ii) the
pro rata share of the bonus that would otherwise have been payable
to the Executive pursuant to the PBP during the year in which the
termination occurs had his employment not been terminated by the
Company, based on bonus arrangements in effect at any time during
the twelve month period immediately prior to the termination of his
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employment, such pro rata share to be calculated from the beginning
of the fiscal year in which the termination occurs through the date
of termination (which shall be paid within ten business days after
the payment of bonuses, if any, to the Company's executive officers
pursuant to the PBP for the year in which the termination occurred);
provided, however, that such pro rata bonus shall only be payable to
the extent of, and in accordance with, (i) the Company's
determination that the Company's and the Executive's PBP performance
goals have been satisfied, and (ii) the Company's determination to
pay bonuses to its executive officers, for the year in which the
termination occurs; and
(2) Provide the Executive and his dependents with life, accident, health
and dental insurance substantially similar to that which the
Executive was receiving immediately prior to the termination of his
employment until the earlier of: (i) either (x) the date which is
twelve (12) months following the Change of Control if the Executive
was terminated prior to July 1, 2007 or (y) the Expiration Date if
the Executive was terminated on or after July 1, 2007 but before the
Expiration Date; or (ii) the date the Executive commences subsequent
employment; and
(3) On the Change of Control, cause any unexercisable installments of
any stock options of the Company or any subsidiary or affiliate of
the Company held by the Executive on the Executive's last date of
employment with the Company that have not expired to become
exercisable on the Change of Control; provided, however, that: (i)
such acceleration of exercisability shall not occur as to any option
if the Change of Control does not occur within the period within
which the Executive may exercise such option after a termination of
employment in accordance with the provisions of the relevant option
agreement and option plan; and (ii) any such acceleration of
exercisability shall not extend the period after a termination of
employment within which any option may be exercised by the Executive
in accordance with the provisions of the relevant option agreement
and option plan; and
(4) On the Change of Control, cause any unvested portion of any
qualified or non-qualified capital accumulation benefits to become
immediately vested (subject to applicable law);
provided, however, that any amounts and benefits set forth in this Section 2
shall be reduced by any and all other severance or other amounts or benefits
paid or payable to the Executive as a result of the termination of his or her
employment.
(b) The Executive shall not be entitled to any payments under this Section
2 in the event his employment is terminated by the Company on or after the
Expiration Date.
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3. TERMINATION FOLLOWING A CHANGE OF CONTROL.
(a) Notwithstanding the provisions of Section 1 above, if, at any time
during a period commencing with a Change of Control and ending eighteen months
after such Change of Control, and prior to the Expiration Date, the Company
terminates the Executive's employment without Cause (as such term is defined in
Section 4(c) below) or the Executive terminates his employment with the Company
for Good Reason (as such term is defined in Section 3(b) below) (provided,
however, that any such termination by the Executive must occur promptly (and in
any event within 90 days) after the occurrence of the event or events
constituting "Good Reason"), the Company shall:
(1) (x) If the Executive was terminated prior to July 1, 2007, pay to
the Executive, within ten (10) business days following the
Executive's last date of employment, a lump sum amount (net of any
required withholding) equal to: (i) twelve (12) months of Base
Salary, plus (ii) the target bonus that could have been payable to
such Executive (assuming continued employment) during the year in
which the termination of employment occurs based on bonus
arrangements in effect immediately prior to the termination of his
or her employment (all payments under Sections 1, 2 and this Section
3(a) being referred to collectively, as the "Severance Payments");
or
(y) If the Executive was terminated on or after July 1, 2007 but
before the Expiration Date, pay to the Executive lump sum amounts
(net of any required withholding) equal to: (i) the aggregate Base
Salary the Executive would have earned between the date of
termination of his employment and the Expiration Date had his
employment not been terminated (to be paid within ten (10) business
days following the Executive's last date of employment), plus (ii)
the pro rata share of the bonus that would otherwise have been
payable to the Executive pursuant to the PBP during the year in
which the termination occurs had his employment not been terminated,
based on bonus arrangements in effect at any time during the twelve
month period immediately prior to the termination of his employment,
such pro rata share to be calculated from the beginning of the
fiscal year in which the termination occurs through the date of
termination (which shall be paid within ten business days after the
payment of bonuses, if any, to the Company's executive officers
pursuant to the PBP for the year in which the termination occurred);
provided, however, that such pro rata bonus shall only be payable to
the extent of, and in accordance with, (i) the Company's
determination that the Company's and the Executive's PBP performance
goals have been satisfied, and (ii) the Company's determination to
pay bonuses to its executive officers, for the year in which the
termination occurs; and
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(2) Provide the Executive and his dependents with life, accident, health
and dental insurance substantially similar to that which the
Executive was receiving immediately prior to the termination of his
employment until the earlier of: (i) either (x) the date which is
twelve (12) months following the Executive's last day of employment
if the Executive was terminated prior to July 1, 2007 or (y) the
Expiration Date if the Executive was terminated on or after July 1,
2007 but before the Expiration Date; or (ii) the date the Executive
commences subsequent employment; and
(3) Cause any unexercisable installments of any stock options of the
Company or any subsidiary or affiliate of the Company held by the
Executive on the Executive's last date of employment with the
Company that have not expired to become exercisable on such last
date of employment; provided, however, that: (i) such acceleration
of exercisability shall not occur as to any option if the Change of
Control does not occur within the period within which the Executive
may exercise such option after a termination of employment in
accordance with the provisions of the relevant option agreement and
option plan; and (ii) any such acceleration of exercisability shall
not extend the period after a termination of employment within which
any option may be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option plan; and
(4) Cause any unvested portion of any qualified and non-qualified
capital accumulation benefits to become immediately vested, subject
to applicable law;
provided, however, that any amounts and benefits set forth in this Section 3
shall be reduced by any and all other severance or other amounts or benefits
paid or payable to the Executive as a result of the termination of his or her
employment.
(b) For purposes of Section 3 above, "Good Reason" shall mean the
occurrence of one or more of the following events following a Change of Control,
as the case may be: (i) the assignment to the Executive of any duties
inconsistent in any adverse, material respect with his position, authority,
duties or responsibilities immediately prior to the Change of Control or any
other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities; (ii) a material reduction in
the aggregate of the Executive's base or incentive compensation or the
termination of the Executive's rights to any employee benefits immediately prior
to the Change of Control, except to the extent any such benefit is replaced with
a comparable benefit, or a reduction in scope or value thereof; or (iii) a
relocation of the Executive's place of business which results in the one-way
commuting distance for the Executive increasing by more than 25 miles from the
location thereof immediately prior to the Change of Control (provided, however,
that travel consistent with past practices for business purposes shall not be
considered "commuting" for purposes of this clause (iii)) or (iv) a failure by
the Company to obtain the agreement referenced in Section 4(f).
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(c) The Executive shall not be entitled to any payments under this Section
3 in the event his employment is terminated for any reason on or after the
Expiration Date.
4. GENERAL.
(a) In the event the Executive's employment with the Company is terminated
(i) by the Company at any time for Cause (as such term is defined in Section
4(c) below), or (ii) the Executive terminates his employment with the Company
other than during the specific time periods set forth in Section 3 or for any
reason other than Good Reason (as such term is defined in Section 3(b) above),
or (iii) for any reason after the Expiration Date, the Executive shall not be
entitled to the severance benefits or other considerations described herein by
virtue of this Agreement.
(b) For purposes of this Agreement, "Change of Control" shall mean the
closing of: (i) a merger, consolidation, liquidation or reorganization of the
Company into or with another Company or other legal person, after which merger,
consolidation, liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not converted into or
exchanged for or does not represent more than 50% of the aggregate voting power
of the surviving or resulting entity; (ii) the direct or indirect acquisition by
any person (as the term "person" is used in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of more than 50% of the voting
capital stock of the Company, in a single or series of related transactions; or
(iii) the sale, exchange, or transfer of all or substantially all of the
Company's assets (other than a sale, exchange or transfer to one or more
entities where the stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the entities to which the assets were
transferred).
(c) For purposes of this Agreement, "Cause" shall mean: (i) the commission
by the Executive of a felony, either in connection with the performance of his
obligations to the Company or which adversely affects the Executive's ability to
perform such obligations; (ii) gross negligence, breach of fiduciary duty or
breach of any confidentiality, non-competition or developments agreement in
favor of the Company; or (iii) the commission by the Executive of an act of
fraud or embezzlement or other acts in intentional disregard of the Company
which result in loss, damage or injury to the Company, whether directly or
indirectly.
(d) Notwithstanding anything to the contrary in this Agreement, if any
portion of any payments received by the Executive from the Company (whether
payable pursuant to the terms of this Agreement or any other plan, agreement or
arrangement with the Company, its successors or any person whose actions result
in a change of control of the Company) shall be subject to tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended or any successor
statutory provision, the Company shall pay to the Executive such additional
amounts as are necessary so that, after taking into account any tax imposed by
Section 4999 (or any successor statutory provision), and any federal and state
income taxes payable on any such tax, the Executive is in the same after-tax
position that he or she would have been if such Section 4999 (or any successor
statutory provision) did not apply and no payments were made pursuant to this
Section 4(d). The Executive and the Company shall each reasonably cooperate with
the other in
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connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Payments.
All determinations required to be made under this Section 4(d), including
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the Company, after consultation with its tax and accounting
advisors.
(e) The parties hereto expressly agree that the payments by the Company to
the Executive in accordance with the terms of this Agreement will be liquidated
damages, and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive.
(f) Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) of
the Company; provided, however, that as a condition of closing any transaction
which results in a Change of Control, the Company shall obtain the written
agreement of any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company to be bound by the
provisions of this Agreement as if such successor were the Company and for
purposes of this Agreement, any such successor of the Company shall be deemed to
be the "Company" for all purposes.
(g) Nothing in this Agreement shall create any obligation on the part of
the Company or any other person to continue the employment of the Executive. If
the Executive elects to receive the severance and benefits set forth in Sections
1, 2 or 3, the Executive shall not be entitled to any other salary continuation
or severance benefits in the event of his cessation of employment with the
Company.
(h) Nothing herein shall affect the Executive's obligations under any key
employee, non-competition, confidentiality, option or similar agreement between
the Company and the Executive currently in effect or which may be entered into
in the future.
(i) The Executive agrees that it will execute and deliver to the Company a
copy of the Agreement/Waiver in the form attached hereto as Exhibit A in
consideration of, and prior to the Company's payment of, any amounts payable
hereunder.
(j) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts. This Agreement constitutes the
entire Agreement between the Executive and the Company concerning the subject
matter hereof and supersedes any prior negotiations, understandings or
agreements concerning the subject matter hereof, whether oral or written, and
may be amended or rescinded only upon the written consent of the Company and the
Executive. The invalidity or unenforceability of any provision of this Agreement
shall not affect the other provisions of this Agreement and this Agreement shall
be construed and reformed to the fullest extent possible. The Executive may not
assign any of his rights or obligations under this Agreement; the rights and
obligations of the Company under this Agreement shall inure to the benefit of,
and shall be binding upon, the successors and assigns of
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the Company. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
The Company:
PAREXEL INTERNATIONAL CORPORATION
By: /s/ Xxxxx X. xxx Xxxxxxxxxx
----------------------------------------
Name: Xxxxx X. xxx Xxxxxxxxxx
Title: Chairman and Chief Executive Officer
The Executive:
Signature: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxxx
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EXHIBIT A
AGREEMENT/WAIVER
It is hereby agreed by and between Xxxxxxx X. Xxxxxxx (the "Executive")
and PAREXEL International Corporation (together with all subsidiaries and
affiliates hereinafter referred to as the "Company"), for good and sufficient
consideration more fully described below, that:
1. Consideration. The Company will provide the Executive with the amounts
and benefits described in Sections 1, 2 and 3 of the Change of Control/Severance
Agreement entered into by the Company and the Executive, dated December 16,
2005, (the "Agreement"), subject to the terms and conditions of such Agreement.
The Executive understands that payment of and all such amounts and benefits are
conditioned upon the Executive signing this agreement.
2. Settlement of Amounts Due the Executive. The Executive agrees that the
amounts set forth above in Section 1, together with any amounts previously
provided to the Executive by the Company, shall be complete and unconditional
payment, settlement, satisfaction and accord with respect to all obligations and
liabilities of the Company and any of its affiliated companies (including their
respective successors, assigns, shareholders, officers, directors, employees
and/or agents) to the Executive, and all claims, causes of action and damages by
the Executive against the Company and/or any such other parties regarding the
Executive's employment with and termination from employment with the Company,
including, without limitation, all claims for back wages, salary, draws,
commissions, bonuses, vacation pay, equity compensation, expenses, compensation,
severance pay, attorney's fees, compensatory damages, exemplary damages, or
other costs or sums.
3. Release.
(a) In exchange for the amounts and benefits described in Section 1 above
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Executive and his representatives, agents, estate, successors
and assigns, absolutely and unconditionally hereby release and forever discharge
the Company, its affiliated companies and/or their successors, assigns,
directors, shareholders, officers, employees and/or agents, both individually
and in their official capacities, (the "Releasees"), from any and all actions or
causes of action, suits, claims, complaints, contracts, liabilities, agreements,
promises, debts and damages, controversies, judgments, rights and demands,
whether existing or contingent, known or unknown, which arise under the
Agreement. This release is intended by the Executive to be all encompassing and
to act as a full and total release of any claims that the Executive may have or
has had against the Releasees under the Agreement, including, but not limited
to, any federal, state or local law or regulation dealing with either employment
or employment discrimination such as those laws or regulations concerning
discrimination on the basis of age, race, color, religion, creed, sex, sexual-
orientation, national origin, ancestry, marital status, physical or mental
disability, any veteran status or any military service or application for any
military service; any contract, whether oral or written, express or implied; or
common law.
(b) The Executive agrees not only to release and discharge the Releasees
from any and all claims as stated above that the Executive could make on his/her
own behalf or on behalf of others, but also those claims which might be made by
any other person or organization on behalf of the Executive, and the Executive
specifically waives any right to become, and promises not to become, a member of
any class in a case in which a claim or claims against the Releasees are made
involving any matters which arise out of, or in connection with, the Agreement.
Nothing in this agreement is to be construed as an admission by the Releasees of
any liability or unlawful conduct whatsoever.
4. Waiver of Rights and Claims Under the Age Discrimination and Employment
Act of 1967.
(a) The Executive has been informed that since he is 40 years of age or
older, he has or might have specific rights and/or claims under the Age
Discrimination and Employment Act of 1967. In consideration for the amounts
described in Section 1 hereof, the Executive specifically waives such rights
and/or claims to the extent that such rights and/or claims arose prior to the
date this Agreement was executed.
(b) The Executive was advised by the Company of his right to consult with
an attorney prior to executing this Agreement.
(c) The Executive was further advised when he was presented by the Company
with the original draft of this Agreement on _______, 200_, that he had at least
21 days within which to consider its terms and to consult with or seek advice
from an attorney or any other person of his/her choosing, until the close of
business on __________, 200_.
5. Confidentiality. The Executive agrees he shall not divulge or publish,
directly or indirectly, any information whatsoever regarding the substance,
terms or existence of the Agreement or this agreement and/or any discussions or
negotiations relating to the Agreement or this agreement to any person or
organization, except to his immediate family members, counsel or accountant, and
unless required under law or court order.
6. Representations and Governing Law.
(a) This agreement represents the complete and sole understanding between
the parties regarding the subject matter hereto. This agreement may not be
modified, altered or rescinded except upon written consent of the Company and
Executive. The invalidity or unenforceability of any provision of this agreement
shall not affect the other provisions of this agreement, but this agreement
shall be revised, construed and reformed to the fullest extent possible to
effectuate the purposes of this agreement. This agreement shall be binding upon
and inure to the benefit of the Company and the Executive and their respective
heirs, successors and assigns. The parties agree that the Company will not have
an adequate remedy if the Executive fails to comply with Sections 3, 4, and 5
hereof and that damages will not be readily ascertainable, and that in the event
of such failure, the Executive shall not oppose any application by the Company
requiring a
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decree of specific performance or an injunction enjoining a breach of this
agreement. If the Executive breaches any of his/her obligations hereunder, he
shall forfeit all right to payments pursuant to Section 1.
(b) This agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without giving effect to the
principles of conflicts of law thereof.
(c) The Executive represents that he has read this agreement, fully
understands the terms and conditions of such agreement, and is voluntarily
executing the same. In entering into this agreement, the Executive does not rely
on any representation, promise or inducement made by the Releasees, with the
exception of the consideration described in this document.
7. Effective Date. The Executive may revoke this agreement during the
period of seven (7) days following its execution by the Executive, and this
agreement shall not become effective or enforceable until this revocation period
has expired.
The Company:
PAREXEL INTERNATIONAL CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
The Executive:
Signature:______________________________
Printed Name: Xxxxxxx X. Xxxxxxx
Date:___________________________________
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