EXHIBIT 10.3
CHANGE OF CONTROL AGREEMENT
AGREEMENT, dated as of October 20, 1998, by and
between PAREXEL International Corporation (the "Company") and
Xxxxx Xxxxx (the "Executive").
WHEREAS, the Executive is a senior executive of the Company
and has made and is expected to continue to make major
contributions to the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue 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 Prior to a Change of Control.
(a) If, within nine months prior to a Change of Control and
subsequent to the commencement of the substantive discussions
that ultimately result in the Change of Control a "Change of
Control" (as such term is defined in Section 3(b) below), the
Company terminates the Executive's employment with the Company
without "Cause" (as such term is defined in Section 3(c) below)
or the Executive terminates his/her employment with the Company
for "Good Reason" (as such term is defined in Section 1(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) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to the amount of
monthly base salary (at the highest monthly base salary
rate in effect for such Executive in the twelve month
period prior to the termination of his or her
employment) that would have been paid to such Executive
had he or she remained an employee of the Company
through the Change of Control; and
(2) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to: (i) twelve
months of monthly base salary (at the highest monthly
base salary rate in effect for such Executive in the
twelve month period prior to the termination of his or
her employment), plus (ii) the maximum bonus that
could have been payable to such Executive (assuming
continued employment) during the year in which the
Change of Control occurs based on bonus arrangements in
effect at any time during the twelve month period
immediately prior to the termination of his or her
employment which would pay the Executive the highest
maximum bonus (all payments under this Section 1(a)(2)
being referred to, collectively, as the "Severance
Payments"); and
(3) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the Change of Control;
or (ii) the date the Executive commences subsequent
employment; and
(4) On the Change of Control, cause any unexercisable
installments of any stock options (other than any
options granted pursuant to the Option Agreement
between Executive and Company dated December 31, 1996)
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 to the extent that: (A) the Change of
Control is intended to be accounted for as a pooling of
interests; and (B) the Company concludes, after
consulting with its independent accountants, that such
acceleration would prevent the Change of Control
transaction from being accounted for as a pooling of
interests for financial accounting purposes; (ii) 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 (iii) 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.
(5) Beginning on the Change of Control, provide
executive outplacement services from an outplacement
company selected by the Executive, with such services
to extend until the earlier of: (i) twelve months
following the Change of Control; or (ii) the date on
which the Employee secures new full-time employment;
provided, however, that the Company shall not be
required to provide more than $25,000 of such services
to the Executive.
(6) 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 1 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 this Section 1, "Good Reason" shall
mean: (i) the assignment to the Executive of any duties
inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities as of the date of
this Agreement 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, except to the
extent any such benefit is replaced with a comparable benefit, or
a reduction in scope or value thereof, other than as a result of
across-the-board reductions or terminations affecting officers of
the Company generally; 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 20 miles provided,
however, that travel consistent with past practices for business
purposes shall not be considered "commuting" for purposes of this
clause.
2. Termination Following a Change of Control.
(a) If, at any time during a period commencing with a
Change in Control and ending eighteen months after such Change in
Control, the Company terminates the Executive's employment
without Cause or the Executive terminates his/her employment with
the Company for "Good Reason" (as such term is defined in Section
2(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) Pay to the Executive, within ten business days
following the Executive's last date of employment, a
lump sum amount (net of any required withholding) equal
to: (i) twelve months of monthly base salary (at the
highest monthly base salary rate in effect for such
Executive in the twelve month period prior to the
termination of his or her employment), plus (ii) the
maximum 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
(collectively, the "Severance Payments").
(2) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the termination of the
Executive's employment; or (ii) the date the Executive
commences subsequent employment.
(3) Cause any unexercisable installments of any stock
options (other than any options granted pursuant to the
Option Agreement between Executive and Company dated
December 31, 1996) 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
to the extent that: (A) the Change of Control is
intended to be accounted for as a pooling of interests;
and (B) the Company concludes, after consulting with
its independent accountants, that such acceleration
would prevent the Change of Control transaction from
being accounted for as a pooling of interests for
financial accounting purposes; (ii) 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 (iii) 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.
(4) Provide executive outplacement services from an
outplacement company selected by the Executive, with
such services to extend until the earlier of:
(i) twelve months following the termination of the
Executive's employment; or (ii) the date on which the
Employee secures new full-time employment; provided,
however, that the Company shall not be required to
provide more than $25,000 of such services to the
Executive.
(5) 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 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) For purposes of Section 2, "Good Reason" shall mean the
occurrence of one or more of the following events following a
Change of Control: (i) the assignment to the Executive of any
duties inconsistent in any adverse, material respect with his/her
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 20 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 3(g).
3. General.
(a) In the event the Executive's employment with the
Company is terminated by the Company other than during the
specific time periods set forth in Section 1(a) and Section 2(a)
or for any reason other than without Cause, or the Executive
terminates his/her employment with the Company other than during
the specific time periods set forth in Section 1(a) and Section
2(a) or for any reason other than Good Reason, 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 of the Executive of a felony, either in connection
with the performance of his/her 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 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
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 3(d). The Executive
and the Company shall each reasonably cooperate with the other in
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 5(i), 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) The Company shall pay or cause to be paid and shall be
solely responsible for any and all attorneys' fees and expenses
incurred by the Executive: (i) in connection with the
Executive's review and execution of this Agreement; and (ii) to
enforce his or her rights under this Agreement, solely in the
event that the Company is found by a court of competent
jurisdiction, an arbitrator or through a mutual settlement
agreement to have failed to perform its obligations under this
Agreement.
(g) 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 the 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.
(h) 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 Section 1 or Section 2,
the Executive shall not be entitled to any other salary
continuation or severance benefits in the event of his/her
cessation of employment with the Company.
(i) 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.
(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 as such relates to any severance payment in the
context of a change in control, 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/her 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 the Company. This
Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument.
(k) Company and Employee agree to enter into a mutually
acceptable Consulting Agreement of up to a four (4) year term.
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:m /s/Xxxxx X. xxx Xxxxxxxxxx
Name: Xxxxx X. xxx Xxxxxxxxxx
Title: Chairman and CEO
The Executive:
Signature: /s/Xxxxx Xxxxx
Printed Name: Xxxxx Xxxxx
