<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
</TABLE>
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
PAREXEL INTERNATIONAL CORPORATION
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PAREXEL INTERNATIONAL CORPORATION
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
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------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[PAREXEL LOGO]
------------------------------------------------------------------
195 West Street, Waltham, Massachusetts 02154
Telephone: 617-487-9900
Fax: 617-487-0525
October 8, 1996
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
PAREXEL International Corporation (the "Company") to be held at 3:00 p.m.,
Boston time, on Thursday, November 14, 1996, at the Harvard Club located at One
Federal Street, Boston, Massachusetts 02110.
At this meeting, you will be asked to: (i) elect two Class I directors to
new three-year terms; (ii) amend the Company's 1995 Stock Plan (the "Plan") to
increase the number of shares currently reserved for issuance under the Plan by
500,000 shares; (iii) approve an amendment to the Company's Restated Articles of
Organization increasing the number of authorized shares of Common Stock, par
value $.01, per share, of the Company from 25,000,000 to 50,000,000; and (iv)
ratify the selection of Price Waterhouse LLP as the Company's independent
auditors for the fiscal year ending June 30, 1997. The Board of Directors
unanimously recommends that you vote FOR each of these proposals.
Details regarding each of the matters to be acted upon at this meeting
appear in the accompanying Proxy Statement. Please give this material your
careful attention.
Whether or not you plan to attend the meeting, please complete, sign and
date the accompanying proxy card and return it in the enclosed postage prepaid
envelope. It is important that your shares be voted whether or not you attend
the meeting in person. If you attend the meeting, you may vote in person even if
you have previously returned your proxy card. Your prompt cooperation will be
greatly appreciated.
Very truly yours,
Josef H. von Rickenbach
President, Chief Executive Officer and
Chairman
<PAGE> 3
[PAREXEL LOGO]
------------------------------------------------------------------
195 West Street, Waltham, Massachusetts 02154
Telephone: 617-487-9900
Fax: 617-487-0525
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 14, 1996
To the Stockholders of PAREXEL International Corporation:
Notice is hereby given that the annual meeting of stockholders of PAREXEL
International Corporation, a Massachusetts corporation (the "Company"), will be
held at 3:00 p.m., Boston time, on Thursday, November 14, 1996, at the Harvard
Club located at One Federal Street, Boston, Massachusetts 02110, to consider and
vote upon the following proposals:
1. To elect two Class I directors to the Company's Board of Directors,
each to serve for a term of three years and until his successor is elected
and qualified or until his earlier resignation or removal.
2. To approve an amendment to the Company's 1995 Stock Plan (the
"Plan") to increase the number of shares currently reserved for issuance
under the Plan by 500,000 shares.
3. To approve an amendment to the Company's Restated Articles of
Organization increasing the number of authorized shares of Common Stock,
par value $.01 per share, of the Company from 25,000,000 to 50,000,000.
4. To ratify the selection of Price Waterhouse LLP, independent public
accountants, as auditors for the fiscal year ending June 30, 1997.
5. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on September 20, 1996
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting, however, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. You may revoke your proxy in the manner described in
the accompanying
<PAGE> 4
Proxy Statement at any time before it has been voted at the annual meeting. Any
Stockholder attending the annual meeting may vote in person even if he or she
has returned a proxy.
By Order of the Board of Directors,
William T. Sobo, Jr.
Senior Vice President, Chief Financial
Officer, Treasurer and Clerk
Waltham, Massachusetts
October 8, 1996
<PAGE> 5
[PAREXEL LOGO]
------------------------
PROXY STATEMENT
------------------------
October 8, 1996
This Proxy Statement is being furnished to holders of common stock, par
value $.01 per share ("Common Stock"), of PAREXEL International Corporation, a
Massachusetts corporation ("PAREXEL" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board")
for use at the annual meeting of the Company's stockholders to be held at 3:00
p.m., Boston time, on Thursday, November 14, 1996, and at any adjournments or
postponements thereof (the "Meeting"), at the Harvard Club located at One
Federal Street, Boston, Massachusetts 02110. The Company's 1996 Annual Report,
containing financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations for the fiscal year ended June 30,
1996, are being mailed contemporaneously with this Proxy Statement to all
stockholders entitled to vote at the Meeting. This Proxy Statement and the form
of proxy were first mailed to stockholders on or about October 8, 1996.
The purpose of the Meeting is (1) to elect two Class I directors to the
Company's Board of Directors, each to serve for a term of three years and until
his successor is elected and qualified, or until his earlier resignation or
removal, (2) to consider and vote upon a proposal to amend the Company's 1995
Stock Plan (the "Plan") to increase the number of shares currently reserved for
issuance under the Plan by 500,000 shares, (3) to consider and vote upon a
proposal to amend the Company's Restated Articles of Organization to increase
the number of authorized shares of Common Stock, par value $.01 per share, from
25,000,000 to 50,000,000 and (4) to ratify the selection of Price Waterhouse
LLP, independent public accountants, as auditors for the fiscal year ending June
30, 1997.
The Board has fixed the close of business on September 20, 1996 as the
record date (the "Record Date") for the determination of the Company's
stockholders entitled to notice of, and to vote at, the Meeting. Accordingly,
only holders of record of Common Stock as of the close of business on the Record
Date will be entitled to notice of, and to vote at, the Meeting or an
adjournment thereof. As of the Record Date, shares of the Company's
Common stock were issued and outstanding. The holders of Common Stock are
entitled to one vote per share on any proposal presented at the Meeting.
Stockholders may vote in person or by proxy. Execution of a proxy will not in
any way affect a stockholder's right to attend the Meeting and vote in person.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (1) filing
with the Clerk of the Company, before the taking of the vote at the Meeting, a
written notice of revocation bearing a later date than the proxy, (2) duly
executing a later dated proxy relating to the same shares and delivering it to
the Clerk of the Company before the taking of the
<PAGE> 6
vote at the Meeting or (3) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice of revocation or subsequent proxy should be sent so
as to be delivered to PAREXEL International Corporation, 195 West Street,
Waltham, Massachusetts 02154, Attention: Clerk, at or before the taking of the
vote at the Meeting.
The persons named as attorneys in the proxy are officers of the Company.
All properly executed proxies returned in time to be counted at the Meeting will
be voted and, with respect to the election of the Board, will be voted as stated
below under "Election of Directors." Any stockholder submitting a proxy has the
right to withhold authority to vote for the nominees to the Board by so making
the box provided on the proxy.
In addition to the election of two Class I directors to three-year terms,
the stockholders will consider and vote upon proposals to amend the Company's
1995 Stock Plan, to amend the Company's Restated Articles of Organization and to
ratify the selection of auditors, all as further described in this Proxy
Statement. All proxies will be voted in accordance with the instructions
contained therein, and if no choice is specified, the proxies will be voted in
favor of the matters set forth in the accompanying Notice of Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business at the Meeting. Votes
withheld from the nominee, abstentions and broker non-votes are counted as
present or represented for purposes of determining the presence or absence of a
quorum. A "non-vote" occurs when a broker holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because the broker
does not have discretionary voting power and has not received instructions from
the beneficial owner. Directors are elected by a plurality of the votes cast by
stockholders entitled to vote at the Meeting. The amendment to the Company's
Restated Articles of Organization requires the affirmative vote of a majority of
outstanding shares of Common Stock entitled to vote at the Meeting. All other
matters being submitted to stockholders require the affirmative vote of a
majority of shares present in person or represented by proxy at the Meeting. An
automated system administered by the Company's transfer agent tabulates the
votes. The vote on each matter submitted to stockholders is tabulated
separately. Abstentions are included in the number of shares present or
represented and voting on each matter and, therefore, with respect to votes on
specific proposals, will have the effect of negative votes. Broker "non-votes"
are not so included.
Where a choice has been specified on the proxy with respect to the
foregoing matters, the shares represented by the proxy will be voted in
accordance with the specification. The shares will be voted FOR the matter in
question if no specification is made.
The Board knows of no other matter to be presented at the Meeting. If any
other matters are properly presented for consideration at the Meeting (or any
adjournment or postponements thereof), the persons named in the enclosed form of
proxy and voting thereunder will have the discretion to vote on such matters in
accordance with their best judgment.
2
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of September 20, 1996 (unless
otherwise indicated) (i) by each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) by
each current director of the Company, (iii) by each executive officer of the
Company named in the Summary Compensation Table and (iv) by all current
directors and executive officers of the Company as a group. Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock,
except to the extent authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED(1) BENEFICIALLY OWNED(2)
- - - ----------------------------------------------------------- ------------------- ---------------------
<S> <C> <C>
INVESCO PLC and certain affiliates(2)...................... 614,500 [7.4]
11 Devonshire Square
London EC2M 4YR
ENGLAND
Josef H. von Rickenbach(3)................................. 432,390 [5.2]
Werner M. Herrmann......................................... 88,493 [1.0]
A. Dana Callow(4).......................................... 83,348 [1.1]
John G. Lee(5)............................................. 48,000 *
Peter Barton Hutt(6)....................................... 39,500 *
James A. Saalfield(7)...................................... 18,666 *
Barry R. Philpott(8)....................................... 7,000 *
R. Adrian Otte(9).......................................... 4,500 *
Patrick J. Fortune......................................... 0 *
All executive officers and directors as a group (13
persons)(10)............................................. 845,247 [9.8]
</TABLE>
- - - ---------------
* Less than 1% of the outstanding Common Stock.
(1) The number of shares of Common Stock deemed outstanding includes: (i)
[8,329,389] shares of Common Stock outstanding as of September 20, 1996;
and (ii) shares issuable pursuant to options held by the respective person
or group which may be exercised within 60 days after September 20, 1996
("presently exercisable" stock options), as set forth below.
(2) Ownership is stated as of April 5, 1996. Shares are held by INVESCO on
behalf of other persons who have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of,
the Company's Common Stock. INVESCO disclaims beneficial ownership of such
shares.
(3) Includes 321,183 shares of Common Stock owned by The Josef H. von
Rickenbach GRAT dated November 17, 1995. Includes 30,000 shares of Common
Stock issuable pursuant to presently exercisable stock options.
3
<PAGE> 8
(4) Includes 44,166 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(5) Includes 44,750 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(6) Includes 39,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(7) Includes 16,666 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 6,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(9) Includes 4,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(10) Includes 251,882 shares of Common Stock issuable pursuant to presently
exercisable stock options.
ELECTION OF DIRECTORS
In accordance with the Company's Restated Articles of Organization, the
Company's Board is divided into three classes: the Class I, Class II and Class
III directors. Each director is elected for a three-year term of office, with
one class of directors being elected at each annual meeting of stockholders.
Each director holds office until his successor is elected and qualified or until
his earlier death, resignation or removal.
The information below sets forth for each member of the Board, including
the Class I nominees to be elected at the Meeting, such person's age, principal
occupations during the past five years and certain other information:
Class I Directors: To be elected at the 1996 Annual Meeting of Stockholders
PATRICK J. FORTUNE, PH.D., 49, was elected a director of the Company in
June 1996 and is a member of the Compensation Committee of the Board. Mr.
Fortune is Vice President, Information Technology and Chief Information Officer
of Monsanto Company. From 1994 to October 1995, Mr. Fortune was President and
Chief Operating Officer, Chief Information Officer and a member of the Board of
Directors of Coram Healthcare Corporation. From 1991 to 1994, Mr. Fortune was
Corporate Vice President, Information Management at Bristol-Myers Squibb. Prior
to that, Mr. Fortune was Senior Vice President and General Manager of Packaging
Corporation of America, a subsidiary of Tenneco and held several management
positions with Baxter International, Inc., including Corporate Vice President,
Vice President, Research and Development and Vice President, Information
Services. Mr. Fortune has been named as a party in four class action or
derivative lawsuits, generally alleging violations of certain anti-fraud
provisions of federal securities law, filed in late 1995 against Coram
Healthcare Corporation and its other officers and directors. These actions are
currently pending and no determination can be made regarding their outcome.
PROF. DR. MED. WERNER M. HERRMANN, 55, is Chief Scientific Officer for
PAREXEL and was elected a director of the Company in April 1991. Dr. Herrmann
founded a Berlin-based provider of clinical and biostatistical and clinical data
management services in 1982, which was acquired by PAREXEL and renamed PAREXEL
GmbH Independent Pharmaceutical Research Organization. Prior to 1982, Dr.
Herrmann was head of the Psychiatry and Neurology Branch, Department of
Experimental and Clinical Pharmacology, Institute for Drugs, Federal Health
Office, Berlin, Germany, from 1979 to 1982. Dr. Herrmann is a Full Professor at
the Department of Psychiatry, Free University of Berlin.
4
<PAGE> 9
All shares of Common Stock that are entitled to vote and are represented at
the Meeting by properly executed proxies received prior to or at the Meeting and
not duly and timely revoked, will be voted at such Meeting in accordance with
the instructions indicated in such proxies. Shares represented by all proxies
received by the Board and not marked so as to withhold authority to vote for any
nominee to the Board will be voted (unless the nominees are unable or unwilling
to serve) FOR the election of the nominees named above. The election of the
directors will be determined by a plurality of the votes cast at the Meeting.
The Board knows of no reason why either of the nominees would be unable or
unwilling to serve, but if such should be the case, proxies may be voted for the
election of other persons.
Class II Directors: Term expires at 1997 Annual Meeting of Stockholders
PETER BARTON HUTT, 61, was elected a director of the Company in March 1989.
Mr. Hutt is partner in the Washington, D.C. law firm of Covington & Burling,
specializing in food and drug law and in government regulation of health and
safety. He is a director of several pharmaceutical and drug development
companies, including IDEC Pharmaceuticals, Inc., Emisphere Technologies, Inc.,
Interneuron Pharmaceuticals, Inc., Vivus, Inc., Sparta, Inc. and Cell Genesys,
Inc. From 1971 to 1975, Mr. Hutt was Chief Counsel for the FDA.
JAMES A. SAALFIELD, 49, was elected a director of the Company in January
1993 and is a member of the Audit Committee and the Stock Option Committee of
the Board. Mr. Saalfield is a retired general partner of Fleet Venture Partners
I, II, III and IV and managing general partner of Dean's Hill L.P. and The Still
River Fund and President of The Still River Management Company. Mr. Saalfield
served as the senior vice president of Fleet Venture Resources, Inc. and senior
vice president of Fleet Growth Resources, Inc. from 1985 to 1993. Mr. Saalfield
is a director of a number of companies, including KVH Industries and a number of
private companies.
Class III Directors: Term expires at 1998 Annual Meeting of Stockholders
JOSEF H. VON RICKENBACH, 41, co-founded PAREXEL in 1983 and has served as a
director since then. Prior to his involvement with PAREXEL, he was European Area
Manager with ERCO (now ENSECO), Inc., a diversified testing and technical
consulting company. Mr. von Rickenbach has worked for Schering-Plough, Inc. and
3M (East), a division of Minnesota Mining and Manufacturing, Inc. Mr. von
Rickenbach received an M.B.A. from the Harvard University Graduate School of
Business Administration and has an undergraduate degree from the Lucerne College
of Economics and Administration.
A. DANA CALLOW, JR., 44, was elected a director of the Company in June 1986
and is a member of the Audit Committee, Compensation Committee and Stock Option
Committee of the Board. Since December 1982, Mr. Callow has been a general
partner of the general partner of several of Boston Capital Ventures' limited
partnerships including Boston Capital Ventures International Limited
Partnership, Boston Capital
5
<PAGE> 10
Ventures Limited Partnership, Boston Capital Ventures II Limited Partnership and
Boston Capital Ventures III, Limited Partnership. Mr. Callow is a director of a
number of privately held companies, including Tektagen Incorporated and ILEX
Oncology, Inc.
DIRECTORS' COMPENSATION
Non-employee members of the Board receive $1,500 per day of Board or
committee meetings (with no more than one $1,500 payment being made for any one
day). Non-employee directors are also reimbursed for their reasonable
out-of-pocket expenses incurred in attending meetings. There are no family
relationships among any of the executive officers or directors of the Company.
The Company's 1995 Non-Employee Director Stock Option Plan (the "Director
Plan") provides for the grant of options to purchase a maximum of 300,000 shares
of Common Stock of the Company to non-employee directors of the Company. Under
the Director Plan, each non-employee director who was a member of the Board of
Directors on the effective date of the Company's initial public offering
received options. In addition, each non-employee director first elected to the
Board of Directors after the effective date of the Company's initial public
offering will receive an option for 10,000 shares on the date of his or her
election. The Director Plan further provides for an automatic grant of an option
for 10,000 shares on the first business day of July of each year to each
non-employee director who has continuously served for the lesser of (i) the
previous full year or (ii) since the last annual meeting of stockholders at
which directors were elected. The exercise price per share for all options
granted under the Director Plan will be equal to the market price of the Common
Stock as of the date of grant. The options granted annually will become
exercisable in three equal annual installments beginning on the first
anniversary of the date of grant, subject to specified meeting attendance
requirements. Options to purchase an aggregate of 126,500 shares of Common Stock
have been granted to date under the Director Plan.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board met ten times and took action by unanimous written consent two
times during the fiscal year ended June 30, 1996. The Board has a standing Audit
Committee, Stock Option Committee and Compensation Committee. The Audit
Committee, which oversees the accounting and financial functions of the Company,
met once during the fiscal year ended June 30, 1996. Messrs. Callow and
Saalfield are the current members of the Audit Committee. The Stock Option
Committee of the Company, which reviews and approves option grants and
administers the Company's stock option plans, met once and took action by
unanimous written consent five times during the fiscal year ended June 30, 1996.
Messrs. Callow and Saalfield are the current members of the Stock Option
Committee. James L. Currie, a former non-employee director of the Company, was a
member of the Stock Option Committee during the fiscal year ended June 30, 1996,
but resigned on July 1, 1996. The Compensation Committee of the Company, which
reviews and makes recommendations concerning executive compensation, met once
and took action by unanimous written consent once during the fiscal year ended
June 30, 1996. Messrs. Callow and Fortune are the current members of the
Compensation Committee. Mr. von Rickenbach and James L. Currie, a former
non-employee director
6
<PAGE> 11
of the Company, were members of the Compensation Committee during the fiscal
year ended June 30, 1996, but resigned on July 1, 1996.
During the fiscal year ended June 30, 1996, all of the Company's directors
other than Peter Barton Hutt attended at least seventy-five percent of the total
number of meetings of the Board and at least seventy-five percent of the total
number of meetings of all committees of the Board on which they served.
EXECUTIVE OFFICERS
Executive officers serve at the discretion of the Board on an annual basis
and serve until their successors have been duly elected and qualified or until
their earlier resignation or removal. The executive officers of the Company are
as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- - - ------------------------------------ --- -------------------------------------------
<S> <C> <C>
Josef H. von Rickenbach............. 41 President, Chief Executive Officer and
Chairman of the Board
William T. Sobo, Jr................. 39 Senior Vice President, Chief Financial
Officer, Treasurer and Clerk
Barry R. Philpott................... 47 President, European Operations
R. Adrian Otte, M.D................. 40 Senior Vice President
Paule Dapres, M.D................... 51 Senior Vice President
Taylor J. Crouch.................... 36 Senior Vice President
Prof. Dr. med. Werner M. Herrmann... 55 Chief Scientific Officer and Director
Veronica G. H. Jordan, Ph.D......... 46 Senior Vice President
John G. Lee, Ph.D................... 62 Senior Vice President
</TABLE>
WILLIAM T. SOBO, JR. is responsible for all financial and administrative
activities of the Company. Prior to joining PAREXEL in 1987, Mr. Sobo was a
supervisor at Coopers & Lybrand in the emerging business/middle market group and
also served as the controller for a regional financial consulting firm. Mr. Sobo
is a Certified Public Accountant and received an M.B.A. from Boston University
and a B.S. from the Wharton School at the University of Pennsylvania.
BARRY R. PHILPOTT is responsible for the general management of PAREXEL's
European operations, based in London, England. Prior to joining PAREXEL in 1993,
Mr. Philpott served in several senior management positions with EG&G Inc., a
diversified technology company based in Massachusetts, most recently as General
Manager of its Worldwide Optical & Analytical Division. Previous to this
position he was the President and Managing Director of EG&G Applied Research
Corp.
R. ADRIAN OTTE, M.D. is responsible for the Company's medical monitoring
and medical writing services for ongoing clinical trials. Prior to joining
PAREXEL's operations in Germany as Vice President, Clinical Research Europe and
General Manager of PAREXEL's Central European region, Dr. Otte served in several
senior management positions, most recently as Head of Clinical Research, at
Duphar BV Holland. Dr. Otte
7
<PAGE> 12
received his medical degree at the Welsh National School of medicine and is a
Fellow of the Faculty of Pharmaceutical Medicine.
PAULE DAPRES, M.D. is responsible for the Company's European clinical
operations. Prior to joining PAREXEL in 1992, Dr. Dapres served in several
senior management positions at Schering Plough, Inc. Dr. Dapres received her
M.D. degree from the University of Paris.
TAYLOR J. CROUCH is responsible for the Company's client relations
activities, including proposal preparation, contract negotiations and account
management, and is responsible for the Company's worldwide marketing activities.
Prior to joining PAREXEL's operations in Germany as Vice President, Client
Relations and Marketing in 1991, Mr. Crouch served in several senior management
positions, most recently as Marketing Operations Manager, at Schering-Plough,
Inc. in Germany. Mr. Crouch received an M.B.A. from the University of Chicago.
VERONICA G.H. JORDAN, PH.D. is responsible for client relations and
marketing activities at PAREXEL. Before joining PAREXEL in 1987, Dr. Jordan was
Director of Marketing and Business Development at Biogen, Inc. Previously, Dr.
Jordan worked at Clinical Assays, a division of Baxter Travenol. Dr. Jordan has
a Ph.D. from Oxford University and a B.S. from Cambridge University.
JOHN G. LEE, PH.D. is the head of worldwide statistical activities of the
Company. Prior to joining PAREXEL in 1988, Dr. Lee worked at The Upjohn Company
for over 20 years in positions of increasing responsibility in the
biostatistical area and most recently as Director of Statistics for the Medical
Affairs Division for eight years. Dr. Lee received a Ph.D. and an M.S. from the
University of Minnesota.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. von Rickenbach, the President, Chief Executive Officer and Chairman of
the Company, served as a member of the Compensation Committee of the Board of
Directors during the fiscal year ended June 30, 1996, but resigned on July 1,
1996. No executive officer of the Company served as a member of the Compensation
Committee (or other Board committee performing equivalent functions or, in the
absence of any such committee, the entire Board of Directors) of another entity,
one of whose executive officers served as a director of the Company.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation paid or accrued by the Company for services
rendered to the Company, in all capacities, for the fiscal year ended June 30,
1996 by its Chief Executive Officer (the "CEO") and the four other most highly
compensated executive officers other than the CEO, in each case whose total
salary and bonus exceeded $100,000 during the fiscal year ended June 30, 1996
(collectively, the "Named Executive Officers"). The Company did not
8
<PAGE> 13
grant any restricted stock awards or stock appreciation rights or make any
long-term incentive plan payouts during the fiscal year ended June 30, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS(#) COMPENSATION
- - - --------------------------------------------- ------ -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Josef H. von Rickenbach...................... 1996 $199,188 $ 0 $ 5,114(2) 50,000 $ 38,825(3)
President, Chief Executive Officer and 1995 183,545 0 26,973(4) 0 3,450
Chairman
Barry R. Philpott............................ 1996 162,530 50,694 12,151(2) 15,000 13,002(5)
President, European Operations 1995 146,300 0 -- 0 11,704(5)
John G. Lee, Ph.D. .......................... 1996 151,249 52,186 -- 10,000 10,483(6)
Senior Vice President 1995 139,135 0 -- 0 2,964(5)
R. Adrian Otte, M.D. ........................ 1996 152,079 40,220 -- 12,000 12,454(7)
Senior Vice President 1995 129,539 10,125 -- 5,000 3,675(5)
Prof. Dr. med. Werner M. Herrmann............ 1996 179,132 5,666 17,807(2) 2,000 --
Chief Scientific Officer and Director 1995 179,021 0 18,587(2) 0 --
</TABLE>
- - - ---------------
(1) Includes commissions.
(2) Automobile allowance.
(3) Includes $3,222 contributions to defined contribution plans and $35,603 for
unused paid vacation.
(4) Includes $11,084 automobile allowance and $15,889 related to interest on
stock subscriptions receivable.
(5) Contributions to defined contribution plans.
(6) Includes $3,861 contributions to defined contribution plans and $6,622 for
unused paid vacation.
(7) Includes $3,806 contributions to defined contribution plans and $8,648 for
unused paid vacation.
EMPLOYMENT AGREEMENTS
The Company is party to an employment agreement dated July 2, 1987 with Dr.
Veronica G.H. Jordan. Currently, Dr. Jordan is paid an annual base salary of
$80,000. The employment agreement with Dr. Jordan may be terminated for cause
upon the unanimous action of the Company's Board of Directors.
The Company and Barry R. Philpott are parties to a letter agreement of
employment dated July 6, 1993. Mr. Philpott's current annual base salary is
L120,000 (approximately $190,000). The Company may terminate Mr. Philpott's
employment upon two months' notice and upon payment of severance benefits equal
to one month's base salary per full year of service, with a maximum payment
equal to six months' base salary.
The executive officers of the Company are bound by the terms of a Key
Employee Confidentiality and Invention Agreement, pursuant to which confidential
information proprietary to the Company obtained during
9
<PAGE> 14
the term of employment by the Company may not be disclosed by the employee
during or subsequent to such term of employment, and pursuant to which the
employee agrees not to compete with the business of the Company during and for
one year subsequent to the term of employment.
In connection with the acquisition by the Company of PAREXEL GmbH, Dr.
Herrmann entered into an employment agreement with PAREXEL GmbH, dated March 11,
1991. The employment agreement was amended as of June 30, 1993. Dr. Herrmann
also entered into an employment agreement with the Company on June 30, 1993. The
employment agreements with Dr. Herrmann expire on June 30, 1997. The employment
agreement with the Company provides for a monthly base salary of approximately
DM 11,400 (approximately $6,900).
OPTIONS AND STOCK PLANS
Option Grant Table. The following table sets forth certain information
regarding options granted during the fiscal year ended June 30, 1996 by the
Company to the Named Executive Officers.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
PERCENT OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
GRANTED TO OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION -------------------
NAME GRANTED(#) FISCAL YEAR BASE PRICE DATE 5% 10%
---- ---------- ------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Josef H. von Rickenbach............. 30,000 9.3% $15.00 11/21/2003 $214,855 $514,615
20,000 6.2 37.50 4/18/2004 358,092 857,692
Barry R. Philpott................... 5,000 1.6 15.00 11/21/2003 35,809 85,769
10,000 3.1 37.50 4/18/2004 179,046 428,846
John G. Lee, Ph.D. ................. 5,000 1.6 15.00 11/21/2003 35,809 85,769
5,000 1.6 37.50 4/18/2004 89,523 214,423
R. Adrian Otte, M.D. ............... 2,000 0.6 15.00 11/21/2003 14,324 34,308
10,000 3.1 37.50 4/18/2004 179,046 428,846
Prof. Dr. med. Werner M. Herrmann... 2,000 0.6 37.50 4/18/2004 35,809 85,769
- - - ---------------
<FN>
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration dates. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not represent
an estimate by the Company of its future stock price growth. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent on
the timing of such exercise and the future performance of Common Stock.
There can be no assurances that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by the
individuals.
</TABLE>
10
<PAGE> 15
Year-End Option Table. The following table sets forth certain information
concerning the unexercised stock options as of June 30, 1996 held by the Named
Executive Officers.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<CAPTION>
VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
SHARES VALUE FISCAL YEAR-END YEAR-END(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Josef H. von Rickenbach................. 40,000 $1,396,000 50,000 20,000 $1,950,500 $ 215,000
Barry R. Philpott....................... 0 -- 6,000 19,000 214,500 416,750
John G. Lee, Ph.D....................... 10,000 349,000 50,000 10,000 2,382,500 220,000
R. Adrian Otte, M.D..................... 0 -- 4,000 18,000 143,000 388,500
Prof. Dr. med. Werner M. Herrmann....... 0 -- 0 2,000 0 21,500
<FN>
- - - ---------------
(1) Amounts disclosed in this column do not reflect amounts actually received by
the Named Executive Officers but are calculated based on the difference
between the fair market value of Common Stock on the date of exercise and
exercise price of the options. Named Executive Officers will receive cash
only if and when they sell the Common Stock issued upon exercise of the
options and the amount of cash, if any, received by such individuals is
dependent on the price of the Company's Common Stock at the time of such
sale.
(2) Value is based on the difference between the option exercise price and the
fair market value at 1996 year-end ($48.25 per share) multiplied by the
number of shares underlying the option.
</TABLE>
Stock Plans. The Company currently maintains three stock ownership plans:
the 1995 Stock Plan, the 1995 Employee Stock Purchase Plan and the 1995
Non-Employee Director Stock Option Plan.
1995 Stock Plan. The 1995 Stock Plan (the "1995 Plan") was adopted by the
Board of Directors of the Company on September 14, 1995 and approved by the
stockholders on November 3, 1995. The 1995 Plan provides for the grant of
incentive stock options to officers and other employees and the grant of
non-qualified stock options, stock awards and authorization to make purchases of
Common Stock to employees, consultants, directors and officers of the Company. A
detailed discussion of the terms of the 1995 Plan is found under the heading
"PROPOSAL TO APPROVE AN AMENDMENT TO THE 1995 STOCK PLAN."
1995 Employee Stock Purchase Plan. The 1995 Employee Stock Purchase Plan
(the "1995 Purchase Plan") was adopted by the Board of Directors of the Company
on September 14, 1995 and was approved by the stockholders on November 3, 1995.
The 1995 Purchase Plan provides for the issuance of a maximum of 300,000 shares
of Common Stock pursuant to the exercise of nontransferable options granted to
participating employees. Presently, 239,952 shares are available for future
issuance under the 1995 Purchase Plan. The 1995 Purchase Plan is intended to
encourage stock ownership by all eligible employees of the Company so that they
may share in the growth of the Company. The 1995 Purchase Plan is designed to
encourage eligible employees to remain in the employ of the Company. It is
intended that options granted pursuant to the 1995 Purchase
11
<PAGE> 16
Plan will constitute options pursuant to an "employee stock purchase plan"
within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
The 1995 Purchase plan is administered by the Stock Option Committee. All
employees of the Company, except employees who immediately after the option was
granted would own five percent or more of the Company's voting stock, whose
customary employment is more than 20 hours per week and for more than five
months in any calendar year are eligible to participate in the 1995 Purchase
Plan. To participate in the 1995 Purchase Plan, an eligible employee must
authorize the Company to deduct an amount (not less than one percent nor more
than ten percent of a participant's total compensation) from his or her total
compensation, including base pay or salary and any bonuses or commissions,
generally during six-month periods from September 1 to the last day of February
and from March 1 to August 31 of each calendar year (each a "Payment Period"),
but in no case shall an employee be entitled to purchase more than 500 shares in
any Payment Period. Any excess is refunded to the employee to the extent the 500
share limit is exceeded. The exercise price for the option for each Payment
Period is 85% of the lesser of the average market price of the Common Stock on
the first or last business day of the Payment Period. If an employee is not a
participant on the last day of the Payment Period, such employee is not entitled
to exercise his or her option, and the amount of his or her accumulated payroll
deductions will be refunded. An employee's rights under the 1995 Purchase Plan
generally terminate upon his or her voluntary withdrawal from the plan at any
time or upon termination of employment. To date, options to purchase 60,048
shares of Common Stock have been exercised pursuant to the 1995 Purchase Plan.
As of September 20, 1996, approximately 530 employees were participating in the
1995 Purchase Plan. Unless terminated sooner, the 1995 Purchase Plan shall
terminate on September 14, 2005.
The 1995 Non-Employee Director Stock Option Plan. The 1995 Non-Employee
Director Stock Option Plan (the "Director Plan") was adopted by the Board of
Directors of the Company on September 14, 1995 and was approved by the
stockholders on November 3, 1995. The Director Plan provides for the grant of
options to purchase a maximum of 300,000 shares of Common Stock to non-employee
directors of the Company. Under the Director Plan, each non-employee director
who was a member of the Board of Directors on the effective date of the
Company's initial public offering received options. In addition, each
non-employee director first elected to the Board of Directors after the
effective date of the Company's initial public offering will receive an option
for 10,000 shares on the date of his or her election. The Director Plan further
provides for an automatic grant of an option to purchase 10,000 shares on the
first business day of July of each year to each non-employee director who has
continuously served for the lesser of (i) the previous full year or (ii) since
the last annual meeting of stockholders at which directors were elected. The
exercise price per share for all options granted under the Director Plan will be
equal to the market price of the Common Stock as of the date of grant. The
options will become exercisable in three equal annual installments beginning on
the first anniversary of the date of grant, subject to specified meeting
attendance requirements.
As of the September 20, 1996, options to purchase an aggregate of 126,500
shares of Common Stock have been granted to the non-employee directors under the
Director Plan.
Federal Income Tax Consequences. THE FOLLOWING DISCUSSION OF UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS GRANTED
UNDER THE 1995 PLAN, THE 1995 PURCHASE PLAN
12
<PAGE> 17
AND THE DIRECTOR PLAN, AND OF CERTAIN OTHER RIGHTS GRANTED UNDER THE 1995 PLAN,
IS BASED UPON THE PROVISIONS OF THE CODE AS IN EFFECT ON THE DATE OF THIS PROXY
STATEMENT, CURRENT REGULATIONS, AND EXISTING ADMINISTRATIVE RULINGS OF THE
INTERNAL REVENUE SERVICE. IT IS NOT INTENDED TO BE A COMPLETE DISCUSSION OF ALL
OF THE FEDERAL INCOME TAX CONSEQUENCES OF THESE PLANS OR OF THE REQUIREMENTS
THAT MUST BE MET IN ORDER TO QUALIFY FOR THE DESCRIBED TAX TREATMENT.
A. Incentive Stock Options (individually, an "ISO," and collectively,
"ISOs"). The following general rules are applicable under current United States
federal income tax law to ISOs granted under the 1995 Plan:
1. In general, an optionee will not recognize any income upon grant of
an ISO or upon the issuance of shares to him or her upon the exercise of an
ISO, and the Company will not be entitled to a federal income tax deduction
upon either the grant or the exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of
within (i) two years from the date the ISO was granted or (ii) one year
from the date the shares are issued to the optionee pursuant to the ISO
exercise (the "Holding Period"), the difference between the amount realized
on any subsequent disposition of the shares and the exercise price will
generally be treated as capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of and the
optionee does not satisfy the Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition, will be taxed to the
optionee as ordinary income in the year of such disposition.
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of shares acquired upon exercise of an ISO, the
Company generally will be entitled to a corresponding federal income tax
deduction.
5. The difference between the amount realized by an optionee as the
result of a Disqualifying Disposition and the sum of (i) the exercise price
and (ii) the amount of ordinary income recognized under the above rules
generally will be treated as capital gain or loss.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's holding
period for the shares exceeds one year.
7. An optionee may be entitled to exercise an ISO be delivering shares
of the Company's Common Stock to the Company in payment of the exercise
price, if the optionee's ISO agreement so provides. If an optionee
exercises an ISO in such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise
of an ISO may result in an "alternative minimum tax." The alternative
minimum tax (at a maximum rate of 28%) will be applied against a taxable
base which is equal to "alternative minimum taxable income," reduced by a
statutory exemption. In general, the amount by which the value of the
shares received upon exercise of the ISO exceeds the exercise price is
included in the optionee's alternative minimum taxable income. A taxpayer
is required to pay the higher of his regular tax liability or the
alternative minimum tax. A taxpayer who
13
<PAGE> 18
pays alternative minimum tax attributable to the exercise of an ISO may be
entitled to a tax credit against his or her regular tax liability in later
years.
9. Special rules apply if the shares acquired upon the exercise of an
ISO are subject to vesting, or are subject to certain restrictions on
resale under federal securities laws applicable to directors, officers or
10% stockholders.
B. Non-Qualified Stock Options. The following general rules are applicable
under current federal income tax law to options granted under the 1995 Plan
which do not qualify as ISOs, and to all options granted under the Director Plan
(individually, a "Non-qualified Option", and collectively, "Non-qualified
Options"):
1. In general, an optionee will not recognize any income upon the
grant of a Non-qualified Option, and the Company will not be entitled to a
federal income tax deduction upon such grant.
2. An optionee generally will recognize ordinary income at the time of
exercise of the Non-qualified Option in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over
the exercise price. The Company may be required to withhold income tax on
this amount.
3. When an optionee sells the shares acquired upon the exercise of a
Non-qualified Option, he or she generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of the shares and his or her basis in the shares (generally, the
exercise price plus the amount taxed to the optionee as ordinary income).
If the optionee's holding period for the shares exceeds one year, such gain
or loss will be long-term capital gain or loss.
4. When an optionee recognizes ordinary income attributable to a
Non-qualified Option, the Company generally will be entitled to a
corresponding federal income tax deduction.
5. An optionee may be entitled to exercise a Non-qualified Option by
delivering shares of the Company's Common Stock to the Company in payment
of the exercise price. If an optionee exercises a Non-qualified Option in
such fashion, special rules will apply.
6. Special rules apply if the shares acquired upon the exercise of a
Non-qualified Option are subject to vesting, or are subject to certain
restrictions on resale under federal securities laws applicable to
directors, officers or 10% stockholders.
C. Stock Awards and Purchases. The following general rules are applicable
under current federal income tax law to Awards and Purchases (each as defined
below) under the 1995 Plan:
Under current federal income tax law, persons receiving Common Stock
under the 1995 Plan pursuant to an award of Common Stock ("Award") or a
grant of an opportunity to purchase Common Stock ("Purchase") generally
will recognize ordinary income equal to the fair market value of the shares
received reduced by any purchase price paid. The Company generally will be
entitled to a corresponding federal income tax deduction. When such shares
are sold, the seller generally will recognize capital gain or loss. Special
rules apply if the shares acquired are subject to vesting, or are subject
to certain restrictions on resale under federal securities laws applicable
to directors, officers or 10% stockholders.
14
<PAGE> 19
D. Options Granted under the 1995 Employee Stock Purchase Plan. The
following general rules are currently applicable under current federal income
tax law to options under the 1995 Purchase Plan:
1. The amounts deducted from an employee's pay under the 1995 Purchase
Plan will be included in the employee's compensation subject to federal
income tax. In general, no additional income will be recognized by the
employee either at the time options are granted pursuant to the 1995
Purchase Plan or at the time the employee purchases shares pursuant to the
1995 Purchase Plan.
2. If the employee disposes of shares purchased pursuant to the Plan
more than two years after the first business day of the Payment Period in
which the employee acquired the shares, then upon such disposition the
employee will recognize ordinary income in an amount equal to the lesser
of:
(a) the excess, if any, of the fair market value of the shares at
the time of disposition over the amount the employee paid for the
shares, or
(b) the excess of the fair market value of the shares on the first
business day of the Payment Period over the option price.
In addition, the employee generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of shares and the employee's tax basis in the shares (generally,
the amount the employee paid for the shares plus the amount, if any, taxed
as ordinary income). If the employee's holding period for the shares is
more than one year, such gain or loss will be long-term capital gain or
loss.
3. If the employee disposes of shares purchased pursuant to the Plan
within two years after the first business day of the Payment Period in
which the employee acquired the shares, then upon disposition the employee
will recognize ordinary income in an amount equal to the excess, if any, of
the fair market value of the shares on the last business day of the Payment
Period over the amount the employee paid for the shares.
In addition, the employee generally will recognize capital gain or
loss in an amount equal to the difference between the amount realized upon
the sale of shares and the employee's tax basis in the shares (generally,
the amount the employee paid for the shares plus the amount, if any, taxed
as ordinary income). If the employee's holding period for the shares is
more than one year, such gain or loss will be long-term capital gain or
loss.
4. If the employee disposes of shares purchased pursuant to the Plan
more than two years after the first business day of the Payment Period, the
Company will not be entitled to any federal income tax deduction with
respect to the options or the shares issued upon their exercise. If the
employee disposes of such shares prior to the expiration of this two-year
holding period, the Company generally will be entitled to a federal income
tax deduction in an amount equal to the amount which is treated as ordinary
income as a result of such disposition.
15
<PAGE> 20
STOCK PERFORMANCE GRAPH
<TABLE>
The Stock Price Performance Graph set forth below compares the cumulative
total stockholder return on the Company's Common Stock from November 22, 1995,
the date of the Company's initial public offering, through June 30, 1996, with
the cumulative total return of the Nasdaq U.S. Stock Index and the Nasdaq Health
Services Index over the same period. The comparison assumes $100 was invested on
November 22, 1995 in the Company's Common Stock, in the Nasdaq U.S. Stock Index
and in the Nasdaq Health Services Index and assumes reinvestment of dividends,
if any.
<CAPTION>
PAREXEL Nasdaq Health
Measurement Period International Nasdaq U.S. Services
(Fiscal Year Covered) Corporation Stock Index Index
<S> <C> <C> <C>
November 22, 1995 100 100 100
June 30, 1996 322 117 125
</TABLE>
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from The Nasdaq Stock Market, a source believed to be reliable, but the
Company is not responsible for any errors or omissions in such information.
16
<PAGE> 21
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
Overview. The Company's executive compensation program is administered by
the Compensation Committee and the Stock Option Committee of the Board of
Directors (the "Compensation Committee" and "Stock Option Committee,"
respectively, and "Committees," collectively). Pursuant to authority delegated
by the Board of Directors, the Compensation Committee establishes each year the
non-equity compensation of senior management, reviews, as appropriate, other
compensation standards of the Company and administers the Company's 401(k)
Savings and Retirement Plan. The Stock Option Committee, pursuant to authority
delegated by the Board of Directors, establishes each year the equity
compensation of senior management, reviews, as appropriate, equity compensation
standards of the Company, and administers the Company's 1986 Incentive Stock
Option Plan, 1987 Stock Plan, 1989 Stock Plan, 1995 Stock Plan, 1995 Purchase
Plan and Director Plan.
The members of the Compensation Committee, who are currently non-employee
directors, bring expertise in matters relating to executive compensation to
their service on the Compensation Committee gained through their experience on
other Boards of Directors of public and private companies. Josef H. von
Rickenbach, President, Chief Executive Officer and Chairman, was a member of the
Compensation Committee until July 1, 1996, when he was replaced by Patrick J.
Fortune, a non-employee director. James L. Currie, a former non-employee
director of the Company, was a member of the Stock Option Committee and
Compensation Committee until his resignation on July 1, 1996.
Procedure for Establishing Compensation. At the beginning of each fiscal
year the Committees establish the annual compensation for the Company's
executive officers based, in part, on recommendations of the Company's Chief
Executive Officer. The Committees review the recommendations, taking into
account the following factors: (i) external market data; (ii) the Company's
performance; (iii) the individual's contribution to the Company's success; and
(iv) the internal equity of compensation levels among executive officers. In
addition, in determining fiscal 1997 compensation levels, the Compensation
Committee and the Stock Option Committee reviewed recommendations from an
independent consulting firm, including a survey of cash compensation and stock
option awards at similarly situated companies.
Tax Considerations. The Company does not believe Section 162(m) of the
Code, which generally disallows a tax deduction for compensation in excess of $1
million to any of the executive officers appearing in the Summary Compensation
Table above, will have an effect on the Company. The Committees have considered
the requirements of Section 162(m) of the Code and the related regulations. It
is the Committees' present intention that, so long as it is consistent with its
overall compensation objectives, substantially all executive compensation will
be deductible for federal income tax purposes.
Elements of Executive Compensation. The Company's compensation policy for
executive officers is designed to achieve the following objectives: (i) to
enhance profitability of the Company and increase stockholder value; (ii) to
reward executives consistent with the Company's annual and long-term performance
goals; (iii) to recognize individual initiative and achievement and (iv) to
provide competitive compensation that will attract and retain qualified
executives. Compensation under the executive compensation program is comprised
of cash compensation in the form of salary and performance-based bonuses,
long-term incentive
17
<PAGE> 22
opportunities in the form of stock options and various benefits, including
medical, savings and insurance plans available to all employees of the Company.
An executive officer's compensation package includes: (i) base salary,
which is based upon the overall performance of the Company and external market
data, (ii) annual performance-based compensation, which is based upon
achievement of pre-determined financial objectives of the Company and individual
objectives, and (iii) long-term incentive compensation, in the form of stock
options, granted with the objective of aligning executive officers' long-term
interests with those of the stockholders and encouraging the achievement of
superior results over an extended period. In addition, the compensation program
is comprised of various benefits, including medical, savings and insurance plans
and the Company's 1995 Purchase Plan, which are generally available to all
employees of the Company.
Base Compensation. Base salaries for executive officers are targeted at
competitive market levels for their respective positions, levels of
responsibility and experience. In setting base cash compensation levels for
executive officers, the Compensation Committee generally takes into account such
factors as: (i) the Company's past financial performance and future
expectations; (ii) the general and industry-specific business environment; (iii)
the individual executive officer's base compensation in the prior year; (iv)
periodic published surveys of base compensation at comparable companies; (v)
corporate and individual performance and (vi) recommendations from an
independent consulting firm. The Compensation Committee's review of the
foregoing factors is subjective and the Compensation Committee assigns no fixed
value or weight to any specific factors when making its decisions regarding the
salary of executive officers.
Performance-Based Compensation. The Company's performance-based
compensation policies are designed to reward executive officers when the Company
meets or exceeds pre-determined goals and are also based on various
non-financial objectives such as ability to recognize and pursue new business
opportunities and initiate programs to enhance the Company's growth and success.
Performance-based cash compensation is generally awarded based on formulas
established by the Compensation Committee at the time salaries are fixed. Bonus
formulas for each executive officer are based on the Company's achieving
specified objectives set forth in the Company's annual operating plan.
In establishing performance bonus formulas for the Company's executive
officers, the Compensation Committee considered: (i) the annual base
compensation of each individual; (ii) individual performance; (iii) the actual
performance of the Company as compared to projected performance under the
Company's annual operating plan; (iv) the projected future performance of the
Company; (v) the general business environment; and (vi) periodically published
surveys of performance compensation at comparable companies. The Compensation
Committee's review of the foregoing factors was subjective and the Compensation
Committee did not assign a fixed value or weight to any specific factors when
making its decisions regarding the salary of executive officers.
Stock Options. Long-term incentive compensation, in the form of stock
options, allows the executive officers to share in any appreciation in the value
of the Company's Common Stock. The Board of Directors believes that stock option
participation aligns executive officers' interests with those of its
stockholders. When establishing stock option grant levels, the Stock Option
Committee considered the existing levels of stock ownership, previous grants of
stock options, vesting schedules of outstanding options, the current stock price
and recommendations from an independent consulting firm. Stock options granted
under the Company's stock
18
<PAGE> 23
plans generally have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. Historically, stock options have
become exercisable over time. However, during fiscal 1996 the Stock Option
Committee began granting options with accelerated exercisability based on
Company performance. These recently granted stock options become exercisable as
follows: (i) 40% over time (10% on each of the first four anniversaries of the
date of grant); (ii) 30% on the fifth anniversary of the date of grant, or
earlier if the Company achieves certain shareholder return levels specified in
the option agreement; and (iii) 30% on the fifth anniversary of the date of
grant, or earlier if the Company achieves certain earnings per share levels
specified in the option agreement.
In awarding stock options, the Stock Option Committee generally reviews:
(i) the overall compensation package of each executive officer; (ii)
periodically published surveys of stock option awards at comparable companies;
(iii) individual performance during the fiscal year in question; (iv) past
financial performance and future expectations; and (v) recommendations from an
independent consulting firm. For new executive officers, the Stock Option
Committee also considers the general and industry-specific business environment
and the expected contribution of the executive officer to the Company over the
short and long term.
In the fiscal year ended June 30, 1996, Mr. von Rickenbach was awarded
non-qualified stock options to purchase 50,000 shares of Common Stock, and other
executive officers of the Company (seven individuals) were awarded non-qualified
stock options to purchase an aggregate of 94,000 shares of Common Stock.
Respectfully submitted by the:
<TABLE>
<S> <C>
Compensation Committee: Stock Option Committee:
A. Dana Callow, Jr. A. Dana Callow, Jr.
James L. Currie James L. Currie
Josef H. von Rickenbach James A. Saalfield
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy whereby all future transactions between
the Company and its officers, directors and affiliates will be on terms no less
favorable to the Company than could be obtained from unrelated third parties and
will be approved by a majority of the disinterested members of the Company's
Board of Directors.
PROPOSAL TO APPROVE AN AMENDMENT TO THE 1995 STOCK PLAN
DESCRIPTION OF THE 1995 STOCK PLAN
The 1995 Plan was adopted by the Board of Directors of the Company on
September 14, 1995 and received shareholder approval on November 3, 1995. It is
currently proposed to increase the number of shares of Common Stock authorized
for issuance pursuant to the 1995 Plan from 500,000 shares to 1,000,000 shares.
The Board of Directors of the Company believe that this increase is important to
permit the Board of
19
<PAGE> 24
Directors to continue to provide incentives to present and future key employees.
Under the 1995 Plan, employees of the Company may be awarded ISOs, as defined in
Section 422(b) of the Code, and directors, officers, employees, and consultants
of the Company may be granted (i) Non-qualified Options; (ii) Awards; and (iii)
Purchases. ISOs, Non-qualified Options, Awards, and Purchases are collectively
referred to as "Stock Rights." ISOs and Non-qualified Options are sometimes
collectively referred to as "Options."
Administration. The 1995 Plan is administered by the Company's Stock
Option Committee (the "Committee"). Subject to the terms of the 1995 Plan, the
Committee has the authority to determine the persons to whom Stock Rights shall
be granted (subject to certain eligibility requirements for grants of ISOs), the
number of shares covered by each such grant, in respect to ISOs, Non-qualified
Options, and Purchases, the exercise of purchase price per share, the time or
times at which Stock Rights shall be granted, and other terms and provisions
governing the Stock Rights, including the nature of such Stock Right as an ISO,
Non-qualified Option, Award, or Purchase, as well as the restrictions, if any,
applicable to shares of Common Stock issuable upon exercise of Stock Rights.
Eligible Employees and Others. Subject to the above-mentioned limitations,
ISOs under the 1995 Plan may be granted to any employee of the Company or any
Related Company (as defined in the 1995 Plan). Officers and directors of the
Company must also be employees of the Company in order to receive ISOs under the
1995 Plan. The aggregate fair market value (determined on the date of grant of
an ISO) of Common Stock for which ISOs granted to any employee are exercisable
for the first time by such employee during any calendar year (under all stock
option plans of the Company and any Related Company) may not exceed $100,000;
any portion of an ISO grant that exceeds the $100,000 limit will be treated as a
Non-qualified Option. Non-qualified Options, Awards, and purchases may be
granted to any director (other than a member of the Committee), officer,
employee, or consultant of the Company or any Related Company. No employee of
the Company or any Related Company may be granted Options to acquire, in the
aggregate, more than 499,000 shares of Common Stock under the Plan.
Shares Subject to the 1995 Plan. The 1995 Plan currently authorizes the
grant of Stock Rights to acquire 500,000 shares of Common Stock. As of September
20, 1996, options to purchase an aggregate of 315,000 shares of Common Stock had
been granted, 1,500 options had been canceled or forfeited and added back into
the shares available for grant, and 186,500 shares of Common Stock remained
available for grant under the 1995 Plan.
Outstanding Stock Rights are subject to adjustment as described hereinafter
under "Changes in Stock; Acquisitions; Recapitalizations and Reorganization."
Pursuant to the terms of the 1995 Plan, shares subject to Stock Rights which for
any reason expire or are terminated unexercised may again be the subject of a
grant under the 1995 Plan.
Granting of Stock Rights. Stock Rights may be granted under the 1995 Plan
at any time prior to September 14, 2005. The Stock Option Committee may, with
the consent of the holder of an ISO, convert an ISO granted under the 1995 Plan
to a Non-qualified Option.
20
<PAGE> 25
Non-qualified Option Price. The exercise price per share of Non-qualified
Options granted under the 1995 Plan shall in no event be less than the minimum
legal consideration required under the laws of the Commonwealth of Massachusetts
or the laws of any jurisdiction in which the Company or its successors in
interest may be organized. Non-Qualified Options granted under the 1995 Plan,
with an exercise price less than fair market value per share of Common Stock on
the date of grant, are intended to qualify as performance-based compensation
under Section 162(m) of the Code and any applicable regulations thereunder. Any
such Non-Qualified Options granted under the 1995 Plan shall be exercisable only
upon the attainment of a pre-established, objective based performance goal
established by the Committee. If the Committee grants Non-Qualified Options with
an exercise price less than fair market value per share of Common Stock on the
date of grant, such grant will be submitted for, and will be contingent upon
shareholder approval.
ISO Price. The exercise price per share of ISOs granted under the 1995
Plan cannot be less than the fair market value of the Common Stock on the date
of grant, or, in the case of ISOs granted to employees holding more than 10% of
the total combined voting power of all classes of stock of the Company or any
Related Company, 110% of the fair market value of the Common Stock on the date
of grant.
Option Duration. The 1995 Plan provides that each Option shall expire on
the date specified by the Board of Directors, but not more than eight years from
its date of grant in the case of Options generally. However, in the case of any
ISO granted to an employee owning more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Company, such ISO
shall expire on the date specified by the Board of Directors, but not more than
five years from its date of grant.
Exercise of Options and Payment for Stock. Each Option granted under the
1995 Plan shall be exercisable as follows:
A. The Option shall either be fully exercisable at the time of grant
or shall become exercisable in such installments as the Committee may
specify.
B. Once an installment becomes exercisable, it shall remain
exercisable until expiration or termination of the option, unless otherwise
specified by the Committee.
C. Each Option may be exercised from time to time, in whole or in
part, up to the total number of shares with respect to which it is then
exercisable.
D. The Board of Directors shall have the right to accelerate the date
of exercise of any installment of any Option (subject to the $100,000 per
year limit on the fair market value of Common Stock subject to ISOs granted
to any employee which may become exercisable in any calendar year).
Exercise of an Option under the 1995 Plan is effected by a written notice
of exercise delivered to the Company at its principal office together with
payment for the shares in full in cash or by check or, if authorized by the
Committee in its discretion, in part or in full by tendering shares of Common
Stock of the Company or a full recourse promissory note. Such written notice
shall also identify the Option being exercised and specify the number of shares
as to which the Option is being exercised.
21
<PAGE> 26
While the use of the stock payment method offers significant advantages to
an optionee, it is subject to certain restrictions. The use of the stock payment
method will result in unfavorable tax treatment to the optionee where the
exchanged shares were acquired under incentive stock option or certain other tax
advantaged plans and the applicable periods for disqualifying dispositions have
not expired. In addition, under accounting principles, a charge against the
Company's income may be necessary for Options exercised by the use of the stock
payment method.
Effect of Termination of Employment, Death, or Disability. If an ISO
optionee ceases to be employed by the Company or any Related Company other than
by reason of death or disability, no further installments of his or her ISOs
will become exercisable, and the ISOs shall terminate after the passage of 60
days from the date of termination of employment (but not later than their
specified expiration dates), except to the extent that such ISOs shall have been
converted into Non-qualified Options. Leave of absence with the written approval
of the Board of Directors shall not constitute an interruption of employment
provided that such approval contractually requires the Company to continue the
employment of the employee after the leave of absence. Employment shall also be
considered as continuing uninterrupted during any other bona fide leave of
absence (including illness, military obligations or governmental service)
provided such leave does not exceed 90 days or, if longer, any period during
which the employees' right to reemployment is guaranteed by statute.
If an optionee dies, any ISO held by the optionee may be exercised, to the
extent exercisable on the date of death, by the optionee's estate, personal
representative or beneficiary who acquires the ISO by will or by the laws of
descent and distribution, at any time within 180 days from the date of the
optionee's death (but not later than the specified expiration date of the ISO).
If an ISO optionee ceases to be employed by the Company by reason of his or her
disability (as defined in Section 22(e)(3) of the Code), the optionee may
exercise any ISO held by him or her on the date of termination of employment, to
the extent exercisable on that date or at any time within 180 days from the date
of termination of employment (but not later than the specified expiration date
of the ISO).
Non-qualified Options are subject to such termination and cancellation
provisions as may be determined by the Committee.
Non-Assignability of Stock Rights. No assignment or transfers of Stock
Rights are permitted, except that Stock Rights may be transferred by will or by
the laws of descent and distribution.
Changes in Stock; Acquisition; Recapitalizations and Reorganizations. In
the event shares of Common Stock of the Company are subdivided or combined into
a greater or smaller number of shares or if the Company issues any shares of
Common Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of Options will be
appropriately increased or decreased proportionately, and appropriate
adjustments will be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
If the Company is to be consolidated with or acquired by another entity in
a merger, sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), the Committee or the Board of Directors of any entity
assuming the obligations of the Company under the 1995 Plan (the "Successor
Board"), shall, as to outstanding Options, either (i) make appropriate provision
for the continuation of such
22
<PAGE> 27
Options by substituting on an equitable basis for the shares then subject to
such Options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition; or (ii) upon written notice to
the optionees, provide that all Options must be exercised, to the extent then
exercisable, within a specified number of days of the date of such notice, at
the end of which period the Options shall terminate; or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the fair market
value of the shares subject to such Options (to the extent then exercisable)
over the exercise price thereof.
In the event of a recapitalization or reorganization of the Company (other
than a transaction described in preceding paragraph) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Option prior to such
recapitalization or reorganization.
Upon the happening of any of the events described in the preceding three
paragraphs, the class and aggregate number of shares reserved for issuance upon
the exercise of Options under the 1995 Plan shall also be appropriately adjusted
to reflect the events described above. Notwithstanding the foregoing, in respect
to ISOs, the adjustments described above shall be made only after the Board of
Directors, in consultation with legal counsel, determines whether such
adjustments would constitute a modification of such ISOs or would cause adverse
tax consequences to the holders of ISOs.
Amendment, Suspension, and Termination of the Plan. The Board of Directors
may terminate or amend the 1995 Plan in any respect at any time, except that,
without the prior approval of the holders of a majority of the outstanding
shares of Common Stock (a) the total number of shares that may be issued under
the 1995 Plan may not be increased except as previously described under "Changes
in Stock; Acquisitions; Recapitalization and Reorganization;" (b) the provisions
regarding eligible employees may not be modified; (c) the provisions regarding
the exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment referred to above); and (d) the expiration date
of the 1995 Plan may not be extended. No action of the Board of Directors or
shareholders, however, may, without the consent of an optionee, alter or impair
his rights under any Option previously granted to him.
Miscellaneous. The proceeds received by the Company from the sale of
shares pursuant to the 1995 Plan shall be used for general corporate purposes.
The Company's obligation to deliver shares is subject to the approval of any
governmental authority required in connection with the sale or issuance of such
shares. The exercise of Non-qualified Options, Awards, or Purchases for less
than fair market value may require the holder to recognize ordinary income and
pay additional withholding taxes in respect of such income, and the Board of
Directors may condition the grant or exercise of an Option, Award, or Purchase
on the payment to the Company of such taxes. An employee is required to notify
the Company in the event that he disposes of stock acquired on the exercise of
an ISO prior to the later of two years from the date of grant or one year from
the date of exercise of the ISO. Unless terminated earlier by the Board of
Directors, the 1995 Plan will expire on September 14, 2005.
23
<PAGE> 28
PROPOSAL TO AMEND THE RESTATED ARTICLES OF ORGANIZATION
By a Board of Directors vote dated August 29, 1996, the Board of Directors
recommended to the stockholders that the Company amend the Company's Restated
Articles of Organization (the "Charter") to increase the number of authorized
shares of Common Stock, par value $.01 per share, from 25,000,000 to 50,000,000
shares. Shares of the Company's Common Stock, including the additional shares
proposed for authorization, do not have preemptive or similar rights.
As of September 20, 1996, there were approximately [8,329,389] shares
issued and outstanding. Assuming the proposal to amend the 1995 Stock Plan is
approved, there will be approximately [1,361,711] shares reserved for future
issuance pursuant to the Company's stock plans. An additional [655,953] shares
are reserved for issuance upon the exercise of options outstanding on September
20, 1996. If the amendment to the Charter is approved, the Board of Directors
will have the authority to issue approximately [39,652,947] additional shares of
Common Stock without further stockholder approval. The Board of Directors
believes that the authorized number of shares of Common Stock should be
increased to provide sufficient shares for such corporate purposes as may be
determined by the Board of Directors to be necessary or desirable. These
purposes may include, without limitation: acquiring other businesses in exchange
for shares of the Company's Common Stock; facilitating broader ownership of the
Company's Common Stock by effecting a stock split or issuing a stock dividend;
raising capital through the sale of Common Stock; and attracting and retaining
valuable employees by the issuance of additional stock options. The Company at
present has no commitments, agreements or undertakings to issue any such
additional shares or stock options. The Board of Directors considers the
authorization of additional shares of Common Stock advisable to ensure prompt
availability of shares for issuance should the occasion arise.
The issuance of additional shares of Common Stock could have the effect of
diluting earnings per share and book value per share, which could adversely
affect the Company's existing stockholders. In addition, the Company's
authorized but unissued shares of Common stock could be used to make a change in
control of the Company more difficult or costly. Issuing additional shares of
Common Stock could have the effect of diluting stock ownership of the persons
seeking to obtain control of the Company. The Company is not aware, however, of
any pending or threatened efforts to obtain control of the Company, and the
Board of Directors has no current intention to use the additional shares of
Common Stock in order to impede a takeover attempt.
The Board of Directors recommends a vote FOR the approval of the amendment
of the Company's Articles of Organization.
RATIFICATION OF SELECTION OF AUDITORS
The Board has selected the firm of Price Waterhouse LLP, independent
certified accountants, to serve as auditors for the year ending June 30, 1997.
Price Waterhouse LLP has served as the Company's auditors since 1992. The Board
recommends a vote FOR ratification of this selection.
24
<PAGE> 29
It is expected that a member of the firm of Price Waterhouse LLP will be
present at the Meeting, will have an opportunity to make a statement if so
desired and will be available to respond to appropriate questions from the
Company's stockholders.
The ratification of this selection is not required under the laws of the
Commonwealth of Massachusetts, where the Company is incorporated, but the
results of this vote will be considered by the Board in selecting auditors for
future fiscal years.
OTHER MATTERS
The Board does not intend to bring any matters before the Meeting other
than those specifically set forth in the Notice of Annual Meeting and it knows
of no matters to be brought before the meeting by others. If any other matters
properly come before the Meeting, it is the intention of the persons named in
the accompanying proxies to vote such proxies in accordance with the judgment of
the Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities Exchange Commission.
Officers, directors and greater-than-ten percent stockholders are required by
SEC regulation to furnish the Company will all Section 16 forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that during the fiscal year ended June 30, 1996 all of its
officers, directors and greater-than-ten-percent stockholders complied with all
Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1997 Annual Meeting of
Stockholders during November 1997. To be included in the Proxy Statement and
form of proxy for the Company's 1997 Annual Meeting of Stockholders, stockholder
proposals must be received by the Company by June 16, 1997. Such stockholder
proposals should be submitted to PAREXEL International Corporation, 195 West
Street, Waltham, Massachusetts 02154, Attention: Clerk.
25
<PAGE> 30
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have Common Stock registered in the
names of a nominee and, if so, will reimburse such banks, brokers and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket costs.
Solicitation by the Company's officers and employees may also be made of some
stockholders in person or by mail, telephone or telegraph following the original
solicitation. The Company may retain a proxy solicitation firm to assist in the
solicitation of proxies. The Company will bear all reasonable solicitation fees
and expenses if such a proxy solicitation firm is retained.
26
<PAGE> 31
Attachment A
------------
PAREXEL INTERNATIONAL CORPORATION
1995 STOCK PLAN
---------------
1. PURPOSE. This 1995 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of PAREXEL International
Corporation (the "Company"), and of any present or future parent or subsidiary
of the Company (collectively, "Related Corporations"), by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" ("ISOs") under Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Options"); (c) to directors, officers, employees and consultants
of the Company and Related Corporations by providing them with awards of stock
in the Company ("Awards"); and (d) to directors, officers, employees and
consultants of the Company and Related Corporations by providing them with
opportunities to make direct purchases of stock in the Company ("Purchases").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." Options, Awards and authorizations to
make Purchases are referred to hereafter collectively as "Stock Rights." As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation," respectively, as those terms are defined in Section
424 of the Code.
2. ADMINISTRATION OF THE PLAN.
--------------------------
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by a committee
appointed by the Board (the "Committee"); provided that the plan shall be
administered: (i) to the extent required by applicable regulations under
Section 162(m) of the Code, by two or more "outside directors" (as defined
in the applicable regulation thereunder), and (ii) to the extent required
by Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or any
successor provision ("Rule 16b-3"), with respect to specific grants of
Stock Rights, the Plan shall be administered by a disinterested
administrator or administrators within the meaning of Rule 16b-3.
Hereinafter, all references in this Plan to the "Committee" shall mean the
Board if no Committee has been appointed. Subject to ratification of the
grant or authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine the employees of the Company and
Related Corporations (from among the class of employees eligible under
paragraph 3 to receive ISOs) to whom ISOs shall be granted, and determine
(from among the class of individuals and entities eligible under paragraph
3 to receive Non-Qualified Options and Awards and to make Purchases) to
whom Non-Qualified Options, Awards and authorizations to make Purchases may
be granted; (ii) determine the time or times at which Options or Awards
shall be granted or Purchases made; (iii) determine the option price of
shares subject to each Option, which price shall not be less than the
minimum price specified in paragraph 6, and the purchase price of shares
subject to each
<PAGE> 32
-2-
Purchase; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 7) the time or
times when each Option shall become exercisable and the duration of the
exercise period; (vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Awards and
Purchases and the nature of such restrictions, if any, and (vii) interpret
the Plan and prescribe and rescind rules and regulations relating to it. If
the Committee determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not
treated as an ISO. The interpretation and construction by the Committee of
any provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from time
to time adopt such rules and regulations for carrying out the Plan as it
may deem best. No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or
any Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. Acts by a majority of the members of the Committee, or acts
reduced to or approved in writing by a majority of the members of the
Committee (if consistent with applicable state law), shall constitute the
valid acts of the Committee. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the
Committee and thereafter directly administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Stock Rights may be granted
to members of the Board consistent with the provisions of the first
sentence of paragraph 2(A) above, if applicable. All grants of Stock Rights
to members of the Board shall in all other respects be made in accordance
with the provisions of this Plan applicable to other eligible persons.
Consistent with the provisions of the first sentence of paragraph 2(A)
above, members of the Board who either (i) are eligible to receive grants
of Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights
may vote on any matters affecting the administration of the Plan or the
grant of any Stock Rights pursuant to the Plan, except that no such member
shall act upon the granting to himself of Stock Rights, but any such member
may be counted in determining the existence of a quorum at any meeting of
the Board during which action is taken with respect to the granting to him
of Stock Rights.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees of
the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant an ISO, a Non-Qualified
Option, an Award or an authorization to make a Purchase. Granting of any Stock
Right to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Stock
Rights.
<PAGE> 33
-3-
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 500,000, subject to adjustment as provided in paragraph
13. If any Stock Right granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject to such Stock
Right shall again be available for grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 499,000 shares of Common Stock
under the Plan. If any Option granted under the Plan shall expire or terminate
for any reason without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part or shall be repurchased by the
Company, the shares subject to such Option shall be included in the
determination of the aggregate number of shares of Common Stock deemed to have
been granted to such employee under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan at
any time on or after September 14, 1995 and prior to September 14, 2005. The
date of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant. Options granted under the Plan are intended to qualify as
performance-based compensation to the extent required under proposed Treasury
Regulation 1.162-27.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
-------------------------------------
A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted
under the Plan shall in no event be less than the minimum legal
consideration required therefor under the laws of the Commonwealth of
Massachusetts or the laws of any jurisdiction in which the Company or its
successors in interest may be organized. Non-Qualified Options granted
under the Plan, with an exercise price less than the fair market value per
share of Common Stock on the date of grant, are intended to qualify as
performance-based compensation under Section 162(m) of the Code and any
applicable regulations thereunder. Any such Non-Qualified Options granted
under the Plan shall be exercisable only upon the attainment of a
pre-established, objective performance goal established by the Committee.
If the Committee grants Non-Qualified Options with an exercise price less
than the fair market value per share of Common Stock on the date of grant,
such grant will be submitted for, and will be contingent upon shareholder
approval.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price
<PAGE> 34
-4-
per share specified in the agreement relating to such ISO shall not be less
than one hundred ten percent (110%) of the fair market value per share of
Common Stock on the date of grant. For purposes of determining stock
ownership under this paragraph, the rules of Section 424(d) of the Code
shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all incentive stock option plans of the
Company and any Related Corporation, ISOs do not become exercisable for the
first time by such employee during any calendar year with respect to stock
having a fair market value (determined at the time the ISOs were granted)
in excess of $100,000. The Company intends to designate any Options granted
in excess of such limitation as Non-Qualified Options.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the last business day for
which the prices or quotes discussed in this sentence are available prior
to the date such Option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the
Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq
National Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
Nasdaq National Market. However, if the Common Stock is not publicly traded
at the time an Option is granted under the Plan, "fair market value" shall
be deemed to be the fair value of the Common Stock as determined by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) eight years from the date of grant in the case
of Options generally and (ii) five years from the date of grant in the case of
ISOs granted to an employee owning stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or any
Related Corporation, as determined under paragraph 6(B). Subject to earlier
termination as provided in paragraphs 9 and 10, the term of each ISO shall be
the term set forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into a Non-Qualified Option
pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
<PAGE> 35
-5-
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided
that the Committee shall not, without the consent of an optionee,
accelerate the exercise date of any installment of any Option granted to
any employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of sixty (60)
days from the date of termination of his employment, but in no event later than
on their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. For purposes of this paragraph 9, employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Committee shall not be considered an interruption of employment under this
paragraph 9, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
-----------------
A. DEATH. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the
laws of descent and distribution, at any time prior to the earlier of the
specified expiration date of the ISO or 180 days from the date of the
optionee's death.
<PAGE> 36
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B. DISABILITY. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have the
right to exercise any ISO held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he
could have exercised it on that date, at any time prior to the earlier of
the specified expiration date of the ISO or 180 days from the date of the
termination of the optionee's employment. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or any successor statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable by
the grantee except by will or by the laws of descent and distribution. During
the lifetime of the grantee each Stock Right shall be exercisable only by him.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"),
the Committee or the board of directors of any entity assuming the
obligations of the Company hereunder (the "Successor Board"), shall, as to
outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable basis for the
shares then subject to such Options the
<PAGE> 37
-7-
consideration payable with respect to the outstanding shares of Common
Stock in connection with the Acquisition; or (ii) upon written notice to
the optionees, provide that all Options must be exercised, to the extent
then exercisable, within a specified number of days of the date of such
notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of
the fair market value of the shares subject to such Options (to the extent
then exercisable) over the exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he would have received if he had exercised his Option prior
to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs or would cause adverse
tax consequences to the holders, it may refrain from making such
adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall
<PAGE> 38
-8-
determine the specific adjustments to be made under this paragraph 13 and,
subject to paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, (b) at the discretion
of the Committee, through delivery of shares of Common Stock owned by the
optionee for at least six months having a fair market value equal as of the date
of the exercise to the cash exercise price of the Stock Right, (c) at the
discretion of the Committee and consistent with applicable law, through the
delivery of an assignment to the Company of a sufficient amount of the proceeds
from the sale of the Common Stock acquired upon exercise of the Stock Right and
an authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be at the participant's direction at the time of
exercise, or (d) at the discretion of the Committee, by any combination of (a),
(b) and (c) above. If the Committee exercises its discretion to permit payment
of the exercise price of an ISO by means of the methods set forth in clauses
(b), (c) or (d) of the preceding sentence, such discretion shall be exercised in
writing at the time of the grant of the ISO in question. The holder of a Stock
Right shall not have the rights of a shareholder with respect to the shares
covered by his Stock Right until the date of issuance of a stock certificate to
him for such shares. Except as expressly provided above in paragraph 13 with
respect to changes in capitalization and stock dividends, no adjustment shall be
made for dividends or similar rights for which the record date is before the
date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
September 14, 1995, subject, with respect to the validation of ISOs granted
under the Plan, to approval of the Plan by the stockholders of the Company at
the next Meeting of Stockholders or, in lieu thereof, by written consent. If the
approval of stockholders is not obtained prior to September 14, 1996, any grants
of ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire at the end of the day on September 13, 2005 (except as to Options
outstanding on that date). Subject to the provisions of paragraph 5 above, Stock
Rights may be granted under the Plan prior to the date of stockholder approval
of the Plan. The Board may terminate or amend the Plan in any respect at any
time, except that, without the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy and voting on such
matter obtained within 12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except by adjustment pursuant
to paragraph 13); (b) the benefits accruing to participants under the Plan may
not be materially increased; (c) the requirements as to eligibility for
participation in the Plan may not be materially modified; (d) the provisions of
paragraph 3 regarding eligibility for grants of ISOs may not be modified; (e)
the provisions of paragraph 6(B) regarding the exercise price at which shares
may be offered pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); (f) the expiration date of the Plan may not be
extended; and (g) the Board may not take any action which would cause the Plan
to fail to comply with Rule 16b-3. Except as otherwise provided in this
paragraph 15, in no event may
<PAGE> 39
-9-
action of the Board or stockholders alter or impair the rights of a grantee,
without his consent, under any Stock Right previously granted to him.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS. The Committee, at the
written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISOs. At the time of such conversion, the Committee (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's ISOs
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Committee takes appropriate action.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after he makes a Disqualifying Disposition (as described in Sections
421, 422 and 424 of the Code and regulations thereunder) of any stock acquired
pursuant to the exercise of ISOs granted under the Plan. A Disqualifying
Disposition is generally any disposition occurring within two years of the date
the ISO was granted or within one year of the date the ISO was exercised,
whichever period ends later.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of a Stock Right hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income. The Committee in its discretion may
condition (i) the exercise of an Option, (ii) the grant of an Award, (iii) the
making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting or transferability of restricted stock or securities acquired
by exercising a Stock Right, on the grantee's making satisfactory arrangement
for such withholding. Such arrangement may include payment by the grantee in
cash or by check of the amount of the withholding taxes or, at the discretion of
the Committee, by the grantee's delivery of previously held shares of Common
Stock held by the Optionee for at least six months or the withholding from the
shares of Common Stock otherwise deliverable upon exercise of a Stock Right
shares having an aggregate fair market value equal to the amount of such
withholding taxes.
<PAGE> 40
-10-
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Stock Rights in connection
with the Plan.
21. GOVERNING LAW; CONSTRUCTION. The validity and construction of the Plan
and the instruments evidencing Stock Rights shall be governed by the laws of the
Commonwealth of Massachusetts, or the laws of any jurisdiction in which the
Company or its successors in interest may be organized. In construing this Plan,
the singular shall include the plural and the masculine gender shall include the
feminine and neuter, unless the context otherwise requires.
<PAGE> 41
PAREXEL INTERNATIONAL CORPORATION
PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 14, 1996
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned Stockholder of PAREXEL International Corporation, a
Massachusetts corporation, revoking all prior proxies, hereby appoints Josef H.
von Rickenbach, William T. Sobo, Jr. and William J. Schnoor, Jr. and each of
them, proxies, with full power of substitution, to vote all shares of Common
Stock of PAREXEL International Corporation which the undersigned is entitled to
vote at the 1996 Annual Meeting of Stockholders of the Company to be held at the
Harvard Club, One Federal Street, Boston, Massachusetts on November 14, 1996 at
3:00 p.m., local time, and at any adjournments thereof, upon matters set forth
in the Notice of Annual Meeting of Stockholders and Proxy Statement dated
October 8, 1996, a copy of which has been received by the undersigned, and in
their discretion upon any other business that may properly come before the
meeting or any adjournments thereof. Attendance of the undersigned at the
meeting or at any adjourned session thereof will not be deemed to revoke this
proxy unless the undersigned shall affirmatively indicate thereat the intention
of the undersigned to vote said shares is person.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE
PROPOSALS IN ITEMS 2, 3 AND 4.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
1. To elect two (2) Class I Directors to serve
for a three year term.
NOMINEES: Patrick J. Fortune
For Withheld
/ / / /
Prof. Dr. med. Werner M. Herrmann
For Withheld
/ / / /
2. To approve a proposal to amend the 1995 Stock For Against Withheld
Plan to increase the number of shares of / / / / / /
Common Stock available for issuance under the
plan from 500,000 shares to 1,000,000 shares.
3. To approve an amendment to the Company's / / / / / /
Restated Articles of Organization increasing
the number of authorized shares of Common
Stock, par value $.01 par share, of the
Company from 25,000,000 shares to 50,000,000
shares.
4. To ratify the selection of Price Waterhouse / / / / / /
LLP as auditors for the fiscal year ending
June 30, 1997.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
THIS PROXY SHOULD BE DATED AND SIGNED BY THE
STOCKHOLDER(S) EXACTLY AS HIS OR HER NAME APPEARS
HEREON AND RETURNED PROMPTLY IN THE ENCLOSED ENVELOPE.
PERSONS SIGNING IN A FIDUCIARY CAPACITY SHALL SO
INDICATE. IF SHARES ARE HELD BY JOINT TENANTS OR AS
COMMUNITY PROPERTY, BOTH SHOULD SIGN.
Signature: Date
----------------------------- ---------
Signature: Date
----------------------------- ---------
