SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
Commission File Number: 0-27058
PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
Massachusetts 04-2776269
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
195 West Street
Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 487-
9900
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As
of November 11, 1998, there were 24,791,879 shares of PAREXEL
International Corporation common stock outstanding.
PAREXEL INTERNATIONAL CORPORATION
INDEX
Page
Part I. Financial Information
Financial Statements (Unaudited):
Item 1
Condensed Consolidated Balance Sheets -
September 30, 1998 and June 30, 1998 3
Condensed Consolidated Statements of
Operations - Three months ended September 4
30, 1998 and 1997
Condensed Consolidated Statements of Cash 5
Flows- Three months ended September 30,
1998 and 1997
Notes to Condensed Consolidated Financial 6
Statements
Management's Discussion and Analysis of
Item 2 Financial Condition and Results of 8
Operations
Quantitative and Qualitative Disclosures
Item 3 about Market Risk 12
Risk
Factors 13
Part Other information
II. 17
Exhibits and Reports on Form 8-K
Item 6 17
Signatu
res 18
Exhibit
Index 19
Part I. Financial Information
Item 1 - Financial Statements
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September June 30,
30, 1998 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 39,884 $39,941
Marketable securities 28,515 37,479
Accounts receivable, net 123,050 109,741
Prepaid expenses 11,223 11,895
Other current assets 10,194 10,674
Total current assets 212,866 209,730
Property and equipment, net 46,313 45,311
Other assets 6,792 6,717
$265,971 $261,758
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Credit arrangements $ 298 $1,413
Accounts payable 10,166 10,923
Advance billings 45,316 45,273
Other current liabilities 31,751 33,184
Total current liabilities 87,531 90,793
Other liabilities 2,831 2,585
Total liabilities 90,362 93,378
Stockholders' equity:
Preferred stock - $0.01 par value; shares -- --
authorized: 5,000,000; none issued and
outstanding
Common stock - $0.01 par value; shares
authorized:
50,000,000 at September 30 and June 30, 1998;
shares issued: 24,790,843 and 24,657,637 at
September 30 and 248 246
June 30, 1998, respectively; shares
outstanding: 24,761,431 and
24,628,225 at September 30 and June 30, 1998,
respectively
Additional paid-in capital 152,091 149,921
Retained earnings and cumulative translation 23,270 18,213
adjustment
Total stockholders' equity 175,609 168,380
$265,971 $261,758
See notes to condensed consolidated financial statements.
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Three months ended
September 30,
1998 1997
Net revenue $82,835 $62,991
Costs and expenses:
Direct costs 53,737 41,309
Selling, general and 17,179 13,222
administrative
Depreciation and 4,242 2,630
amortization
75,158 57,161
Income from operations 7,677 5,830
Other income, net 713 1,158
Income before provision for 8,390 6,988
income taxes
Provision for income taxes 2,885 2,649
Net income $5,505 $4,339
Earnings per common share:
Basic $0.22 $0.18
Diluted $0.22 $0.18
See notes to condensed consolidated financial statements.
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three months ended
September 30,
1998 1997
Cash flows from operating activities:
Net income $ 5,505 $4,339
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,242 2,630
Changes in operating assets and liabilities (12,033) (14,092)
Net cash used in operating activities (4,345) (5,064)
Cash flows from investing activities:
Purchase of marketable securities (18,856) (39,020)
Proceeds from sale of marketable securities 27,820 68,456
Other investing activities (290) -
Purchase of property and equipment (5,029) (6,720)
Net cash provided by investing activities 3,645 22,716
Cash flows from financing activities:
Proceeds from issuance of common stock 2,172 1,431
Repayments on credit arrangements (1,081) (856)
Net cash provided by financing activities 1,091 575
Effect of exchange rate changes on cash and cash (448) (104)
equivalents
Net (decrease) increase in cash and cash (57) 18,123
equivalents
Cash and cash equivalents at beginning of period 39,941 38,592
Cash and cash equivalents at end of period $39,884 $56,715
See notes to condensed consolidated financial statements.
PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of PAREXEL International Corporation (the "Company")
have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions of Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (primarily consisting of normal recurring
adjustments) considered necessary for a fair presentation have
been included. Operating results for the three months ended
September 30, 1998, are not necessarily indicative of the results
that may be expected for other quarters or the entire fiscal
year. The financial statements for the three months ended
September 30, 1997 have been restated to reflect fiscal 1998
acquisitions accounted for under the pooling of interests method.
Certain prior year balances have been reclassified in order to
conform to current year presentation. For further information,
refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1998.
Note 2 - Earnings per Share
Effective December 31, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). Earnings per share amounts for prior periods
presented have been restated to conform to the SFAS 128
requirements. The following table outlines the basic and diluted
earnings per common share computations (in thousands, except per
share data):
Three
months
ended
Septembe
r 30,
1998 1997
Net income attributable to common shares $5,505 $4,339
Basic Earnings Per Common Share
Computation:
Weighted average common shares 24,677 23,638
outstanding
Basic earnings per common share $0.22 $0.18
Diluted Earnings Per Common Share
Computation:
Weighted average common shares
outstanding:
A. Shares attributable to common stock 24,677 23,638
outstanding
B. Shares attributable to common stock 420 992
options
25,097 24,630
Diluted earnings per common share $0.22 $0.18
Note 3 - Comprehensive Income
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income" in the quarter
ended September 30, 1998. SFAS No. 130 establishes new rules for
the reporting and display of comprehensive income and its
components. The adoption of SFAS 130 had no impact on the
Company's net income or stockholders' equity. SFAS No. 130
requires the Company's foreign currency translation adjustments,
which prior to adoption were reported separately in shareholders'
equity, to be included in other comprehensive income. Prior year
financial statements have been reclassified to conform to the
requirements of this Statement. Total comprehensive income,
which was comprised of net income and foreign currency
translation adjustments, was $5.1 million and $4.6 million for
the three months ended September 30, 1998 and 1997, respectively.
Note 4 - New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 131 requires selected information
to be reported on the Company's operating segments. Operating
segments are determined by the way management structures the
segments in making operating decisions and assessing performance.
The Company is currently reviewing what changes, if any, this
will require on the presentation of the financial statements for
fiscal year 1999. The adoption of this statement will not have
an effect on the Company's financial position or results of
operations but may result in additional disclosures.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes new standards for the recognition of gains and losses
on derivative instruments and provides guidance as to whether a
derivative may be accounted for as a hedging instrument. Gains
or losses from hedging transactions may be wholly or partially
recorded in earnings or comprehensive income as part of a
cumulative translation adjustment. Gains or losses on derivative
instruments not classified as hedging instruments are recognized
in earnings in the period of change. SFAS No. 133 will be
effective for the Company beginning in fiscal 2000. The Company
does not believe that adoption of SFAS No. 133 will have a
material impact on its financial position or its results of
operations.
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
The financial information discussed below is derived from the
Condensed Consolidated Financial Statements included herein. The
financial information set forth and discussed below is unaudited
but, in the opinion of management, reflects all adjustments
(primarily consisting of normal recurring adjustments) necessary
for a fair presentation of such information. The Company's
results of operations for a particular quarter may not be
indicative of results expected during subsequent fiscal quarters
or for the entire year.
Overview
The Company is a leading contract research and medical marketing
organization providing a broad range of knowledge-based product
development and product launch services to the worldwide
pharmaceutical, biotechnology and medical device industries. The
Company's primary objective is to help clients quickly obtain the
necessary regulatory approvals of their products and, ultimately,
optimize the market penetration of those products. The Company's
service offerings include: clinical trials management, data
management, biostatistical analysis, medical marketing, clinical
pharmacology, regulatory and medical consulting, performance
improvement, industry training and publishing, and other drug
development consulting services.
The Company's contracts are typically fixed price, multi-year
contracts that require a portion of the fee to be paid at the
time the contract is entered into, with the balance of the fee
paid in installments during the contract's duration. Net revenue
from contracts is generally recognized on a percentage of
completion basis as work is performed.
Most of the Company's contracts are terminable upon 60 to 90
days' notice by the client. Clients terminate or delay contracts
for a variety of reasons, including, among others, the failure of
products being tested to satisfy safety requirements, unexpected
or undesired clinical results of the product, the client's
decision to forego a particular study, insufficient patient
enrollment or investigator recruitment, or production problems
resulting in shortages of the drug.
As is customary in the industry, the Company routinely
subcontracts with third party investigators in connection with
clinical trials and other third party service providers for
laboratory analysis and other specialized services. These and
other reimbursable costs, which vary from contract to contract,
are paid by the client and, in accordance with industry practice,
are included in gross revenue. Reimbursed costs vary from
contract to contract. Accordingly, the Company views net
revenue, which consists of gross revenue less reimbursed costs,
as its primary measure of revenue growth.
Direct costs primarily consist of compensation and related fringe
benefits for project-related employees, other project-related
costs not reimbursed and allocated facilities and information
systems costs. Selling, general and administrative expenses
primarily consist of compensation and related fringe benefits for
selling and administrative employees, professional services and
advertising costs, as well as allocated costs related to
facilities and information systems.
The Company's stock is currently quoted on the Nasdaq-Amex Market
Group under the symbol "PRXL."
Results of Operations
Three Months Ended September 30, 1998 Compared to Three Months
Ended September 30, 1997
Net revenue increased by $19.8 million, or 31.5%, from $63.0
million for the three months ended September 30, 1997 to $82.8
million for the three months ended September 30, 1998. This net
revenue growth was primarily attributable to an increase in the
volume of contract research, marketing and consulting projects
serviced by the Company across all geographic regions. There can
be no assurance that the Company can sustain this rate of
increase in net revenue from continuing operations in future
periods. See "Risk Factors."
Direct costs increased by $12.4 million, or 30.1%, from $41.3
million for the three months ended September 30, 1997 to $53.7
million for the three months ended September 30, 1998. This
increase in direct costs was due to the increase in the number of
project-related personnel, hiring expenses, facilities and
information system costs necessary to support the increased level
of operations. Direct costs as a percentage of net revenue
decreased from 65.6% for the three months ended September 30,
1997 to 64.9% for the three months ended September 30, 1998.
Selling, general and administrative expenses increased by $4.0
million, or 29.9%, from $13.2 million for the three months ended
September 30, 1997 to $17.2 million for the three months
September 30, 1998. This increase was due to increased selling
and administrative personnel, hiring expenses, and facilities
costs necessary to accommodate the Company's growth. As a
percentage of net revenue, selling, general and administrative
expenses decreased from 21.0% for the three months ended
September 30, 1997 to 20.7% for the three months ended September
30, 1998.
Depreciation and amortization expense increased by $1.6 million,
from $2.6 million for the three months ended September 30, 1997
to $4.2 million for the three months ended September 30, 1998.
The increase was due to capital spending on information
technology, facility improvements and furnishings to support the
increased level of operations.
Income from operations increased $1.8 million, or 31.7%, from
$5.8 million for the three months ended September 30, 1997 to
$7.7 million for the three months ended September 30, 1998. This
increase is primarily due to the 31.5% increase in net revenues
noted above. Income from operations as a percentage of net
revenue remained constant at 9.3%.
Other income, net decreased by $0.4 million from $1.1 million for
the three months ended September 30, 1997 to $0.7 million for the
three months ended September 30, 1998. This decrease resulted
from lower interest rates obtained due to a shift to tax-exempt
securities in fiscal 1998, along with lower average balances of
cash, cash equivalents, and marketable securities due primarily
to capital spending and to fund working capital for an increased
level of operations.
The Company had an income tax provision of $2.9 million for the
three months ended September 30, 1998. The effective income tax
rate for the three months ended September 30, 1998, was 34.4%
compared to 37.9% for the three months ended September 30, 1997.
This decrease was due to changes in the mix of taxable income
from the different jurisdictions in which the Company operates
and the impact of tax-exempt interest income from securities held
by the Company.
Liquidity and Capital Resources
Since its inception, the Company has financed its operations and
growth, including acquisition costs, with cash flows from
operations and the proceeds from the sale of equity securities.
Investing activities primarily reflect capital expenditures for
information systems enhancements and leasehold improvements.
The Company's clinical research and development contracts are
generally fixed price, with some variable components, and range
in duration from a few months to several years. The cash flows
from contracts typically consist of a down payment required at
the time the contract is entered into and the balance in
installments over the contract's duration, usually on a milestone
achievement basis. Revenue from the contracts is generally
recognized on a percentage of completion basis as work is
performed. Accordingly, cash receipts do not necessarily
correspond to costs incurred and revenue recognized on contracts.
The Company's operating cash flow is influenced by changes in the
levels of billed and unbilled receivables and advance billings.
These account balances and the number of days revenue outstanding
in accounts receivable, net of advance billings, can vary based
on contractual milestones and the timing and size of cash
receipts. The number of days revenue outstanding in accounts
receivable, net of advance billings, was 65 days at September 30,
1998 compared to 54 days at June 30, 1998. This increase was due
to a $13.3 million increase in accounts receivable, net of the
allowance for doubtful accounts, from $109.7 million at June 30,
1998 to $123.1 million at September 30, 1998, while advance
billings remained constant at $45.3 million at June 30 and
September 30, 1998.
The Company had cash and cash equivalents of $39.9 million at
September 30, 1998 and at June 30, 1998. Net cash used in
operating activities of $4.3 million resulted primarily from net
income excluding depreciation and amortization expense of $9.7
million offset primarily by a $13.3 million increase in accounts
receivable and decreases in payables.
Net cash provided by investing activities of $3.6 million
consisted primarily of net proceeds from sales of marketable
securities of $9.0 million, partially offset by capital
expenditures of $5.0 million related to facility expansions and
investments in information technology.
Financing activities consisted primarily of net proceeds from the
issuance of common stock of $2.2 million, partially offset by the
repayment of credit arrangements of $1.1 million.
The Company has domestic and foreign line of credit arrangements
with banks totaling approximately $15.1 million and a capital
lease line of credit with a U.S. bank for $2.4 million. At
September 30, 1998, the Company had approximately $16.6 million
in available credit under these arrangements.
The Company's primary short-term and long-term cash needs are for
the payment of salaries and fringe benefits, hiring and
recruiting expenses, business development costs, acquisition-
related costs, capital expenditures and facility-related
expenses. The Company believes that its existing capital
resources, together with cash flows from operations and borrowing
capacity under its existing lines of credit, will be sufficient
to meet its foreseeable cash needs. In the future, the Company
will continue to consider acquiring businesses to enhance its
service offerings, therapeutic base, and global presence. Any
such acquisitions may require additional external financing and
the Company may from time to time seek to obtain funds from
public or private issuance of equity or debt securities. There
can be no assurance that such financing will be available on
terms acceptable to the Company.
The foregoing statements include forward-looking statements that
involve risks and uncertainties. Such forward looking statements
include those related to the adequacy of the Company's existing
capital resources and future cash flows from operations as well
as the desire to continue to expand through acquisitions. The
Company's actual experience may differ materially from that
discussed above. Factors that might cause such a difference
include, but are not limited to, the potential loss or delay of
one or more large contracts, the Company's ability to manage
adequately its continued expansion, and future events that have
the effect of reducing the Company's available cash balances,
such as unexpected operating losses, capital expenditures or cash
expenditures related to possible future acquisitions as well as
those discussed in Risk Factors.
Year 2000 Readiness Disclosure Statement
Information systems are an integral part of the services the
Company provides. As such, the Company recognizes that it must
ensure that its service and operations will not be adversely
affected by Year 2000 software and equipment failures (the "Year
2000 Issue"), which can arise from the use of date-dependent
systems that utilize only two digits to represent the year
applicable to a transaction; for example, "98" to represent
"1998" rather than the full four digits. Computer systems
engineered in this manner may not operate properly when the last
two digits of the year become "00", as will occur on January 1,
2000.
The Company has initiated a four-phase program, led by its Chief
Information Officer and a global, cross-functional team, to
assess and remediate the effect of the Year 2000 Issue on the
Company's operations. As part of this program, the Company is
contacting its clients, principal suppliers, and other vendors to
assess whether their Year 2000 Issues, if any, will affect the
Company. This Company-wide effort began in 1997. To date, many
Year 2000 dependencies have already been identified and addressed
through planned systems and infrastructure evolution,
replacement, or elimination. The continuing program described
below is to ensure that the Company identifies and addresses all
remaining Year 2000 systems and dependencies well in advance of
the millennium change.
The first phase of the program, conducting an inventory of all
systems and dependencies that may be affected by the Year 2000
Issue, is substantially complete. The second phase of the
program, the assessment and categorization of all the inventoried
systems and dependencies by level of priority, reflecting their
potential impact on business continuation, is underway. Based on
this prioritization, the third phase will be to develop detailed
plans to address each Year 2000 Issue and a general contingency
plan in the event that any critical systems cannot be made fully
compliant by January 1, 2000.
While the Company has not yet completed its full assessment of
the scope of the Year 2000 Issue facing its systems and
dependencies, based on its analysis to date it does not believe
that the costs to be incurred will be material. However, until
the full analysis is complete, the Company is unable to
definitively determine whether or not future costs will be
material. Furthermore, as noted above, the Company is in the
process of contacting its principal clients, suppliers, and other
vendors concerning the state of their Year 2000 compliance.
Until that effort is completed, the Company cannot be assured
that such third party systems are or will be Year 2000 compliant
and the Company is unable to estimate at this time the impact on
the Company if one or more third party systems is not Year 2000
compliant. For the foregoing reasons, the Company is not able to
definitively determine at this time whether the Year 2000 Issue
will materially affect its future financial results or financial
condition.
Euro Conversion
On January 1, 1999, certain member countries of the European
Union are scheduled to establish fixed conversion rates between
their existing currencies and the European Union's common
currency (Euro).
The transition period for the introduction of the Euro will be
between January 1, 1999 and January 1, 2002. The Company has
established a Euro Initiative Project Team to determine how this
will affect the Company with its business processes,
applications, and internal and external contracts. The project
team has begun the process of determining the many issues
involved with the introduction of the Euro, including the
conversion of information technology systems, recalculating
currency risk, and impacts on the processes for preparing
taxation and accounting records.
While the Company has not yet completed its full assessment of
the scope of the Euro Conversion Issue facing its systems and
dependencies, based on its analysis to date it does not believe
that the costs to be incurred will be material. However, until
the full analysis is complete, the Company is unable to
definitively determine whether or not future costs will be
material.
Item 3 Quantitative and Qualitative Disclosures about Market
Risk
The Company does not invest in market risk sensitive instruments.
RISK FACTORS
In addition to the other information in this report, the
following risk factors should be considered carefully in
evaluating the Company and its business. Information provided by
the Company from time to time may contain certain "forward-
looking" information, as that term is defined by (i) the Private
Securities Litigation Reform Act of 1995 (the "Act") and (ii) in
releases made by the Securities and Exchange Commission (the
"SEC"). These risk factors are being provided pursuant to the
provisions of the Act and with the intention of obtaining the
benefits of the "safe harbor" provisions of the Act.
Loss or Delay of Large Contracts
Most of the Company's contracts are terminable upon 60 to 90
days' notice by the client. Clients terminate or delay contracts
for a variety of reasons, including, among others, the failure of
products being tested to satisfy safety requirements, unexpected
or undesired clinical results of the product, the client's
decision to forego a particular study, such as for economic
reasons, insufficient patient enrollment or investigator
recruitment or production problems resulting in shortages of the
drug. In addition, the Company believes that cost-containment
and competitive pressures have caused pharmaceutical companies to
apply more stringent criteria to the decision to proceed with
clinical trials, and therefore, may result in a greater
willingness of these companies to cancel contracts with contract
research organizations. The loss or delay of a large contract or
the loss or delay of multiple contracts could have a material
adverse effect on the financial performance of the Company.
Variability of Quarterly Operating Results
The Company's quarterly operating results have been subject to
variation, and will continue to be subject to variation,
depending upon factors such as the initiation, progress, or
cancellation of significant projects, exchange rate fluctuations,
the mix of services offered, the opening of new offices and other
internal expansion costs, the costs associated with integrating
acquisitions and the startup costs incurred in connection with
the introduction of new products and services. Because a high
percentage of the Company's operating costs are relatively fixed,
variations in the initiation, completion, delay or loss of
contracts, or in the progress of client projects can cause
material adverse variations in quarterly operating results.
Dependence on Certain Industries and Clients
The Company's revenues are highly dependent on research and
development expenditures by the pharmaceutical and biotechnology
industries. The Company's operations could be materially and
adversely affected by general economic downturns in its clients'
industries, the impact of the current trend toward consolidation
in these industries or any decrease in research and development
expenditures. Furthermore, the Company has benefited to date
from the increasing tendency of pharmaceutical companies to
outsource large clinical research projects. A reversal or
slowing of this trend would have a material adverse effect on the
Company. In fiscal 1998, the Company's top five clients
accounted for 34% of the Company's consolidated net revenue. For
the three months ended September 30, 1998, the Company's top five
clients accounted for 44% of the Company's consolidated net
revenue. In fiscal 1998 one client accounted for 12% of
consolidated net revenue, and for the three months ended
September 30, 1998 a different client accounted for 18% of
consolidated net revenue. The loss of business from a
significant client could have a material adverse effect on the
Company.
Management of Business Expansion
The Company's business and operations have experienced
substantial expansion particularly over the past few years. The
Company believes that such expansion places a strain on
operational, human and financial resources. In order to manage
such expansion, the Company must continue to improve its
operating, administrative and information systems, accurately
predict its future personnel and resource needs to meet client
contract commitments, track the progress of ongoing client
projects and attract and retain qualified management,
professional, scientific and technical operating personnel.
Expansion of foreign operations also may involve the additional
risks of assimilating differences in foreign business practices,
hiring and retaining qualified personnel, and overcoming language
barriers. In the event that the operation of an acquired business
does not meet expectations, the Company may be required to
restructure the acquired business or write-off the value of some
or all of the assets of the acquired business. Failure by the
Company to meet the demands of and to manage expansion of its
business and operations could have a material adverse effect on
the Company's business.
Risks Associated with Acquisitions
The Company has made a number of acquisitions and will continue
to review future acquisition opportunities. Acquisition
candidates may not continue to be available on terms and
conditions acceptable to the Company. Acquisitions involve
numerous risks, including, among other things, difficulties and
expenses incurred in connection with the acquisitions and the
subsequent assimilation of the operations and services or
products of the acquired companies, the diversion of management's
attention from other business concerns and the potential loss of
key employees of the acquired company. Acquisitions of foreign
companies also may involve the additional risks of assimilating
differences in foreign business practices and overcoming language
barriers. In the event that the operations of an acquired
business do not meet expectations, the Company may be required to
restructure the acquired business or write-off the value of some
or all of the assets of the acquired business. The Company may
experience difficulty integrating acquired companies into the
Company's operations.
Dependence on Government Regulation
The Company's business depends on the comprehensive government
regulation of the drug development process. In the United
States, the general trend has been in the direction of continued
or increased regulation, although the FDA recently announced
regulatory changes intended to streamline the approval process
for biotechnology products by applying the same standards as are
in effect for conventional drugs. In Europe, the general trend
has been toward coordination of common standards for clinical
testing of new drugs, leading to changes in the various
requirements currently imposed by each country. Japan also
legislated GCP and legitimatized the use of contract research
organizations in April 1997. Changes in regulation, including a
relaxation in regulatory requirements or the introduction of
simplified drug approval procedures, as well as anticipated
regulation, could materially and adversely affect the demand for
the services offered by the Company. In addition, failure on the
part of the Company to comply with applicable regulations could
result in the termination of ongoing research or the
disqualification of data, either of which could have a material
adverse effect on the Company.
Competition
The Company primarily competes against in-house departments of
pharmaceutical companies, full service CROs, and to a lesser
extent, universities, teaching hospitals and other site
organizations. Some of these competitors have greater capital,
technical and other resources than the Company. CROs generally
compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, the quality
of services, the ability to organize and manage large-scale
trials on a global basis, the ability to manage large and complex
medical databases, the ability to provide statistical and
regulatory services, the ability to recruit investigators and
patients, the ability to integrate information technology with
systems to improve the efficiency of contract research, an
international presence with strategically located facilities,
financial viability and price.
The CRO industry is fragmented, with participants ranging from
several hundred small, limited-service providers to several
large, full-service CROs with global operations. Large CROs
against whom PAREXEL competes include Quintiles Transnational
Corporation, Covance Inc., and Pharmaceutical Product
Development, Inc. The trend toward CRO industry consolidation
has resulted in heightened competition among the larger CROs for
clients and acquisition candidates. In addition, consolidation
within the pharmaceutical industry, as well pharmaceutical
companies outsourcing to a fewer number of preferred CROs, has
led to heightened competition for CRO contracts.
Potential Volatility of Stock Price
The market price of the Company's common stock could be subject
to wide fluctuations in response to quarter-to-quarter variations
in operating results, changes in earnings estimates by analysts,
market conditions in the industry, prospects of health care
reform, changes in government regulation and general economic
conditions. In addition, the stock market has from time to time
experienced significant price and volume fluctuations that have
been unrelated to the operating performance of particular
companies. These market fluctuations may adversely affect the
market price of the Company's common stock. Because the
Company's common stock currently trades at a relatively high
price-earnings multiple, due in part to analysts' expectations of
continued earnings growth, even a relatively small shortfall in
earnings from, or a change in, analysts' expectations may cause
an immediate and substantial decline in the Company's stock
price. Investors in the Company's common stock must be willing
to bear the risk of such fluctuations in earnings and stock
price.
Potential Adverse Impact of Health Care Reform
Numerous governments have undertaken efforts to control growing
health care costs through legislation, regulation and voluntary
agreements with medical care providers and pharmaceutical
companies. In the last few years, several comprehensive health
care reform proposals were introduced in the U.S. Congress. The
intent of the proposals was, generally, to expand health care
coverage for the uninsured and reduce the growth of total health
care expenditures. While none of the proposals were adopted,
health care reform may again be addressed by the U.S. Congress.
Implementation of government health care reform may adversely
affect research and development expenditures by pharmaceutical
and biotechnology companies, resulting in a decrease of the
business opportunities available to the Company. Management is
unable to predict the likelihood of health care reform proposals
being enacted into law or the effect such law would have on the
Company.
Many governments outside the U.S. have also reviewed or
undertaken health care reform. The Company cannot predict the
impact that any pending or future health care reform proposals
may have on the Company's business in other countries.
Dependence on Personnel; Ability to Attract and Retain Personnel
The Company relies on a number of key executives, including Josef
H. von Rickenbach, its President, Chief Executive Officer and
Chairman, upon whom the Company maintains key man life insurance.
Although the Company has entered into agreements containing non-
competition restrictions with its senior officers, the Company
does not have employment agreements with certain of these persons
and the loss of the services of any of the Company's key
executives could have a material adverse effect on the Company.
The Company's performance also depends on its ability to attract
and retain qualified professional, scientific and technical
operating staff. The level of competition among employers for
skilled personnel, particularly those with M.D., Ph.D. or
equivalent degrees, is high. The Company may not be able to
continue to attract and retain qualified staff.
Potential Liability; Possible Insufficiency of Insurance
Clinical research services involve the testing of experimental
drugs on consenting human volunteers pursuant to a study
protocol. Such testing involves a risk of liability for personal
injury or death to patients due to, among other reasons, possible
unforeseen adverse side effects or improper administration of the
new drug by physicians. Many of these patients are already
seriously ill and are at risk of further illness or death. The
Company could be materially and adversely affected if it were
required to pay damages or incur defense costs in connection with
a claim that is outside the scope of an indemnity or insurance
coverage, or if the indemnity, although applicable, is not
performed in accordance with its terms or if the Company's
liability exceeds the amount of applicable insurance. In
addition, such insurance may not continue to be available on
terms acceptable to the Company.
Adverse Effect of Exchange Rate Fluctuations
Approximately 41% and 44% of the Company's net revenue for fiscal
1998 and the three months ended September 30, 1998, respectively,
was derived from the Company's operations outside of North
America. Since the revenue and expenses of the Company's foreign
operations are generally denominated in local currencies,
exchange rate fluctuations between local currencies and the
United States dollar will subject the Company to currency
translation risk with respect to the results of its foreign
operations. To the extent the Company is unable to shift to its
clients the effects of currency fluctuations, these fluctuations
could have a material adverse effect on the Company's results of
operations. The Company does not currently hedge against the
risk of exchange rate fluctuations.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock
The Company's Restated Articles of Organization, as amended, and
Restated By-Laws contain provisions that may make it more
difficult for a third party to acquire, or may discourage a third
party from acquiring, the Company. These provisions could limit
the price that certain investors might be willing to pay in the
future for shares of the Company's common stock. In addition,
shares of the Company's preferred stock may be issued in the
future without further stockholder approval and upon such terms
and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights
of the holders of common stock will be subject to, and may be
adversely affected by, the rights of any holders of preferred
stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate
purposes, could adversely affect the market price of the common
stock and could have the effect of making it more difficult for a
third party to acquire, or discouraging a third party from
acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue any shares of
preferred stock.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
10.1 Employment Agreement dated October 20, 1998
between Josef H. von Rickenbach and the
Company.
10.2 Change-of-control Agreement dated October 20,
1998 between William T. Sobo and the Company.
10.3 Change-of-control Agreement dated October 20,
1998 between James Karis and the Company.
10.4 Change-of-control Agreement dated October 20,
1998 between Barry R. Philpott and the
Company.
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated
August 12, 1998 reporting financial results for the
three months and the fiscal year ended June 30, 1998.
The Company filed a Current Report on Form 8-K dated
October 29, 1998 reporting financial results for the
three months ended September 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on this
12th day of November, 1998.
PAREXEL International Corporation
By: /s/ Josef H. von Rickenbach
Josef H. von Rickenbach
President, Chief Executive Officer and Chairman
By: /s/ William T. Sobo, Jr.
William T. Sobo, Jr.
Senior Vice President, Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
10.1 Employment Agreement dated October 20, 1998
between Josef H. von Rickenbach and the Company.
10.2 Change-of-control Agreement dated October 20, 1998
between William T. Sobo and the Company.
10.3 Change-of-control Agreement dated October 20, 1998
between James Karis and the Company.
10.4 Change-of-control Agreement dated October 20, 1998
between Barry R. Philpott and the Company.
27 Financial Data Schedule
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<NAME> PAREXEL INTERNATIONAL CORPORATION
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1998
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 39,884 0
<SECURITIES> 28,515 0
<RECEIVABLES> 127,533 0
<ALLOWANCES> (4,483) 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 212,866 0
<PP&E> 83,370 0
<DEPRECIATION> (37,057) 0
<TOTAL-ASSETS> 265,971 0
<CURRENT-LIABILITIES> 87,531 0
<BONDS> 0 0
0 0
0 0
<COMMON> 248 0
<OTHER-SE> 175,361 0
<TOTAL-LIABILITY-AND-EQUITY> 265,971 0
<SALES> 0 0
<TOTAL-REVENUES> 82,835 62,991
<CGS> 0 0
<TOTAL-COSTS> 53,737 41,309
<OTHER-EXPENSES> 20,708 14,694
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 8,390 6,998
<INCOME-TAX> 2,885 2,649
<INCOME-CONTINUING> 0 0
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</TABLE>
EXHIBIT 10.1
Employment Agreement
Agreement dated this 20th day of October, 1998 between
PAREXEL International Corporation, a Massachusetts corporation
having its principal place of business in Waltham, Massachusetts
(the "Company"), and Josef H. von Rickenbach residing in
Lexington, Massachusetts (the "Employee").
WITNESSETH:
WHEREAS, the Company considers the establishment and
maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its stockholders; and
WHEREAS, on the date of this agreement Employee is the
President, Chief Executive Officer and Chairman of the Board of
Directors of the Company and has developed an intimate and
thorough knowledge of the Company's business methods and
operations; and
WHEREAS, the retention of Employee's services, for and on
behalf of the Company, is materially important to the
preservation and enhancement of the value of the Company's
business; and
WHEREAS, the Company is desirous of formalizing Employee's
employment upon the terms and conditions contained herein; and
Employee is desirous of continuing to be employed by the Company
in accordance with such terms and conditions,
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties
hereto do hereby agree as follows:
1. Employment. The Company hereby agrees to employ
Employee, and Employee agrees to be employed by the Company in
accordance with and pursuant to the terms and conditions set
forth below.
2. Term of Employment. This Agreement shall be for an
initial term of three (3) years. Upon the first anniversary
hereof (and upon each successive anniversary thereafter), this
Agreement shall be automatically renewed for a three (3) year
term commencing on the date of such renewal (i.e. each such
renewal term will extend the term in effect immediately prior to
such renewal by one year), unless either party hereto notifies
the other in writing of its intent not to renew this Agreement
upon not less than ninety (90) days notice prior to the renewal
date hereof. In the event either party gives the other proper
notice of non-renewal, then this Agreement shall only continue
for the balance of the then existing term. Notwithstanding
anything contained herein to the contrary, any term of employment
may be earlier terminated as provided in Section 8 hereof.
3. Position and Responsibilities
(a) Employee will occupy the position of President and
Chief Executive Officer of the Company.
(b) Employee will report directly to the Board of
Directors and shall have such duties and responsibilities as are
set forth in the By-Laws of the Company, which duties and
responsibilities shall include, but not be limited to, overall
management responsibilities for the operation and administration
of the Company as well as such other duties and responsibilities,
consistent with Employee's position as President and Chief
Executive Officer, as shall be defined by the Board of Directors.
(c) Employee will be expected to be in the full-time
employment of the Company, to devote substantially all of his
business time and attention, and exert his best efforts to the
performance of his duties hereunder, and to serve the Company
diligently and to the best of his ability; provided, however,
nothing set forth herein shall prohibit Employee from (i) serving
as a member of the board of directors of an unaffiliated company
(including, without limitation, not-for-profit entities) not in
competition with the Company subject, however, in each such case
of board membership, to prior approval of the Board of Directors
of the Company and (ii) engaging in charitable and community
activities to the extent that such activities do not, either
individually or in the aggregate, impair the ability of Employee
to perform his duties and obligations under this Agreement;
provided, further, that Employee shall promptly notify the Board
of Directors of any such outside activities and in the event the
Board of Directors reasonably determines that any such activity
or activities materially interfere with the ability of Employee
to perform his duties and obligations as President and Chief
Executive Officer of the Company, Employee agrees to promptly
cease such outside activity or activities.
4. Compensation. The Company shall pay to Employee a
salary (the "base salary") at a monthly rate of twenty nine
thousand one hundred sixty seven dollars ($29,167), subject to
deductions for social security, payroll withholding and all other
legally required or authorized deductions and withholdings.
Employee's salary shall be payable at the same time and on the
same basis as the Company pays its executive employees in
general. The Board of Directors or the Compensation Committee
thereof shall review Employee's base salary no less frequently
than annually. In no event shall Employee's base salary be
decreased during his period of employment.
5. Annual Incentive Payments. In addition to the base
salary referenced in Section 4, Employee shall be entitled to
annual (i.e. fiscal year) bonuses ("incentive payments") if he
satisfies agreed upon goals/objectives to be established by the
Board of Directors or Compensation Committee at its sole and
absolute discretion in consultation with Employee on an annual
basis, with the goals/objectives for any fiscal year to be
established by the end of the first quarter of such fiscal year.
The amount of such bonuses, if any, shall be determined by the
Board of Directors or Compensation Committee. In no event shall
Employee's target bonus opportunity for any fiscal year be less
than the amount, if any, by which $560,000 exceeds Employee's
base salary for such fiscal year.
6. Stock Options and Other Long Term Incentive Programs.
Employee shall continue to be entitled to receive stock options
pursuant to the Company's Amended and Restated 1995 Stock Plan
(or any successor plan or additional plans the Company may adopt
in the future), including in each case any amendments thereto.
The number of shares covered by any such option grants, the
exercise price per share and other terms and conditions governing
such options shall be determined by the Stock Option Committee,
subject however to the terms of such 1995 Plan and any other
applicable option plan, each as amended from time to time, and,
to the extent applicable, the provisions of this Agreement. The
Stock Option Committee is not under any obligation, express or
implied, to make any option grants, and any such grants will be
made by the Stock Option Committee acting in its sole discretion.
In addition, Employee shall also be eligible to participate in
any other long term incentive program covering executive
employees generally. To the extent permitted by law and the
governing provisions of the plan documents, in the event of a
termination, Employee shall have the authority to direct the
payment by the Company of any lump sum amounts received pursuant
to any long term incentive or pension program into a tax-free
rollover, if applicable.
7. Benefits; Expenses; Vacations.
(a) Employee shall be entitled to receive the same
standard employee benefits, perquisites and services as other
executive employees of the Company receive generally. Employee
shall also be entitled to fully participate in all of the
Company's future employee benefit programs, perquisites and
services in accordance with their then existing terms.
(b) Employee shall be entitled to reimbursement for
all approved and reasonable travel and other business expenses
incurred by him in connection with his services to the Company
pursuant to the terms of this Agreement. All business expenses
for which Employee seeks reimbursement from the Company shall be
adequately documented by Employee in accordance with the
Company's procedures covering expense reimbursement, and in
compliance with regulations of the U.S. Internal Revenue Service.
(c) Employee shall be entitled to vacation days in
accordance with the Company's employment policies and practices
applicable to executive employees of the Company generally, as
such policies and practices are from time to time in effect.
8. Employment Termination. The employment of Employee
pursuant to this Agreement shall terminate upon the occurrence of
any of the following:
(a) Expiration of the employment term set forth in
Section 2.
(b) For Cause (as defined in Section 10) upon written
notice by the Company to the Employee.
(c) Death or thirty (30) days after the disability (as
defined in Section 10) of Employee.
(d) At the election of either the Company
without Cause (as defined below) or Employee without Good Reason
(as defined below), upon not less than sixty (60) days prior
written notice of termination.
(e) At the election of Employee for Good Reason (as
defined in Section 10), upon not less than thirty (30) days prior
written notice of termination, which written notice must be given
by Employee within ninety (90) days after the occurrence of such
Good Reason.
9. Effect of Termination.
(a) Termination at the Expiration of the Employment
Term. In the event Employee has a termination from employment
pursuant to Section 8(a), the Company shall pay him within thirty
(30) days of the last day of the term of this Agreement, a lump
sum payment equal to any base salary (less applicable
deductions), incentive payments and benefits, perquisites and
services earned by Employee or otherwise payable to him through
the last day of the term of this Agreement pursuant to Section 2,
but not yet paid to Employee.
In the event of termination pursuant to Section 8(a)
where Employee has given a notice of non-renewal in accordance
with Section 2: all (i) vested stock options shall remain
exercisable in accordance with their terms and (ii) non-vested
stock options shall be canceled in accordance with their terms;
and all (i) unvested portions of any other long term incentive
programs referenced in Section 6 shall be canceled and (ii)
vested portions of any other long term incentive programs
referenced in Section 6 shall be paid to Employee in accordance
with their terms.
In all other events of termination pursuant to Section
8(a): all previously granted, but unexercised stock options which
are outstanding on Employee's date of termination shall remain
(or shall become) fully vested and exercisable as of such date,
and shall be exercisable in accordance with their terms;
provided, however, that any such acceleration of exercisability
shall not extend the period after a termination of employment
within which any option may be exercised by Employee in
accordance with the provisions of the relevant option agreement
and option plan. In addition, any amounts or awards to which
Employee may be entitled under any other long term incentive
program referenced in Section 6 (whether or not vested) shall be
paid to Employee in a lump-sum within thirty (30) days of his
termination.
(b) Termination for Cause or at Election of Employee.
In the event Employee's employment is terminated by the Company
for Cause pursuant to Section 8(b), or at the election of the
Employee pursuant to Section 8(d), the Company shall pay Employee
within thirty (30) days of his termination a lump sum equal to
any base salary (less applicable deductions), incentive payment
and benefits, perquisites and services earned by Employee or
otherwise payable to him through the last day of his actual
employment by the Company, but not yet paid to Employee.
All (i) vested stock options shall remain exercisable
in accordance with their terms and (ii) non-vested stock options
shall be canceled in accordance with their terms. All (i)
unvested portions of any other long term incentive programs
referenced in Section 6 shall be canceled and (ii) vested
portions of any other long term incentive programs referenced in
Section 6 shall be paid to Employee in accordance with its terms.
(c) Termination at the Election of the Company Without
Cause or at the Election of Employee for Good Reason, Other than
in Connection with a Change of Control. In the event that
Employee's employment is terminated at the election of the
Company without Cause pursuant to Section 8(d), or at the
election of the Employee for Good Reason pursuant to Section
8(e), in each case other than in circumstances covered by Section
9(d) below, the Company shall continue to pay Employee his then
base salary (less applicable deductions), incentive payments and
benefits, perquisites and services otherwise payable to him
through the last day of the term of this Agreement pursuant to
Section 2. The incentive payments referred to in the preceding
sentence for each year of the balance of this Agreement (or
portion thereof) shall be equal to the greater of Employee's
target incentive award for the year of his termination, or his
actual incentive payment for the immediately preceding year.
All previously granted, but unexercised stock options
which are outstanding on Employee's date of termination shall
remain (or shall become) fully vested and exercisable as of such
date, and shall be exercisable in accordance with their terms;
provided, however, that any such acceleration of exercisability
shall not extend the period after a termination of employment
within which any option may be exercised by Employee in
accordance with the provisions of the relevant option agreement
and option plan. In addition, any amounts or awards to which
Employee may be entitled under any other long term incentive
program referenced in Section 6 (whether or not vested) shall be
paid to Employee in a lump-sum within thirty (30) days of his
termination.
(d) Termination at the Election of the Company Without
Cause or at the Election of Employee for Good Reason, in
Connection with a Change of Control. In the event that, during
the period beginning twelve (12) months prior to a Change of
Control (as defined in Section 10) and subsequent to the
commencement of substantive discussions that ultimately result in
the Change of Control and ending eighteen (18) months following
such Change of Control, Employee's employment is terminated at
the election of the Company without Cause pursuant to Section
8(d), or at the election of the Employee for Good Reason pursuant
to Section 8(e) (provided that any such termination by Employee
must occur promptly (and in any event within ninety (90) days)
after the occurrence of the event or events constituting Good
Reason), the Company shall pay Employee within thirty (30) days
following the Change of Control (if Employee's employment was
terminated on or prior to the Change of Control) or within thirty
days following the date Employee's employment is terminated (if
such employment is terminated after the Change of Control):
(i) if Employee's employment was terminated on or
prior to the Change of Control, a lump-sum equal to the
amount of base salary (less applicable deductions),
incentive payments and benefits, perquisites and services
that would have been payable to Employee had he remained an
employee of the Company through the date of the Change of
Control; and
(ii) a lump-sum equal to the amount of base salary
(less applicable deductions), incentive payments and
benefits, perquisites and services otherwise payable to him
through the last day of the term of this Agreement pursuant
to Section 2 (with incentive payments for each year of the
balance of this Agreement (or portion thereof) being equal
to the greater of Employee's target incentive award for the
year of his termination, or his actual incentive payment for
the immediately preceding year); and
(iii) All previously granted, but unexercised
stock options which are outstanding on Employee's date of
termination shall remain (or shall become) fully vested and
exercisable as of such date, and shall be exercisable in
accordance with their terms; provided, however, that: (1)
any acceleration of exercisability shall not occur to the
extent that: (I) the Change of Control is intended to be
accounted for as a pooling of interests, and (II) the
Company concludes, after consulting with its independent
accountants, that such acceleration would prevent the Change
of Control transaction from being accounted for as a pooling
of interests for financial accounting purposes; (2) any such
acceleration of exercisability shall not occur as to any
option if the Change of Control does not occur within the
period within which Employee may exercise such option after
a termination of employment in accordance with the
provisions of the relevant option agreement and option plan
and (3) any such acceleration of exercisability shall not
extend the period after a termination of employment within
which any option may be exercised by Employee in accordance
with the provisions of the relevant option agreement and
option plan. In addition, any amounts or awards to which
Employee may be entitled under any other long term incentive
program referenced in Section 6 (whether or not vested)
shall be paid to Employee in a lump-sum within thirty (30)
days of his termination.
In addition, upon the request of Employee, the Company
shall provide outplacement services through one (1) or more
outside firms of Employee's choosing up to an aggregate amount of
thirty-five thousand dollars ($35,000), with such services to
extend until the earlier of: (i) twelve (12) months following
the termination of Employee's employment or (ii) the date
Employee secures full time employment.
Any amounts or benefits payable to Employee under this
Section 9(d) shall be in lieu of, and not in addition to any
other amounts or benefits under this Agreement which might
otherwise have been or be payable to Employee. In that regard,
any amounts and benefits set forth in this Section 9(d) shall be,
as applicable, eliminated or reduced by any and all other
severance or other amounts or benefits paid or payable to
Employee as a result of the termination
of his employment, including any amounts that were paid
to Employee pursuant to Section 9(c) if Employee's employment was
terminated prior to a Change of Control that was later determined
to give rise to benefits pursuant to this Section 9(d).
(e) Termination for Death or Disability. In the event
Employee's employment is terminated by death or disability
pursuant to Section 8(c), the Company shall pay to the estate of
Employee, or to Employee, as the case may be, within thirty (30)
days of Employee's death, or disability a lump-sum equal to his
then base salary, incentive payments and benefits, perquisites
and services otherwise payable to him through the last day of the
term of this Agreement pursuant to Section 2, or such other
period as may be required by law; provided, however, any amounts
payable as a result of Employee's disability shall be reduced by
any Company provided long term disability payments received by
him. The incentive payments referred to in the preceding
sentence for each year of the balance of this Agreement (or
portion thereof) shall be equal to the greater of Employee's
target incentive amount for the year of his death or disability,
or his actual incentive payment for the immediately preceding
year.
All previously granted, but unexercised stock options
which are outstanding on Employee's date of termination shall
remain (or shall become) fully vested and exercisable as of the
date of his death or disability and shall be exercisable in
accordance with their terms. In addition, any amounts or awards
to which Employee may be entitled under any other long term
incentive program referenced in Section 6 as a result of
Employee's death or disability, shall be paid to the estate of
Employee, or to Employee, as the case may be, in a lump-sum
within thirty (30) days of Employee's death, or sixty (60) days
after termination for disability.
10. Certain Definitions.
(a) "Change of Control" Definition. For purposes of
this Agreement, "Change of Control" shall mean the closing of:
(i) a merger, consolidation, liquidation or
reorganization of the Company into or with another Company
or other legal person, after which merger, consolidation,
liquidation or reorganization the capital stock of the
Company outstanding prior to consummation of the transaction
is not converted into or exchanged for or does not represent
more than 50% of the aggregate voting power of the surviving
or resulting entity;
(ii) the direct or indirect acquisition by any
person (as the term person is used in Section 13(d) (3) or
14(d) (2) of the Securities Exchange Act of 1934, as
amended) of more than 50% of the voting capital stock of the
Company, in a single or series of related transactions, or
(iii) the sale, exchange, or transfer of all
or substantially all of the Company's assets (other than a
sale, exchange or transfer to one or more entities where the
stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at
least a majority of the beneficial interest in the voting
stock of the entities to which the assets were transferred).
(b) "Good Reason" Definition. For purposes of this
Agreement, Good Reason shall mean (i) the assignment to Employee
of any duties inconsistent in any adverse, material respect with
his position, authority, duties or responsibilities as President
and Chief Executive Officer of the Company, or any other action
by the Company which results in a material diminution in such
position, authority, duties or responsibilities, (ii) a material
reduction in the aggregate of Employee's base or incentive
compensation or the termination of Employee's rights to any
employee benefits, except to the extent that any such benefit is
replaced with a comparable benefit, or a reduction in scope or
value thereof, other than as a result of across-the-board
reductions or terminations affecting officers of the Company
generally, (iii) a relocation of Employee's place of business to
a new location more than 40 (forty) miles distant from the
Employee's prior place of business, provided, however, that
travel consistent with past practices for business purposes shall
not be considered "relocation" for purposes of this clause (iii),
or (iv) prior to a Change in Control the failure by the Company
to effect the nomination of Employee for election to the
Company's Board of Directors upon the expiration of Employee's
then-current term as a director.
(c) "Cause" Definition. For the purposes of this
Agreement, "Cause" shall mean: (i) any material breach by
Employee of this Agreement or a refusal by Employee to comply in
all material respects with a directive(s) reasonably assigned by
the Company's Board of Directors; (ii) the commission by Employee
of a felony, either in connection with the performance of his
obligations to the Company or which adversely affects Employee's
ability to perform such obligations; (iii) gross negligence,
breach of fiduciary duty or breach of any confidentiality, non-
competition or developments agreement in favor of the Company; or
(iv) the commission by Employee of an act of fraud or
embezzlement or other acts which result in loss, damage or injury
to the Company, whether directly or indirectly. Any notice of
termination of employment for cause shall set forth in reasonable
detail the facts and circumstances claimed to provide the basis
for such termination under the provisions contained herein and
the date of termination ("Termination Date"). With respect to
termination pursuant to subsection (i) and (iii) hereof, Employee
shall be given the opportunity to cease or correct the
performance (or nonperformance) giving rise to such notice within
a reasonable period of time from receipt of notice, but in no
event to exceed twenty (20) days; and, in the judgment of the
Board of Directors, upon failure of Employee to cease or correct
such performance (or nonperformance) within such twenty (20) day
period, Employee's employment shall automatically terminate.
(d) "Disability" Definition. For purposes of this
Agreement, the term "disability" shall mean the inability of
Employee due to a physical or mental disability, for a period of
ninety (90) days (whether or not consecutive) during any three
hundred sixty five (365) day period to perform the services
contemplated under this Agreement. A determination of disability
shall be made by a physician satisfactory to both Employee and
the Company; provided, however, if Employee and the Company do
not agree on a physician, Employee and the Company shall each
select a physician and these two together shall select a third
physician, and such third physician's determination as to
disability shall be binding on all parties.
11. Gross-up Provision.
(a) Notwithstanding any provision of this Agreement,
or any other agreement, plan or arrangement to the contrary, if
any portion of the Contingent Payments made or to be made to the
Employee would result in the imposition of an Excise Tax, then :
(i) if the After-Tax Proceeds With Gross-Up
exceed the After-Tax Proceeds With Cut-Back, the Company
shall pay to Employee an amount in cash equal to the Gross-
Up Amount; or
(ii) if the After-Tax Proceeds With Cut-Back
exceed the After-Tax Proceeds With Gross-Up, Employee shall
not be paid the Gross-Up Amount and the aggregate amount of
all payments to which Employee is entitled under this
Agreement and all other agreements, plans and arrangements
shall be reduced to the minimum extent necessary so that the
aggregate present value of such payments equals no more than
299% of Employee's Base Amount.
(b) All determinations required under this Section 11
shall be made by the Company's independent accountants, after due
consideration of Employee's comments with respect to the
interpretation hereof, and all such determinations shall be
conclusive, final and binding on the parties hereto, subject to a
Final Determination.
(c) For purposes of this Section 11:
"After-Tax Proceeds With Cut-Back" shall mean the fair
market value of all Contingent Payments to Employee reduced to
the minimum extent necessary so that the aggregate present value
of such payments equals 299% of the Employee's Base Amount, and
reduced further by the aggregate amount of all Taxes which would
be imposed on Employee with respect to such Contingent Payments.
The amount of Taxes deemed imposed with respect to such
Contingent Payments shall be determined as if all events that
could give rise to a Tax with respect to such Contingent Payments
had occurred.
"After-Tax Proceeds With Gross-Up" shall mean the fair
market value of all Contingent Payments to the Employee plus the
Gross-Up Amount, reduced by the aggregate amount of all Taxes
which would be imposed on Employee with respect to such
Contingent Payments. The amount of Taxes deemed imposed with
respect to such Contingent Payments shall be determined as if all
events that could give rise to a Tax with respect to such
Contingent Payments had occurred.
"Base Amount" shall have the meaning set forth in
Section 280G(b)(3) of the Code and Proposed Treasury Regulation
Section 1.280G-1, Q/A34, or any successor provisions of law.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor provision of law.
"Contingent Payments" shall mean all payments in the
nature of compensation payable to (or for the benefit of)
Employee which would otherwise be treated as "excess parachute
payments" (within the meaning of Section 280G(b)(1) of the Code)
determined as if the thresholds set forth in Section
280G(b)(2)(A)(ii) of the Code were satisfied with respect to
Employee.
"Change in Control" shall mean a change in the
ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company, in each
case determined in accordance with the provisions of Section
280G(b)(2)(A) and the Proposed Treasury Regulations promulgated
thereunder.
"Excise Tax" shall mean any Tax imposed upon Employee
pursuant to Section 4999 of the Code.
"Final Determination" shall mean any final
determination of liability that, under applicable law, is not
subject to further appeal, review or modification through
proceedings or otherwise, including but not limited to the
expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse
determinations.
"Gross-Up Amount" shall mean the lesser of (i) $500,000
and (ii) the quotient equal to (A) the aggregate excise taxes
which would be imposed on Employee under Section 4999 of the Code
in connection with a Change in Control of the Company, determined
without regard to the provisions of this Section 11, divided by
(B) one minus the highest marginal income and excise Tax rate
applicable to Employee for the calendar year in which occurred
the Change in Control, determined as if all Contingent Payments
were paid without regard to the provisions of this Section 11.
"Taxes" shall mean all federal, state and local income,
employment and excise taxes (including Excise Taxes) imposed by
any governmental authority.
12. Employee's Obligations. Nothing herein shall affect
Employee's obligations under any key employee, non-competition,
confidentiality, option or similar agreement between the Company
and Employee currently in effect or which may be entered into in
the future. Notwithstanding the foregoing, the Company and
Employee hereby agree that the duration of Employee's obligations
pursuant to Section 3.2 of the Key Employee Confidentiality and
Invention Agreement dated as of July 31, 1986 by and between the
Company and Employee ("Key Employee Agreement") is hereby
extended so that, in the event of termination of Employee's
employment in the circumstances contemplated by Sections 9(c) or
9(d) above, Employee's obligations under Section 3.2 of the Key
Employee Agreement shall remain in effect until the last day of
the term of this Agreement but for such termination of
employment.
13. Waivers. This Agreement may be modified, and the
rights and remedies of any provision hereof may be waived, only
in writing, signed by both the Company and Employee. No waiver
by either party of any breach by the other or any provision
hereof shall be deemed to be a waiver of any later or other
breach hereof, or as a waiver of any other provision of this
Agreement.
14. Governing Law; Waivers; Severability. This Agreement
shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts. The provisions of this
Agreement may be amended, waived or rescinded only upon the
written agreement of the Company and Employee. The invalidity or
unenforceability of any provision of this Agreement shall not
affect the other provisions of this Agreement and this Agreement
shall be construed and reformed to the fullest extent possible.
15. Termination of All Prior Agreements; Entire Agreement.
Upon execution of this Agreement, all prior employment agreements
shall be terminated and of no further force or effect, except for
the Key Employee Agreement, which shall continue in full force
and effect in accordance with its terms. This Agreement, the
relevant option agreements relating to the options that have been
or may be granted to Employee, and the Key Employee Agreement
constitute the entire agreement and understanding between the
Company and Employee with respect to the subject matter hereof
and supersede any other prior agreements or understandings
whether oral or written.
16. Expenses. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorney's fees
and expenses incurred by Employee (i) in connection with
Employee's review and execution of this Agreement; and (ii) to
enforce his rights under this Agreement, solely in the event that
the Company is found by a court of competent jurisdiction, an
arbitrator or through a mutual settlement agreement to have
failed to perform any of its obligations under this Agreement.
17. Liquidated Damages. The parties hereto expressly agree
that the payments by the Company to Employee in accordance with
the terms of this Agreement will be liquidated damages, and that
Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings
or other benefits from any source whatsoever create any
mitigation offset, reduction, or any other obligation on the part
of Employee.
18. Agreement Binding; Assignment. Except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the Company, and any successor (whether
directly or indirectly, by purchase, merger, consolidation,
reorganization or otherwise) of the Company; provided, however,
that as a condition of closing a transaction which results in a
Change of Control, the Company shall obtain the written agreement
of any successor (whether directly or indirectly, by purchase,
merger, consolidation, reorganization or otherwise) of the
Company to be bound by the provisions of this Agreement as if
such successor were the Company and for purposes of this
Agreement, any such successor of the Company shall be deemed the
"Company" for all purposes. Employee may not assign any of his
rights or obligations under this Agreement; the rights and
obligations of the Company under this Agreement shall inure to
the benefit of, and shall be binding upon, the successors and
assigns of the Company.
19. Notices. Any notice required or permitted to be given
pursuant to this Agreement shall be in writing, and sent to the
party for whom (or which) it is intended at the address of such
parties set forth below by registered or certified mail, return
receipt requested, or at such other address either party shall
designate by notice to the other in the manner provided herein
for giving notice.
If to the Company PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: Chairman of Compensation
Committee
If to the Employee Josef H. von Rickenbach
31 Fairbanks Road
Lexington, MA 02173
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties hereto has executed
this Employment Agreement (which may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument) as of the date and year first above
written.
PAREXEL International Corporation
By: /s/William T. Sobo, Jr.
William T. Sobo, Jr.
Title:Chief Financial Officer
/s/Josef H. von Rickenbach
Josef H. von Rickenbach
EXHIBIT 10.2
CHANGE OF CONTROL AGREEMENT
AGREEMENT, dated as of October 20, 1998, by and
between PAREXEL International Corporation (the "Company") and
William T. Sobo, Jr. (the "Executive").
WHEREAS, the Executive is a senior executive of the Company
and has made and is expected to continue to make major
contributions to the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue to render
services to the Company subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Termination Prior to a Change of Control.
(a) If, within nine months prior to a Change of Control and
subsequent to the commencement of the substantive discussions
that ultimately result in the Change of Control a "Change of
Control" (as such term is defined in Section 3(b) below), the
Company terminates the Executive's employment with the Company
without "Cause" (as such term is defined in Section 3(c) below)
or the Executive terminates his/her employment with the Company
for "Good Reason" (as such term is defined in Section 1(b)
below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to the amount of
monthly base salary (at the highest monthly base salary
rate in effect for such Executive in the twelve month
period prior to the termination of his or her
employment) that would have been paid to such Executive
had he or she remained an employee of the Company
through the Change of Control; and
(2) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to: (i) twelve
months of monthly base salary (at the highest monthly
base salary rate in effect for such Executive in the
twelve month period prior to the termination of his or
her employment), plus (ii) the maximum bonus that
could have been payable to such Executive (assuming
continued employment) during the year in which the
Change of Control occurs based on bonus arrangements in
effect at any time during the twelve month period
immediately prior to the termination of his or her
employment which would pay the Executive the highest
maximum bonus (all payments under this Section 1(a)(2)
being referred to, collectively, as the "Severance
Payments"); and
(3) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the Change of Control;
or (ii) the date the Executive commences subsequent
employment; and
(4) On the Change of Control, cause any unexercisable
installments of any stock options held by the Executive
on the Executive's last date of employment with the
Company that have not expired to become exercisable on
the Change of Control; provided, however, that:
(i) such acceleration of exercisability shall not occur
to the extent that: (A) the Change of Control is
intended to be accounted for as a pooling of interests;
and (B) the Company concludes, after consulting with
its independent accountants, that such acceleration
would prevent the Change of Control transaction from
being accounted for as a pooling of interests for
financial accounting purposes; (ii) such acceleration
of exercisability shall not occur as to any option if
the Change of Control does not occur within the period
within which the Executive may exercise such option
after a termination of employment in accordance with
the provisions of the relevant option agreement and
option plan; and (iii) any such acceleration of
exercisability shall not extend the period after a
termination of employment within which any option may
be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option
plan.
(5) Beginning on the Change of Control, provide
executive outplacement services from an outplacement
company selected by the Executive, with such services
to extend until the earlier of: (i) twelve months
following the Change of Control; or (ii) the date on
which the Employee secures new full-time employment;
provided, however, that the Company shall not be
required to provide more than $25,000 of such services
to the Executive.
(6) On the Change of Control, cause any unvested
portion of any qualified or non-qualified capital
accumulation benefits to become immediately vested
(subject to applicable law).
provided, however, that any amounts and benefits set forth in
this Section 1 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of this Section 1, "Good Reason" shall
mean: (i) the assignment to the Executive of any duties
inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities as of the date of
this Agreement or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a material reduction in the aggregate of
the Executive's base or incentive compensation or the termination
of the Executive's rights to any employee benefits, except to the
extent any such benefit is replaced with a comparable benefit, or
a reduction in scope or value thereof, other than as a result of
across-the-board reductions or terminations affecting officers of
the Company generally; or (iii) a relocation of the Executive's
place of business which results in the one-way commuting distance
for the Executive increasing by more than 20 miles provided,
however, that travel consistent with past practices for business
purposes shall not be considered "commuting" for purposes of this
clause.
2. Termination Following a Change of Control.
(a) If, at any time during a period commencing with a
Change in Control and ending eighteen months after such Change in
Control, the Company terminates the Executive's employment
without Cause or the Executive terminates his/her employment with
the Company for "Good Reason" (as such term is defined in Section
2(b) below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Executive's last date of employment, a
lump sum amount (net of any required withholding) equal
to: (i) twelve months of monthly base salary (at the
highest monthly base salary rate in effect for such
Executive in the twelve month period prior to the
termination of his or her employment), plus (ii) the
maximum bonus that could have been payable to such
Executive (assuming continued employment) during the
year in which the termination of employment occurs
based on bonus arrangements in effect immediately prior
to the termination of his or her employment
(collectively, the "Severance Payments").
(2) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the termination of the
Executive's employment; or (ii) the date the Executive
commences subsequent employment.
(3) Cause any unexercisable installments of any stock
options held by the Executive on the Executive's last
date of employment with the Company that have not
expired to become exercisable on such last date of
employment; provided, however, that: (i) such
acceleration of exercisability shall not occur to the
extent that: (A) the Change of Control is intended to
be accounted for as a pooling of interests; and (B) the
Company concludes, after consulting with its
independent accountants, that such acceleration would
prevent the Change of Control transaction from being
accounted for as a pooling of interests for financial
accounting purposes; (ii) such acceleration of
exercisability shall not occur as to any option if the
Change of Control does not occur within the period
within which the Executive may exercise such option
after a termination of employment in accordance with
the provisions of the relevant option agreement and
option plan; and (iii) any such acceleration of
exercisability shall not extend the period after a
termination of employment within which any option may
be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option
plan.
(4) Provide executive outplacement services from an
outplacement company selected by the Executive, with
such services to extend until the earlier of:
(i) twelve months following the termination of the
Executive's employment; or (ii) the date on which the
Employee secures new full-time employment; provided,
however, that the Company shall not be required to
provide more than $25,000 of such services to the
Executive.
(5) Cause any unvested portion of any qualified and
non-qualified capital accumulation benefits to become
immediately vested, subject to applicable law.
provided, however, that: any amounts and benefits set forth in
this Section 2 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of Section 2, "Good Reason" shall mean the
occurrence of one or more of the following events following a
Change of Control: (i) the assignment to the Executive of any
duties inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities immediately prior
to the Change of Control or any other action by the Company which
results in a material diminution in such position, authority,
duties or responsibilities; (ii) a material reduction in the
aggregate of the Executive's base or incentive compensation or
the termination of the Executive's rights to any employee
benefits immediately prior to the Change of Control, except to
the extent any such benefit is replaced with a comparable
benefit, or a reduction in scope or value thereof; or (iii) a
relocation of the Executive's place of business which results in
the one-way commuting distance for the Executive increasing by
more than 20 miles from the location thereof immediately prior to
the Change of Control (provided, however, that travel consistent
with past practices for business purposes shall not be considered
"commuting" for purposes of this clause (iii)) or (iv) a failure
by the Company to obtain the agreement referenced in
Section 3(g).
3. General.
(a) In the event the Executive's employment with the
Company is terminated by the Company other than during the
specific time periods set forth in Section 1(a) and Section 2(a)
or for any reason other than without Cause, or the Executive
terminates his/her employment with the Company other than during
the specific time periods set forth in Section 1(a) and Section
2(a) or for any reason other than Good Reason, the Executive
shall not be entitled to the severance benefits or other
considerations described herein by virtue of this Agreement.
(b) For purposes of this Agreement, "Change of Control"
shall mean the closing of: (i) a merger, consolidation,
liquidation or reorganization of the Company into or with another
Company or other legal person, after which merger, consolidation,
liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not
converted into or exchanged for or does not represent more than
50% of the aggregate voting power of the surviving or resulting
entity; (ii) the direct or indirect acquisition by any person (as
the term "person" is used in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of more than 50% of
the voting capital stock of the Company, in a single or series of
related transactions; or (iii) the sale, exchange, or transfer of
all or substantially all of the Company's assets (other than a
sale, exchange or transfer to one or more entities where the
stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the
entities to which the assets were transferred).
(c) For purposes of this Agreement, "Cause" shall mean: (i)
the commission of the Executive of a felony, either in connection
with the performance of his/her obligations to the Company or
which adversely affects the Executive's ability to perform such
obligations; (ii) gross negligence, breach of fiduciary duty or
breach of any confidentiality, non-competition or developments
agreement in favor of the Company; or (iii) the commission by the
Executive of an act of fraud or embezzlement or other acts in
intentional disregard of the Company which result in loss, damage
or injury to the Company, whether directly or indirectly.
(d) Notwithstanding anything to the contrary in this
Agreement, if any portion of any payments received by Executive
from the Company (whether payable pursuant to the terms of this
Agreement or any other plan, agreement or arrangement with the
Company, its successors or any person whose actions result in a
change of control of the Company) shall be subject to tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
or any successor statutory provision, the Company shall pay to
Executive such additional amounts as are necessary so that, after
taking into account any tax imposed by Section 4999 (or any
successor statutory provision), and any federal and state income
taxes payable on any such tax, the Executive is in the same after-
tax position that he or she would have been if such Section 4999
(or any successor statutory provision) did not apply and no
payments were made pursuant to this Section 3(d). The Executive
and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax
with respect to the Payments. All determinations required to be
made under this Section 5(i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment,
shall be made by the Company, after consultation with its tax and
accounting advisors.
(e) The parties hereto expressly agree that the payments by
the Company to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
(f) The Company shall pay or cause to be paid and shall be
solely responsible for any and all attorneys' fees and expenses
incurred by the Executive: (i) in connection with the
Executive's review and execution of this Agreement; and (ii) to
enforce his or her rights under this Agreement, solely in the
event that the Company is found by a court of competent
jurisdiction, an arbitrator or through a mutual settlement
agreement to have failed to perform its obligations under this
Agreement.
(g) Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and
any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company;
provided, however, that as a condition of closing the transaction
which results in a change of control, the Company shall obtain
the written agreement of any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) of the Company to be bound by the provisions of this
Agreement as if such successor were the Company and for purposes
of this Agreement, any such successor of the Company shall be
deemed to be the "Company" for all purposes.
(h) Nothing in this Agreement shall create any obligation
on the part of the Company or any other person to continue the
employment of the Executive. If the Executive elects to receive
the severance and benefits set forth in Section 1 or Section 2,
the Executive shall not be entitled to any other salary
continuation or severance benefits in the event of his/her
cessation of employment with the Company.
(i) Nothing herein shall affect the Executive's obligations
under any key employee, non-competition, confidentiality, option
or similar agreement between the Company and the Executive
currently in effect or which may be entered into in the future.
(j) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
This Agreement constitutes the entire Agreement between the
Executive and the Company concerning the subject matter hereof
and supersedes any prior negotiations, understandings or
agreements concerning the subject matter hereof, whether oral or
written, and may be amended or rescinded only upon the written
consent of the Company and the Executive. The invalidity or
unenforceability of any provision of this Agreement shall not
affect the other provisions of this Agreement and this Agreement
shall be construed and reformed to the fullest extent possible.
The Executive may not assign any of his/her rights or obligations
under this Agreement; the rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Company. This
Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument.
(k) Company and Employee agree to enter into a mutually
acceptable Consulting Agreement of up to a four (4) year term.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
The Company:
PAREXEL INTERNATIONAL CORPORATION
By: /s/Josef von Rickenbach
Name: Josef von Rickenbach
Title: Chairman and CEO
The Executive:
Signature: /s/William T. Sobo, Jr.
Printed Name: William T. Sobo, Jr.
EXHIBIT 10.3
CHANGE OF CONTROL AGREEMENT
AGREEMENT, dated as of October 20, 1998, by and
between PAREXEL International Corporation (the "Company") and
James Karis (the "Executive").
WHEREAS, the Executive is a senior executive of the Company
and has made and is expected to continue to make major
contributions to the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue to render
services to the Company subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Termination Prior to a Change of Control.
(a) If, within nine months prior to a Change of Control and
subsequent to the commencement of the substantive discussions
that ultimately result in the Change of Control a "Change of
Control" (as such term is defined in Section 3(b) below), the
Company terminates the Executive's employment with the Company
without "Cause" (as such term is defined in Section 3(c) below)
or the Executive terminates his/her employment with the Company
for "Good Reason" (as such term is defined in Section 1(b)
below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to the amount of
monthly base salary (at the highest monthly base salary
rate in effect for such Executive in the twelve month
period prior to the termination of his or her
employment) that would have been paid to such Executive
had he or she remained an employee of the Company
through the Change of Control; and
(2) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to: (i) twelve
months of monthly base salary (at the highest monthly
base salary rate in effect for such Executive in the
twelve month period prior to the termination of his or
her employment), plus (ii) the maximum bonus that
could have been payable to such Executive (assuming
continued employment) during the year in which the
Change of Control occurs based on bonus arrangements in
effect at any time during the twelve month period
immediately prior to the termination of his or her
employment which would pay the Executive the highest
maximum bonus (all payments under this Section 1(a)(2)
being referred to, collectively, as the "Severance
Payments"); and
(3) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the Change of Control;
or (ii) the date the Executive commences subsequent
employment; and
(4) On the Change of Control, cause any unexercisable
installments of any stock options (other than any
options granted pursuant to the Option Agreement
between Executive and Company dated December 31, 1996)
held by the Executive on the Executive's last date of
employment with the Company that have not expired to
become exercisable on the Change of Control; provided,
however, that: (i) such acceleration of exercisability
shall not occur to the extent that: (A) the Change of
Control is intended to be accounted for as a pooling of
interests; and (B) the Company concludes, after
consulting with its independent accountants, that such
acceleration would prevent the Change of Control
transaction from being accounted for as a pooling of
interests for financial accounting purposes; (ii) such
acceleration of exercisability shall not occur as to
any option if the Change of Control does not occur
within the period within which the Executive may
exercise such option after a termination of employment
in accordance with the provisions of the relevant
option agreement and option plan; and (iii) any such
acceleration of exercisability shall not extend the
period after a termination of employment within which
any option may be exercised by the Executive in
accordance with the provisions of the relevant option
agreement and option plan.
(5) Beginning on the Change of Control, provide
executive outplacement services from an outplacement
company selected by the Executive, with such services
to extend until the earlier of: (i) twelve months
following the Change of Control; or (ii) the date on
which the Employee secures new full-time employment;
provided, however, that the Company shall not be
required to provide more than $25,000 of such services
to the Executive.
(6) On the Change of Control, cause any unvested
portion of any qualified or non-qualified capital
accumulation benefits to become immediately vested
(subject to applicable law).
provided, however, that any amounts and benefits set forth in
this Section 1 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of this Section 1, "Good Reason" shall
mean: (i) the assignment to the Executive of any duties
inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities as of the date of
this Agreement or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a material reduction in the aggregate of
the Executive's base or incentive compensation or the termination
of the Executive's rights to any employee benefits, except to the
extent any such benefit is replaced with a comparable benefit, or
a reduction in scope or value thereof, other than as a result of
across-the-board reductions or terminations affecting officers of
the Company generally; or (iii) a relocation of the Executive's
place of business which results in the one-way commuting distance
for the Executive increasing by more than 20 miles provided,
however, that travel consistent with past practices for business
purposes shall not be considered "commuting" for purposes of this
clause.
2. Termination Following a Change of Control.
(a) If, at any time during a period commencing with a
Change in Control and ending eighteen months after such Change in
Control, the Company terminates the Executive's employment
without Cause or the Executive terminates his/her employment with
the Company for "Good Reason" (as such term is defined in Section
2(b) below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Executive's last date of employment, a
lump sum amount (net of any required withholding) equal
to: (i) twelve months of monthly base salary (at the
highest monthly base salary rate in effect for such
Executive in the twelve month period prior to the
termination of his or her employment), plus (ii) the
maximum bonus that could have been payable to such
Executive (assuming continued employment) during the
year in which the termination of employment occurs
based on bonus arrangements in effect immediately prior
to the termination of his or her employment
(collectively, the "Severance Payments").
(2) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the termination of the
Executive's employment; or (ii) the date the Executive
commences subsequent employment.
(3) Cause any unexercisable installments of any stock
options (other than any options granted pursuant to the
Option Agreement between Executive and Company dated
December 31, 1996) held by the Executive on the
Executive's last date of employment with the Company
that have not expired to become exercisable on such
last date of employment; provided, however, that:
(i) such acceleration of exercisability shall not occur
to the extent that: (A) the Change of Control is
intended to be accounted for as a pooling of interests;
and (B) the Company concludes, after consulting with
its independent accountants, that such acceleration
would prevent the Change of Control transaction from
being accounted for as a pooling of interests for
financial accounting purposes; (ii) such acceleration
of exercisability shall not occur as to any option if
the Change of Control does not occur within the period
within which the Executive may exercise such option
after a termination of employment in accordance with
the provisions of the relevant option agreement and
option plan; and (iii) any such acceleration of
exercisability shall not extend the period after a
termination of employment within which any option may
be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option
plan.
(4) Provide executive outplacement services from an
outplacement company selected by the Executive, with
such services to extend until the earlier of:
(i) twelve months following the termination of the
Executive's employment; or (ii) the date on which the
Employee secures new full-time employment; provided,
however, that the Company shall not be required to
provide more than $25,000 of such services to the
Executive.
(5) Cause any unvested portion of any qualified and
non-qualified capital accumulation benefits to become
immediately vested, subject to applicable law.
provided, however, that: any amounts and benefits set forth in
this Section 2 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of Section 2, "Good Reason" shall mean the
occurrence of one or more of the following events following a
Change of Control: (i) the assignment to the Executive of any
duties inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities immediately prior
to the Change of Control or any other action by the Company which
results in a material diminution in such position, authority,
duties or responsibilities; (ii) a material reduction in the
aggregate of the Executive's base or incentive compensation or
the termination of the Executive's rights to any employee
benefits immediately prior to the Change of Control, except to
the extent any such benefit is replaced with a comparable
benefit, or a reduction in scope or value thereof; or (iii) a
relocation of the Executive's place of business which results in
the one-way commuting distance for the Executive increasing by
more than 20 miles from the location thereof immediately prior to
the Change of Control (provided, however, that travel consistent
with past practices for business purposes shall not be considered
"commuting" for purposes of this clause (iii)) or (iv) a failure
by the Company to obtain the agreement referenced in
Section 3(g).
3. General.
(a) In the event the Executive's employment with the
Company is terminated by the Company other than during the
specific time periods set forth in Section 1(a) and Section 2(a)
or for any reason other than without Cause, or the Executive
terminates his/her employment with the Company other than during
the specific time periods set forth in Section 1(a) and Section
2(a) or for any reason other than Good Reason, the Executive
shall not be entitled to the severance benefits or other
considerations described herein by virtue of this Agreement.
(b) For purposes of this Agreement, "Change of Control"
shall mean the closing of: (i) a merger, consolidation,
liquidation or reorganization of the Company into or with another
Company or other legal person, after which merger, consolidation,
liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not
converted into or exchanged for or does not represent more than
50% of the aggregate voting power of the surviving or resulting
entity; (ii) the direct or indirect acquisition by any person (as
the term "person" is used in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of more than 50% of
the voting capital stock of the Company, in a single or series of
related transactions; or (iii) the sale, exchange, or transfer of
all or substantially all of the Company's assets (other than a
sale, exchange or transfer to one or more entities where the
stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the
entities to which the assets were transferred).
(c) For purposes of this Agreement, "Cause" shall mean: (i)
the commission of the Executive of a felony, either in connection
with the performance of his/her obligations to the Company or
which adversely affects the Executive's ability to perform such
obligations; (ii) gross negligence, breach of fiduciary duty or
breach of any confidentiality, non-competition or developments
agreement in favor of the Company; or (iii) the commission by the
Executive of an act of fraud or embezzlement or other acts in
intentional disregard of the Company which result in loss, damage
or injury to the Company, whether directly or indirectly.
(d) Notwithstanding anything to the contrary in this
Agreement, if any portion of any payments received by Executive
from the Company (whether payable pursuant to the terms of this
Agreement or any other plan, agreement or arrangement with the
Company, its successors or any person whose actions result in a
change of control of the Company) shall be subject to tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
or any successor statutory provision, the Company shall pay to
Executive such additional amounts as are necessary so that, after
taking into account any tax imposed by Section 4999 (or any
successor statutory provision), and any federal and state income
taxes payable on any such tax, the Executive is in the same after-
tax position that he or she would have been if such Section 4999
(or any successor statutory provision) did not apply and no
payments were made pursuant to this Section 3(d). The Executive
and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax
with respect to the Payments. All determinations required to be
made under this Section 5(i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment,
shall be made by the Company, after consultation with its tax and
accounting advisors.
(e) The parties hereto expressly agree that the payments by
the Company to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
(f) The Company shall pay or cause to be paid and shall be
solely responsible for any and all attorneys' fees and expenses
incurred by the Executive: (i) in connection with the
Executive's review and execution of this Agreement; and (ii) to
enforce his or her rights under this Agreement, solely in the
event that the Company is found by a court of competent
jurisdiction, an arbitrator or through a mutual settlement
agreement to have failed to perform its obligations under this
Agreement.
(g) Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and
any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company;
provided, however, that as a condition of closing the transaction
which results in a change of control, the Company shall obtain
the written agreement of any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) of the Company to be bound by the provisions of this
Agreement as if such successor were the Company and for purposes
of this Agreement, any such successor of the Company shall be
deemed to be the "Company" for all purposes.
(h) Nothing in this Agreement shall create any obligation
on the part of the Company or any other person to continue the
employment of the Executive. If the Executive elects to receive
the severance and benefits set forth in Section 1 or Section 2,
the Executive shall not be entitled to any other salary
continuation or severance benefits in the event of his/her
cessation of employment with the Company.
(i) Nothing herein shall affect the Executive's obligations
under any key employee, non-competition, confidentiality, option
or similar agreement between the Company and the Executive
currently in effect or which may be entered into in the future.
(j) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
This Agreement constitutes the entire Agreement between the
Executive and the Company concerning the subject matter hereof
and supersedes any prior negotiations, understandings or
agreements as such relates to any severance payment in the
context of a change in control, whether oral or written, and may
be amended or rescinded only upon the written consent of the
Company and the Executive. The invalidity or unenforceability of
any provision of this Agreement shall not affect the other
provisions of this Agreement and this Agreement shall be
construed and reformed to the fullest extent possible. The
Executive may not assign any of his/her rights or obligations
under this Agreement; the rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Company. This
Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument.
(k) Company and Employee agree to enter into a mutually
acceptable Consulting Agreement of up to a four (4) year term.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
The Company:
PAREXEL INTERNATIONAL CORPORATION
By:m /s/Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: Chairman and CEO
The Executive:
Signature: /s/James Karis
Printed Name: James Karis
EXHIBIT 10.4
CHANGE OF CONTROL AGREEMENT
AGREEMENT, dated as of October 20, 1998, by and
between PAREXEL International Corporation (the "Company") and
Barry Philpott (the "Executive").
WHEREAS, the Executive is a senior executive of the Company
and has made and is expected to continue to make major
contributions to the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue to render
services to the Company subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Termination Prior to a Change of Control.
(a) If, within nine months prior to a Change of Control and
subsequent to the commencement of the substantive discussions
that ultimately result in the Change of Control a "Change of
Control" (as such term is defined in Section 3(b) below), the
Company terminates the Executive's employment with the Company
without "Cause" (as such term is defined in Section 3(c) below)
or the Executive terminates his/her employment with the Company
for "Good Reason" (as such term is defined in Section 1(b)
below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to the amount of
monthly base salary (at the highest monthly base salary
rate in effect for such Executive in the twelve month
period prior to the termination of his or her
employment) that would have been paid to such Executive
had he or she remained an employee of the Company
through the Change of Control; and
(2) Pay to the Executive, within ten business days
following the Change of Control, a lump sum amount (net
of any required withholding) equal to: (i) twelve
months of monthly base salary (at the highest monthly
base salary rate in effect for such Executive in the
twelve month period prior to the termination of his or
her employment), plus (ii) the maximum bonus that
could have been payable to such Executive (assuming
continued employment) during the year in which the
Change of Control occurs based on bonus arrangements in
effect at any time during the twelve month period
immediately prior to the termination of his or her
employment which would pay the Executive the highest
maximum bonus (all payments under this Section 1(a)(2)
being referred to, collectively, as the "Severance
Payments"); and
(3) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the Change of Control;
or (ii) the date the Executive commences subsequent
employment; and
(4) On the Change of Control, cause any unexercisable
installments of any stock options held by the Executive
on the Executive's last date of employment with the
Company that have not expired to become exercisable on
the Change of Control; provided, however, that:
(i) such acceleration of exercisability shall not occur
to the extent that: (A) the Change of Control is
intended to be accounted for as a pooling of interests;
and (B) the Company concludes, after consulting with
its independent accountants, that such acceleration
would prevent the Change of Control transaction from
being accounted for as a pooling of interests for
financial accounting purposes; (ii) such acceleration
of exercisability shall not occur as to any option if
the Change of Control does not occur within the period
within which the Executive may exercise such option
after a termination of employment in accordance with
the provisions of the relevant option agreement and
option plan; and (iii) any such acceleration of
exercisability shall not extend the period after a
termination of employment within which any option may
be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option
plan.
(5) Beginning on the Change of Control, provide
executive outplacement services from an outplacement
company selected by the Executive, with such services
to extend until the earlier of: (i) twelve months
following the Change of Control; or (ii) the date on
which the Employee secures new full-time employment;
provided, however, that the Company shall not be
required to provide more than $25,000 of such services
to the Executive.
(6) On the Change of Control, cause any unvested
portion of any qualified or non-qualified capital
accumulation benefits to become immediately vested
(subject to applicable law).
provided, however, that any amounts and benefits set forth in
this Section 1 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of this Section 1, "Good Reason" shall
mean: (i) the assignment to the Executive of any duties
inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities as of the date of
this Agreement or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a material reduction in the aggregate of
the Executive's base or incentive compensation or the termination
of the Executive's rights to any employee benefits, except to the
extent any such benefit is replaced with a comparable benefit, or
a reduction in scope or value thereof, other than as a result of
across-the-board reductions or terminations affecting officers of
the Company generally; or (iii) a relocation of the Executive's
place of business which results in the one-way commuting distance
for the Executive increasing by more than 20 miles provided,
however, that travel consistent with past practices for business
purposes shall not be considered "commuting" for purposes of this
clause.
2. Termination Following a Change of Control.
(a) If, at any time during a period commencing with a
Change in Control and ending eighteen months after such Change in
Control, the Company terminates the Executive's employment
without Cause or the Executive terminates his/her employment with
the Company for "Good Reason" (as such term is defined in Section
2(b) below); provided, however, that any such termination by the
Executive must occur promptly (and in any event within 90 days)
after the occurrence of the event or events constituting "Good
Reason", the Company shall:
(1) Pay to the Executive, within ten business days
following the Executive's last date of employment, a
lump sum amount (net of any required withholding) equal
to: (i) twelve months of monthly base salary (at the
highest monthly base salary rate in effect for such
Executive in the twelve month period prior to the
termination of his or her employment), plus (ii) the
maximum bonus that could have been payable to such
Executive (assuming continued employment) during the
year in which the termination of employment occurs
based on bonus arrangements in effect immediately prior
to the termination of his or her employment
(collectively, the "Severance Payments").
(2) Provide the Executive and his or her dependents
with life, accident, health and dental insurance
substantially similar to that which the Executive was
receiving immediately prior to the termination of his
or her employment until the earlier of: (i) the date
which is twelve months following the termination of the
Executive's employment; or (ii) the date the Executive
commences subsequent employment.
(3) Cause any unexercisable installments of any stock
options held by the Executive on the Executive's last
date of employment with the Company that have not
expired to become exercisable on such last date of
employment; provided, however, that: (i) such
acceleration of exercisability shall not occur to the
extent that: (A) the Change of Control is intended to
be accounted for as a pooling of interests; and (B) the
Company concludes, after consulting with its
independent accountants, that such acceleration would
prevent the Change of Control transaction from being
accounted for as a pooling of interests for financial
accounting purposes; (ii) such acceleration of
exercisability shall not occur as to any option if the
Change of Control does not occur within the period
within which the Executive may exercise such option
after a termination of employment in accordance with
the provisions of the relevant option agreement and
option plan; and (iii) any such acceleration of
exercisability shall not extend the period after a
termination of employment within which any option may
be exercised by the Executive in accordance with the
provisions of the relevant option agreement and option
plan.
(4) Provide executive outplacement services from an
outplacement company selected by the Executive, with
such services to extend until the earlier of:
(i) twelve months following the termination of the
Executive's employment; or (ii) the date on which the
Employee secures new full-time employment; provided,
however, that the Company shall not be required to
provide more than $25,000 of such services to the
Executive.
(5) Cause any unvested portion of any qualified and
non-qualified capital accumulation benefits to become
immediately vested, subject to applicable law.
provided, however, that: any amounts and benefits set forth in
this Section 2 shall be reduced by any and all other severance or
other amounts or benefits paid or payable to the Executive as a
result of the termination of his or her employment.
(b) For purposes of Section 2, "Good Reason" shall mean the
occurrence of one or more of the following events following a
Change of Control: (i) the assignment to the Executive of any
duties inconsistent in any adverse, material respect with his/her
position, authority, duties or responsibilities immediately prior
to the Change of Control or any other action by the Company which
results in a material diminution in such position, authority,
duties or responsibilities; (ii) a material reduction in the
aggregate of the Executive's base or incentive compensation or
the termination of the Executive's rights to any employee
benefits immediately prior to the Change of Control, except to
the extent any such benefit is replaced with a comparable
benefit, or a reduction in scope or value thereof; or (iii) a
relocation of the Executive's place of business which results in
the one-way commuting distance for the Executive increasing by
more than 20 miles from the location thereof immediately prior to
the Change of Control (provided, however, that travel consistent
with past practices for business purposes shall not be considered
"commuting" for purposes of this clause (iii)) or (iv) a failure
by the Company to obtain the agreement referenced in
Section 3(g).
3. General.
(a) In the event the Executive's employment with the
Company is terminated by the Company other than during the
specific time periods set forth in Section 1(a) and Section 2(a)
or for any reason other than without Cause, or the Executive
terminates his/her employment with the Company other than during
the specific time periods set forth in Section 1(a) and Section
2(a) or for any reason other than Good Reason, the Executive
shall not be entitled to the severance benefits or other
considerations described herein by virtue of this Agreement.
(b) For purposes of this Agreement, "Change of Control"
shall mean the closing of: (i) a merger, consolidation,
liquidation or reorganization of the Company into or with another
Company or other legal person, after which merger, consolidation,
liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not
converted into or exchanged for or does not represent more than
50% of the aggregate voting power of the surviving or resulting
entity; (ii) the direct or indirect acquisition by any person (as
the term "person" is used in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of more than 50% of
the voting capital stock of the Company, in a single or series of
related transactions; or (iii) the sale, exchange, or transfer of
all or substantially all of the Company's assets (other than a
sale, exchange or transfer to one or more entities where the
stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the
entities to which the assets were transferred).
(c) For purposes of this Agreement, "Cause" shall mean: (i)
the commission of the Executive of a felony, either in connection
with the performance of his/her obligations to the Company or
which adversely affects the Executive's ability to perform such
obligations; (ii) gross negligence, breach of fiduciary duty or
breach of any confidentiality, non-competition or developments
agreement in favor of the Company; or (iii) the commission by the
Executive of an act of fraud or embezzlement or other acts in
intentional disregard of the Company which result in loss, damage
or injury to the Company, whether directly or indirectly.
(d) Notwithstanding anything to the contrary in this
Agreement, if any portion of any payments received by Executive
from the Company (whether payable pursuant to the terms of this
Agreement or any other plan, agreement or arrangement with the
Company, its successors or any person whose actions result in a
change of control of the Company) shall be subject to tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
or any successor statutory provision, the Company shall pay to
Executive such additional amounts as are necessary so that, after
taking into account any tax imposed by Section 4999 (or any
successor statutory provision), and any federal and state income
taxes payable on any such tax, the Executive is in the same after-
tax position that he or she would have been if such Section 4999
(or any successor statutory provision) did not apply and no
payments were made pursuant to this Section 3(d). The Executive
and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax
with respect to the Payments. All determinations required to be
made under this Section 5(i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment,
shall be made by the Company, after consultation with its tax and
accounting advisors.
(e) The parties hereto expressly agree that the payments by
the Company to the Executive in accordance with the terms of this
Agreement will be liquidated damages, and that the Executive
shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation,
offset, reduction or any other obligation on the part of the
Executive.
(f) The Company shall pay or cause to be paid and shall be
solely responsible for any and all attorneys' fees and expenses
incurred by the Executive: (i) in connection with the
Executive's review and execution of this Agreement; and (ii) to
enforce his or her rights under this Agreement, solely in the
event that the Company is found by a court of competent
jurisdiction, an arbitrator or through a mutual settlement
agreement to have failed to perform its obligations under this
Agreement.
(g) Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and
any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company;
provided, however, that as a condition of closing the transaction
which results in a change of control, the Company shall obtain
the written agreement of any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) of the Company to be bound by the provisions of this
Agreement as if such successor were the Company and for purposes
of this Agreement, any such successor of the Company shall be
deemed to be the "Company" for all purposes.
(h) Nothing in this Agreement shall create any obligation
on the part of the Company or any other person to continue the
employment of the Executive. If the Executive elects to receive
the severance and benefits set forth in Section 1 or Section 2,
the Executive shall not be entitled to any other salary
continuation or severance benefits in the event of his/her
cessation of employment with the Company.
(i) Nothing herein shall affect the Executive's obligations
under any key employee, non-competition, confidentiality, option
or similar agreement between the Company and the Executive
currently in effect or which may be entered into in the future.
(j) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
This Agreement constitutes the entire Agreement between the
Executive and the Company concerning the subject matter hereof
and supersedes any prior negotiations, understandings or
agreements as such relates to any severance payment in the
context of a change in control, whether oral or written, and may
be amended or rescinded only upon the written consent of the
Company and the Executive. The invalidity or unenforceability of
any provision of this Agreement shall not affect the other
provisions of this Agreement and this Agreement shall be
construed and reformed to the fullest extent possible. The
Executive may not assign any of his/her rights or obligations
under this Agreement; the rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Company. This
Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument.
(k) Company and Employee agree to enter into a mutually
acceptable Consulting Agreement of up to a four (4) year term.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
The Company:
PAREXEL INTERNATIONAL CORPORATION
By:/s/Josef H. von Rickenbach
Name: Josef H. von Rickenbach
Title: Chairman and CEO
The Executive:
Signature: /s/Barry R. Philpott
Printed Name: Barry R. Philpott
