Exhibit 10.3
PRA INTERNATIONAL
FORM OF OPTION AGREEMENT
(Directors)
     THIS OPTION AGREEMENT (the “Agreement”) evidences an agreement made as of
the ___th day of ___, 200___ (the “Date of Grant”), by and between ______ (the
“Optionee”), and PRA INTERNATIONAL, a Delaware corporation (the “Corporation”).
     1. Option. In consideration of the Optionee’s directorship with the
Corporation, the Corporation hereby grants to the Optionee the option to
purchase that number of shares of the Corporation’s Common Stock at the exercise
price set forth on Schedule 1 hereto (the “Option”), subject to the terms and
conditions of this Option Agreement and the PRA International 2004 Incentive
Award Plan (the “Plan”) (attached at Exhibit 1). The Option is intended to
qualify as an “incentive stock option” within the meaning of Section 422 of the
Code. To the extent that the Option does not so qualify that portion of the
Option shall be treated as a non-qualified option under Section 422 of the Code.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Plan.
     2. Vesting of Options.
          (a) The Option shall vest in accordance with the terms set forth on
Schedule 1 and the terms of Section 3 hereof.
          (b) Unless sooner terminated in accordance with the terms hereof, the
Option shall terminate (whether or not vested) on the seventh (7th) anniversary
of the Date of Grant.
     3. Expiration of the Option.
          (a) Death or Disability of Employee. In the event that the Optionee’s
directorship is terminated by reason of death or disability, the unvested
portion of the Option that would otherwise vest on the next anniversary of the
Date of Grant will automatically vest on a pro rata basis for the period
commencing on the Date of Grant or, if applicable, the most recent anniversary
of the Date of Grant and ending on the date the Optionee’s directorship is so
terminated, and all other unvested Options will automatically terminate. The
vested portion of the Option shall be exercisable by the Optionee’s beneficiary
or estate for a period of the earlier of (i) eighteen (18) months following
Optionee’s death or disability or (ii) the seventh (7th) anniversary of the Date
of Grant. If the vested portion of the Option is not exercised within the
earlier of (i) eighteen (18) months following Optionee’s death or disability or
(ii) the seventh (7th) anniversary of the Date of Grant, then such vested
portion of the Option shall expire and shall no longer be exercisable.
          (b) Cause. In the event that the Optionee’s directorship is terminated
by the Corporation for Cause (as defined below) the Option will automatically
terminate and

 

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expire and shall no longer be exercisable, whether or not previously vested. For
purposes of this Agreement, “Cause” shall mean: (i) a material failure of the
Optionee to perform his duties and functions as a director; (ii) Optionee
engaging in or causing an act that has a material adverse impact on the
reputation, business, business relationships or financial condition of the
Corporation; (iii) the conviction of or plea of guilty or nolo contendere by
Optionee to a felony or any crime involving moral turpitude; or (iv) Optionee’s
gross misconduct, dishonesty, or fraud.
          (c) Other Termination. In the event that the Optionee’s directorship
is terminated for any reason other than death, disability or Cause, the unvested
portion of the Option will automatically terminate. The Optionee shall have the
right, in the Optionee’s sole discretion, for a period of thirty (30) days
following such termination of directorship to exercise the Option. If the
Optionee does not exercise the vested portion of the Option within 30 days after
his/her directorship so terminates, then the Option shall expire and shall no
longer be exercisable.
          (d) Forfeiture for Competition. In the event that during Optionee’
directorship or during a period of 15 months thereafter (the “Noncompetition
Period”), Optionee, whether as owner, manager, officer, director, employee,
consultant or otherwise, is engaged or employed by a Competing CRO to provide
Customer Services that are the same or substantially similar to the Customer
Services that Optionee performed for the Corporation at any time during the
twenty-four (24) months prior to the termination of Optionee’s directorship (the
“Prohibited Services”), then in addition to other remedies available to the
Corporation, Optionee shall immediately forfeit all rights under the Option that
may have been granted to Optionee or to which Optionee may be entitled, whether
the same are then vested or not. In addition, to the extent that Optionee
exercises any of the Option during the Noncompetition Period and provides
Prohibited Services then such exercise shall be rescinded and all such shares of
common stock of the Corporation purchased by Optionee pursuant to the exercise
of such Option during the Noncompetition Period may be repurchased by the
Corporation, in its sole discretion, at the price paid by Optionee for such
shares of common stock. To the extent that the Optionee has sold or otherwise
disposed of any shares acquired upon exercise of the Option, then the Optionee
shall pay back to the Corporation any and all proceeds received by the Optionee
as a result of such sale or other disposition. The Optionee shall also return
all dividends or other distributions, if any, paid on such shares.
     The Corporation acknowledges and agrees that ownership by Optionee of not
more than one percent (1.0%) of the shares of any corporation having a class of
equity securities actively traded on a national securities exchange shall not be
deemed, in and of itself, to violate the prohibitions set forth in this section.
     For the purposes of this Agreement, the term “Customer Services” means any
product or service provided by the Corporation or any of its affiliates to a
third party for remuneration, including, but not limited to on a contract or
outsourced basis, assisting pharmaceutical or biotechnology companies in
developing and taking drug compounds, biologics, and drug delivery devices
through appropriate regulatory approval processes, (i) during Optionee’s
directorship with the Corporation or (ii) about which Optionee has material
knowledge and that

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Optionee knows the Corporation will provide or has contracted to provide to
third parties during the twelve (12) months following the Optionee’s
directorship with the Corporation. “Customer” means any person or legal entity
(and its subsidiaries, agents, employees and representatives) about whom
Optionee has acquired material information based on directorship with the
Corporation and as to whom Optionee has been informed that the Corporation or
any of its affiliates provide or will provide Customer Services. “Competing CRO”
means any of the following entities and their affiliates and successors to the
extent that and for so long as those said entities, affiliates, and successors
directly compete with the Corporation in the provision of Customer Services to
Customers: Charles River Laboratories International, Inc., Covance Inc., ICON
plc, INC Research, Inc., Kendle International Inc., MDS Pharma Services,
Omnicare, Inc., PAREXEL International Corporation, Pharmaceutical Product
Development, Inc., Quintiles Transnational Corp., SFBC International, Inc.,
United BioSource Corporation, and United HealthCare Corporation.
     4. Exercise of Option. To the extent exercisable, the Optionee may exercise
the vested portion of the Option at anytime in whole or in part prior to its
termination under Section 2(b) or Section 3 above by giving written notice of
such exercise to the Corporation, in such form and at such time as the
Corporation may specify from time to time. As a condition to the exercise of any
portion of the Option, the Optionee may be required to execute such documents
and make such representations as the Corporation may require in order to comply
with applicable law. The Option may not be exercised until Optionee shall have
delivered to the Corporation the aggregate exercise price per Share of the
number of Shares for which the Option is being exercised. The exercise price may
be paid by any method prescribed in Section 5.1(c) of the Plan.
     5. Construction and Binding Effect. This Agreement shall be construed
according to the laws of the State of Delaware, without giving effect to any
conflict or choice of law provision, and shall bind the parties, their permitted
assigns and their personal representatives.
     6. Invalidity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the other provisions, and the
Agreement shall be construed in all respects as if an invalid or unenforceable
provision were omitted.
     7. Entire Agreement. This document contains the entire agreement between
the parties and no modification or change in this Agreement shall be valid
unless the same shall be in writing and signed by the parties hereto.
     8. Notices. All notices, requests, consents, payments, demands and other
communications required or contemplated under this Agreement (“Notices”) shall
be in writing and (a) personally delivered; (b) deposited in the United States
mail, registered or certified mail, return receipt requested, with postage
prepaid; or (c) sent by Federal Express or other nationally recognized overnight
delivery service (for next business day delivery), shipping prepaid, as follows:
If to the Corporation, to:

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PRA International
12120 Sunset Hills Road, Suite 600
Reston, VA 20190
Attn: President and Chief Executive Officer
If to Optionee, to:
The Optionee’s then home address currently on file with the Corporation
or such other persons or address as any party may request by notice given as
aforesaid. Notices shall be deemed given and received at the time of personal
delivery or, if sent by U.S. mail, five (5) business days after the date mailed
in the manner set forth in this Section 9, or, if sent by Federal Express or
other nationally recognized overnight delivery service, one business day after
such sending.
     9. Severability. The provisions of this Agreement shall be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party, for
any reason, and if such provision cannot be changed consistent with the intent
of the parties hereto to make it fully legal, valid, binding and enforceable,
then such provision shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.
     10. No Right to Future Grants. The grant of this Option is a voluntary act
by the Corporation and does not give the Optionee any right to, or otherwise
obligate the Corporation to grant any additional options in the future.

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             IN WITNESS WHEREOF, the parties hereto have signed this Option
Agreement as of the date first above written.

              CORPORATION:
 
            PRA INTERNATIONAL
 
       
 
  By:    
 
       
 
  Title:   President and CEO
 
            OPTIONEE:
 
             
 
            Address:

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SCHEDULE 1
Options for                      Shares (the “Time Vesting Options”) will vest
on each of                                          (contingent upon employment
with the Corporation or one of its subsidiaries at that time).
The exercise price for all such Options shall be $                     per
share.

 

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EXHIBIT 1
PRA International 2004 Incentive Award Plan
 2