Document:

exv10w2

 

Exhibit 10.2

STONE ENERGY CORPORATION

EXECUTIVE CHANGE IN CONTROL SEVERANCE POLICY

1.  POLICY

     Stone Energy Corporation (the “Company”) will provide the severance benefits as defined herein
to designated executives of the Company who are terminated for other than Cause or who leave for
Good Reason, in either case in connection with, or within twenty-four (24) months after, a Change
in Control.

2.  PURPOSE

     The purpose of this policy is to define the severance policy of the Company for designated
executives after a Change in Control.

3.  SCOPE

     This policy shall only apply to certain executives designated by the Company’s Board of
Directors (the “Board”) in its sole discretion. No benefit shall be payable under this policy to
employees who enter into a separate written severance agreement with the Company on or after the
effective date of this policy and who are entitled to receive severance payments thereunder as a
result of a termination of service in connection with, or within twenty-four (24) months after, a
Change in Control. As a condition precedent to receipt of any payments, benefits or other services
under this policy, each executive will be required to execute a binding release satisfactory to the
Company pursuant to which such employee releases the Company from any liability in connection with
employment by the Company.

4.  PROCEDURE

     Executives who are terminated for other than Cause or who leave for Good Reason as defined
under this policy shall be provided the following payments, benefits and other services as
hereinafter defined, with payments to be made within eight (8) business days after execution of a
satisfactory release.

	 	4.1	 	Base Salary
	 
	 	 	 	The Company will pay the executive’s base salary up to the date of termination.
	 
	 	4.2	 	Bonus
	 
	 	 	 	The Company will pay the executive a pro rata share of the bonus opportunity up to
the date of termination at the then projected year end rate of payout, in an amount,
if any, as determined by the Compensation Committee in its sole discretion.
	 
	 	4.3	 	Severance

 

 

	 	 	 	The executive will be eligible to receive a lump sum cash severance payment equal to
2.99 times the sum of: (a) the executive’s base salary calculated using the higher
of the annual salary rate in effect at the time of termination or that in effect on
the date of the Change in Control and (b) any target bonus at the one hundred
percent (100%) level for which the executive is eligible for the fiscal year in
which termination occurs.
	 
	 	4.4	 	Long Term Incentives
	 
	 	 	 	Terminations made under the provisions of this policy shall, unless otherwise
governed by the specific award and plan, for purposes of any long term incentive
awards held by the executive be deemed “For the Convenience of the Company,” as
defined within the individual LTIP award letters, if any.
	 
	 	4.5	 	Outplacement
	 
	 	 	 	The executive will be eligible to receive outplacement services the duration and
costs for which shall be determined by the then prevailing Human Resources
Department’s practice concerning use of outplacement services, and in no event
should exceed a cost to the Company of 5% of the base annual salary of the
executive.
	 
	 	4.6	 	Other Benefits
	 
	 	 	 	Any other termination benefits will be managed consistent with current severance
practices for non-executive employees.
	 
	 	4.7	 	Excise Tax
	 
	 	 	 	If any of the payments or benefits received by the executive designated to
participate, whether or not pursuant to this policy, will be subject to the Excise
Tax, then the Company shall pay to the executive an additional amount (“Gross-Up
Payment”) such that the net amount retained by the executive, after deduction of any
Excise Tax on the total payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
amount the executive would have otherwise received without such Excise Tax;
provided, however, that if it shall be determined that the executive is entitled to
a Gross-Up Payment, but that the total to be paid to executive does not exceed one
hundred ten percent (110%) of the greatest amount (the “Reduced Amount”) that could
be paid to the executive such that the receipt of the total would not give rise to
any Excise Tax, then no Gross-Up Payment shall be made to the executive and the
total payments to executive in the aggregate shall be reduced to the Reduced Amount.

 

 

5.  DEFINITIONS

     “Cause” for termination by the Company of the executive’s employment shall mean (i) the
willful and continued failure by the executive to substantially perform the executive’s duties with
the Company (other than any such failure resulting from the executive’s incapacity due to physical
or mental illness) after a written demand for substantial performance is delivered to the executive
by the Board which demand specifically identifies the manner in which the Board believes that the
executive has not substantially performed the executive’s duties, or (ii) the willful engaging by
the executive in conduct which is demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the executive’s part shall be deemed “willful” unless done, or omitted to be done, by the
executive not in good faith and without reasonable belief that the executive’s act, or failure to
act, was in the best interest of the Company.

“Change in Control” — a Change in Control shall be deemed to have occurred for purposes of this
policy if the event set forth in any one of the following paragraphs shall have occurred:

(A) any Person (a “person or entity”) is or becomes the Beneficial Owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing twenty percent (20%) or more of
the combined voting power of the Company’s then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a transaction described in clause (i)
of paragraph (C) below; or

(B) the following individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals, who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or recommended;
or

(C) there is consummated a scheme of arrangement, merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation, other than (i)
a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior to such scheme of arrangement, merger or consolidation
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least sixty-five percent (65%) of the combined
voting power of the securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a scheme of arrangement,
merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities Beneficially Owned by such
Person any securities acquired

 

 

directly from the Company or its Affiliates other than in connection with the acquisition by
the Company of its Affiliates of a business) representing twenty percent (20%) or more of
the combined voting power of the Company’s then outstanding securities; or

(D) the stockholders of the Company approve a plan of complete liquidation or dissolution of
the Company or there is consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets, other than a sale or disposition by the
Company of all or substantially all of the Company’s assets to an entity, at least
sixty-five percent (65%) of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.

“Excise Tax” shall mean any excise tax imposed under section 4999 of the Internal Revenue Code.

“Good Reason” for termination by the executive of the executive’s employment shall mean the
occurrence (without the executive’s express written consent) within twenty-four (24) months after
any Change in Control of any one of the following acts by the Company, or failures by the Company
to act:

(A) a reduction in the executive’s annual base salary as in effect on the date of the Change
in Control or as the same may be increased from time to time except for across-the-board
salary reductions similarly affecting all senior executives of the Company and all senior
executives of any Person in control of the Company;

(B) the failure by the Company to continue in effect any compensation plan in which the
executive participates immediately prior to the Change in Control which is material to the
executive’s total compensation, including but not limited to the Company’s Annual Incentive
Compensation Plan and its Amended and Restated Stock Incentive Plan or any substitute plans
adopted prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan or unless
the Company eliminates the compensation plan for all participants, or the failure by the
Company to continue the executive’s participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the executive’s participation
relative to other participants, as existed immediately prior to the Change in Control;

(C) the failure by the Company to continue to provide the executive with benefits
substantially similar to those enjoyed by the executive under any of the Company’s pension,
savings, life insurance, medical, health and accident, or disability plans in which the
executive was participating immediately prior to the Change in Control (except for

 

 

across-the-board changes similarly affecting all senior executives of the Company and all
senior executives of any Person in control of the Company), the taking of any other action
by the Company which would directly or indirectly materially reduce any of such benefits or
deprive the executive of any material fringe benefit or perquisite enjoyed by the executive
at the time of the Change in Control, or the failure by the Company to provide the executive
with the number of paid vacation days to which the executive is entitled on the basis of
years of service with the Company in accordance with the Company’s normal vacation policy in
effect at the time of the Change in Control.

The executive’s right to terminate the executive’s employment for Good Reason shall not be affected
by the executive’s incapacity due to physical or mental illness. The executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.

6.  RESPONSIBILITY

     Except as otherwise stated herein, this policy will be administered by the Company’s Vice
President of Human Resources. This policy is subject to review, change or cancellation at any time
at the sole discretion of the Compensation Committee of the Board, provided, however, that the
policy shall not be changed as to the designated executives after a Change in Control.

7.  SECTION 409A

     Notwithstanding anything in this policy to the contrary, if any payment or benefit under this
policy would result in the imposition of an additional tax under Section 409A of the Internal
Revenue Code and related regulations and United States Department of the Treasury pronouncements,
that provision of this policy will be reformed to avoid imposition of the applicable tax.

8.  EFFECTIVE DATE

     The effective date of this policy is August 18, 2005.exv4w3

 

Exhibit 4.3

PRA INTERNATIONAL

2005 EMPLOYEE STOCK PURCHASE PLAN

 

 

PRA INTERNATIONAL

2005 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 2005 Employee Stock Purchase Plan of PRA
International.

     1. Purpose. The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Shares of the Company. It is the
intention, but not the obligation, of the Company to have the Plan qualify as an “employee stock
purchase plan” under Section 423 of the Code. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner consistent with the requirements of
that section of the Code.

     2. Definitions.

          (a) “Administrator” means (i) any person or committee to whom the Board delegates
administrative discretion under the Plan, and (ii) the Board, which may exercise any and all
administrative powers associated with the Plan.

          (b) “Board” means the Board of Directors of the Company.

          (c) “Code” means the Internal Revenue Code of 1986, as amended.

          (d) “Common Shares” means shares of common stock, par value $.01 per share, of the
Company.

          (e) “Company” means PRA International, a Delaware corporation.

          (f) “Compensation” means all base straight time gross earnings, excluding commissions,
payments for overtime, shift premium, incentive compensation, incentive payments, bonuses and other
compensation.

          (g) “Continuous Status as an Employee” means the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee shall not be considered
interrupted in the case of (i) military leave; (ii) any other leave of absence approved by the
Administrator, provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (iii) in the case of
transfers between locations of the Company or between the Company and its Designated Subsidiaries.

          (h) “Contributions” means all amounts credited to the account of a participant
pursuant to the Plan.

          (i) “Corporate Transaction” means a sale of all or substantially all of the Company’s
assets, or a merger, consolidation, or other capital reorganization of the Company

 

 

	 	 	with or into another corporation, or any other transaction or series of related transactions in
which the Company’s shareholders immediately prior thereto own less than 50% of the voting shares
of beneficial interest of the Company (or its successor or parent) immediately thereafter.

          (j) “Designated Subsidiaries” means the Subsidiaries (or other entities with respect
to sub-plans established under Section 19(d) hereof) that have been designated by the Board from
time to time in its sole discretion as eligible to participate in the Plan.

          (k) “Employee” means any person, excluding individuals who are eligible under the
Company’s Management Stock Purchase Plan, whom the Company or one of its Designated Subsidiaries
classifies as an employee for payroll tax purposes and who (i) is customarily employed by the
Company or one of its Designated Subsidiaries for at least 20 hours per week, and (ii) is
customarily employed by the Company or one of its Designated Subsidiaries for more than five months
in a calendar year.

          (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (m) “Offering Date” means the first business day of each Offering Period of the Plan.

          (n) “Offering Period” means a period of three months (or such other period of up to 27
consecutive months that the Administrator may determine in its sole discretion before an Offering
Date).

          (o) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

          (p) “Plan” means this 2005 Employee Stock Purchase Plan.

          (q) “Purchase Date” means the last day of each Purchase Period of the Plan, provided,
however, that if such date is not a business day, the “Purchase Date” shall mean the immediately
preceding business day.

          (r) “Purchase Period” means a period of three calendar months (or such other period of
up to 27 consecutive months that the Administrator may determine in its sole discretion before an
Offering Date), except for the first Purchase Period set forth in Section 4.

          (s) “Purchase Price” means with respect to a Purchase Period an amount equal to 90% of
the Fair Market Value (as defined in Section 7(b) below) of a Share on the Purchase Date; provided,
however, that the Administrator may before any Offering Date establish a different formula for
determining the Purchase Price so long as the formula does not result in a lower Purchase Price
than is allowable under Section 423(b)(6) of the Code.

          (t) “Share” means one Common Share, as adjusted in accordance with Section 18 of the
Plan.

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          (u) “Subsidiary” means a corporation, domestic or foreign, of which not less than 50%
of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by the Company or a Subsidiary.

     3. Eligibility.

     (a)      Any person who is an Employee as of the date 30 days before the Offering Date of a given
Purchase Period shall be eligible to participate in such Purchase Period under the Plan, subject to
the requirements of Section 5(a) and the limitations imposed by Section 423(b) of the Code.

     (b)      Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted
an option under the Plan (i) if, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own
shares of beneficial ownership of the Company and/or hold outstanding options to purchase Shares
possessing five percent (5%) or more of the total combined voting power or value of all classes of
Shares of the Company or shares of common stock of any Subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase Shares under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that
exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair Market Value (as defined in Section 7(b)
below) of such Shares (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.

     4. Purchase Periods. Purchase Periods shall generally commence on the first day of each
calendar quarter (e.g., January 1, April 1, July 1, October 1) and shall end on the last
day of the calendar quarter in which the Purchase Period begins. The Administrator shall have the
discretion to establish the first Purchase Period as commencing on or after the effective date
determined in Section 22 below. The Administrator shall have the power to change the duration
and/or frequency of Purchase Periods with respect to future purchases without stockholder approval,
provided that the Administrator shall announce any such change at least five (5) days prior to the
scheduled beginning of the first Purchase Period to be affected. All Shares purchased pursuant to
the Plan are subject to the Company Insider Trading Policy.

     5. Participation.

     (a)      An eligible Employee may become a participant in the Plan by completing a subscription
agreement or any other equivalent means that the company may determine from time to time, and
filing it with the Company’s Human Resources Department or the stock brokerage or other financial
services firms designated or approved by the Administrator (each, a “Designated Broker”)
prior to the applicable Offering Date, unless a later time for filing the subscription agreement is
set by the Board for all eligible Employees with respect to a given Purchase Period. The
subscription agreement shall set forth the percentage of the participant’s Compensation (subject to
Section 6(a) below) to be paid as Contributions pursuant to the Plan.

     (b)      Payroll deductions shall commence on the first full payroll following the Offering Date
and shall end on the last payroll paid on or prior to the last Purchase Period to

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which the subscription agreement is applicable, unless sooner terminated by the participant as
provided in Section 10.

     (c)      A participant’s subscription agreement shall remain in effect for successive Purchase
Periods unless modified as provided in Section 6 or terminated as provided in Section 10.

     6. Method of Payment of Contributions.

     (a)      A participant shall elect to have payroll deductions made on each payday during the
Purchase Period in an amount not less than 1% per payroll period and not more than 10% (or such
other percentage as the Administrator may establish from time to time before an Offering Date) of
such participant’s Compensation on each payday during the Purchase Period. All payroll deductions
made by a participant shall be credited to his or her account under the Plan. A participant may
not make any additional payments into such account.

     (b)      A participant may discontinue his or her participation in the Plan as provided in Section
10, and may increase or decrease the rate of his or her Contributions with respect to the Purchase
Period only in accordance with rules that the Administrator establishes before the Offering begins.
Any change in rate shall be effective as of the beginning of the next calendar month following the
date of filing of the new subscription agreement, if the agreement is filed at least ten (10)
business days prior to such date and, if not, as of the beginning of the next succeeding calendar
month.

     (c)      Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b) herein, a participant’s payroll deductions may be decreased during any
Purchase Period scheduled to end during the current calendar year to 0%. Payroll deductions shall
re-commence at the rate provided in such participant’s subscription agreement at the beginning of
the first Purchase Period that is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.

     7. Grant of Option.

     (a) On the First Day of each Purchase Period, each eligible Employee participating in such
Purchase Period shall be granted an option to purchase on the Purchase Date for the Purchase Period
a number of whole Shares determined by dividing such Employee’s Contributions accumulated prior to
such Purchase Date and retained in the participant’s account as of the Purchase Date by the
applicable Purchase Price; provided that in no event shall an eligible Employee participating in
such Purchase Period be permitted to purchase more than 2,500 Shares in such Purchase Period
(subject to any adjustment pursuant to Section 18 below), and provided further that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 13. The Administrator may, for
future Purchase Periods, increase or decrease, in its absolute discretion, the maximum number of
Shares an eligible Employee may purchase during each Purchase Period. Exercise of the option shall
occur as provided in Section 7(c), unless the participant has withdrawn pursuant to Section 10.
The option shall expire on the last day of the Purchase Period.

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     (b) The fair market value of the Company’s Common Shares on a given date (the “Fair Market
Value”) shall be the closing sales price of the Common Shares for such date (or, in the event
that the Common Shares are not traded on such date, on the immediately preceding trading date), as
reported by the NASDAQ, or, if such price is not reported, then on the nearest preceding trading
day during which a sale occurred;

     (c) Unless a participant withdraws from the Plan as provided in Section 10, his or her option
for the purchase of Shares will be exercised automatically on each Purchase Date of a Purchase
Period, and the maximum number of whole Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her account. Any
contributions not used to purchase shares will be carried over to the next scheduled Purchase
Period. No fractional shares shall be purchased; any payroll deductions accumulated in a
participant’s account which are not sufficient to purchase a full share shall be retained in the
participant’s account for the subsequent Purchase Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other funds left over in a participant’s account
after the Purchase Date shall be returned to the participant.

     (d) Notwithstanding the foregoing, if the Administrator determines that, on a given Purchase
Date, the number of Shares with respect to which options are to be exercised may exceed the number
of Shares available for sale under the Plan on such Purchase Date, the Administrator may provide
that the Company shall make a pro rata allocation of the Shares available for purchase on such
Purchase Date in as uniform a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase Shares on such
Purchase Date.

     8. Transfer to Participant. The Shares purchased upon exercise of an option hereunder
shall be deemed to be transferred to the participant on the Purchase Date. During his or her
lifetime, a participant’s option to purchase Shares hereunder is exercisable only by him or her.

     9. Delivery. As promptly as practicable after each Purchase Date of each Purchase Period,
the number of Shares purchased by each participant upon exercise of his or her option shall be
deposited into an account established in the participant’s name with a Designated Broker or
Administrator.

     10. Voluntary Withdrawal; Termination of Employment.

     (a) A participant may withdraw all but not less than all the Contributions credited to his or
her account under the Plan at any time prior to each Purchase Date by giving written notice, in the
form and manner as directed by the Company, at least five (5) days prior to the Purchase Date. All
of the participant’s Contributions credited to his or her account will be paid to him or her
promptly after receipt of his or her notice of withdrawal and his or her option for the current
period will be automatically terminated, and no further Contributions for the purchase of Shares
will be made during the Purchase Period.

     (b) Upon termination of the participant’s status as an Employee prior to the Purchase Date of
a Purchase Period for any reason, including retirement or death, the Contributions

5

 

credited to his or her account will be returned to him or her or, in the case of his or her death,
to the person or persons entitled thereto under Section 14, and his or her option will be
automatically terminated.

     (c) In the event an Employee fails to remain customarily employed in the Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the Purchase Period in
which the employee is a participant, he or she will be deemed to have elected to withdraw from the
Plan and the Contributions credited to his or her account will be returned to him or her and his or
her option terminated.

     11. Interest. No interest shall accrue on the Contributions of a participant in the Plan.

     12. Shares.

     (a) Subject to adjustment as provided in Section 18, the maximum number of shares of the
Company’s Common Stock which shall be made available for sale under the Plan shall be 250,000
Shares (the “Reserve”).

     (b) As promptly as practicable after each Purchase Date on which a purchase occurs, the number
of whole Shares so purchased shall be delivered to the Designated Broker account designated by the
Company and kept in such account pursuant to a subscription agreement between each Participant and
the Company and subject to the conditions described therein which include a requirement that Shares
may not be delivered to an account outside of a participant’s account established at the Designated
Brokers for a period of (21) months after the applicable Purchase Date.

     (c) The participant shall have no interest (including no right to receive any dividends) or
voting right in Shares covered by his or her option until such option has been exercised.

     (d) Shares to be delivered to a participant under the Plan will be registered in the name of
the participant or, if directed by the participant in writing, in the name of the participant and
his or her spouse.

     13. Administration. The Administrator shall supervise and administer the Plan, and shall
have full and exclusive discretionary authority to construe, interpret, and apply the terms of the
Plan, to determine eligibility, to adjudicate all disputed claims under the Plan, to adopt, amend
and rescind any rules deemed appropriate for the administration of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. Every finding, decision,
and determination made by the Administrator shall, to the full extent permitted by law, be final
and binding upon all parties. No person acting individually or jointly as the Administrator shall
be liable for any action or determination made in good faith with respect to the Plan or any
participant.

     14. Designation of Beneficiary.

          (a) A participant may designate a beneficiary who is to receive any Shares and cash, if any,
from the participant’s account under the Plan in the event of such participant’s death

6

 

subsequent to the end of a Purchase Period but prior to delivery to him or her of such Shares and
cash. In addition, a participant may designate a beneficiary who is to receive any cash from the
Participant’s account under the Plan in the event of such participant’s death prior to the Purchase
Date. If a participant is married and the designated beneficiary is not the spouse, spousal
consent shall be required for such designation to be effective. Beneficiary designations under
this Section 14(a) shall be made in the form and in the manner as directed by the Company’s Human
Resources Department.

          (b) Such designation of beneficiary may be changed by the participant (and his or her spouse,
if any) at any time by written notice in accordance with Section 14(a). In the event of the death
of a participant and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant’s death, the Company shall deliver such Shares and/or cash
to the executor or administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company, in its discretion,
may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

     15. Transferability. Neither Contributions credited to a participant’s account nor any
rights with regard to the exercise of an option or to receive Shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 14) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Section 10.

     16. Use of Funds. All Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be obligated to segregate
such Contributions.

     17. Reports. Individual recordkeeping accounts will be maintained for each participant in
the Plan. Statements of account will be provided to participating Employees at least annually by
the Designated Broker, which statements will set forth the amounts of Contributions, the per Share
Purchase Price, the number of Shares purchased, and the remaining cash balance, if any.

     18. Adjustments Upon Corporate Transactions.

          (a) In the event of a proposed dissolution or liquidation of the Company, any Purchase Period
then in progress will terminate immediately prior to the consummation of such action, unless
otherwise provided by the Board. In the event of a Corporate Transaction, each option outstanding
under the Plan shall be assumed or an equivalent option shall be substituted by the successor
corporation or a parent or Subsidiary of such successor corporation. In the event that the
successor corporation refuses to assume or substitute for outstanding options, each Purchase Period
then in progress shall be shortened and a new Purchase Date shall be set (the “New Purchase
Date”) and any Purchase Period then in progress will terminate on the New Purchase Date. The
New Purchase Date shall be on or before the date of consummation of the transaction and the Board
shall notify each participant in writing, at least ten (10) days prior to the New Purchase Date,
that the Purchase Date for his or her option has been changed to the

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New Purchase Date and that his or her option will be exercised automatically on the New Purchase
Date, unless prior to such date he or she has withdrawn from the Purchase Period as provided in
Section 10.

               For purposes of this Section 18, an option granted under the Plan shall be deemed to be
assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a
Corporate Transaction, each holder of an option under the Plan would be entitled to receive upon
exercise of the option the same number and kind of shares of stock or the same amount of property,
cash or securities as such holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to the transaction, the holder of the number
of Shares covered by the option at such time (after giving effect to any adjustments in the number
of Shares covered by the option as provided for in this Section 18); provided, however, that if the
consideration received in the transaction is not solely common stock of the successor corporation
or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the
successor corporation, provide for the consideration to be received upon exercise of the option to
be solely common stock of the successor corporation or its parent equal in Fair Market Value to the
per Share consideration received by holders of Common Shares in the transaction.

               The Board may, if it so determines in the exercise of its sole discretion, also make provision
for adjusting the Reserves, as well as the price per Common Share covered by each outstanding
option and the maximum number of Shares each participant may purchase each Purchase Period pursuant
to Section 7(a), in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of its outstanding Common
Shares, and in the event of the Company’s being consolidated with or merged into any other
corporation.

     19. Amendment or Termination.

          (a) The Board may at any time and for any reason terminate or amend the Plan. Except as
provided in Section 18, no such termination of the Plan may affect options previously granted,
provided that the Plan or a Purchase Period may be terminated by the Board on a Purchase Date or by
the Board’s setting a new Purchase Date with respect to a Purchase Period then in progress if the
Board determines that termination of the Plan and/or the Purchase Period is in the best interests
of the Company and the shareholders, or if continuation of the Plan and/or the Purchase Period
would cause the Company to incur adverse accounting charges as a result of a change after the
effective date of the Plan in the generally accepted accounting rules applicable to the Plan.
Except as provided in Section 18 and in this Section 19, no amendment to the Plan shall make any
change in any option previously granted that adversely affects the rights of any participant. In
addition, to the extent the Administrator considers it appropriate to conform the Plan with Rule
16b-3 under the Exchange Act, Section 423 of the Code, or any other applicable law, regulation, or
stock exchange rule, the Company shall obtain stockholder approval in such a manner and to such a
degree as so required.

          (b) Without shareholder consent and without regard to whether any participant rights may be
considered to have been adversely affected, the Board (or its committee) shall be entitled to
change future Purchase Periods, to limit the frequency and/or number of changes in the amount
withheld during a Purchase Period, to establish the exchange

8

 

ratio applicable to amounts withheld in a currency other than U.S. dollars, to permit payroll
withholding in excess of the amount designated by a participant in order to adjust for delays or
mistakes in the Company’s processing of properly completed withholding elections, to establish
reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Common Shares for each participant properly correspond with
amounts withheld from the participant’s Compensation, and to establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion advisable that are
consistent with the Plan.

          (c) The Company may adopt rules or procedures relating to the operation and administration of
the Plan to accommodate the specific requirements of local laws and procedures. Without limiting
the generality of the foregoing, the Company specifically authorizes the Administrator to adopt
rules and procedures regarding handling of payroll deductions, payment of interest, conversion of
local currency, payroll tax, withholding procedures and handling of stock certificates which vary
with local requirements.

          (d) The Administrator may also adopt sub-plans applicable to particular Subsidiaries, or
locations, which sub-plans may be designed to be outside the scope of Code Section 423. The rules
of such sub-plans may take precedence over other provisions of this Plan, but unless otherwise
superseded by the specific terms of such sub-plan, the provisions of this Plan shall govern the
operation of such sub-plan. In addition, the Administrator may adopt rules or procedures relating
to the operation and administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the Company is specifically
authorized to adopt rules and procedures regarding handling of payroll deductions, payment of
interest, conversion of local currency, payroll tax, withholding procedures and handling of stock
certificates which vary with local requirements.

     20. Notices. All notices or other communications by a participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.

     21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such Shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

     As a condition to the exercise of an option, the Company may require the person exercising
such option to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

9

 

     22. Term of Plan; Effective Date. The Plan shall become effective on October 1, 2005,
provided that the Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months after the Plan is adopted. Such shareholder approval shall be obtained in the
manner and to the degree required under applicable laws. The Plan shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 19.

     23. Additional Restrictions of Rule 16b-3. The terms and conditions of options granted
hereunder to, and the purchase of Shares by, persons subject to Section 16 of the Exchange Act
shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain,
and such options shall contain, and the Shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

     24. Notice of Disqualifying Dispositions. By electing to participate in the Plan, each
participant agrees to notify the Company in writing immediately after the participant sells,
transfers or otherwise disposes of any Shares acquired under the Plan, if such disposition occurs
within the earlier of (i) two (2) years of the Offering Date, or (ii) one (1) year of the Purchase
Date, associated with such Shares. Each participant further agrees to provide any information
about a disposition of Shares as may be requested by the Company to assist it in complying with any
applicable tax laws.

     25. Withholding of Taxes. Each participant must make adequate provision for all applicable
federal, state, or other tax withholding obligations, which may arise upon the exercise of any
option or the disposition of any Shares.

     26. No Employment Rights. The Plan does not create, directly or indirectly, any right for
the benefit of any employee or class of employees to purchase any Shares from the Company (other
than as expressly provided in, and subject to the terms and conditions of, the Plan), or create in
any employee or class of employees any right with respect to continuation of employment by the
Company or any Subsidiary, and it shall not be deemed to interfere in any way with the Company’s or
any Subsidiary’s right to terminate, or otherwise modify, an employee’s employment at any time.

     27. Offsets. To the extent permitted by law, the Company shall have the absolute right to
withhold any amounts payable to any participant under the terms of the Plan to the extent of any
amount owed for any reason by such participant to the Company or any Subsidiary and to set off and
apply the amounts so withheld to payment of any such amount owed to the Company or any Subsidiary,
whether or not such amount shall then be immediately due and payable and in such order or priority
as among such amounts owed as the Board or its committee, in its sole discretion, shall determine.

     28. Captions. The captions of the sections and paragraphs of this Plan have been inserted
solely as a matter of convenience and in no way define or limit the scope or intent of any
provision of the Plan. References to sections herein are to the specified sections of this Plan
unless another reference is specifically stated. Wherever used herein, a singular number shall be
deemed to include the plural unless a different meaning is required by the context.

10

 

     29. Governing Law. The internal laws of the Commonwealth of Virginia shall govern all
matters relating to this Plan except to the extent superseded by the laws of the United States.

11

 

EXHIBIT A

PRA INTERNATIONAL

2005 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

	 	 	 
	___ Original Application

	 	Enrollment Date:_______________________________________
	___ Change in Payroll Deduction Rate
	 	 
	___ Change of Beneficiary(ies)
	 	 

     1. ___________________________________hereby elects to participate in the PRA
International 2005 Employee Stock Purchase Plan (the “2005 Employee Stock Purchase Plan”), and
subscribes to purchase Common Shares of the Company in accordance with this Subscription Agreement
and the 2005 Employee Stock Purchase Plan.

     2. I hereby authorize payroll deductions from each paycheck in the amount of _________________
(minimum 1% per paycheck) of my Compensation on each payday (not to exceed 10%) during the Purchase
Period in accordance with the 2005 Employee Stock Purchase Plan. (Please note that no fractional
percentages are permitted.)

     3. I understand that said payroll deductions shall be accumulated for the purchase of Common
Shares at the applicable Purchase Price determined in accordance with the 2005 Employee Stock
Purchase Plan. I understand that if I do not withdraw from a Purchase Period, any accumulated
payroll deductions will be used to automatically exercise my option.

     4. I have received a copy of the complete “2005 Employee Stock Purchase Plan.” I understand
that my participation in the 2005 Employee Stock Purchase Plan is in all respects subject to the
terms of the Plan. I understand that the grant of the option by the Company under this
Subscription Agreement may be subject to obtaining stockholder approval of the 2005 Employee Stock
Purchase Plan.

     5. Shares purchased for me under the 2005 Employee Stock Purchase Plan should be issued in the
name(s) of (Employee or Employee and Spouse Only).

     6. I understand that I may not request a certificate representing my shares held in the Plan
for a period of 21 months following the Purchase Date. I further understand that if I dispose of
any shares received by me pursuant to the Plan within 2 years after the Offering Date (the first
day of the Purchase Period during which I purchased such shares) or one year from the Purchase Date
whichever is earlier, I will be treated for Federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess of the fair market value of
the shares at the time such shares were purchased by me over the price which I paid for the shares.
All shares purchased pursuant to the plan are bound by the Company Insider Trading Policy.

 

 

          I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY
DISPOSITION OF SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX
WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The Company
may, but will not be obligated to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early disposition of Common Shares
by me. If I dispose of such shares at any time after the expiration of the 2-year holding period,
I understand that I will be treated for Federal income tax purposes as having received income only
at the time of such disposition, and that such income will be taxed as ordinary income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at
the time of such disposition over the purchase price which I paid for the shares, or (2) 10% of the
fair market value of the shares on the last day of the Purchase Period. The remainder of the gain,
if any, recognized on such disposition will be taxed as capital gain. I UNDERSTAND THAT NOTHING IN
THIS AGREEMENT CONSTITUTES TAX ADVICE, AND I ACKNOWLEDGE THAT THE COMPANY HAS ENCOURAGED ME TO
CONSULT MY OWN TAX ADVISOR WITH REGARD TO THE TAX CONSEQUENCES OF PARTICIPATING IN THE 2005
EMPLOYEE STOCK PURCHASE PLAN.

     7. I hereby agree to be bound by the terms of the 2005 Employee Stock Purchase Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the
2005 Employee Stock Purchase Plan.

     8. In the event of my death, I hereby designate the following as my beneficiary(ies) to
receive all payments and Shares due me under the 2005 Employee Stock Purchase Plan:

	 	 	 
	NAME:
	 	 
	 
	 	 
	

	 	___________________________________

(First)     (Middle)     (Last)
	 
	 	 
	___________________________________

Relationship

	 	___________________________________

	 
	 	 
	

	 	___________________________________

(Address)
	 
	 	 
	NAME:
	 	 
	 
	 	 
	

	 	___________________________________

(First)     (Middle)     (Last)
	 
	 	 
	___________________________________

Relationship

	 	___________________________________

	 
	 	 
	

	 	___________________________________

(Address)

     I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE
PURCHASE PERIODS

 

 

UNLESS TERMINATED BY ME AND CONFIRM THAT THE FOLLOWING INFORMATION IS TRUE AND CORRECT.

	 	 	 
	Employee’s Social

Security Number:

	 	___________________________________
	 
	 	 
	Employee’s Address:

	 	___________________________________
	 
	 	 
	

	 	___________________________________
	 
	 	 
	

	 	___________________________________
	 
	 	 
	Dated: ____________

	 	___________________________________

Signature of Employee
	 
	 	 
	 
	 	 
	 

	 	___________________________________

Spouse’s Signature

(If beneficiary other than spouse)

 

 

EXHIBIT B

2005 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

     The undersigned participant in the Purchase Period of the PRA International 2005 Employee
Stock Purchase Plan which began on ________________, 20___ (the “Enrollment Date”) hereby
notifies the Company that he or she hereby withdraws from the participation in the 2005 Employee
Stock Purchase Plan for the Purchase Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions which has not yet used to
exercise the options be credited to his or her account with respect to such Purchase Period. The
undersigned understands and agrees that his or her option for such Purchase Period will be
automatically terminated.

     The undersigned understands further that no further payroll deductions will be made for the
purchase of shares in the current Purchase Period and the undersigned shall be eligible to
participate in succeeding Purchase Periods only by delivering to the Company a new Subscription
Agreement for a Purchase Period beginning at least one year after the date of this withdrawal.

Name and Address of Participant:

_____________________________

_____________________________

_____________________________

Signature:

_____________________________

Date: ________________________

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