EXHIBIT 10.3

PHARMANET DEVELOPMENT GROUP, INC.

2008 INCENTIVE COMPENSATION PLAN

ARTICLE ONE

GENERAL PROVISIONS

I.

PURPOSE OF THE PLAN

This 2008 Incentive Compensation Plan (the “Plan”) is intended to promote the
interests of PharmaNet Development Group, Inc., a Delaware corporation, by
providing eligible persons in the Corporation’s service with the opportunity to
participate in one or more cash or equity incentive compensation programs
designed to encourage them to continue their service relationship with the
Corporation.

The Plan shall serve as the successor to the Corporation’s Amended and Restated
1999 Stock Plan (the “Predecessor Plan”), and no further awards shall be granted
under the Predecessor Plan after the Plan Effective Date. All awards outstanding
under the Predecessor Plan on the Plan Effective Date shall continue to be
governed solely by the terms of the documents evidencing such award, and no
provision of the Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such transferred awards.

Capitalized terms shall have the meanings assigned to such terms in the attached
Appendix.

II.

TYPES OF AWARDS

Awards may be made under the Plan in the form of (i) options, (ii) stock
appreciation rights, (iii) stock awards, (iv) restricted stock units, (v) cash
awards, (vi) performance units, and (vii) dividend equivalent rights.

III.

ADMINISTRATION OF THE PLAN

A.

The Compensation Committee shall have sole and exclusive authority to administer
the Plan with respect to Section 16 Insiders. Administration of the Plan with
respect to all other persons eligible to participate in the Plan may, at the
Board’s discretion, be vested in the Compensation Committee or a Secondary Board
Committee, or the Board may retain the power to administer those programs with
respect to such persons.

B.

Members of the Compensation Committee or any Secondary Board Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Board Committee and reassume all powers and authority previously
delegated to such committee.

C.

To the extent permitted by and consistent with applicable law, the Board may
delegate to one or more executive officers the power to grant awards to
employees other than Section 16 Insiders.

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D.

Each Plan Administrator shall, within the scope of its administrative functions
under the Plan, have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the provisions of the Plan and any outstanding
Awards thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any Award thereunder.

E.

Service as a Plan Administrator by the members of the Compensation Committee or
the Secondary Board Committee shall constitute service as Board members, and the
members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Compensation Committee or the Secondary Board
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any Award thereunder.

IV.

ELIGIBILITY

A.

The persons eligible to participate in the Plan are as follows:

(i)

Employees,

(ii)

non-employee members of the Board or the board of directors of any Parent or
Subsidiary, and

(iii)

consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary).

B.

The Plan Administrator shall have full authority to determine which eligible
persons are to receive Awards under the Plan, the time or times when those
Awards are to be made, the number of shares to be covered by each such Award,
the time or times when the Award is to become exercisable, the status of an
option for federal tax purposes, the maximum term for which an option or stock
appreciation right is to remain outstanding, the vesting and issuance schedules
applicable to the shares which are the subject of the Award, the cash
consideration (if any) payable for those shares and the form (cash or shares of
Common Stock) in which the Award is to be settled and, with respect to
performance–based Awards, the performance objectives for each such Award, the
amounts payable at designated levels of attained performance, any applicable
service vesting requirements, and the payout schedule for each such Award.

C.

Non-employee members of the Board shall be eligible to participate in the
automatic grant program for non-employee directors as set forth in Section VIII
of Article Two.

V.

STOCK SUBJECT TO THE PLAN

A.

The stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market. The number of shares of Common Stock initially reserved for
issuance over the term of the Plan shall be limited to Six Hundred Thirty
Thousand Nine Hundred and Seventy Four (630,974) shares. Such reserve shall
consist of (i) the number of shares of Common Stock

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estimated to remain available for issuance, as of the Plan Effective Date, under
the Predecessor Plan as last approved by the Corporation’s stockholders
(excluding shares subject to outstanding awards under the Predecessor Plan),
plus (ii) an additional increase of Five Hundred Thousand (500,000) shares. To
the extent any options or restricted stock units outstanding under the
Predecessor Plan on the Plan Effective Date expire or terminate unexercised or
without the issuance of shares thereunder, the number of shares of Common Stock
subject to those expired or terminated options and restricted stock units at the
time of expiration or termination shall be added to the share reserve under this
Plan and shall accordingly be available for issuance hereunder, up to a maximum
of an additional Eighty-Three Thousand (83,000) shares.

B.

Each person participating in the Plan shall be subject the following
limitations:

(i)

for Awards denominated in shares of Common Stock (whether payable in Common
Stock, cash or a combination of both), the maximum number of shares of Common
Stock for which such Awards may be made to such person in any calendar year
shall not exceed Two Hundred Thousand (200,000) shares of Common Stock in the
aggregate, and

(ii)

for Awards denominated in dollars (whether payable in cash, Common Stock or a
combination of both), the maximum dollar amount for which such Awards may be
made in the aggregate to such person shall not exceed Two Million Dollars
($2,000,000) per calendar year within the applicable service or performance
measurement period.

C.

Shares of Common Stock subject to outstanding Awards made under the Plan
(including Awards transferred to this Plan from the Predecessor Plan) shall be
available for subsequent issuance under the Plan to the extent those Awards
expire or terminate for any reason prior to the issuance of the shares of Common
Stock subject to those Awards. Unvested shares issued under the Plan and
subsequently forfeited or repurchased by the Corporation, at a price per share
not greater than the original issue price paid per share, pursuant to the
Corporation’s repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for subsequent reissuance. Should the exercise price of
an option under the Plan be paid with shares of Common Stock, then the
authorized reserve of Common Stock under the Plan shall be reduced only by the
net number of shares issued under the exercised stock option and not by the
gross number of shares for which that option is exercised. Upon the exercise of
any stock appreciation right under the Plan, the share reserve shall be reduced
only by the net number of shares actually issued by the Corporation upon such
exercise and not by the gross number of shares as to which such right is
exercised. If shares of Common Stock otherwise issuable under the Plan are
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise, vesting or settlement of an Award, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
by the net number of shares issued after such share withholding.

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D.

Should any change be made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares,
spin-off transaction or other change affecting the outstanding Common Stock as a
class without the Corporation’s receipt of consideration, or should the value of
outstanding shares of Common Stock be substantially reduced as a result of a
spin-off transaction or an extraordinary dividend or distribution, or should
there occur any merger, consolidation or other reorganization, then equitable
adjustments shall be made by the Plan Administrator to (i) the maximum number
and/or class of securities issuable under the Plan, (ii) the maximum number
and/or class of securities by which the share reserve under the Plan may
increase by reason of the expiration or termination of options or restricted
stock units under the Predecessor Plan, (iii) the maximum number and/or class of
securities for which any one person may be granted Common Stock-denominated
Awards under the Plan per calendar year, (iv) the number and/or class of
securities for Awards are subsequently to be made under the automatic grant
program for non-employee directors, (v) the number and/or class of securities
and the exercise or base price per share in effect under each outstanding award
under the Plan and the cash consideration (if any) payable per share, and
(vi) the number and/or class of securities subject to the Corporation’s
outstanding repurchase rights under the Plan and the repurchase price payable
per share. The adjustments shall be made in such manner as the Plan
Administrator deems appropriate in order to prevent the dilution or enlargement
of benefits under the Plan and the outstanding Awards thereunder, and such
adjustments shall be final, binding and conclusive. In the event of a Change in
Control, however, the adjustments (if any) shall be made solely in accordance
with the applicable provisions of the Plan governing Change in Control
transactions.

E.

Outstanding Awards granted pursuant to the Plan shall in no way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

ARTICLE TWO

AWARDS

I.

OPTIONS

A.

Authority. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant Incentive Options and Nonstatutory
Options evidenced by one or more Award Agreements in the form approved by the
Plan Administrator; provided, however, that each such agreement shall comply
with the terms specified below. Each agreement evidencing an Incentive Option
shall, in addition, be subject to the provisions of Section H below.

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B.

Exercise Price.

(i)

The exercise price per share shall be fixed by the Plan Administrator; provided,
however, that such exercise price shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the grant date.

(ii)

The exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of the documents evidencing the option, be
payable in one or more of the forms specified below:

(1)

cash or check made payable to the Corporation,

(2)

shares of Common Stock (whether delivered in the form of actual stock
certificates or through attestation of ownership) held for the requisite period
(if any) necessary to avoid any resulting charge to the Corporation’s earnings
for financial reporting purposes and valued at Fair Market Value on the Exercise
Date, or

(3)

to the extent the option is exercised for vested shares of Common Stock, through
a special sale and remittance procedure pursuant to which the Participant shall
concurrently provide instructions to (a) a brokerage firm (reasonably
satisfactory to the Corporation for purposes of administering such procedure in
compliance with the Corporation’s pre-clearance/pre-notification policies) to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm on such
settlement date in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

C.

Exercise and Term of Options. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined
by the Plan Administrator and set forth in the Award Agreements evidencing the
option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.

D.

Effect of Termination of Service.

(i)

The following provisions shall govern the exercise of any options that are
outstanding at the time of the Participant’s cessation of Service or death:

(1)

Any option outstanding at the time of the Participant’s cessation of Service for
any reason shall remain exercisable for such period of time thereafter as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option, but no such option shall be exercisable after the
expiration of the option term.

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(2)

Any option held by the Participant at the time of the Participant’s death and
exercisable in whole or in part at that time may be subsequently exercised by
the personal representative of the Participant’s estate or by the person or
persons to whom the option is transferred pursuant to the Participant’s will or
the laws of inheritance or by the Participant’s designated beneficiary or
beneficiaries of that option.

(3)

Should the Participant’s Service be terminated for Misconduct or should the
Participant otherwise engage in Misconduct while holding one or more outstanding
options granted under this Article Two, then all of those options shall
terminate immediately and cease to be outstanding.

(4)

During the applicable post-Service exercise period, the option may not be
exercised for more than the number of vested shares for which the option is at
the time exercisable; provided, however, that one or more options may be
structured so that those options continue to vest in whole or part during the
applicable post-Service exercise period. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any shares for which the
option has not been exercised.

(ii)

The Plan Administrator shall have complete discretion, exercisable either at the
time an option is granted or at any time while the option remains outstanding,
to:

(1)

extend the period of time for which the option is to remain exercisable
following the Participant’s cessation of Service from the limited exercise
period otherwise in effect for that option to such greater period of time as the
Plan Administrator shall deem appropriate, but in no event beyond the expiration
of the option term;

(2)

include an automatic extension provision whereby the specified post-Service
exercise period in effect for any option shall automatically be extended by an
additional period of time equal in duration to any interval within the specified
post-Service exercise period during which the exercise of that option or the
immediate sale of the shares acquired under such option could not be effected in
compliance with applicable federal and state securities laws, but in no event
shall such an extension result in the continuation of such option beyond the
expiration date of the term of that option; and/or

(3)

permit the option to be exercised, during the applicable post-Service exercise
period, not only with respect to the number of vested shares of Common Stock for
which such option is exercisable at the time of the Participant’s cessation of
Service but also with respect to one or more additional installments in which
the Participant would have vested had the Participant continued in Service.

E.

Stockholder Rights. The holder of an option shall have no stockholder rights
with respect to the shares subject to the option until such person shall have
exercised the option, paid the exercise price and become a holder of record of
the purchased shares.

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F.

Repurchase Rights. The Plan Administrator shall have the discretion to grant
options which are exercisable for unvested shares of Common Stock. Should the
Participant cease Service while such shares are unvested, the Corporation shall
have the right to repurchase any or all of those unvested shares at a price per
share equal to the lower of (i) the exercise price paid per share or (ii) the
Fair Market Value per share of Common Stock at the time of repurchase. The terms
upon which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.

G.

Transferability of Options. The transferability of options granted under the
Plan shall be governed by the following provisions:

(i)

Incentive Options: During the lifetime of the Participant, Incentive Options
shall be exercisable only by the Participant and shall not be assignable or
transferable other than by will or the laws of inheritance following the
Participant’s death.

(ii)

Non-Statutory Options. Non-Statutory Options shall be subject to the same
limitation on transfer as Incentive Options, except that the Plan Administrator
may structure one or more Non-Statutory Options so that the option may be
assigned in whole or in part during the Participant’s lifetime. The assigned
portion may only be exercised by the person or persons who acquire a proprietary
interest in the option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.

(iii)

Beneficiary Designation. Notwithstanding the foregoing, the Participant may
designate one or more persons as the beneficiary or beneficiaries of his or her
outstanding options, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Participant’s death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Participant’s death.

H.

Incentive Options. The terms specified below shall be applicable to all
Incentive Options.

(i)

Eligibility. Incentive Options may only be granted to Employees.

(ii)

Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000).

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To the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, then for purposes of
the foregoing limitations on the exercisability of those options as Incentive
Options, such options shall be deemed to become first exercisable in that
calendar year on the basis of the chronological order in which they were
granted, except to the extent otherwise provided under applicable law or
regulation.

(iii)

10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date, and the option term shall not exceed five (5) years
measured from the option grant date.

II.

STOCK APPRECIATION RIGHTS

A.

Authority. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant stock appreciation rights evidenced
by one or more Award Agreements in the form approved by the Plan Administrator
which complies with the terms specified below.

B.

Types. Two types of stock appreciation rights shall be authorized for issuance
under this Section II: (i) tandem stock appreciation rights (“Tandem Rights”)
and (ii) stand-alone stock appreciation rights (“Stand-alone Rights”).

C.

Tandem Rights. The following terms and conditions shall govern the grant and
exercise of Tandem Rights.

(i)

One or more Participants may be granted a Tandem Right, exercisable upon such
terms and conditions as the Plan Administrator may establish, to elect between
the exercise of the underlying option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation in
an amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Participant is at the time
vested under the surrendered option (or surrendered portion thereof) over
(ii) the aggregate exercise price payable for such vested shares.

(ii)

Any distribution to which the Participant becomes entitled upon the exercise of
a Tandem Right may be made in (i) shares of Common Stock valued at Fair Market
Value on the option surrender date, (ii) cash or (iii) a combination of cash and
shares of Common Stock, as specified in the applicable Award agreement.

D.

Stand-Alone Rights. The following terms and conditions shall govern the grant
and exercise of Stand-alone Rights:

(i)

One or more Participants may be granted a Stand-alone Right not tied to any
underlying option. The Stand-alone Right shall relate to a specified number of
shares of Common Stock and shall be exercisable upon such terms and conditions
as the Plan Administrator may establish. In no event, however, may the
Stand-alone Right have a maximum term in excess of ten (10) years measured from
the grant date.

(ii)

Upon exercise of the Stand-alone Right, the holder shall be entitled to receive
a distribution from the Corporation in an amount equal to the excess of (i) the

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aggregate Fair Market Value (on the exercise date) of the shares of Common Stock
underlying the exercised right over (ii) the aggregate base price in effect for
those shares.

(iii)

The number of shares of Common Stock underlying each Stand-alone Right and the
base price in effect for those shares shall be determined by the Plan
Administrator in its sole discretion at the time the Stand-alone Right is
granted. In no event, however, may the base price per share be less than the
Fair Market Value per underlying share of Common Stock on the grant date.

(iv)

Stand-alone Rights shall be subject to the same transferability restrictions
applicable to Non-Statutory Options and may not be transferred during the
holder’s lifetime, except to the extent otherwise provided in the applicable
Award Agreement. In addition, one or more beneficiaries may be designated for an
outstanding Stand-alone Right in accordance with substantially the same terms
and provisions as set forth in Section I.F of this Article Two.

(v)

The distribution with respect to an exercised Stand-alone Right may be made in
(i) shares of Common Stock valued at Fair Market Value on the exercise date,
(ii) cash or (iii) a combination of cash and shares of Common Stock, as
specified in the applicable Award agreement.

(vi)

The holder of a Stand-alone Right shall have no stockholder rights with respect
to the shares subject to the Stand-alone Right unless and until such person
shall have exercised the Stand-alone Right and become a holder of record of the
shares of Common Stock issued upon the exercise of such Stand-alone Right.

E.

Post-Service Exercise. The provisions governing the exercise of Tandem and
Stand-alone Rights following the cessation of the Participant’s Service shall be
substantially the same as those set forth in Section I.C. of this Article Two
for the options granted under the Plan, and the Plan Administrator’s
discretionary authority under Section I.C.(ii) of this Article Two shall also
extend to any outstanding Tandem or Stand-alone Appreciation Rights.

III.

STOCK AWARDS

A.

Authority. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant stock awards either as vested or
unvested shares, through direct and immediate issuances. Each stock award shall
be evidenced by an Award Agreement which complies with the terms specified
below.

B.

Issue Price/Consideration.

(i)

Shares may be issued for a price per share fixed by the Plan Administrator at
the time of the Award, but in no event shall such issue price be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
Award date.

(ii)

Shares of Common Stock may be issued for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:

(1)

cash;

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(2)

past services rendered or to be rendered the Corporation (or any Parent or
Subsidiary); or

(3)

any other valid consideration under the State in which the Corporation is at the
time incorporated.

C.

Vesting Provisions.

(i)

Stock awards may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance as a bonus for Service rendered or may vest in
one or more installments over the Participant’s period of Service and/or upon
the attainment of specified performance objectives. The elements of the vesting
schedule applicable to any stock award shall be determined by the Plan
Administrator and incorporated into the Award Agreement.

(ii)

The Plan Administrator shall also have the discretionary authority, consistent
with Code Section 162(m), to structure one or more stock awards so that the
shares of Common Stock subject to those Awards shall vest upon the achievement
of pre-established performance objectives based on one or more Performance Goals
and measured over the performance period specified by the Plan Administrator at
the time of the Award.

(iii)

Should the Participant cease to remain in Service while holding one or more
unvested shares of Common Stock issued under a stock award or should the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent, the Corporation shall repay to the Participant the lower of
(i) the cash consideration paid for the surrendered shares or (ii) the Fair
Market Value of those shares at the time of cancellation.

(iv)

The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares. Any
such waiver shall result in the immediate vesting of the Participant’s interest
in the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives. However, no vesting requirements tied to the attainment of
performance objectives may be waived with respect to shares which were intended
at the time of issuance to qualify as performance-based compensation under Code
Section 162(m), except in the event of the Participant’s Involuntary Termination
with respect to Awards made prior to January 1, 2009 or as otherwise provided in
Section IX of this Article Two.

(v)

Any new, substituted or additional securities or other property (including money
paid other than as a regular cash dividend) which the Participant may have the
right to receive with respect to the Participant’s unvested shares of Common
Stock by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares, spin-off transaction, extraordinary
dividend or distribution or other change affecting the outstanding

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Common Stock as a class without the Corporation’s receipt of consideration shall
be issued subject to (i) the same vesting requirements applicable to the
Participant’s unvested shares of Common Stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate, unless and to the extent the
Plan Administrator determines at the time to vest and distribute such securities
or other property. Equitable adjustments to reflect each such transaction shall
also be made by the Plan Administrator to the repurchase price payable per share
by the Corporation for any unvested securities subject to its existing
repurchase rights under the Plan; provided the aggregate repurchase price shall
in each instance remain the same.

D.

Stockholder Rights. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under a stock
award, whether or not the Participant’s interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any dividends paid on such shares, subject to any applicable vesting
requirements.

IV.

RESTRICTED STOCK UNITS

A.

Authority. The Plan Administrator shall have the full power and authority,
exercisable in its sole discretion, to grant restricted stock units which
entitle the Participants to receive the shares underlying those Awards upon
vesting or upon the expiration of a designated time period following the vesting
of those Awards.

B.

Vesting Provisions.

(i)

Restricted stock units may, in the discretion of the Plan Administrator, vest in
one or more installments over the Participant’s period of Service or upon the
attainment of specified performance objectives.

(ii)

The Plan Administrator shall also have the discretionary authority, consistent
with Code Section 162(m), to structure one or more restricted stock unit awards
so that the shares of Common Stock subject to those Awards shall vest (or vest
and become issuable) upon the achievement of pre-established performance
objectives based on one or more Performance Goals and measured over the
performance period specified by the Plan Administrator at the time of the Award.

(iii)

Outstanding restricted stock units shall automatically terminate, and no shares
of Common Stock shall actually be issued in satisfaction of those Awards, if the
performance goals or Service requirements established for those Awards are not
attained or satisfied. The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or more
outstanding Awards of restricted stock units as to which the designated
performance goals or Service requirements have not been attained or satisfied.
However, no vesting requirements tied to the attainment of performance goals may
be waived with respect to Awards which were intended, at the time those Awards
were made, to qualify as performance-based compensation under Code
Section 162(m), except in the event of the Participant’s Involuntary Termination
with respect to Awards made prior to January 1, 2009 or as otherwise provided in
Section IX of this Article Two.

C.

Stockholder Rights. The Participant shall not have any stockholder rights with
respect to the shares of Common Stock subject to a restricted stock unit award
until that

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award vests and the shares of Common Stock are actually issued thereunder.
However, dividend-equivalent units may be paid or credited, either in cash or in
actual or phantom shares of Common Stock, on outstanding restricted stock unit
awards, subject to such terms and conditions as the Plan Administrator may deem
appropriate.

V.

CASH AWARDS

A.

Authority. The Plan Administrator shall have the full power and authority,
exercisable in its sole discretion, to make cash incentive awards which are to
vest in one or more installments over the Participant’s continued Service with
the Corporation or upon the attainment of specified performance goals. Each such
cash award shall be evidenced by one or more Award Agreements in the form
approved by the Plan Administrator; provided however, that each such agreement
shall comply with the terms specified below.

B.

Vesting Provisions.

(i)

The elements of the vesting schedule applicable to each cash award shall be
determined by the Plan Administrator and incorporated into the Award Agreement.

(ii)

The Plan Administrator shall also have the discretionary authority, consistent
with Code Section 162(m), to structure one or more cash awards so that those
Awards shall vest upon the achievement of pre-established corporate performance
objectives based upon one or more Performance Goals.

(iii)

Outstanding cash awards shall automatically terminate, and no cash payment or
other consideration shall be due the holders of those Awards, if the performance
goals or Service requirements established for the Awards are not attained or
satisfied. The Plan Administrator may in its discretion waive the cancellation
and termination of one or more unvested cash awards which would otherwise occur
upon the cessation of the Participant’s Service or the non-attainment of the
performance objectives applicable to those Awards. Any such waiver shall result
in the immediate vesting of the Participant’s interest in the cash award as to
which the waiver applies. Such wavier may be effected at any time, whether
before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives. However, no vesting
requirements tied to the attainment of performance goals may be waived with
respect to awards which were intended, at the time those awards were granted, to
qualify as performance-based compensation under Code Section 162(m), except in
the event of the Participant’s Involuntary Termination with respect to Awards
made prior to January 1, 2009 or as otherwise provided in Section IX of this
Article Two.

C.

Payment. Cash awards which become due and payable following the attainment of
the applicable performance goals or satisfaction of the applicable Service
requirement (or the waiver of such goals or Service requirement) may be paid in
(i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment
date or (iii) a combination of cash and shares of Common Stock as the Plan
Administrator shall determine.

VI.

PERFORMANCE UNIT AWARDS

A.

Authority. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant Performance Unit Awards in
accordance with the terms of this Section VI. Each such Performance Unit Award
shall be evidenced by one or more Award

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Agreements in the form approved by the Plan Administrator; provided however,
that each such agreement shall comply with the terms specified below.

B.

Bonus Pool. A Performance Unit shall represent a participating interest in a
special bonus pool tied to the attainment of pre-established performance
objectives based on one or more Performance Goals. The amount of the bonus pool
may vary with the level at which the applicable performance objectives are
attained, and the value of each Performance Unit which becomes due and payable
upon the attained level of performance shall be determined by dividing the
amount of the resulting bonus pool (if any) by the total number of Performance
Units issued and outstanding at the completion of the applicable performance
period.

C.

Service Requirement. Performance Units may also be structured to include a
Service requirement which the Participant must satisfy following the completion
of the performance period in order to vest in the Performance Units awarded with
respect to that performance period.

D.

Payment. Performance Units which become due and payable following the attainment
of the applicable performance objectives and the satisfaction of any applicable
Service requirement may be paid in (i) cash, (ii) shares of Common Stock valued
at Fair Market Value on the payment date or (iii) a combination of cash and
shares of Common Stock, as determined by the Plan Administrator in its sole
discretion and set forth in the Award Agreement.

VII.

DIVIDEND EQUIVALENT RIGHTS

A.

Authority. The Plan Administrator shall have the discretionary authority to
grant dividend equivalent rights in accordance with the terms of this
Section VII. Each such Award shall be evidenced by an Award Agreement in the
form approved by the Plan Administrator; provided however, that each such
agreement shall comply with the terms specified below.

B.

Terms. The dividend equivalent rights may be granted as stand-alone awards or in
tandem with other Awards made under the Plan. The term of each such Award shall
be established by the Plan Administrator at the time of grant, but no such Award
shall have a term in excess of ten (10) years.

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C.

Entitlement. Each dividend equivalent right shall represent the right to receive
the economic equivalent of each dividend or distribution, whether in cash,
securities or other property (other than shares of Common Stock), which is made
per issued and outstanding share of Common Stock during the term the dividend
equivalent right remains outstanding. A special account on the books of the
Corporation shall be maintained for each Participant to whom a dividend
equivalent right is granted, and that account shall be credited per dividend
equivalent right with each such dividend or distribution made per issued and
outstanding share of Common Stock during the term of that dividend equivalent
right remains outstanding.

D.

Timing of Payment. Payment of the amounts credited to such book account may be
made to the Participant either concurrently with the actual dividend or
distribution made per issued and outstanding share of Common Stock or may be
deferred for a period specified by the Plan Administrator at the time the
dividend equivalent right is initially granted or (to the extent permitted by
the Plan Administrator) designated by the Participant pursuant to a timely
deferral election made in accordance with the requirements of Code Section 409A.

E.

Form of Payment. Payment may be paid in (i) cash, (ii) shares of Common Stock or
(iii) a combination of cash and shares of Common Stock, as determined by the
Plan Administrator in its sole discretion and set forth in the Award Agreement.
If payment is to be made in the form of Common Stock, the number of shares of
Common Stock into which the cash dividend or distribution amounts are to be
converted for purposes of the Participant’s book account may be based on the
Fair Market Value per share of Common Stock on the date of conversion, a prior
date or an average of the Fair Market Value per share of Common Stock over a
designated period, as determined by the Plan Administrator in its sole
discretion.

VIII.

AUTOMATIC GRANT PROGRAM FOR NON-EMPLOYEE DIRECTORS

A.

Automatic Grants. Awards shall be made to non-employee Board members as follows:

(i)

Each individual who is first elected as a non-employee Board member at an annual
meeting of the stockholders beginning with the 2009 Annual Meeting shall
automatically be granted, on the date of such initial election, an Award in the
form of restricted stock units covering that number of shares of Common Stock
(rounded up to the next whole share) determined by dividing the Applicable
Annual Amount by the Fair Market Value per share of Common Stock on such date,
provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

(ii)

Each individual who is first elected or appointed as a non-employee Board member
at any time after the 2008 Annual Meeting and other than at an annual meeting of
stockholders shall automatically be granted on the date of such election or
appointment, an Award in the form of restricted stock units covering that number
of shares of Common Stock (rounded up to the next whole share) determined by
dividing the Pro-rata Applicable Annual Amount by the Fair Market Value per
share of Common Stock on such date, provided that individual has not previously
been in the employ of the Corporation or any Parent or Subsidiary. The Pro-rata
Applicable Annual Amount shall be determined by multiplying the Applicable
Annual Amount by a fraction, the numerator of which is the difference between 12

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and the number of whole months that have elapsed since the last annual
stockholders meeting prior to such election or appointment and the denominator
of which is 12.

(iii)

On the date of each annual stockholders meeting, beginning with the 2009 Annual
Meeting, each individual who is at that time serving as, and is to continue to
serve as, a non-employee Board member shall automatically be granted an Award in
the form of restricted stock units covering that number of shares of Common
Stock (rounded up to the next whole share) determined by dividing the Applicable
Annual Amount by the Fair Market Value per share on such date. There shall be no
limit on the number of such Annual Grants any one continuing non-employee Board
member may receive over his or her period of Board service, and non-employee
Board members who have previously been in the employ of the Corporation (or any
Parent or Subsidiary) shall be eligible to receive one or more such Annual
Grants over their period of continued Board service.

(iv)

The Applicable Annual Amount shall be determined by the Plan Administrator on or
before the date of the grant, but in no event shall exceed One Hundred
Twenty-Five Thousand Dollars ($125,000).

(v)

Each restricted stock unit awarded under this Section VIII shall entitle the
non-employee Board member to one share of Common Stock on the applicable
issuance date following the vesting of that unit.

B.

Vesting of Awards and Issuance of Shares.

(i)

Normal Vesting Provisions. The shares of Common Stock subject to each Award
granted under Section VIII.A.(i) and Section VIII.A(iii) shall vest with respect
to fifty percent (50%) of the shares on December 31 following the grant date of
the Award (the "Initial Vesting Date") and with respect to the remaining
fifty percent (50%) of the shares, the earlier of June 30 or the date of the
Annual Meeting which follows the Initial Vesting Date, provided the non-employee
Board member continues in Board service through each such date. If an individual
is first elected or appointed as a non-employee Board member after the date of
an Annual Meeting of stockholders and prior to December 31 of the year of such
meeting, then the shares of Common Stock subject to the Award granted under
Section VIII. A.(ii) to such non-employee Board member shall vest with respect
to fifty percent (50%) of the shares on December 31 following the grant date of
the Award and, with respect to the remaining fifty percent (50%) of the shares,
on the earlier of June 30 or the date of the Annual Meeting which follows such
initial vesting date, provided the non-employee Board member continues in Board
service through such date. If an individual is first elected or appointed as a
non-employee Board member after the date of an Annual Meeting of stockholders
and on or after December 31 of the year of such meeting, then the shares of
Common Stock subject to the Award granted under Section VIII. A(ii) to such
non-employee Board member shall vest with respect to one hundred percent (100%)
of the shares on the earlier of June 30 or the date of the Annual Meeting which
follows the grant date of the Award, provided the non-employee Board member
continues in Board service through such date.

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(ii)

Special Vesting Provisions. Should the non-employee Board member cease Board
service by reason of death or Permanent Disability, then each Award made to such
individual under this Section VIII and outstanding at the time of such cessation
of Board service shall immediately vest in full. Should the non-employee Board
member continue in Board service until the effective date of a Change in Control
transaction, then each Award made to such individual under this Section VIII and
outstanding at the time of the Change in Control shall, immediately prior to the
effective date of that Change in Control transaction, vest in full and shall be
issued to him or her as soon as administratively practicable thereafter, but in
no event more than fifteen (15) business days after such effective date, or
shall otherwise be converted into the right to receive the same consideration
per share of Common Stock payable to the other stockholders in the Change in
Control and distributed at the same time as such stockholder payments.

(iii)

Issuance. The shares of Common Stock underlying each Award made under this
Section VIII shall be issued as those shares vest in accordance with the
foregoing vesting provisions; provided, however , that the Plan Administrator
may allow one or more non-employee Board members to defer, in accordance with
the applicable requirements of Code Section 409A and the regulations thereunder,
the issuance of the vested shares to a designated date or until cessation of
Board service or an earlier Change in Control.

C.

Dividend Equivalent Rights. Each restricted stock unit shall include a dividend
equivalent right pursuant to which a book account shall be established for the
non-employee Board member and credited from time to time with each dividend or
distribution, whether in cash, securities or other property (other than shares
of Common Stock) which is made per issued and outstanding share of Common Stock
during the period the share of Common Stock underlying that restricted stock
unit remains unissued. The amount credited to the book account with respect to
such restricted stock unit shall be paid to the non-employee Board member
concurrently with the issuance of the share of Common Stock underlying that
unit, subject to the Corporation’s collection of any applicable withholding
taxes.

IX.

EFFECT OF CHANGE IN CONTROL

A.

In the event of an actual Change in Control transaction, each option, stock
appreciation right and restricted stock unit award outstanding at that time
under the Plan but not otherwise fully vested shall automatically accelerate,
immediately prior to the effective date of that Change in Control, as to all the
shares of Common Stock at the time subject to such Award, unless (i) such Award
is to be assumed by the successor corporation (or parent thereof) or is
otherwise to continue in full force and effect pursuant to the terms of the
Change in Control transaction or (ii) the acceleration of such Award is subject
to other limitations imposed by the Plan Administrator.

B.

All outstanding repurchase rights shall automatically terminate, and the shares
of Common Stock subject to those terminated rights shall immediately vest in
full, immediately prior to the effective date of an actual Change in Control
transaction, except to the extent (i) those repurchase rights are to be assigned
to the successor corporation (or parent thereof) or are otherwise to continue in
full force and effect pursuant to the terms of the Change in Control transaction
or (ii) such accelerated vesting is precluded by other limitations imposed by
the Plan Administrator.

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C.

Immediately following the consummation of the Change in Control, all outstanding
options, stock appreciation rights and restricted stock unit awards shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.

D.

Each Award denominated in shares of Common Stock which is assumed in connection
with a Change in Control or otherwise continued in effect shall be appropriately
adjusted, immediately after such Change in Control, to apply to the number and
class of securities into which the shares of Common Stock subject to that Award
would have been converted in consummation of such Change in Control had those
shares actually been outstanding at that time. Appropriate adjustments to
reflect such Change in Control shall also be made to (i) the exercise or base
price or cash consideration payable per share in effect under each outstanding
Award, provided the aggregate exercise or base price or cash consideration in
effect for such securities shall remain the same, (ii) the maximum number and/or
class of securities available for issuance over the remaining term of the Plan,
(iii) the maximum number and/or class of securities for which any one person may
be granted Common Stock-denominated Awards under the Plan per calendar year and
(iv) the number and/or class of securities subject to the Corporation’s
outstanding repurchase rights under the Plan and the repurchase price payable
per share. To the extent the actual holders of the Corporation’s outstanding
Common Stock receive cash consideration for their Common Stock in consummation
of the Change in Control, the successor corporation may, in connection with the
assumption or continuation of the outstanding Awards under the Plan and subject
to the Plan Administrator’s approval, substitute, for the securities underlying
those assumed rights, one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Change in Control transaction, provided such common stock is readily
traded on an established U.S. securities exchange or market.

E.

The Plan Administrator shall have the discretionary authority to structure one
or more outstanding Awards so that those Awards shall, immediately prior to the
effective date of an actual Change in Control transaction, vest as to all the
shares of Common Stock at the time subject to those Awards, whether or not those
Awards are to be assumed in the Change in Control transaction or otherwise
continued in effect. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase
rights so that those rights shall terminate immediately prior to the effective
date of an actual Change in Control transaction, and the shares subject to those
terminated rights shall thereupon vest in full.

F.

The Plan Administrator shall have full power and authority to structure one or
more outstanding Awards so that those Awards shall vest as to all the shares of
Common Stock at the time subject to those Awards in the event the Participant’s
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period following the effective date of any Change in Control
transaction in which those Awards do not otherwise vest on an accelerated basis.
In addition, the Plan Administrator may structure one or more of the
Corporation’s repurchase rights so that those rights shall immediately terminate
with respect to any shares held by the Participant at the time of such
Involuntary Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.

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G.

The portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To
the extent such dollar limitation is exceeded, the accelerated portion of such
option shall be exercisable as a Non-statutory Option under the Federal tax
laws.

H.

The Plan Administrator shall have the discretionary authority to structure one
or more cash, performance unit and dividend equivalent right awards so that such
Awards shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the subsequent
termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period following the effective date of such Change in
Control.

I.

The Plan Administrator’s authority under Paragraphs E, F and H of this
Section IX shall also extend to any Awards intended to qualify as
performance-based compensation under Code Section 162(m), even though the
automatic vesting of those Awards pursuant to Paragraphs E, F and H of this
Section IX may result in their loss of performance-based status under Code
Section 162(m).

ARTICLE THREE

MISCELLANEOUS

I.

DEFERRED COMPENSATION

A.

The Plan Administrator may, in its sole discretion, structure one or more Awards
(other than options and stock appreciation rights) so that the Participants may
be provided with an election to defer the compensation associated with those
Awards for federal income tax purposes. Any such deferral opportunity shall
comply with all applicable requirements of Code Section 409A.

B.

To the extent the Corporation maintains one or more separate non-qualified
deferred compensation arrangements which allow the participants the opportunity
to make notional investments of their deferred account balances in shares of
Common Stock, the Plan Administrator may authorize the share reserve under the
Plan to serve as the source of any shares of Common Stock that become payable
under those deferred compensation arrangements. In such event, the share reserve
under the Plan shall be reduced on a share-for-one share basis for each share of
Common Stock issued under the Plan in settlement of the deferred compensation
owed under those separate arrangements.

II.

TAX WITHHOLDING

A.

The Corporation’s obligation to deliver shares of Common Stock upon the
exercise, issuance or vesting of an Award under the Plan shall be subject to the
satisfaction of all applicable income and employment tax withholding
requirements.

B.

The Plan Administrator may, in its discretion, provide Participants to whom
Awards are made under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such holders may
become subject in connection with the exercise, issuance or vesting of those
Awards or the issuance of shares of

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Common Stock thereunder. Such right may be provided to any such holder in either
or both of the following formats:

(i)

Stock Withholding: The election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the issuance, exercise or vesting
of such Award or the issuance of shares of Common Stock thereunder, a portion of
those shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by such
individual. The shares of Common Stock so withheld shall not reduce the number
of shares of Common Stock authorized for issuance under the Plan.

(ii)

Stock Delivery: The election to deliver to the Corporation, at the time of the
issuance, exercise or vesting of such Award or the issuance of shares of Common
Stock thereunder, one or more shares of Common Stock previously acquired by such
individual (other than in connection with the exercise, share issuance or share
vesting triggering the Withholding Taxes) with an aggregate Fair Market Value
equal to the percentage of the Withholding Taxes (not to exceed one hundred
percent (100%)) designated by the individual. The shares of Common Stock so
delivered shall neither reduce the number of shares of Common Stock authorized
for issuance under the Plan nor be added to the number of shares of Common Stock
authorized for issuance under the Plan.

III.

SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow
by the Corporation until the Participant’s interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

IV.

EFFECTIVE DATE AND TERM OF THE PLAN

A.

The Plan shall become effective on the Plan Effective Date.

B.

One or more provisions of the Plan, including (without limitation) the vesting
acceleration provisions of the Plan relating to Changes in Control, may, in the
Plan Administrator’s discretion, be extended to one or more Awards incorporated
from the Predecessor Plan which do not otherwise contain such provisions.

C.

The Plan shall terminate upon the earliest to occur of (i) March 4, 2018,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as fully vested shares or (iii) the termination of all
outstanding Awards in connection with a Change in Control. Should the Plan
terminate on March 4, 2018, then all Awards outstanding at that time shall
continue to have force and effect in accordance with the provisions of the
documents evidencing those Awards.

V.

AMENDMENT OF THE PLAN

A.

The Board shall have complete and exclusive power and authority to amend or
modify the Plan in any or all respects, subject to stockholder approval to the
extent required under applicable law or regulation or pursuant to the listing
standards of the Stock Exchange on which the Common Stock is at the time
primarily traded. However, no such amendment or modification shall adversely
affect the rights and obligations with respect to

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Awards at the time outstanding under the Plan unless the Participant consents to
such amendment or modification.

B.

The Compensation Committee shall have the discretionary authority to adopt and
implement from time to time such addenda or subplans to the Plan as it may deem
necessary in order to bring the Plan into compliance with applicable laws and
regulations of any foreign jurisdictions in which Awards are to be made under
the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions
for the individuals to whom the Awards are made.

C.

Awards may be made under the Plan that involve shares of Common Stock in excess
of the number of shares then available for issuance under the Plan, provided no
shares shall actually be issued pursuant to those Awards until the number of
shares of Common Stock available for issuance under the Plan is sufficiently
increased by stockholder approval of an amendment of the Plan authorizing such
increase. If such stockholder approval is not obtained within twelve (12) months
after the date the first excess Award is made, then all Awards granted on the
basis of such excess shares shall terminate and cease to be outstanding.

VI.

USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.

VII.

REGULATORY APPROVALS

A.

The implementation of the Plan, the granting of any Award under the Plan and the
issuance of any shares of Common Stock in connection with the issuance, exercise
or vesting of any Award under the Plan shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Awards made under the Plan and the shares
of Common Stock issuable pursuant to those Awards.

B.

No shares of Common Stock or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all applicable
requirements of applicable securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of any
Stock Exchange on which Common Stock is then listed for trading.

VIII.

NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining such person) or of the Participant, which rights are
hereby expressly reserved by each, to terminate such person’s Service at any
time for any reason, with or without cause.

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APPENDIX

The following definitions shall be in effect under the Plan:

A.

Award shall mean any of the following awards authorized for issuance or grant
under the Plan: options, stock appreciation rights, stock awards, restricted
stock units, performance units, dividend equivalent rights and cash incentive
awards.

B.

Award Agreement shall mean the agreement(s) between the Corporation and the
Participant evidencing a particular Award made to that individual under the
Plan, as such agreement(s) may be in effect from time to time.

C.

Board shall mean the Corporation’s Board of Directors.

D.

Change in Control shall, with respect to each Award made under the Plan, be
defined in accordance with the following provisions:

(i)

Change in Control shall have the meaning assigned to such term in the Award
Agreement for the particular Award or in any other agreement incorporated by
reference into the Award Agreement for purposes of defining such term.

(ii)

In the absence of any other Change in Control definition in the Award Agreement
(or in any other agreement incorporated by reference into the Award Agreement),
Change in Control shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:

(iii)

a merger, consolidation or other reorganization approved by the Corporation’s
stockholders, unless securities representing more than fifty percent (50%) of
the total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation’s outstanding voting securities immediately
prior to such transaction,

(iv)

a sale, transfer or other disposition of all or substantially all of the
Corporation’s assets, or

(v)

the closing of any transaction or series of related transactions pursuant to
which any person or any group of persons comprising a “group” within the meaning
of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person
that, prior to such transaction or series of related transactions, directly or
indirectly controls, is controlled by or is under common control with, the
Corporation) becomes directly or indirectly (whether as a result of a single
acquisition or by reason of one or more acquisitions within the twelve
(12)-month period ending with the most recent acquisition) the beneficial owner
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or
convertible into or exercisable for securities possessing) fifty percent (50%)
or more of the total combined voting power of the Corporation’s securities (as
measured in terms of the power to vote with respect to the election of Board
members) outstanding immediately after the consummation of such transaction or
series of related transactions, whether such transaction involves a direct
issuance from the Corporation

A-1

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or the acquisition of outstanding securities held by one or more of the
Corporation’s existing stockholders.

E.

Code shall mean the Internal Revenue Code of 1986, as amended.

F.

Common Stock shall mean the Corporation’s Common Stock.

G.

Compensation Committee shall mean the Compensation Committee of the Board
comprised of two (2) or more non-employee Board members.

H.

Corporation shall mean PharmaNet Development Group, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of PharmaNet Development Group, Inc. which has by
appropriate action assumed the Plan.

I.

Employee shall mean an individual who is in the employ of the Corporation (or
any Parent or Subsidiary, whether now existing or subsequently established),
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.

J.

Exercise Date shall mean the date on which the Corporation shall have received
written notice of the option exercise.

K.

Fair Market Value per share of Common Stock on any relevant date shall be the
closing selling price per share of Common Stock at the close of regular hours
trading (i.e., before after-hours trading begins) on date on question on the
Stock Exchange serving as the primary market for the Common Stock, as such price
is reported by the National Association of Securities Dealers (if primarily
traded on the Nasdaq Global or Global Select Market) or as officially quoted in
the composite tape of transactions on any other Stock Exchange on which the
Common Stock is then primarily traded. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such quotation
exists.

L.

Good Reason shall, with respect to each Award made under the Plan, be defined in
accordance with the following provisions:

(i)

Good Reason shall have the meaning assigned to such term in the Award Agreement
for the particular Award or in any other agreement incorporated by reference
into the Award Agreement for purposes of defining such term.

(ii)

In the absence of any other Good Reason definition in the Award Agreement (or in
any other agreement incorporated by reference into the Award Agreement), Good
Reason shall mean an individual’s voluntary resignation following (A) a change
in his or her position with the Corporation (or any Parent or Subsidiary) which
materially reduces his or her duties, responsibilities or authority, (B) a
material diminution in the duties, responsibilities or authority of the person
to whom such individual reports, (C) a material reduction in such individual’s
level of base compensation, with a reduction of more than fifteen percent (15%)
to be deemed material for such purpose, or (D) a material relocation of such
individual’s place of employment, with a relocation of more than fifty
(50) miles to be deemed material for such

A-2

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purpose, provided, however, that a resignation for Good Reason may be effected
only after (i) the individual provides written notice to the Corporation of the
event or transaction constituting grounds for such resignation within sixty
(60) days after the occurrence of that event or transaction and (ii) the
Corporation fails to take the requisite remedial action with respect to such
event or transaction within thirty (30) days after receipt of such notice.

M.

Incentive Option shall mean an option which satisfies the requirements of Code
Section 422.

N.

Involuntary Termination shall, with respect to each Award made under the Plan,
be defined in accordance with the following provisions:

(i)

Involuntary Termination shall have the meaning assigned to such term in the
Award Agreement for the particular Award or in any other agreement incorporated
by reference into the Award Agreement for purposes of defining such term.

(ii)

In the absence of any other Involuntary Termination definition in the Award
Agreement (or in any other agreement incorporated by reference into the Award
Agreement), Involuntary Termination shall mean such individual’s involuntary
dismissal or discharge by the Corporation (or any Parent or Subsidiary) for
reasons other than Misconduct, or such individual’s voluntary resignation for
Good Reason.

O.

Misconduct shall, with respect to each Award made under the Plan, be defined in
accordance with the following provisions:

(i)

Misconduct shall have the meaning assigned to such term in the Award Agreement
for the particular Award or in any other agreement incorporated by reference
into the Award Agreement for purposes of defining such term.

(ii)

In the absence of any other Misconduct definition in the Award Agreement for a
particular Award (or in any other agreement incorporated by reference into the
Award Agreement), Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Participant, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or any
Parent or Subsidiary) to discharge or dismiss any Participant or other person in
the Service of the Corporation (or any Parent or Subsidiary) for any other acts
or omissions, but such other acts or omissions shall not be deemed, for purposes
of the Plan, to constitute grounds for termination for Misconduct.

P.

1934 Act shall mean the Securities Exchange Act of 1934, as amended.

Q.

Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.

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R.

Parent shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

S.

Participant shall mean any person who is granted an Award under the Plan.

T.

Performance Goals shall mean any of the following performance criteria upon
which the vesting of one or more Awards under the Plan may be based: (i) pre-tax
or after-tax earnings, profit or net income, (ii) revenue or revenue growth,
(iii) earnings per share, (iv) return on assets, capital or stockholder equity,
(v) total stockholder return, (vi) gross or net profit margin, (vii) cash flow,
(viii) earnings or operating income before interest, taxes, depreciation,
amortization and/or charges for stock-based compensation, (ix) market share,
(x) increases in customer base, (xi) operating income, net operating income or
net operating income after recorded tax expense; (xii) operating profit, net
operating profit or net operating profit after recorded tax expense,
(xiii) operating margin, (xiv) cost reductions or other expense control
objectives, (xv) market price of the Common Stock, whether measured in absolute
terms or in relationship to earnings or operating income, (xvi) budget
objectives, (xvii) working capital, (xviii) mergers, acquisitions or
divestitures or (xix) measures of customer satisfaction. Each performance
criteria may be based upon the attainment of specified levels of the
Corporation’s performance under one or more of the measures described above
relative to the performance of other entities and may also be based on the
performance of any of the Corporation’s business units or divisions or any
Parent or Subsidiary. Each applicable Performance Goal may include a minimum
threshold level of performance below which no Award will be earned, levels of
performance at which specified portions of an Award will be earned and a maximum
level of performance at which an Award will be fully earned. Each applicable
Performance Goal may be structured at the time of the Award to provide for
appropriate adjustment for one or more of the following items: (A) asset
impairments or write-downs; (B) litigation judgments or claim settlements;
(C) the effect of changes in tax law, accounting principles or other such laws
or provisions affecting reported results; (D) accruals for reorganization and
restructuring programs; (E) any extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Corporation’s annual report to shareholders for the applicable year; (F) the
operations of any business acquired by the Corporation or any Parent or
Subsidiary or of any joint venture in which the Corporation or any Parent or
Subsidiary participates; (G) the divestiture of one or more business operations
or the assets thereof; or (H) the costs incurred in connection with such
acquisitions or divestitures.

U.

Permanent Disability or Permanently Disabled shall, with respect to each Award
made under the Plan, be defined in accordance with the following provisions:

(i)

Permanent Disability or Permanently Disabled shall have the meaning assigned to
such term in the Award Agreement for the particular Award or in any other
agreement incorporated by reference into the Award Agreement for purposes of
defining such term.

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(ii)

In the absence of any other definition of Permanent Disability or Permanently
Disabled in the Award Agreement for a particular Award (or in any other
agreement incorporated by reference into the Award Agreement), Permanent
Disability or Permanently Disabled shall mean the inability of the Participant
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

V.

Plan shall mean the Corporation’s 2008 Incentive Compensation Plan, as set forth
in this document.

W.

Plan Administrator shall mean the particular entity or individual, whether the
Compensation Committee (or subcommittee thereof), the Board, the Secondary Board
Committee or executive officer authorized to administer the Plan with respect to
one or more classes of eligible persons, to the extent such entity or individual
is carrying out its administrative functions under the Plan with respect to the
persons under the jurisdiction of such entity or individual.

X.

Plan Effective Date shall mean the date upon which the Plan shall be approved by
the Corporation’s stockholders.

Y.

Predecessor Plan shall mean the Corporation’s Amended and Restated 1999 Stock
Plan in effect immediately prior to the Plan Effective Date hereunder.

Z.

Secondary Board Committee shall mean a committee of one or more Board members
appointed by the Board to administer the Plan with respect to eligible persons
other than Section 16 Insiders.

AA.

Section 16 Insider shall mean an officer or director of the Corporation subject
to the short-swing profit liabilities of Section 16 of the 1934 Act.

BB.

Service shall, with respect to each Award made under the Plan, be defined in
accordance with the following provisions:

(i)

Service shall have the meaning assigned to such term in the Award Agreement for
the particular Award or in any other agreement incorporated by reference into
the Award Agreement for purposes of defining such term.

(ii)

In the absence of any other definition of Service in the Award Agreement for a
particular Award (or in any other agreement incorporated by reference into the
Award Agreement), Service shall mean the performance of services for the
Corporation (or any Parent or Subsidiary, whether now existing or subsequently
established) by a person in the capacity of an Employee, a non-employee member
of the board of directors or a consultant or independent advisor, except to the
extent otherwise specifically provided in the documents evidencing the option
grant or stock issuance. For purposes of this particular definition of Service,
a Participant shall be deemed to cease Service immediately upon the occurrence
of the either of the following events: (i) the Participant no longer performs
services in any of the foregoing capacities for the Corporation or any Parent or
Subsidiary or (ii) the entity for which the Participant is performing such
services ceases to remain a Parent or Subsidiary of the

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Corporation, even though the Participant may subsequently continue to perform
services for that entity.

(iii)

Service shall not be deemed to cease during a period of military leave, sick
leave or other personal leave approved by the Corporation; provided, however,
that should such leave of absence exceed three (3) months, then for purposes of
determining the period within which an Incentive Option may be exercised as such
under the federal tax laws, the Participant’s Service shall be deemed to cease
on the first day immediately following the expiration of such three (3)-month
period, unless Participant is provided with the right to return to Service
following such leave either by statute or by written contract. Except to the
extent otherwise required by law or expressly authorized by the Plan
Administrator or by the Corporation’s written policy on leaves of absence, no
Service credit shall be given for vesting purposes for any period the
Participant is on a leave of absence.

CC.

Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or
Global Select Market or the New York Stock Exchange.

DD.

Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

EE.

10% Stockholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary).

FF.

Withholding Taxes shall mean the applicable federal, state and foreign income
and employment withholding taxes and other payments to which the holder of an
Award under the Plan may become subject in connection with the issuance,
exercise or vesting of that Award or the issuance of shares of Common Stock
thereunder.

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