Exhibit 10.86

 

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

EMPLOYEE STOCK PURCHASE PLAN

 

THIS INSTRUMENT is executed as of the 1st day of March, 2005 by PHARMACEUTICAL
PRODUCT DEVELOPMENT, INC., a North Carolina corporation (the “Company”).

 

Statement of Purpose

 

The Company sponsors the Pharmaceutical Product Development, Inc. Employee Stock
Purchase Plan (the “Plan”) in order to provide eligible employees with the
opportunity to purchase shares of the common stock of the Company and to thereby
share in the continued growth and success of the Company. The Company is hereby
amending and restating the Plan effective with the Offering Period under the
Plan commencing July 1, 2005 to (i) incorporate the provisions of prior
amendments into a single document, (ii) change the method for determining the
purchase price of shares under the Plan to cause the Plan to be treated as a
noncompensatory plan under the Financial Accounting Standards Board Statement
No. 123(R) Share-Based Payment, as revised in 2004, and (iii) otherwise meet
current needs.

 

NOW, THEREFORE, for the purposes aforesaid, the Company hereby amends and
restates the Plan effective with the Offering Period under the Plan commencing
July 1, 2005 to consist of the following Articles I through VIII:

 

ARTICLE I

 

NAME, PURPOSE, CONSTRUCTION AND DEFINITIONS

 

Section 1.1. Name. The Plan shall be known as the “Pharmaceutical Product
Development, Inc. Employee Stock Purchase Plan.”

 

Section 1.2. Purpose. The purpose of the Plan is to provide Participants in the
Plan with an opportunity to purchase Common Stock in the Company through payroll
deductions and other contributions, thereby encouraging Participants to share in
the economic growth and success of the Company through stock ownership.

 

Section 1.3. Construction. Article, Section and paragraph headings have been
inserted in the Plan for convenience of reference only and are to be ignored in
any construction of the provisions hereof. If any provision of the Plan shall be
invalid or unenforceable the remaining

--------------------------------------------------------------------------------

provisions shall nevertheless be valid, enforceable and fully effective. It is
the intent that the Plan shall at all times constitute an “employee stock
purchase plan” within the meaning of Section 423(b) of the Code, and the Plan
shall be construed and interpreted to remain such. The Plan shall be construed,
administered, regulated and governed by the laws of the United States to the
extent applicable, and to the extent such laws are not applicable, by the laws
of the State of North Carolina.

 

Section 1.4. Definitions. Whenever used in the Plan, unless the context clearly
indicates otherwise, the following terms shall have the following meanings:

 

(a) Beneficiary, with respect to a Participant, means such Participant’s
“Beneficiary” under the group term life insurance plan maintained by the
Company.

 

(b) Board or Board of Directors means the Board of Directors of the Company or
any Committee or Committees of said Board of Directors of the Company to which,
and to the extent, said Board of Directors of the Company has delegated some or
all of its power, authority, duties or responsibilities with respect to the
Plan.

 

(c) Code means the Internal Revenue Code of 1986, as the same may be amended
from time to time, and references thereto shall include the valid Treasury
regulations issued thereunder.

 

(d) Committee means the “Committee” as defined under the Retirement Savings Plan
which is responsible for the administration of the Plan in accordance with
Article VI hereof.

 

(e) Common Stock means shares of the $0.10 par value common stock of the Company
and any other stock or securities resulting from the adjustment thereof or
substitution therefor as described in Section 3.4.

 

(f) Company means Pharmaceutical Product Development, Inc., a North Carolina
corporation.

 

(g) Compensation means “Contribution Compensation” as defined under the
Retirement Savings Plan, except that Compensation under the Plan shall not be
limited by Section 401(a)(17) of the Code.

 

(h) Effective Date means July 1, 1997.

 

(i) Employee means a person employed by the Company. In addition, the employees
of the Company’s subsidiaries which the Company designates in its sole and
exclusive discretion as participating subsidiaries for purposes of this Plan
shall also be considered Employees for purposes of this Plan.

 

2

--------------------------------------------------------------------------------

(j) Fair Market Value, with respect to a share of Common Stock from time to
time, means (i) if the Common Stock is traded on the National Market System, the
closing price of the Common Stock for the applicable date, as published in the
NASDAQ National Market Issues report in the Eastern Edition of The Wall Street
Journal, (ii) if the Common Stock is not traded on the National Market System
but such Common Stock is listed on a national securities exchange, the mean
between the highest price and the lowest price at which the Common Stock shall
have been sold regular way on a national securities exchange on the applicable
date during an Offering Period or, if there are no sales on said date, then on
the next preceding date on which there were sales of Common Stock, (iii) if the
Common Stock is not traded on the National Market System or listed on a national
securities exchange, the mean between the bid and asked prices last reported by
the National Association of Securities Dealers, Inc. for the over-the-counter
market on the applicable date during an Offering Period or, if no bid and asked
prices are reported on said date, then on the next preceding date on which there
were such quotations, or (iv) if the Common Stock is not traded on the National
Market System or listed on a national securities exchange and quotations for the
Common Stock are not reported by the National Association of Securities Dealers,
Inc., the fair market value determined by the Committee on the basis of
available prices for the Common Stock or in such manner as the Committee shall
agree.

 

(k) Offering means the offering of shares of Common Stock to Participants
pursuant to this Plan that occurs on each Offering Date.

 

(l) Offering Date means July 1, 1997 and each succeeding January 1 and July 1.

 

(m) Offering Period means the period from an Offering Date through the
immediately succeeding Offering Date.

 

(n) Participant means an Employee who has become a Participant pursuant to
Section 2.2 of the Plan.

 

(o) Plan means the Pharmaceutical Product Development, Inc. Employee Stock
Purchase Plan, as set forth herein, together with any and all amendments
thereto.

 

3

--------------------------------------------------------------------------------

(p) Retirement Savings Plan means The Pharmaceutical Product Development, Inc.
Retirement Savings Plan as in effect from time to time.

 

(q) Stock Purchase Account, with respect to a Participant, means the account
established on the books and records of the Company for such Participant
representing the payroll deductions credited to such account in accordance with
the provisions of the Plan.

 

ARTICLE II

 

PARTICIPATION

 

Section 2.1. General. No person shall become a Participant unless or until such
person is or becomes an Employee and upon or following satisfaction of the
eligibility requirement set forth in the Plan. In addition, in no event shall
any person be eligible to participate in the Plan before the Effective Date.

 

Section 2.2. Participation Requirements.

 

(a) Eligibility Requirement. An Employee shall satisfy the eligibility
requirement for the Plan on the date the Employee is first employed by the
Company, subject to the provisions of Section 2.2(c) below.

 

(b) Commencement of Participation. Each person who satisfies the eligibility
requirement of Section 2.2(a) on or before the Effective Date shall become a
Participant in the Plan:

 

(1) on the Offering Date coinciding with the Effective Date, if such person is
an Employee on such Offering Date; or

 

(2) if such person is not an Employee on such Offering Date, then on the first
Offering Date coinciding with or next following the date (if any) on which such
person again becomes an Employee after the Effective Date.

 

Each person who satisfies the eligibility requirement of Section 2.2(a) after
the Effective Date shall become a Participant in the Plan:

 

(1) on the first Offering Date after such person satisfies the eligibility
requirement, if such person is an Employee on such Offering Date; or

 

(2) if such person is not an Employee on such Offering Date, then on the first
Offering Date coinciding with or next following the date (if any) on which such
person again becomes an Employee.

 

4

--------------------------------------------------------------------------------

(c) Exclusions. Notwithstanding any provision of the Plan to the contrary, in no
event shall the following persons be eligible to participate in the Plan:

 

(1) Any Employee whose customary employment with the Company is twenty (20)
hours or less per week; or

 

(2) Any Employee whose customary employment with the Company is for not more
than five (5) months in any calendar year.

 

Section 2.3. Eligibility of Former Participants. If a person terminates
employment with the Company after becoming a Participant and subsequently
resumes employment with the Company, such person shall again become a
Participant on the Offering Date coinciding with or next following such
resumption of employment with the Company without having to satisfy again the
eligibility requirement of Section 2.2(a).

 

ARTICLE III

 

OFFERING OF COMMON STOCK

 

Section 3.1. Reservation of Common Stock. The Board of Directors has reserved
one million two-hundred fifty thousand (1,250,000) shares of Common Stock for
the Plan, subject to adjustment in accordance with Section 3.4. The aggregate
number of shares of Common Stock which may be purchased under the Plan by
Participants shall not exceed one million two-hundred fifty thousand (1,250,000)
shares, subject to adjustment in accordance with Section 3.4.

 

Section 3.2. Offering of Common Stock.

 

(a) General. Subject to Section 3.2(b), each Participant in the Plan on an
Offering Date shall be entitled to purchase shares of Common Stock on the last
day of the Offering Period beginning with such Offering Date with the amounts
deducted from such Participant’s Compensation or otherwise contributed during
such Offering Period pursuant to Article IV. The purchase price for such shares
of Common Stock shall be determined under Section 3.3.

 

(b) Limitations. Notwithstanding Section 3.2(a), the maximum number of shares of
Common Stock a Participant may purchase pursuant to an Offering under Section
3.2(a) shall be subject to the following limitations:

 

(1) If as of the Offering Date for such Offering such Participant owns
(including stock which such Participant is considered to own under Section
425(d) of the Code) stock (including the Common Stock such Participant would be
entitled to purchase pursuant to an Offering) possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of the
Company, then the maximum number of shares of Common Stock such Participant may
purchase pursuant to such Offering

 

5

--------------------------------------------------------------------------------

shall be reduced so that the number of shares of Common Stock such Participant
may purchase pursuant to such Offering when added to the number of shares of
stock of the Company such Participant owns (including stock which such
Participant is considered to own under Section 425(d) of the Code) (excluding
the Common Stock such Participant would be entitled to purchase pursuant to such
Offering) is less than five percent (5%) of the total combined voting power or
value of all classes of stock of the Company; and

 

(2) If such Participant could acquire within the same calendar year as an
Offering shares of stock of the Company under all “employee stock ownership
plans” within the meaning of Section 423(b) of the Code sponsored by the Company
(including the Common Stock such Participant would be entitled to purchase
pursuant to such Offering) having a total fair market value (determined as of
the date of such Offering) which exceeds Twenty-Five Thousand Dollars ($25,000),
then the maximum number of shares such Participant may purchase pursuant to such
Offering shall be reduced so that such total fair market value does not exceed
Twenty-Five Thousand Dollars ($25,000).

 

(3) In no event may the total number of shares of Common Stock that may be
purchased by Participants for any Offering Period exceed the lesser of (A) an
amount that the Board of Directors may, in its sole and exclusive discretion,
establish from time to time or (B) the total remaining shares available pursuant
to Section 3.1. In the event that the total number of shares of Common Stock to
be purchased for an Offering Period would otherwise exceed the limit set forth
in the preceding sentence, the Committee shall first reduce shares to be
purchased by non-payroll deduction additional cash contributions for such
Offering Period proportionately among all Participants who have made such
additional cash contributions; and if such limit would still be exceeded, the
Committee shall then reduce shares to be purchased by payroll deductions for
such Offering Period proportionately among all Participants who have made such
payroll deductions.

 

Section 3.3. Determination of Purchase Price for Offered Common Stock. The
purchase price per share of the shares of Common Stock offered to Participants
pursuant to an Offering shall be equal to ninety-five percent (95%) of the Fair
Market Value of a share of Common Stock as of the last day of the Offering
Period for such Offering; provided, however, that in no event shall the purchase
price be less than the par value of a share of Common Stock.

 

Section 3.4. Effect of Certain Transactions. The number of shares of Common
Stock reserved for the Plan pursuant to Section 3.1 and the determination under
Section 3.3 of the purchase price per share of the shares of Common Stock
offered to Participants pursuant to an Offering shall be appropriately adjusted
to reflect any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, a consolidation of shares, the payment of a
stock dividend or any other capital adjustment affecting the number of issued
shares of Common Stock. In the event that the outstanding shares of Common Stock
shall be

 

6

--------------------------------------------------------------------------------

changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or another corporation, whether through
reorganization, recapitalization, merger, consolidation or otherwise, then there
shall be substituted for each share of Common Stock reserved for issuance under
the Plan but not yet purchased by Participants, the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchanged.

 

ARTICLE IV

 

PAYROLL DEDUCTIONS

 

Section 4.1. Payroll Deduction Elections. A Participant in the Plan (or a person
who will become a Participant in the Plan on the next Offering Date if such
person is an Employee on such Offering Date) who wishes to purchase shares of
Common Stock to be offered to such Participant on the next Offering Date shall
elect to have the Company deduct from the Compensation payable to such
Participant during the Offering Period beginning on such Offering Date any
amount between one percent (1%) and fifteen percent (15%) of such Participant’s
Compensation, in whole multiples of one percent (1%). Such election shall be
made by delivering to the Committee during the forty-five (45) day period
preceding such Offering Date a written direction to make such deductions. Such
election shall become effective as of the first day of such Participant’s first
pay period that begins on or after such Offering Date and shall remain effective
for each successive pay period until changed or terminated pursuant to this
Article IV. In addition, at any time during an Offering Period, a Participant
may make additional contributions from the Participant’s own funds towards the
purchase of Common Stock under the Plan for such Offering Period. Such
additional contributions must be made in cash or its equivalent under procedures
established from time to time by the Committee. Notwithstanding the foregoing,
(i) for the Offering Period beginning on January 1, 1998, the maximum amount of
such additional contributions that may be made by any Participant shall not
exceed five thousand dollars ($5,000) and (ii) no such additional contributions
shall be permitted for Offering Periods beginning on or after July 1, 1998.

 

Section 4.2. Election to Increase or Decrease Payroll Deductions. Subject to
Section 4.5, a Participant who has a payroll deduction election in effect under
Section 4.1 may prospectively increase or decrease during an Offering Period the
percentage amount of the deductions being made by the Company from such
Participant’s

 

7

--------------------------------------------------------------------------------

Compensation (including a decrease to zero (0)) by delivering to the Committee a
written direction to make such change. Such change shall become effective as
soon as practical after the Committee’s receipt of such written direction and
shall remain in effect until changed or terminated pursuant to this Article IV.

 

Section 4.3. Termination of Election Upon Termination of Employment. The
termination of employment of a Participant with the Company for any reason shall
automatically terminate the election (if any) of such Participant to have
amounts deducted from such Participant’s Compensation pursuant to this Article
IV that is then in effect. Such termination shall be effective immediately
following the pay period during which such termination of employment occurs, but
shall not affect the deduction from Compensation for that pay period.

 

Section 4.4. Change or Termination Not Retroactively Effective. Neither the
change nor the termination of any election to have amounts deducted from
Compensation under this Article IV shall increase, decrease or otherwise affect
the deduction from the Compensation of a Participant for any pay period ending
prior to the effective date of such change or termination.

 

Section 4.5. Form, Timing and Frequency of Elections. Any written direction by
any Participant with respect to any deductions from Compensation pursuant to
this Article IV shall be on a form furnished by the Committee for such purpose
and shall be made by such Participant’s completing, signing and filing such form
with the Committee in the manner prescribed from time to time by the Committee.
A Participant shall be permitted to increase or decrease the percentage amount
of the deductions being made by the Company from such Participant’s Compensation
only once during an Offering Period; provided, however, a Participant may
terminate the deductions being made by the Company from such Participant’s
Compensation at any time during an Offering Period notwithstanding any prior
change in the amount of such Participant’s Compensation deductions during such
Offering Period.

 

ARTICLE V

 

STOCK PURCHASE ACCOUNTS AND PURCHASE OF COMMON STOCK

 

Section 5.1. Stock Purchase Accounts. A Stock Purchase Account shall be
established and maintained on the books and records of the Company for each
Participant. Amounts deducted from a Participant’s Compensation or otherwise
contributed by the Participant pursuant to Article IV shall be credited to such
Participant’s Stock Purchase Account. No interest or other increment shall
accrue or be payable to any Participant with respect to any amounts credited to

 

8

--------------------------------------------------------------------------------

such Stock Purchase Accounts. All amounts credited to such Stock Purchase
Accounts shall be withdrawn, paid or applied toward the purchase of Common Stock
pursuant to the provisions of this Article V.

 

Section 5.2. Purchase of Common Stock.

 

(a) General. As of the last day of each Offering Period, the amount to the
credit of a Participant in such Participant’s Stock Purchase Account shall be
used to purchase from the Company on such Participant’s behalf the largest
number of whole and fractional shares of Common Stock which can be purchased at
the price determined under Section 3.3 with the amount then credited to such
Participant’s Stock Purchase Account subject to the limitations set forth in
Article III on the maximum number of shares of Common Stock such Participant may
purchase. As of such date, such Participant’s Stock Purchase Account shall be
charged with the aggregate purchase price of the shares of Common Stock
purchased on such Participant’s behalf.

 

(b) Issuance of Common Stock. The shares of Common Stock purchased for a
Participant on the last day of an Offering Period shall be deemed to have been
issued by the Company for all purposes as of the close of business on such date.
Prior to such date, none of the rights and privileges of a shareholder of the
Company shall exist with respect to such shares of Common Stock. As soon as
practicable after such date, the Company shall issue and deliver, or shall cause
its stock transfer agent to issue and deliver, a certificate for the number of
shares of Common Stock purchased for a Participant on such date, which such
certificate shall be issued in the Participant’s name.

 

(c) Insufficient Common Stock Available. If as of the last day of any Offering
Period, the aggregate Stock Purchase Accounts available for the purchase of
shares of Common Stock pursuant to Section 5.2(a) would purchase a number of
shares of Common Stock in excess of the number of shares of Common Stock then
available for purchase under the Plan, (i) the number of shares of Common Stock
which would otherwise be purchased for each Participant on such date shall be
reduced proportionately to the extent necessary to eliminate such excess, (ii)
the remaining balance to the credit of each Participant in each such
Participant’s Stock Purchase Account shall be distributed to each such
Participant and (iii) the Plan shall terminate automatically upon the
distribution of the remaining balance in such Stock Purchase Accounts.

 

Section 5.3. Withdrawal From Plan Prior to Purchase of Common Stock. In the
event (i) a Participant terminates employment with the Company for any reason
during an Offering

 

9

--------------------------------------------------------------------------------

Period, or (ii) a Participant terminates deductions from such Participant’s
Compensation pursuant to Article IV during an Offering Period and such
Participant elects to withdraw in writing from the Plan, then the entire amount
to the credit of such Participant in such Participant’s Stock Purchase Account
shall be distributed to such Participant (or if such Participant is deceased, to
such Participant’s Beneficiary) as soon as administratively practicable after
such termination of employment or withdrawal (as the case may be). If a
Participant terminates deductions from such Participant’s Compensation pursuant
to Article IV during an Offering Period but such Participant does not elect to
withdraw in writing from the Plan, the amount to the credit of such Participant
in such Participant’s Stock Purchase Account shall be used to purchase shares of
Common Stock for such Participant as of the last day of such Offering Period to
the extent provided in Section 5.2(a) and the remaining balance in such
Participant’s Stock Purchase Account shall be distributed to such Participant as
soon as administratively practicable. Notwithstanding the preceding sentence, if
a Participant terminates deductions from such Participant’s Compensation
pursuant to Article IV during an Offering Period and the amount to the credit of
such Participant in such Participant’s Stock Purchase Account upon such
termination of Compensation deductions does not exceed One Hundred Dollars
($100.00), then such Participant shall be deemed to have withdrawn from the Plan
upon such termination of Compensation deductions for purposes of this Section
5.3.

 

ARTICLE VI

 

COMMITTEE

 

Section 6.1. Organization of Committee. The Committee for purposes of the Plan
shall be the “Committee” as defined under the Retirement Savings Plan. The
Committee may appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties, whether administerial or
discretionary, as the Committee may deem expedient or appropriate. The Committee
shall act by majority vote and may adopt such bylaws, rules and regulations as
it deems desirable for the conduct of its affairs.

 

Section 6.2. Powers of Committee. The Committee shall administer the Plan. The
Committee shall have all powers necessary to enable it to carry out its duties
under the Plan properly. Not in limitation of the foregoing, the Committee shall
have the power to construe and interpret the Plan and to determine all questions
that shall arise thereunder. It shall decide all

 

10

--------------------------------------------------------------------------------

questions relating to eligibility to participate in the Plan and to purchase
Common Stock under the Plan. The Committee shall have such other and further
specified duties, powers, authority and discretion as are elsewhere in the Plan
either expressly or by necessary implication conferred upon it. The decision of
the Committee upon all matters within the scope of its authority shall be final
and conclusive on all persons, except to the extent otherwise provided by law.

 

Section 6.3. Expenses of Committee. The reasonable expenses of the Committee
incurred by the Committee in the performance of its duties under the Plan,
including without limitation reasonable counsel fees and the expenses of other
agents, shall be paid by the Company.

 

Section 6.4. Indemnification of Committee. To the extent permitted by applicable
law, the Company shall indemnify and hold harmless each member of the Committee
from and against any and all liability, claims, demands, costs and expenses
(including the costs and expenses of attorneys incurred in connection with the
investigation or defense of claims) in any manner connected with or arising out
of any actions or inactions in connection with the administration of the Plan
except for such actions or inactions which are not in good faith or which
constitute willful misconduct.

 

ARTICLE VII

 

AMENDMENT AND TERMINATION

 

Section 7.1. Amendment of Plan. The Company expressly reserve the right, at any
time and from time to time, to amend in whole or in part any of the terms and
provisions of the Plan for whatever reason(s) the Company may deem appropriate.
The Company shall require shareholder approval of any such amendment to the
extent the Company determines that shareholder approval is required by
applicable law.

 

Section 7.2. Termination of Plan. The Company expressly reserves the right, at
any time and for whatever reason it deems appropriate, to terminate the Plan.
Upon any termination of the Plan, the entire amount credited to the Stock
Purchase Account of each Participant shall be distributed to each such
Participant.

 

Section 7.3. Effective Date and Procedure for Amendment or Termination. Any
amendment to the Plan or termination of the Plan may be retroactive to the
extent not prohibited by applicable law. Any amendment to the Plan or
termination of the Plan shall be made by the Company by resolution of the Board
of Directors and shall not require the approval or consent of any Participant or
Beneficiary in order to be effective.

 

11

--------------------------------------------------------------------------------

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.1. Transferability of Rights. To the extent permitted by law, rights
to purchase shares of Common Stock are exercisable only by the Participant to
whom such rights are granted and are not transferable by such Participant other
than by will or the laws of descent and distribution.

 

Section 8.2. No Employment Rights. Participation in the Plan shall not give any
employee of the Company any right to remain in the employ of the Company or upon
termination of employment, any right or interest in the Plan except as expressly
provided herein.

 

Section 8.3. Compliance with Law. No shares of Common Stock shall be issued
under the Plan prior to compliance by the Company to the satisfaction of its
counsel with any applicable laws.

 

Section 8.4. Repurchase of Common Stock. The Company shall not be required to
repurchase from any Participant any shares of Common Stock which such
Participant acquires under this Plan.

 

IN WITNESS WHEREOF, the Company have caused this Instrument to be executed by
its duly authorized officer as of the day and year first above written.

 

 

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

By:  

/s/ Fred N. Eshelman

--------------------------------------------------------------------------------

Name:   Fred N. Eshelman Title:   Chief Executive Officer

 

12