EXHIBIT 10.134

                    PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

                            EQUITY COMPENSATION PLAN

                        Effective as of October 30, 1995
                              Amended and Restated
                             Effective May 12, 1999



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                    PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
                            EQUITY COMPENSATION PLAN


                         ARTICLE I - GENERAL PROVISIONS

1.1     The Plan is designed, for the benefit of the Company, to attract and
retain for the Company personnel of exceptional ability; to motivate such
personnel through added incentives to make a maximum contribution to greater
profitability; to develop and maintain a highly competent management team; and
to be competitive with other companies with respect to executive compensation.

1.2     Awards under the Plan may be made to Participants in the form of (i)
Incentive Stock Options; (ii) Nonqualified Stock Options; (iii) Stock
Appreciation Rights; (iv) Restricted Stock; (v) Deferred Stock; (vi) Stock
Awards; (vii) Performance Shares; and (viii) Other Stock-Based Awards and other
forms of equity-based compensation as may be provided and are permissible under
this Plan and the law.

1.3     The Plan shall be effective as of October 30, 1995 (the "Effective
Date"), subject to the approval of shareholders of the Company within 12 months
before or after such date.

                            ARTICLE II - DEFINITIONS

         Except where the context otherwise indicates, the following definitions
apply:

2.1      "Acceleration Event" means the occurrence of an event defined in
         Article XIII of the Plan.

2.2      "Act" means the Securities Exchange Act of 1934, as now in effect or as
         hereafter amended. All citations to sections of the Act or rules
         thereunder are to such sections or rules as they may from time to time
         be amended. All citations to sections of the act or rules thereunder
         are to such sections or rules as they may from time to time be amended
         or renumbered.

2.3      "Agreement" means the written agreement evidencing each Award granted
         to a Participant under the Plan.

2.4      "Award" means an award granted to a Participant in accordance with the
         provisions of the Plan, including, but not limited to, a Stock Option,
         Stock Right, Restricted Stock, Deferred Stock, Stock Awards,
         Performance shares, Other Stock-Based Awards, or any combination of the
         foregoing.

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2.5      "Board" means the Board of Directors of Pharmaceutical Product
         Development, Inc.

2.6      "Code" means the Internal Revenue Code of 1986, as now in effect or as
         hereafter amended. All citations to sections of the Code are to such
         sections as they may from time to time be amended or renumbered.

2.7      "Committee" means the Compensation Committee or such other committee
         consisting of two or more members as may be appointed by the Board to
         administer this Plan pursuant to Article III. To the extent required by
         Rule 16b-3 under the Act, the Committee shall consist of individuals
         who are members of the Board and who are Non-Employee Directors.
         Committee members may also be appointed for such limited purposes as
         may be provided by the Board.

2.8      "Company" means Pharmaceutical Product Development, Inc., a North
         Carolina corporation, and its successors and assigns. The term
         "Company" shall include any corporation which is a member of a
         controlled group of corporations (as defined in Section 414(b) of the
         Code, as modified by Section 415(h) of the Code) which includes the
         Company; any trade or business (whether or not incorporated) which is
         under common control (as defined in Section 414(c) of the Code, as
         modified by Section 415(h) of the Code) with the Company; any
         organization (whether or not incorporated) which is a member of an
         affiliated service group (as defined in Section 414(m) of the Code)
         which includes the Company; and any other entity required to be
         aggregated with the Company pursuant to regulations under Section
         414(o) of the Code. With respect to all purposes of the Plan,
         including, but not limited to, the establishment, amendment,
         termination, operation and administration of the Plan, Pharmaceutical
         Product Development, Inc. shall be authorized to act on behalf of all
         other entities included within the definition of Company.

2.9      "Deferred Stock" means the stock awarded under Article IX of the Plan.

2.10     "Disability" means disability as determines under procedures
         established by the Committee or in any Award.

2.11     "Discount Stock Options" means the Nonqualified Stock Options which
         provide for an exercise price of less than the Fair Market Value of the
         Stock at the date of the Award.

2.12     "Non-Employee Director" shall have the meaning set forth in Rule 16b-3
         under the Act.

2.13     "Early Retirement" means retirement from active employment with the
         Company, with the express consent of the Committee, pursuant to the
         early retirement provisions established by the Committee or in any
         Award.

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2.14     "Eligible Participant" means any employee of the Company, as shall be
         determined by the Committee, as well as any other person, including
         directors, subject to such limitations imposed on a person designated
         as a Non-Employee Director, whose participation the Committee
         determines is in the best interest of the Company, subject to
         limitations as may be provided by the Code, the Act or the Committee.

2.15     "Fair Market Value" means, with respect to any given day, the closing
         price of the Stock reported on the stock exchange on which the Stock is
         then listed for such day, as reported by such source as the Committee
         may select, provided there was a sale of at least 100 shares of Stock
         on such date. If there was not a sale of at least 100 shares of Stock
         on such day, the Fair Market Value shall be determined based on the
         closing price of the Stock reported on the stock exchange as of the
         last date on which there was a sale of at least 100 shares of Stock.
         The Committee may establish an alternative method of determining Fair
         Market Value.

2.16     "Incentive  Stock Option:  means a Stock Option  granted  under Article
         IV of the Plan,  and as defined in Section 422 of the Code.

2.17     "Limited Stock Appreciation Rights" means a Stock Right which is
         exercisable only in the event of a Change in Control and/or a Potential
         Change in Control, as described in Section 6.9 of the Plan, which
         provides for an amount payable solely in cash, equal to the excess of
         the Stock Appreciation Right Fair Market Value of a share of Stock on
         the day the Stock Right is surrendered over the price at which a
         Participant could exercise a related Stock Option to purchase the share
         of Stock.

2.18     "Nonqualified Stock Option" means a Stock Option granted under Article
         V of the Plan.

2.19     "Normal Retirement" means retirement from active employment with the
         Company on or after age 65, or pursuant to such other requirements as
         may be established by the Committee or in any Award.

2.20     "Option Grant Date" means, as to any Stock Option, the latest of:

         (a)      The date on which the Committee grants the Stock Option by
                  entering into an Award Agreement with the Participant;

         (b)      The date the Participant receiving the Stock Option becomes an
                  employee of the Company, to the extent employment status is a
                  condition of the grant or a requirement of the Code or the
                  Act; or

         (c)      Such other date (later than the dates described in (i) and
                  (ii) above) as the Committee may designate.

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2.21     "Participant" means an Eligible Participant to whom an Award of
         equity-based compensation has been granted and who has entered into an
         Agreement evidencing the Award.

2.22     "Performance Share" means an Award under Article XI of the Plan of a
         unit valued by reference to a designated number of shares of Stock,
         which value may be paid to the Participant by delivery of such property
         as the Committee shall determine, including without limitation, cash or
         Stock, or any combination thereof, upon achievement of such Performance
         objectives during the Performance Period as the Committee shall
         establish at the time of such Award or thereafter.

2.23     "Plan" means the Pharmaceutical Product Development, Inc. Equity
         Compensation Plan, as amended from time to time.

2.24     "Restricted Stock" means an Award of Stock under Article VIII of the
         Plan, which Stock is issued with the restriction that the holder may
         not sell, transfer, pledge, or assign such Stock and with such other
         restrictions as the Committee, in its sole discretion, may impose,
         including without limitation, any restriction on the right to vote such
         Stock, and the right to receive any cash dividends, which restrictions
         may lapse separately or in combination at such time or times, in
         installments or otherwise, as the Committee may deem appropriate.

2.25     "Restriction Period" means the period commencing on the date an Award
         of Restricted Stock is granted and ending on such date as the Committee
         shall determine.

2.26     "Retirement" means Normal or Early Retirement.

2.27     "Stock" means shares of common stock of Pharmaceutical Product
         Development, Inc., as may be adjusted pursuant to the provisions of
         Section 3.11.

2.28     "Stock Appreciation Right" means a Stock Right, as described in Article
         VI of this Plan, which provides for an amount payable in Stock and/or
         cash, as determined by the Committee, equal to the excess of the Fair
         Market Value of a share of Stock on the day the Stock Right is
         exercised over the price at which the Participant could exercise a
         related Stock Option to purchase the share of stock.

2.29     "Stock Appreciation Right Fair Market Value" means a value established
         by the Committee for the exercise of a Stock Appreciation Right or a
         Limited stock Appreciation Right.

2.30     "Stock  Award"  means an Award of Stock  granted in payment of
         compensation,  as provided in Article X of the Plan

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2.31     "Stock Option" means an Award under Article IV or V of the Plan of an
         option to purchase Stock. A Stock Option may be either an Incentive
         Stock Option or a Nonqualified Stock Option.

2.32     "Stock Right" means an Award under Article VI of the Plan. A Stock
         Right may be either a Stock Appreciation Right or a Limited Stock
         Appreciation Right.

2.33     "Termination of Employment" means the discontinuance of employment of a
         Participant with the Company for any reason. The determination of
         whether a Participant has discontinued employment shall be made by the
         Committee in its discretion. In determining whether a Termination of
         Employment has occurred, the Committee may provide that service as a
         consultant or service with a business enterprise in which the Company
         has a significant ownership interest shall be treated as employment
         with the Company. The Committee shall have the discretion, exercisable
         either at the time the Award is granted or at the time the Participant
         terminates employment, to establish as a provision applicable to the
         exercise of one or more Awards that during the limited period of
         exercisability following Termination of Employment, the Award may be
         exercised not only with respect to the number of shares of Stock for
         which it is exercisable at the time of the Termination of Employment
         but also with respect to one or more subsequent installments for which
         the Award would have become exercisable had the Termination of
         Employment not occurred.

                          ARTICLE III - ADMINISTRATION

3.1      This Plan shall be administered by the Committee. A Committee member
         who is not a Non-Employee Director, with respect to action to be taken
         by the Committee, shall not be able to participate in the decision to
         the extent prescribed by Rule 16b-3 under the Act. The Committee, in
         its discretion, may delegate to one or more of its members such of its
         powers as it deems appropriate. The Committee also may limit the power
         of any member to the extent necessary to comply with Rule 16b-3 under
         the Act or any other law. Members of the Committee shall be appointed
         originally, and as vacancies occur, by the Board, to serve at the
         pleasure of the Board. The Board may serve as the Committee, if by the
         terms of the Plan all Board members are otherwise eligible to serve on
         the Committee.

3.2      The Committee shall meet at such times and places as it determines. A
         majority of its members shall constitute a quorum, and the decision of
         the majority of those present at any meeting at which a quorum is
         present shall constitute the decision of the Committee. A memorandum
         signed by all of its members shall constitute the decision of the
         Committee without necessity, in such event, for holding an actual
         meeting.


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3.3      The Committee shall have the exclusive right to interpret, construe and
         administer the Plan, to select the persons who are eligible to receive
         an Award, and to act in all matters pertaining to the granting of an
         Award and the contents of the Agreement evidencing the Award, including
         without limitation, the determination of the number of Stock Options,
         Stock Rights, shares of Stock or Performance Shares subject to an Award
         and the form, terms, conditions and duration of each Award, and any
         amendment thereof consistent with the provisions of the Plan. All acts,
         determinations and decisions of the Committee made or taken pursuant to
         grants of authority under the Plan or with respect to any questions
         arising in connection with the administration and interpretation of the
         Plan, including the severability of any and all of the provisions
         thereof, shall be conclusive, final and binding upon all Participants,
         Eligible Participants and their beneficiaries.

3.4      The Committee may adopt such rules, regulations and procedures of
         general application for the administration of this Plan, as it deems
         appropriate.

3.5      Without limiting the foregoing Sections 3.1, 3.2, 3.3 and 3.4, and
         notwithstanding any other provisions of the Plan, the Committee is
         authorized to take such action as it determines to be necessary or
         advisable, and fair and equitable to Participants, with respect to an
         Award in the event of an Acceleration Event as defined in Article XIII.
         Such action may include, but shall not be limited to, establishing,
         amending or waiving the forms, terms, conditions and duration of an
         Award and the Award Agreement, so as to provide for earlier, later,
         extended or additional times for exercise or payment, differing methods
         for calculating payments, alternate forms and amounts of payment, an
         accelerated release of restrictions or other modifications. The
         Committee may take such actions pursuant to this Section 3.5 by
         adopting rules and regulations of general applicability to all
         Participants or to certain categories of Participants, by including,
         amending or waiving terms and conditions in an Award and the Award
         Agreement, or by taking action with respect to individual Participants.

3.6      The aggregate number of shares of Stock which are subject to an Award
         under the Plan shall be Three Million Five Hundred Thousand (3,500,000)
         shares. Such shares of Stock shall be made available from authorized
         and unissued shares of the Company.

         (a)      If, for any reason, any shares of Stock or Performance Shares
                  awarded or subject to purchase under the Plan are not
                  delivered or purchased, or are reacquired by the Company, for
                  reasons including, but not limited to, a forfeiture of
                  Restricted Stock or termination, expiration or cancellation of
                  a Stock Option, Stock Right or Performance Share, or any other
                  termination of an Award without payment being made in the form
                  of Stock, whether or not Restricted Stock, such shares of
                  Stock or Performance Shares shall not be charged against the
                  aggregate number of

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                  shares of Stock available for Awards under the Plan, and may
                  again be available for Award under the Plan.

         (b)      For all purposes under the Plan, each Performance Share
                  awarded shall be counted as one share of Stock subject to an
                  Award.

         (c)      To the extent a Stock Right granted in connection with a Stock
                  Option is exercised without payment being made in the form of
                  Stock, whether or not Restricted Stock, the shares of Stock
                  which otherwise would have been issued upon the exercise of
                  such related Stock Option shall not be charged against the
                  aggregate number of shares of Stock subject to Awards under
                  the Plan, and may again be available for Award under the Plan.

         (d)      The aggregate number of shares of Stock which are awarded
                  pursuant to Awards made under the Plan to any "covered
                  employee", as said term is defined in Section 162(m) of the
                  Code, shall not exceed Five Hundred Thousand (500,000) shares
                  in any three-year period.

         (e)      The aggregate number of shares of Stock which are awarded
                  pursuant to Awards made under the Plan to Non-Employee
                  Directors as a group shall not exceed Two Hundred Fifty
                  Thousand (250,000) shares in any three-year period.

3.7      Each Award granted under the Plan shall be evidenced by a written Award
         Agreement. Each Award Agreement shall be subject to and incorporate, by
         reference or otherwise, the applicable terms and conditions of the
         Plan, and any other terms and conditions, not inconsistent with the
         Plan, required by the Committee.

3.8      The Company shall not be required to issue or deliver any certificates
         for shares of Stock prior to:

         (a)      The listing of such shares on any stock exchange on which the
                  Stock may then be listed; and

         (b)      The completion of any registration or qualification of such
                  shares of Stock under any federal or state laws, or any ruling
                  or regulation of any government body which the Company shall,
                  in its discretion, determine to be necessary or advisable.

3.9      All certificates for shares of Stock delivered under the Plan shall
         also be subject to such stop-transfer orders and other restrictions as
         the Committee may deem advisable under the rules, regulations, and
         other requirements of the Securities and Exchange Commission, any stock
         exchange upon which the Stock is then

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         listed and any applicable federal or state laws, and the Committee may
         cause a legend or legends to be placed on any such certificates to make
         appropriate reference to such restrictions. In making such
         determination, the Committee may rely upon an opinion of counsel for
         the Company.

3.10     Subject to the restrictions on Restricted Stock, as provided in Article
         VIII of the Plan and in the Restricted Stock Award Agreement, each
         Participant who receives an Award of Restricted Stock shall have all of
         the rights of a shareholder with respect to such shares of Stock,
         including the right to vote the shares to the extent, if any, such
         shares possess voting rights and receive dividends and other
         distributions. Except as provided otherwise in the Plan or in an Award
         Agreement, no Participant awarded a Stock Option, Stock Right, Deferred
         Stock, Stock Award or Performance Share shall have any rights as a
         shareholder with respect to any shares of Stock covered by his or her
         Stock Option, Stock Right, Deferred Stock, Stock Award or Performance
         Share prior to the date of issuance to him or her of a certificate or
         certificates for such shares of Stock.

3.11     If any reorganization, recapitalization, reclassification, stock
         split-up, stock dividend, or consolidation of shares of Stock, merger
         or consolidation of the Company or sale or other disposition by the
         Company of all or a portion of its assets, any other change in the
         Company's corporate structure, or any distribution to shareholders
         other than a cash dividend results in the outstanding shares of Stock,
         or any securities exchanged therefor or received in their place, being
         exchanged for a different number or class of shares of Stock or other
         securities of the Company, or for shares of Stock or other securities
         of any other corporation, or new, different or additional shares or
         other securities of the Company or of any other corporation being
         received by the holders of outstanding shares of Stock, then equitable
         adjustments shall be made by the Committee in:

         (a)      The limitations of the aggregate number of shares of Stock
                  that may be awarded as set forth in Section 3.6 of the Plan;
                  provided, however, that no equitable adjustment shall be made
                  as a result of any stock split-up, stock dividend or increase
                  in the authorized number of shares in connection with the
                  Company's initial public offering;

         (b)      the number and class of Stock that may be subject to an Award,
                  and which have not been issued or transferred under an
                  outstanding Award;

         (c)      the purchase price to be paid per share of Stock under
                  outstanding Stock Options and the number of shares of Stock to
                  be transferred in settlement of outstanding Stock Rights; and

         (d)      the terms, conditions or restrictions of any Award and Award
                  Agreement, including the price payable for the acquisition of
                  Stock; provided, however, that all adjustments made as the
                  result of the foregoing in respect

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                  of each Incentive Stock Option shall be made so that such
                  Stock Option shall continue to be an Incentive Stock Option,
                  as defined in Section 422 of the Code.

3.12     In addition to such other rights of indemnification as they may have as
         directors or as members of the Committee, the members of the Committee
         shall be indemnified by the Company against reasonable expenses,
         including attorney's fees, actually and necessarily incurred in
         connection with the defense of any actions, suit or proceeding, or in
         connection with any appeal therein, to which they or any of them may be
         a party by reason of any action taken or failure to act under or in
         connection with the Plan or any Award granted thereunder, and against
         all amounts paid by them in settlement thereof, provided such
         settlement is approved by independent legal counsel selected by the
         Company, or paid by them in satisfaction of a judgment or settlement in
         any such action, suit or proceeding, except as to matters as to which
         the Committee member has been negligent or engaged in misconduct in the
         performance of his duties; provided, that within 60 days after
         institution of any such action, suit or proceeding, a Committee member
         shall in writing offer the Company the opportunity, at its own expense,
         to handle and defend the same.

3.13     The Committee may require each person purchasing shares of Stock
         pursuant to a Stock Option or other Award under the Plan to represent
         to and agree with the Company in writing that he is acquiring the
         shares of Stock without a view to distribution thereof. The
         certificates for such shares of Stock may include any legend which the
         Committee deems appropriate to reflect any restrictions on transfer.

3.14     The Committee shall be authorized to make adjustment in
         performance-based criteria or in the terms and conditions of other
         Awards in recognition of unusual or nonrecurring events affecting the
         Company or its financial statements or changes in applicable laws,
         regulations or accounting principles. The Committee may correct any
         defect, supply any omission or reconcile any inconsistency in the Plan
         or any Award Agreement in the manner and to the extent it shall deem
         desirable to carry it into effect. In the event the Company shall
         assume outstanding employee benefit-awards or the right or obligation
         to make future such awards in connection with the acquisition of
         another corporation or business entity, the Committee may, in its
         discretion, make such adjustments in the terms of Awards under the Plan
         as it shall deem appropriate.

3.15     The Committee shall have full power and authority to determine whether,
         to what extent and under what circumstances, any Award shall be
         cancelled or suspended. In particular, but without limitation, all
         outstanding Awards to any Participant may be cancelled if (a) the
         Participant, without the consent of the Committee, while employed by
         the Company or after Termination of Employment, becomes associated
         with, employed by, renders services to, or owns any interest in, other


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         than any insubstantial interest, as determined by the Committee, any
         business in which the Company has a substantial interest as determined
         by the Committee; or (b) the Participant is terminated for cause as
         determined by the Committee.

                      ARTICLE IV - INCENTIVE STOCK OPTIONS

4.1      Each provision of this Article IV and of each Incentive Stock Option
         granted hereunder shall be construed in accordance with the provisions
         of Section 422 of the Code, and any provision hereof that cannot be so
         construed shall be disregarded.

4.2      Incentive Stock Options shall be granted only to Eligible Participants
         who are in the active employment of the Company, each of whom may be
         granted one or more such Incentive Stock Options for a reason related
         to his employment at such time or times determined by the Committee
         following the Effective Date until May 12, 2009, subject to the
         following conditions:

         (a)      The Incentive Stock Option price per share of Stock shall be
                  set in the Award Agreement, but shall not be less than 100% of
                  the Fair Market Value of the Stock on the Option Grant Date.
                  If the Optionee owns more than 10% of the outstanding Stock
                  (as determined pursuant to Section 424(d) of the Code) on the
                  Option Grant Date, the Incentive Stock Option price per share
                  shall not be less than 110% of the Fair Market Value of the
                  Stock on the Option Grant Date.

         (b)      The  Incentive  Stock  Option and its related  Stock  Right,
                  if any, may be exercised in whole or in part from time to time
                  within  ten (10)  years  from the  Option  Grant  Date  (five
                  (5) years if the Optionee  owns more than 10% of the Stock on
                  the Option  Grant Date),  or such shorter  period as may be
                  specified by the  Committee  in the Award;  provided,  that in
                  any event,  the  Incentive Stock  Option and any  related
                  Stock  Right shall  lapse and cease to be  exercisable  upon,
                  or within such period  following,  a Termination of Employment
                  as shall have been  determined by the Committee  and as
                  specified in the  Incentive  Stock Option Award  Agreement or
                  its related Stock Right  Award  Agreement;   provided,
                  however,  that  such  period  following  a  Termination  of
                  Employment shall not exceed three months unless employment
                  shall have terminated:

                       (i)          as a result of death or Disability, in which
                                    event, such period shall not exceed one year
                                    after the date of death or Disability; and

                       (ii)         as a result of death, if death shall have
                                    occurred following a Termination of
                                    Employment and while the Incentive Stock
                                    Option or Stock Right was still exercisable,
                                    in which event,


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                                    such period shall not exceed one year after
                                    the date of death; provided, further, that
                                    such period following a Termination of
                                    Employment shall in no event extend the
                                    original exercise period of the Incentive
                                    Stock Option or any related Stock Right.

         (c)      To the extent the aggregate Fair Market Value, determined as
                  of the Option Grant Date, of the shares of Stock with respect
                  to which Incentive Stock Options (determined without regard to
                  this subsection) are first exercisable during any calendar
                  year by any Eligible Participant exceeds $100,000, such
                  options shall be treated as Nonqualified Stock Options granted
                  under Article V.

         (d)      The Committee may adopt any other terms and conditions which
                  it determines should be imposed for the Incentive Stock Option
                  to qualify under Section 422 of the Code, as well as any other
                  terms and conditions not inconsistent with this Article IV as
                  determined by the Committee.

4.3      The Committee may at any time offer to buy out for a payment in cash,
         Stock, Deferred Stock or Restricted Stock an Incentive Stock Option
         previously granted, based on such terms and conditions as the Committee
         shall establish and communicate to the Participant at the time that
         such offer is made.

4.4      If the Incentive Stock Option Award Agreement so provides, the
         Committee may require that all or part of the shares of Stock to be
         issued upon the exercise of an Incentive Stock Option shall take the
         form of Deferred or Restricted Stock, which shall be valued on the date
         of exercise, as determined by the Committee, on the basis of the Fair
         Market Value of such Deferred Stock or Restricted Stock determined
         without regard to the deferral limitations and/or forfeiture
         restrictions involved.

                     ARTICLE V - NONQUALIFIED STOCK OPTIONS

5.1      One or more Stock Options may be granted as Nonqualified Stock Options
         to Eligible Participants to purchase shares of Stock at such time or
         times determined by the Committee, following the Effective Date,
         subject to the terms and conditions set forth in this Article V.

5.2      The Nonqualified Stock Option price per share of Stock shall be
         established in the Award Agreement and may be less than 100% of the
         Fair Market Value at the time of the grant, or at such later date as
         the Committee shall determine.

5.3      The Nonqualified Stock Option and its related Stock Right, if any, may
         be exercised in full or in part from time to time within such period as
         may be specified by the Committee or in the Award Agreement; provided,
         that, in any


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         event, the Nonqualified Stock Option and any related Stock
         Right shall lapse and cease to be exercisable upon, or within such
         period following, Termination of Employment as shall have been
         determined by the Committee and as specified in the Nonqualified Stock
         Option Award Agreement or Stock Right Award Agreement; provided,
         however, that such period following Termination of Employment shall not
         exceed three months unless employment shall have terminated:

         (a)      As a result of Retirement or Disability, in which event, such
                  period shall not exceed one year after the date of Retirement
                  or Disability, or within such longer period as the Committee
                  may specify; and

         (b)      As a result of death, or if death shall have occurred
                  following a Termination of Employment and while the
                  Nonqualified Stock Option or Stock Right was still
                  exercisable, in which event, such period may not exceed one
                  year after the date of death, as provided by the Committee or
                  in the Award Agreement.

5.4      The Nonqualified Stock Option Award Agreement may include any other
         terms and conditions not inconsistent with this Article V or in Article
         VII, as determined by the Committee.

                     ARTICLE VI - STOCK APPRECIATION RIGHTS

6.1      A Stock Appreciation Right may be granted to an Eligible Participant in
         connection with an Incentive Stock Option or a Nonqualified Stock
         Option granted under Article IV or Article V of this Plan,
         respectively, or may be granted independent of any related Stock
         Option.

6.2      A related Stock Appreciation Right shall entitle a holder of a Stock
         Option, within the period specified for the exercise of the Stock
         Option, to surrender the unexercised Stock Option, or a portion
         thereof, and to receive in exchange therefor a payment in cash or
         shares of Stock having an aggregate value equal to the amount by which
         the Fair Market Value of each share of Stock exceeds the Stock Option
         price per share of Stock, times the number of shares of Stock under the
         Stock Option, or portion thereof, which is surrendered.

6.3      Each related Stock Appreciation Right granted hereunder shall be
         subject to the same terms and conditions as the related Stock Option,
         including limitations on transferability, and shall be exercisable only
         to the extent such Stock Option is exercisable when the related Stock
         Option terminates or lapses. The grant of Stock Appreciation Rights
         related to Incentive Stock Options must be concurrent with the grant of
         the Incentive Stock Options. With respect to Nonqualified Stock
         Options, the grant either may be concurrent with the grant of the
         Nonqualified


                                       12
<PAGE>


         Stock Options, or in connection with Nonqualified Stock Options
         previously granted under Article V, which are unexercised and
         have not terminated or lapsed.

6.4      The Committee shall have sole discretion to determine in each case
         whether the payment with respect to the exercise of a Stock
         Appreciation Right will be in the form of all cash or all Stock, or any
         combination thereof. If payment is to be made in Stock, the number of
         shares of Stock shall be determined based on the Fair Market Value of
         the Stock on the date of exercise. If the Committee elects to make full
         payment in Stock, no fractional shares of Stock shall be issued and
         cash payment shall be made in lieu of fractional shares.

6.5      The Committee shall have sole discretion as to the timing of any
         payment made in cash or Stock, or a combination thereof, upon exercise
         of Stock Appreciation Rights. Payment may be made in a lump sum, in
         annual installments or may be otherwise deferred; and the Committee
         shall have sole discretion to determine whether any deferred payments
         may bear amounts equivalent to interest or cash dividends.

6.6      Upon exercise of a Stock Appreciation Right, the number of shares of
         Stock subject to exercise under any related Stock Option shall
         automatically be reduced by the number of shares of Stock represented
         by the Stock Option or portion thereof which is surrendered.

6.7      Notwithstanding any other provision of the Plan, the exercise of a
         Stock Appreciation Right is required to satisfy the applicable
         requirements under Rule 16b-3 of the Act.

6.8      The Committee, in its sole discretion, may also provide that, in the
         event of a change in Control and/or a Potential Change in Control, as
         defined in Article XIII, the amount to be paid upon the exercise of a
         Stock Appreciation Right or Limited Stock Appreciation Right shall be
         based on the Change in Control Price, as defined in Section 13.9,
         subject to such terms and conditions as the Committee may specify.

6.9      In its sole discretion, the Committee may grant Limited Stock
         Appreciation Rights under this Article VI. Limited Stock Appreciation
         Rights become exercisable only in the event of a Change in Control
         and/or a Potential Change in Control, subject to such terms and
         conditions as the Committee, in its sole discretion, may specify. Such
         Limited Stock Appreciation Rights shall be settled solely in cash. A
         Limited Stock Appreciation Right shall entitle the holder of the
         related Stock Option to surrender such Stock Option, or any portion
         thereof, to the extent unexercised in respect of the number of shares
         of Stock as to which such Limited Stock Appreciation Right is
         exercised, and to receive a cash payment equal to the difference
         between (a) the Stock Appreciation Right Fair Market Value, at the date
         of surrender, of a share of Stock for which the surrendered


                                       13
<PAGE>


         Stock Option or portion thereof is then exercisable, and (b) the price
         at which a Participant could exercise a related Stock Option to
         purchase the share of Stock. Such Stock Option shall, to the extent so
         surrendered, thereupon cease to be exercisable. A Limited Stock
         Appreciation Right shall be subject to such further terms and
         conditions as the Committee shall, in its sole discretion, deem
         appropriate, including any restrictions necessary to comply with
         Section 16(b) of the Act.

            ARTICLE VII - INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS

7.1      Each Stock Option and Stock Right shall be granted subject to such
         terms and conditions, if any, not inconsistent with this Plan, as shall
         be determined by the Committee, including any provisions as to
         continued employment as consideration for the grant or exercise of such
         Stock Option or Stock Right and any provisions which may be advisable
         to comply with applicable laws, regulations or rulings of any
         governmental authority.

7.2      A Stock Option or Stock Right shall not be transferable by the
         Participant other than by will or by the laws of descent and
         distribution, or, to the extent otherwise allowed by Rule 16b-3 under
         the Act, or other applicable law, pursuant to a qualified domestic
         relations order as defined by the Code or the Employee Retirement
         Income Security Act, or the rules thereunder, and shall be exercisable
         during the lifetime of the Participant only by him or by his guardian
         or legal representative.

7.3      Shares of Stock purchased upon exercise of a Stock Option shall be paid
         for in such amounts, at such times and upon such terms as shall be
         determined by the Committee, subject to limitations set forth in the
         Stock Option Award Agreement. Without limiting the foregoing, the
         Committee may establish payment terms for the exercise of Stock Options
         which permit the Participant to deliver shares of Stock, or other
         evidence of ownership of Stock satisfactory to the Company, with a Fair
         Market Value equal to the Stock Option price as payment.

7.4      No cash dividends shall be paid on shares of Stock subject to
         unexercised Stock Options. The Committee may provide, however, that a
         Participant to whom a Stock Option has been granted which is
         exercisable in whole or in part at a future time for shares of Stock
         shall be entitled to receive an amount per share equal in value to the
         cash dividends, if any, paid per share on issued and outstanding Stock,
         as of the dividend record dates occurring during the period between the
         date of the grant and the time each such share Option or the related
         Stock Right. Such amounts (herein called "dividend equivalents") may,
         in the discretion of the Committee, be:


                                       14
<PAGE>


         (a)      Paid in cash or Stock either from time to time prior to, or at
                  the time of the delivery of, such Stock, or upon expiration of
                  the Stock Option if it shall not have been fully exercised; or

         (b)      Converted into contingently credited shares of Stock, with
                  respect to which dividend equivalents may accrue, in such
                  manner, at such value, and deliverable at such time or times,
                  as may be determined by the Committee.

         Such Stock, whether delivered or contingently credited, shall be
         charged against the limitations set forth in Section 3.6.

7.5      The Committee, in its sole discretion, may authorize payment of
         interest equivalents on dividend equivalents which are payable in cash
         at a future time.

7.6      In the event of Disability or death, the Committee, with the consent of
         the Participant or his legal representative, may authorize payment, in
         cash or in Stock, or partly in cash and partly in Stock, as the
         Committee may direct, of an amount equal to the difference at the time
         between the Fair Market Value of the Stock subject to a Stock Option
         and the option price in consideration of the surrender of the Stock
         Option.

7.7      If a Participant is required to pay to the Company an amount with
         respect to income and employment tax withholding obligations in
         connection with exercise of a Nonqualified Stock option, and/or with
         respect to certain dispositions of Stock acquired upon the exercise of
         an Incentive Stock Option, the Committee, in its discretion and subject
         to such rules as is may adopt, may permit the Participant to satisfy
         the obligation, in whole or in part, by making an irrevocable election
         that a portion of the total Fair Market Value of the shares of Stock
         subject to the Nonqualified Stock Option and/or with respect to certain
         dispositions of Stock acquired upon the exercise of an Incentive Stock
         Option, be paid in the form of cash in lieu of the issuance of Stock
         and that such cash payment be applied to the satisfaction of the
         withholding obligations. The amount to be withheld shall not exceed the
         statutory minimum federal and state income and employment tax liability
         arising from the Stock Option exercise transaction. Notwithstanding any
         other provision of the Plan, any election under this Section 7.7 is
         required to satisfy the applicable requirements under Rule 16b-3 of the
         Act.

7.8      The Committee may permit the voluntary surrender of all or a portion of
         any Stock Option granted under the Plan to be conditioned upon the
         granting to the Participant of a new Stock Option for the same or a
         different number of shares of Stock as the Stock Option surrendered, or
         may require such surrender as a condition precedent to a grant of a new
         Stock Option to such Participant. Subject to the provisions of the
         Plan, such new Stock Option shall be exercisable at the same price,
         during such period and on such other terms and conditions as are


                                       15
<PAGE>


         specified by the Committee at the time the new Stock Option is granted.
         Upon surrender, the Stock Options surrendered shall be cancelled and
         the shares of Stock previously subject to them shall be available for
         the grant of other Stock Options.

                         ARTICLE VIII - RESTRICTED STOCK

8.1      Restricted Stock Awards may be made to certain Participants as an
         incentive for the performance of future services that will contribute
         materially to the successful operation of the Company. Awards of
         Restricted Stock may be made either alone, in addition to or in tandem
         with other Awards granted under the Plan and/or cash payments made
         outside of the Plan.

8.2      With respect to Awards of Restricted Stock, the Committee shall:

         (a)      Determine the purchase price, if any, to be paid for such
                  Restricted Stock, which may be equal to or less than par value
                  and may be zero, subject to such minimum consideration as may
                  be required by applicable law;

         (b)      Determine the length of the Restriction Period;

         (c)      Determine any restrictions applicable to the Restricted Stock
                  such as service or performance, other than those set forth in
                  this Article VIII;

         (d)      Determine if the restrictions shall lapse as to all shares of
                  Restricted Stock at the end of the Restriction Period or as to
                  a portion of the shares of Restricted Stock in installments
                  during the Restriction Period; and

         (e)      Determine if dividends and other distributions on the
                  Restricted Stock are to be paid currently to the Participant
                  or paid to the Company for the account of the Participant.

8.3      Awards of Restricted Stock must be accepted within a period of 60 days,
         or such shorter period as the Committee may specify, by executing a
         Restricted Stock Award Agreement and paying whatever price, if any, is
         required. The prospective recipient of a Restricted Stock Award shall
         not have any rights with respect to such Awards, unless such recipient
         has executed a Restricted Stock Award Agreement and has delivered a
         fully executed copy thereof to the Committee, and has otherwise
         complied with the applicable terms and conditions of such Award.

8.4      Except when the Committee determines otherwise, or as otherwise
         provided in the Restricted Stock Award Agreement, upon a Termination of
         Employment of a Participant before the expiration of the Restriction
         Period, all shares of Restricted Stock still subject to restriction
         shall be forfeited by the Participant and shall be reacquired by the
         Company.

                                       16
<PAGE>


8.5      Except as otherwise provided in this Article VIII, no shares of
         Restricted Stock received by a Participant shall be sold, exchanged,
         transferred, pledged, hypothecated or otherwise disposed of during the
         Restriction Period.

8.6      To the extent not otherwise provided in a Restricted Stock Award
         Agreement, in cases of death, Disability or Retirement or in cases of
         special circumstances, the Committee, if it finds that a waiver would
         be appropriate, may elect to waive any or all remaining restrictions
         with respect to such Participant's Restricted Stock.

8.7      In the event of hardship or other special circumstances of a
         Participant whose Termination of Employment with the Company is
         involuntary, the Committee may waive in whole or in part any or all
         remaining restrictions with respect to any or all of the Participant's
         Restricted Stock, based on such factors and criteria as the Committee
         may deem appropriate.

8.8      The certificates representing shares of Restricted Stock may either:

         (a)      Be held in custody by the Company until the Restriction Period
                  expires or until restrictions thereon otherwise lapse, and the
                  Participant shall deliver to the Company a stock power
                  endorsed in blank relating to the Restricted Stock; and/or

         (b)      Be issued to the Participant and registered in the name of the
                  Participant, and shall bear an appropriate restrictive legend
                  and shall be subject to appropriate stop-transfer orders.

8.9      Except as provided in this Article VIII, a Participant receiving a
         Restricted Stock Award shall have, with respect to the shares of
         Restricted Stock covered by any Award, all of the rights of a
         shareholder of the Company, including the right to vote the shares to
         the extent, if any, such shares possess voting rights and the right to
         receive any dividends; provided, however, the Committee may require
         that any dividends on such shares of Restricted Stock shall be
         automatically deferred and reinvested in additional Restricted Stock
         subject to the same restrictions as the underlying Award, or may
         require that dividends and other distributions on Restricted Stock
         shall be paid to the Company for the account of the Participant. The
         Committee shall determine whether interest shall be paid on such
         amounts, the rate of any such interest, and the other terms applicable
         to such amounts.

8.10     If and when the Restriction Period expires without a prior forfeiture
         of the Restricted Stock subject to such Restriction Period,
         unrestricted certificates for such shares shall be delivered to the
         Participant.

8.11     In order to better ensure that Award payment actually reflect the
         performance of the Company and the service of the Participant, the
         Committee may provide, in its

                                       17
<PAGE>


         sole discretion, for a tandem performance-based or other Award designed
         to guarantee a minimum value, payable in cash or Stock to the recipient
         of a Restricted Stock Award, subject to such performance, future
         service, deferral and other terms and conditions as may be specified
         by the Committee.

                           ARTICLE IX - DEFERRED STOCK

9.1      Shares of Deferred Stock together with cash dividend equivalents, if so
         determined by the Committee, may be issued either alone or in addition
         to other Awards granted under the Plan in the discretion of the
         Committee. The Committee shall determine the individuals to whom, and
         the time or times at which, such Awards will be made, the number of
         shares to be awarded, the price, if any, to be paid by the recipient of
         a Deferred Stock Award, the time or times within which such Awards may
         be subject to forfeiture, and all other conditions of the Awards. The
         Committee may condition Awards of Deferred Stock upon the attainment of
         specified performance goals or such other factors or criteria as the
         Committee may determine.

9.2      Deferred Stock Awards shall be subject to the following terms and
         conditions:

         (a)      Subject to the provisions of this Plan and the applicable
                  Award Agreement, Deferred Stock Awards may not be sold,
                  transferred, pledged, assigned or otherwise encumbered during
                  the period specified by the Committee for purposes of such
                  Award (the "Deferral Period"). At the expiration of the
                  Deferral Period, or the Elective Deferral Period defined in
                  Section 9.3, share certificates shall be delivered to the
                  Participant, or his legal representative, in a number equal to
                  the number of shares of Stock covered by the Deferred Stock
                  Award.

                  Based on service, performance and/or such other factors or
                  criteria as the Committee may determine, the Committee,
                  however, at or after grant, may accelerate the vesting of all
                  or any part of any Deferred Stock Award and/or waive the
                  deferral limitations for all or any part of such Award.

         (b)      Unless otherwise determined by the Committee, amounts equal to
                  any dividends that would have been payable during the Deferral
                  Period with respect to the number of shares of Stock covered
                  by a Deferred Stock Award if such shares of Stock had been
                  outstanding shall be automatically deferred and deemed to be
                  reinvested in additional Deferred Stock, subject to the same
                  deferral limitations as the underlying Award.

         (c)      Except to the extent otherwise provided in this Plan or in the
                  applicable Award Agreement, upon Termination of Employment
                  during the Deferral Period for a given Award, the Deferred
                  Stock covered by such Award shall be forfeited by the
                  Participant; provided, however, the Committee may

                                       18
<PAGE>


                  provide for accelerated vesting in the event of Termination of
                  Employment due to death, Disability or Retirement, or in the
                  event of hardship or other special circumstances as the
                  Committee deems appropriate.

         (d)      The Committee may require that a designated percentage of the
                  total Fair Market Value of the shares of Deferred Stock held
                  by one or more Participants be paid in the form of cash in
                  lieu of the issuance of Stock and that such cash payment be
                  applied to the satisfaction of the federal and state income
                  and employment tax withholding obligations that arise at the
                  time the Deferred Stock becomes free of all restrictions. The
                  designated percentage shall be equal to the minimum income and
                  employment tax withholding rate in effect at the time under
                  applicable federal and state laws.

         (e)      The Committee may provide one or more Participants subject to
                  the mandatory cash payment with an election to receive an
                  additional percentage of the total value of the Deferred Stock
                  in the form of a cash payment in lieu of the issuance of
                  Deferred Stock. The additional percentage shall not exceed the
                  difference between 50% and the designated percentage cash
                  payment.

         (f)      The Committee may impose such further terms and conditions on
                  partial cash payments with respect to Deferred Stock as it
                  deems appropriate, including any restrictions necessary to
                  comply with Section 16(b) of the Act.

9.3      A Participant may elect to further defer receipt of Deferred Stock for
         a specified period or until a specified event (the "Elective Deferral
         Period"), subject in each case to the Committee's approval and to such
         terms as are determined by the Committee. Subject to any exceptions
         adopted by the Committee, such election must generally be made at least
         12 months prior to completion of the Deferral Period for the Deferred
         Stock Award in question, or for the applicable installment of such an
         Award.

9.4      Each Award shall be confirmed by, and subject to the terms of, a
         Deferred Stock Award Agreement.

9.5      In order to better ensure that the Award actually reflects the
         performance of the Company and the service of the Participant, the
         Committee may provide, in its sole discretion, for a tandem
         performance-based or other Award designed to guarantee a minimum value,
         payable in cash or Stock to the recipient of a Deferred Stock Award,
         subject to such performance, future service, deferral and other terms
         and conditions as may be specified by the Committee.


                                       19
<PAGE>



                            ARTICLE X - STOCK AWARDS

10.1     A Stock Award shall be granted only in payment of compensation that has
         been earned or as compensation to be earned, including without
         limitation, compensation awarded concurrently with or prior to the
         grant of the Stock Award.

10.2     For the purposes of this Plan, in determining the value of a Stock
         Award, all shares of Stock subject to such Stock Award shall be valued
         at not less than 100% of the Fair Market Value of such shares of Stock
         on the date such Stock Award is granted, regardless of whether or when
         such shares of Stock are issued or transferred to the Participant and
         whether or not such shares of Stock are subject to restrictions which
         affect their value.

10.3     Shares of Stock subject to a Stock Award may be issued or transferred
         to the Participant at the time the Stock Award is granted, or at any
         time subsequent thereto, or in installments from time to time, as the
         Committee shall determine. If any such issuance or transfer shall not
         be made to the Participant at the time the Stock Award is granted, the
         Committee may provide for payment to such Participant, either in cash
         or shares of Stock, from time to time or at the time or times such
         shares of Stock shall be issued or transferred to such Participant, of
         amounts not exceeding the dividends which would have been payable to
         such Participant in respect of such shares of Stock, as adjusted under
         Section 3.11, as if such shares of Stock had been issued or transferred
         to such Participant at the time such Stock Award was granted. Any
         issuance payable in shares of Stock under the terms of a Stock Award,
         at the discretion of the Committee, may be paid in cash on each date on
         which delivery of shares of Stock would otherwise have been made, in an
         amount equal to the Fair Market Value on such date of the shares of
         Stock which would otherwise have been delivered.

10.4     A Stock Award shall be subject to such terms and conditions, including
         without limitation, restrictions on the sale or other disposition of
         the Stock Award or of the shares of Stock issued or transferred
         pursuant to such Stock Award, as the Committee shall determine;
         provided, however, that upon the issuance or transfer of shares
         pursuant to a Stock Award, the Participant, with respect to such shares
         of Stock, shall be and become a shareholder of the Company fully
         entitled to receive dividends, to vote to the extent, if any, such
         shares possess voting rights and to exercise all other rights of a
         shareholder except to the extent otherwise provided in the Stock Award.
         Each Stock Award shall be evidenced by a written Award Agreement in
         such form as the Committee shall determine.

                         ARTICLE XI - PERFORMANCE SHARES

11.1     Awards of Performance Shares may be made to certain Participants as an
         incentive for the performance of future services that will contribute
         materially to the successful operation of the Company. Awards of
         Performance Shares may be

                                       20
<PAGE>



         made either alone, in addition to or in tandem with other Awards
         granted under the Plan and/or cash payments made outside of the Plan.

11.2     With respect to Awards of Performance Shares, which may be issued for
         no consideration or such minimum consideration as is required by
         applicable law, the Committee shall:

        (a)       Determine and designate from time to time those  Participants
                  to whom Awards of Performance  Shares are to be made;

        (b)       Determine the performance period (the "Performance Period")
                  and/or performance objectives (the "Performance Objectives")
                  applicable to such Awards;

        (c)       Determine the form of settlement of a Performance Share; and

        (d)       Generally determine the terms and conditions of each such
                  Award. At any date, each Performance Share shall have a value
                  equal to the Fair Market Value, determined as set forth in
                  Section 2.15.

11.3     Performance Periods may overlap, and Participants may participate
         simultaneously with respect to Performance Shares for which different
         Performance Periods are prescribed.

11.4     The Committee shall determine the Performance Objectives of Awards of
         Performance Shares. Performance Objectives may vary from Participant to
         Participant and between Awards and shall be based upon such performance
         criteria or combination of factors as the Committee may deem
         appropriate, including for example, but not limited to, minimum
         earnings per share or return on equity. If during the course of a
         Performance Period there shall occur significant events which the
         Committee expects to have a substantial effect on the applicable
         Performance Objectives during such period, the Committee may revise
         such Performance Objectives.

11.5     The Committee shall determine for each Participant the number of
         Performance Shares which shall be paid to the Participant if the
         applicable Performance Objectives are exceeded or met in whole or in
         part.

11.6     If a Participant terminates services with the Company during a
         Performance Period because of death, Disability, Retirement or under
         other circumstances in which the Committee in its discretion finds that
         a waiver would be appropriate, that Participant, as determined by the
         Committee, may be entitled to a payment of Performance Shares at the
         end of the Performance Period based upon the extent to which the
         Performance Objectives were satisfied at the end of such period and pro
         rated for the portion of the Performance Period during which the
         Participant was

                                       21
<PAGE>

         employed by the Company; provided, however, the Committee may provide
         for an earlier payment in settlement of such Performance Shares in such
         amount and under such terms and conditions as the Committee deems
         appropriate or desirable. If a Participant terminates service with the
         Company during a Performance Period for any other reason, then such
         Participant shall not be entitled to any payment with respect to that
         Performance Period unless the Committee shall otherwise determine.

11.7     Each Award of a Performance Share shall be paid in whole shares of
         Stock, or cash, or a combination of Stock and cash as the Committee
         shall determine, with payment to be made as soon as practicable after
         the end of the relevant Performance Period.

11.8     The Committee shall have the authority to approve requests by
         Participants to defer payment of Performance Shares on terms and
         conditions approved by the Committee and set forth in a written Award
         Agreement between the Participant and the Company entered into in
         advance of the time of receipt or constructive receipt of payment by
         the Participant.

                     ARTICLE XII - OTHER STOCK-BASED AWARDS

12.1     Other awards that are valued in whole or in part by reference to, or
         are otherwise based on, Stock ("Other Stock-Based Awards"), including
         without limitation, convertible preferred stock, convertible
         debentures, exchangeable securities, phantom stock and Stock Awards or
         options valued by reference to book value or performance, may be
         granted either alone or in addition to or in tandem with Stock Options,
         Stock Rights, Restricted Stock, Deferred Stock or Stock Awards granted
         under the Plan and/or cash awards made outside of the Plan. Subject to
         the provisions of the Plan, the Committee shall have authority to
         determine the Eligible Participants to whom and the time or times at
         which such Awards shall be made, the number of shares of Stock subject
         to such Awards, and all other conditions of the Awards. The Committee
         also may provide for the grant of shares of Stock upon the completion
         of a specified Performance Period.

         The provisions of Other Stock-Based Awards need not be the same with
         respect to each recipient.

12.2     Other  Stock-Based  Awards made pursuant to this Article XII shall be
         subject to the following terms and conditions:

         (a)      Subject to the provisions of this Plan and the Award
                  Agreement, shares of Stock subject to Awards made under this
                  Article XII may not be sold, assigned, transferred, pledged or
                  otherwise encumbered prior to the date on which the shares are
                  issued, or, if later, the date on which any applicable
                  restriction, performance or deferral period lapses.

                                       22
<PAGE>


         (b)      Subject to the provisions of this Plan and the Award Agreement
                  and unless otherwise determined by the Committee at the time
                  of the Award, the recipient of an Award under this Article XII
                  shall be entitled to receive, currently or on a deferred
                  basis, interest or dividends or interest or dividend
                  equivalents with respect to the number of shares covered by
                  the Award, as determined at the time of the Award by the
                  Committee, in its sole discretion, and the Committee may
                  provide that such amounts, if any, shall be deemed to have
                  been reinvested in additional Stock or otherwise reinvested.

         (c)      Any Award under this Article XII and any Stock covered by any
                  such Award shall vest or be forfeited to the extent so
                  provided in the Award Agreement, as determined by the
                  Committee, in its sole discretion.

         (d)      Upon the Participant's Retirement, Disability or death, or in
                  cases of special circumstances, the Committee may, in its sole
                  discretion, waive in whole or in part any or all of the
                  remaining limitations imposed hereunder, if any, with respect
                  to any or all of an Award under this Article XII.

         (e)      Each Award under this Article XII shall be confirmed by, and
                  subject to the terms of an Award under this Article XII.

         (f)      Stock, including securities convertible into Stock, issued on
                  a bonus basis under this Article XII may be issued for no cash
                  consideration.

12.3     Other  Stock-Based  Awards may include a phantom stock Award, which is
         subject to the following terms and conditions:

         (a)      The Committee shall select the Eligible Participants who may
                  receive phantom stock Awards. The Eligible Participant shall
                  be awarded a phantom stock unit, which shall be the equivalent
                  to a share of Stock.

         (b)      Under an Award of phantom stock, payment shall be made on the
                  dates or dates as specified by the Committee or as stated in
                  the Award Agreement and phantom stock Awards may be settled in
                  cash, Stock, or some combination thereof.

         (c)      The Committee shall determine such other terms and conditions
                  of each Award as it deems necessary in its sole discretion.


                                       23
<PAGE>



                       ARTICLE XIII - ACCELERATION EVENTS

13.1     For the purposes of the Plan, an Acceleration Event shall occur in the
         event of a "Potential Change in Control", or "Change in Control" or a
         "Board-Approved Change in Control", as those terms are defined below.

13.2     A "Change in Control" shall be deemed to have occurred if:

         (a)      Any "Person" as defined in Section 3(a)(9) of the Act,
                  including a "group" (as that term is used in Sections 13(d)(3)
                  and 14(d)(2) of the Act), but excluding the Company and any
                  employee benefit plan sponsored or maintained by the Company,
                  including any trustee of such plan acting as trustee, who:

                  (i)      makes a tender or exchange offer for any shares of
                           the Company's Stock (as defined below) pursuant to
                           which any shares of the Company's Stock are purchased
                           (an "Offer"); or

                  (ii)     together with its "affiliates" and "associates" (as
                           those terms are defined in Rule 12b-2 under the Act)
                           becomes the "Beneficial Owner" (within the meaning of
                           Rule 13d-3 under the Act) of at least 20% of the
                           Company's Stock (an "Acquisition");

         (b)      The Shareholders of the Company approve a definitive agreement
                  or plan to merge or consolidate the Company with or into
                  another corporation, to sell or otherwise dispose of all or
                  substantially all of its assets, or to liquidate the Company
                  (individually, a "Transaction"); or

         (c)      When,  during any period of 24 consecutive  months during the
                  existence of the Plan, the  individuals  who constitute  the
                  Board (the  "Incumbent  Directors") at the beginning of such
                  period cease for any reason other than death to  constitute at
                  least a majority  thereof;  provided,  however,  that a
                  director  who was not a director at the  beginning  of such
                  24-month  period  shall be deemed to have  satisfied such
                  24-month  requirement,  and be an Incumbent  Director,  if
                  such director was elected by, or on the  recommendation  of or
                  with the  approval  of, at least  two-thirds  of the
                  directors who then qualify as Incumbent  Directors either
                  actually,  because they were directors at the beginning of
                  such 24-month period, or by prior operation of this Section
                  13.2(c).

13.3     A "Board-Approved Change in Control" shall be deemed to have occurred
         if the Offer, Acquisition or Transaction, as the case may be, is
         approved by a majority of the Directors serving as members of the Board
         at the time of the Potential Change in Control or Change in Control.

                                       24
<PAGE>


13.4     A "Potential Change in Control" means the happening of any one of the
         following:

         (a)      The approval by shareholders of an agreement by the Company,
                  the consummation of which would result in a Change in Control
                  of the Company, as defined in Section 13.2; or

         (b)      The acquisition of Beneficial Ownership, directly or
                  indirectly, by any entity, person or group, other than the
                  Company or any Company employee benefit plan, including any
                  trustee of such plan acting as such trustee, of securities of
                  the Company representing five percent or more of the combined
                  voting power of the Company's outstanding securities and the
                  adoption by the Board of a resolution to the effect that a
                  Potential Change in Control of the Company has occurred for
                  the purposes of this Plan.

13.5     Upon the occurrence of an Acceleration Event, subject to the approval
         of the Committee if the Acceleration Event results from a
         Board-Approved Change in Control, all then outstanding Performance
         shares with respect to which the applicable Performance Period has not
         been completed shall be paid as soon as practicable as follows:

         (a)      All Performance Objectives applicable to the Award of
                  Performance Shares shall be deemed to have been satisfied to
                  the extent necessary to result in payment of 100% of the
                  Performance Shares covered by the Award; and

         (b)      The applicable Performance Period shall be deemed to have
                  ended on the date of the Acceleration Event;

         (c)      The payment to the Participant shall be the amount determined
                  either by the Committee, in its sole discretion, or in the
                  manner stated in the Award Agreement. This amount shall then
                  be multiplied by a fraction, the numerator of which is the
                  number of full calendar months of the applicable Performance
                  Period that have elapsed prior to the date of the Acceleration
                  Event, and the denominator of which is the total number of
                  months in the original Performance Period; and

         (d)      Upon the making of any such payment, the Award Agreement as to
                  which it relates shall be deemed canceled and of not further
                  force and effect.

13.6     Upon the occurrence of an Acceleration Event, subject to the approval
         of the Committee if the Acceleration Event results from a
         Board-Approved Change in Control, the Committee in its discretion may
         declare any or all then outstanding Stock Options, and any or all
         related Stock Rights outstanding for at least six

                                       25
<PAGE>


         months, not previously exercisable and vested as immediately
         exercisable and fully vested, in whole or in part.

13.7     Upon the occurrence of an Acceleration Event, subject to the approval
         of the Committee if the Acceleration Event results from a
         Board-Approved Change in Control, the Committee in its discretion, may
         declare the restrictions applicable to Awards of Restricted Stock,
         Deferred Stock or Other Stock-Based Awards to have lapsed, in which
         case the Company shall remove all restrictive legends and stop-transfer
         orders applicable to the certificates for such shares of Stock, and
         deliver such certificates to the Participants in whose names they are
         registered.

13.8     The value of all outstanding Stock Options, Stock Rights, Restricted
         Stock, Deferred Stock, Performance Shares, Stock Awards and Other
         Stock-Based Awards, in each case to the extent vested, shall, unless
         otherwise determined by the Committee in its sole discretion at or
         after grant but prior to any Change in Control, be cashed out on the
         basis of the "Change in Control Price" (as defined in Section 13.9) as
         of the date such Change in Control or such Potential Change in Control
         is determined to have occurred or such other date as the Committee may
         determine prior to the Change in Control.

13.9     For purposes of Section 13.8, "Change in Control Price" means the
         highest price per share of Stock paid in any transaction reported on
         the exchange on which the Stock is then traded, or paid or offered in
         any bona fide transaction related to a Potential or actual Change in
         Control of the Company at any time during the 60-day period immediately
         preceding the occurrence of the Change in Control, or, where
         applicable, the occurrence of the Potential Change in Control event, in
         each case as determined by the Committee except that, in the case of
         Incentive Stock Options and Stock Appreciation Rights, or Limited Stock
         Appreciation Rights relating to such Incentive Stock Options, such
         price shall be based only on transactions reported for the date on
         which the optionee exercises such Incentive Stock Options, Stock
         Appreciation Rights, or Limited Stock Appreciation Rights.

                     ARTICLE XIV - AMENDMENT AND TERMINATION

14.1     The Board, upon recommendation of the Committee, or otherwise, at any
         time and from time to time, may amend or terminate the Plan. To the
         extent required by Rule 16b-3 under the Act, no amendment, without
         approval by the Company's shareholders, shall:

         (a)      alter the group of persons eligible to participate in the
                  Plan;

         (b)      except as provided in Section 3.6, increase the maximum number
                  of shares of Stock or Stock Options or Stock Rights which are
                  available for Awards under the Plan;

                                       26
<PAGE>


         (c)      extend the period during which Incentive Stock Option Awards
                  may be granted beyond May 12, 2009;

         (d)      limit or restrict the powers of the Committee with respect to
                  the administration of this Plan;

         (e)      change the definition of an Eligible Participant for the
                  purpose of an Incentive Stock Option or increase the limit or
                  the value of shares of Stock for which an Eligible Participant
                  may be granted an Incentive Stock option;

         (f)      materially increase the benefits accruing to Participants
                  under this Plan;

         (g)      materially modify the requirements as to eligibility for
                  participation in this Plan; or

         (h)      change any of the provisions of this Article XIV.

14.2     No amendment to or discontinuance of this Plan or any provision thereof
         by the Board or the shareholders of the Company shall, without the
         written consent of the Participant, adversely affect, as shall be
         determined by the Committee, any Award theretofore granted to such
         Participant under this Plan; provided, however, the Committee retains
         the right and power to:

         (a)      annul any Award if the Participant is terminated for cause as
                  determined by the Committee;

         (b)      provide for the forfeiture of shares of Stock or other gain
                  under an Award as determined by the Committee for competing
                  against the Company; and

         (c)      convert any outstanding Incentive Stock Option to a
                  Nonqualified Stock Option.

14.3     If an Acceleration Event has occurred, no amendment or termination
         shall impair the rights of any person with respect to an outstanding
         Award as provided in Article XIII.

                      ARTICLE XV - MISCELLANEOUS PROVISIONS

15.1     Nothing in the Plan or any Award granted hereunder shall confer upon
         any Participant any right to continue in the employ of the Company, or
         to serve as a director thereof, or interfere in any way with the right
         of the Company to terminate his or her employment at any time. Unless
         specifically provided otherwise, no Award granted under the Plan shall
         be deemed salary or compensation for the purpose of computing benefits
         under any employee benefit

                                       27
<PAGE>


         plan or other arrangement of the Company for the benefit of its
         employees unless the Company shall determine otherwise. No Participant
         shall have any claim to an Award until it is actually granted under the
         Plan. To the extent that any person acquires a right to receive
         payments from the Company under the Plan, such right shall, except as
         otherwise provided by the Committee, be no greater than the right of an
         unsecured general creditor of the Company. All payments to be made
         hereunder shall be paid from the general funds of the Company, and no
         special or separate fund shall be established and no segregation of
         assets shall be made to assure payment of such amounts, except as
         provided in Article VIII with respect to Restricted Stock and except as
         otherwise provided by the Committee.

15.2     The Company may make such provisions and take such steps as it may deem
         necessary or appropriate for the withholding of any taxes which the
         Company is required by any law or regulation of any governmental
         authority, whether federal, state or local, domestic or foreign, to
         withhold in connection with any Stock option or the exercise thereof,
         any Stock Right or the exercise thereof, or in connection with any
         other type of equity-based compensation provided hereunder or the
         exercise thereof, including, but not limited to, the withholding of
         payment of all or any portion of such Award or another Award under this
         Plan until the Participant reimburses the Company for the amount the
         Company is required to withhold with respect to such taxes, or
         canceling any portion of such Award or another Award under this Plan in
         an amount sufficient to reimburse itself for the amount it is required
         to so withhold, or selling any property contingency credited by the
         Company for the purpose of paying such Award or another Award under
         this Plan, in order to withhold or reimburse itself for the amount it
         is required to so withhold.

15.3     The Plan and the grant of Awards shall be subject to all applicable
         federal and state laws, rules, and regulations and to such approvals by
         any United States government or regulatory agency as may be required.
         Any provision herein relating to compliance with Rule 16b-3 under the
         Act shall not be applicable with respect to participation in the Plan
         by Participants who are not subject to Section 16(b) of the Act.

15.4     The terms of the Plan shall be binding upon the Company, and its
         successors and assigns.

15.5     Neither a Stock Option, Stock Right, nor any other type of equity-based
         compensation provided for hereunder, shall be transferable except as
         provided for herein. In addition to any other restrictions upon
         transferability herein, Incentive Stock Options shall be subject to
         such further restrictions as required by federal or state securities
         and tax laws or provided by the Committee or in an Award Agreement. If
         any Participant makes such a transfer in violation hereof, any
         obligation of the Company shall forthwith terminate.

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<PAGE>


15.6     This Plan and all actions taken hereunder shall be governed by the laws
         of the State of North Carolina, except to the extent preempted by the
         Employee Retirement Income Security Act of 1974, as amended.

15.7     The Plan is intended to constitute an "unfunded" plan for incentive and
         deferred compensation. With respect to any payments not yet made to a
         Participant by the Company, nothing contained herein shall give any
         such Participant any rights that are greater than those of a general
         creditor of the Company. In its sole discretion, the Committee may
         authorize the creation of trusts or other arrangements to meet the
         obligations created under the Plan to deliver shares of Stock or
         payments in lieu of or with respect to Awards hereunder; provided,
         however, that, unless the Committee otherwise determines with the
         consent of the affected Participant, the existence of such trusts or
         other arrangements is consistent with the "unfunded" status of the
         Plan.

15.8     Each Participant exercising an Award hereunder agrees to give the
         Committee prompt written notice of any election made by such
         Participant under Section 83(b) of the Code, or any similar provision
         thereof.

15.9     If any provision of this Plan or an Award Agreement is or becomes or is
         deemed invalid, illegal or unenforceable in any jurisdiction, or would
         disqualify the Plan or any Award Agreement under any law deemed
         applicable by the Committee, such provision shall be construed or
         deemed amended to conform to applicable laws or if it cannot be
         construed or deemed amended without, in the determination of the
         Committee, materially altering the intent of the Plan or the Award
         Agreement, it shall be stricken and the remainder of the Plan or the
         Award Agreement shall remain in full force and effect.


                                 PHARMACEUTICAL PRODUCT
                                 DEVELOPMENT, INC.



                                 By: /s/ Fred Eshelman
                                     -----------------
                                 Chief Executive Officer

[CORPORATE SEAL]


Attest:  /s/ Fred B. Davenport, Jr.
         ------------------------------------------
Secretary