**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., aNorth Carolina corporation (the “Company”). 

 

Statement of Purpose

 

The Company sponsors thePharmaceutical 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 continuedgrowth 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 thepurposes 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 StockPurchase Plan.” 

 

Section 1.2. Purpose. The purposeof 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 theCompany 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 orunenforceable 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 stockpurchase 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 extentapplicable, 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 followingmeanings: 

 

(a) Beneficiary, withrespect 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 ofDirectors 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, asthe 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 theadministration 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 PharmaceuticalProduct 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 employedby 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 purposesof this Plan. 

 

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(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 TheWallStreetJournal, (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 Stockshall 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 theCommon 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 onthe 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 orlisted 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 CommonStock 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 OfferingDate 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 anyand all amendments thereto. 

 

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(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 accountin accordance with the provisions of the Plan. 

 

ARTICLEII

 

PARTICIPATION

 

Section 2.1. General. No person shall become a Participant unless oruntil 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 theeligibility 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 shallbecome a Participant in the Plan: 

 

(1) on theOffering 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 OfferingDate; or 

 

(2) if such person is not anEmployee 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. 

 

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(c) Exclusions. Notwithstanding any provision of the Plan to the contrary, in no event shall thefollowing 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 personterminates 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 ofemployment 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 ofCommon 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 Planon 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 duringsuch 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 Offeringunder 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 Participantwould 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 maypurchase pursuant to such Offering 

 

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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 ofstock 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 lessthan 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 “employeestock 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 (determinedas 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 exceedTwenty-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 totime 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, theCommittee 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 wouldstill 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 forsuch 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 thedetermination 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 ofCommon 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 Stockshall be 

 

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changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or another corporation, whether throughreorganization, 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 stockor 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) whowishes 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 Dateany 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 precedingsuch 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 eachsuccessive 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 CommonStock 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 beginningon 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 beginningon or after July 1, 1998. 

 

Section 4.2. Election to Increaseor 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 beingmade by the Company from such Participant’s 

 

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Compensation (including a decrease to zero (0)) by delivering to the Committee a written direction to make such change. Such change shall become effective assoon 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 ofEmployment. The termination of employment of aParticipant 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. Suchtermination 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 priorto the effective date of such change or termination. 

 

Section4.5. 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 bemade 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 deductionsbeing 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 Compensationat 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 eachParticipant. 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 accrueor be payable to any Participant with respect to any amounts credited to 

 

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

 

Section 5.2.Purchase of Common Stock. 

 

(a) General. As ofthe 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 fractionalshares 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 ofshares 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 CommonStock 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 ashareholder 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 thenumber 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 thepurchase 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 Stockwhich 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’sStock 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 ofCommonStock. In the event (i) a Participant terminates employment with the Company for any reason during an Offering 

 

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Period, or (ii) a Participant terminates deductions from such Participant’s Compensation pursuant to Article IV during an Offering Period and suchParticipant 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 suchParticipant’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 IVduring 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 forsuch 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 administrativelypracticable. 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 suchParticipant’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 Compensationdeductions for purposes of this Section 5.3. 

 

ARTICLE VI

 

COMMITTEE

 

Section 6.1. Organization of Committee. The Committee for purposes ofthe 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 maydelegate 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 deemsdesirable 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 powerto construe and interpret the Plan and to determine all questions that shall arise thereunder. It shall decide all 

 

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questions relating to eligibility to participate in the Plan and to purchase Common Stock under the Plan. The Committee shall have such other and furtherspecified 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 andconclusive 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 andthe 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 andexpenses (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 Planexcept 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 shallrequire 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 terminatethe 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 ofthe 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 ofany Participant or Beneficiary in order to be effective. 

 

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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 theParticipant 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 theCompany 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 satisfactionof 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 andyear first above written. 

 

 

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
By: 
/s/ Fred N. Eshelman
Name: Fred N. EshelmanTitle: Chief Executive Officer
 

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