Exhibit 10.11
**QUINTILES TRANSNATIONAL CORP.**
**2002 STOCK OPTION PLAN**
     1.  Purposes of the Plan. The Quintiles Transnational Corp. 2002 StockOption Plan (the “Plan”) has been established by Quintiles Transnational Corp.(the “Company”) to (i) attract and retain persons eligible to participate inthe Plan; (ii) motivate such persons, by means of appropriate incentives, toachieve long-range goals; (iii) provide incentive compensation opportunitiesthat are competitive with those of other, similar companies; and (iv) furtheridentify Optionees’ interests with those of the Company’s other shareholdersthrough compensation based upon the Common Stock and thereby promote thelong-term financial interests of the Company and its Subsidiaries. Optionsgranted under the Plan may be Incentive Stock Options or Nonqualified StockOptions, as determined by the Administrator at the time of grant.
     2.  Definitions. As used herein, the following definitions shall apply:
          (a)  “Administrator” means the Board or the Committee (or their designees),as applicable.
          (b)  “Applicable Laws” means the requirements relating to theadministration of stock option plans under U.S. state corporate laws, U.S.federal and state securities laws, the Code, any stock exchange or quotationsystem on which the Common Stock is listed or quoted and the applicable laws ofany other country or jurisdiction where Options are granted under the Plan.
          (c)  “Board” means the Board of Directors of the Company.
          (d)  “Code” means the Internal Revenue Code of 1986, as amended.
          (e)  “Committee” means a committee of Directors appointed by the Board inaccordance with Section 4 hereof.
          (f)  “Common Stock” means the common stock of the Company, par value $.01per Share.
          (g)  “Consultant” means any person who is not an Employee and who isengaged by the Company or any Parent or Subsidiary to render consulting oradvisory services to such entity.
          (h)  “Director” means a member of the Board.
          (i)  “Disability” means “permanent and total disability” as defined inSection 22(e)(3) of the Code.
 

 

          (j)  “Employee” means any person, including officers and Directors,employed by the Company or any Parent or Subsidiary of the Company. A ServiceProvider shall not cease to be an Employee upon (i) any leave of absenceapproved by the Company (or by the Parent or Subsidiary that employs theperson) or (ii) a transfer between locations of the Company (or the Parent orSubsidiary that employs the person) or between the Company, its Parent, anySubsidiary, or any successor. For purposes of Incentive Stock Options, no suchleave of absence may exceed 90 days, unless reemployment upon expiration ofsuch leave is guaranteed by statute or contract. Neither service as a Directornor payment of a Director’s fee shall constitute “employment.”
          (k)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.
          (l)  “Fair Market Value” means, as of any date, the value of Common Stockdetermined as follows:
               (i)  If the Common Stock is listed on any established stock exchange or anational market system, including, without limitation, the Nasdaq NationalMarket or The Nasdaq Small Cap Market of The Nasdaq Stock Market, its FairMarket Value shall be the closing sales price for such stock (or the closingbid, if no sales were reported) as quoted on such exchange or system for thedate of determination (or the next succeeding market trading day, if the dateof determination is not a market trading day), as reported in *The Wall StreetJournal,*or such other source as the Administrator deems reliable;
               (ii)  If the Common Stock is regularly quoted by a recognized securitiesdealer but selling prices are not reported, its Fair Market Value shall be themean between the high bid and low asked prices for the Common Stock on the dateof determination (or the next succeeding market trading day, if the date ofdetermination is not a market trading day); or
               (iii)  In the absence of an established market for the Common Stock, theFair Market Value thereof shall be determined in good faith by theAdministrator.
          (m)  “Incentive Stock Option” means an Option intended to qualify as an“incentive stock option” within the meaning of Section 422 of the Code.
          (n)  “Notice of Grant” means the notice to an Optionee of the key terms ofan Option (*e.g.*, the option type, number of Shares, exercise price, vesting andexpiration date, etc.). The Notice of Grant may be in written or electronicform (including in the form of one or more electronic screens displaying thedetails of an Option) and shall be deemed to be part of the Option Agreement.
          (o)  “Nonqualified Stock Option” means an Option not intended to qualify asan Incentive Stock Option.
          (p)  “Option” means a stock option granted pursuant to the Plan.
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          (q)  “Option Agreement” means the written agreement between the Company andan Optionee setting forth the terms and conditions of an Option.
          (r)  “Optionee” means the holder of an outstanding Option granted under thePlan.
          (s)  “Parent” means a “parent corporation,” whether now or hereafterexisting, as defined in Section 424(e) of the Code.
          (t)  “Rule 16b-3” means Rule 16b-3 under the Exchange Act or any successorthereto.
          (u)  “Service Provider” means an Employee, Director or Consultant.
          (v)  “Share” means a share of Common Stock, as adjusted in accordance withSection 12 below.
          (w)  “Subsidiary” means, for purposes of Incentive Stock Options, a“subsidiary corporation,” whether now or hereafter existing, as defined inSection 424(f) of the Code. For all other purposes under the Plan (other thanSection 13(a), the term “Subsidiary” means any corporation, partnership, jointventure, limited liability company or other entity during any periodin which atleast a fifty percent (50%) voting or profits interest is owned, directly orindirectly, by the Company (or any entity that is a successor to the Company)and any other business venture designated by the Committee in which the Company(or any entity that is a successor to the Company) has a significant ownershipinterest, as determined in the discretion of the Committee.
     3.  Stock Subject to the Plan. Subject to the provisions of Section 12 ofthe Plan, the maximum aggregate number of Shares that may be subject to Optionsand sold under the Plan shall be five million (5,000,000) Shares. The Sharesshall be authorized but unissued Common Stock.
          If an Option expires or becomes unexercisable without having beenexercised in full, the unpurchased Shares that were subject thereto shallbecome available for future grant or sale under the Plan unless the Plan hasterminated. Shares that have actually been issued under the Plan upon exerciseof an Option shall not be returned to the Plan and shall not become availablefor future distribution under the Plan, except that if the Company repurchasesunvested Shares at their original purchase price, such Shares shall becomeavailable for future grant under the Plan.
     4.  Administration of the Plan.
          (a)  Procedure. The Human Resources and Compensation Committee, or suchother Committee as the Board may appoint from time to time, shall administerthe Plan. At the
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discretion of the Board, the Board may take any action under the Plan thatwould otherwise be the responsibility of the Committee.
               (i)  Rule 16b-3. To the extent desirable to qualify Options as exemptunder Rule 16b-3, the Committee shall be composed solely of two or more“Non-Employee Directors,” within the meaning of Rule 16b-3(d)(1), or thetransactions contemplated hereunder shall otherwise be structured to meet therequirements for exemption under Rule 16b-3.
               (ii)  Section 162(m). To the extent desirable to qualify Options grantedhereunder as “performance-based compensation,” within the meaning of Section162(m) of the Code, the Committee shall be composed solely of two or more“outside directors” within the meaning of Section 162(m) of the Code.
               (iii)  Delegation to Officer. The Board or the Committee may authorize oneor more senior executive officers of the Company to authorize or approve grantsof Options within limits specifically prescribed by the Board or the Committee,as applicable, to the extent permitted by the rules of any applicable stockexchange or national market system and by Section 55-8-25 of the GeneralStatutes of North Carolina. The Board or the Committee may revoke or amend theterms of such a delegation at any time, but such action shall not invalidateany prior action of such delegate(s) that were consistent with the terms of thePlan.
          (b)  Powers of the Administrator. Subject to the provisions of the Planand, in the case of a Committee, the specific duties delegated by the Board tosuch Committee, the Administrator shall have the authority in its discretion:
               (i)  To determine the Fair Market Value of the Shares, select the ServiceProviders to whom Options may from time to time be granted hereunder, determinethe dates of grant, determine the type and the number of Shares covered by eachOption, establish the terms, conditions, performance criteria, and otherrestrictions and provisions of Options, and approve the forms of OptionAgreements, which need not be identical in each case;
               (ii)  To prescribe, amend and rescind rules and regulations relating to thePlan, including rules and regulations for the purpose of qualifying forpreferred tax treatment under non-U.S. tax laws;
               (iii)  To satisfy the Company’s required minimum statutory withholdingobligations (based on minimum statutory withholding rates for federal and statetax purposes, including payroll taxes, that are applicable to supplementaltaxable income) by repurchasing upon exercise of an Option that number ofShares having a Fair Market Value equal to the amount of the Company’s requiredminimum statutory withholding obligation;
               (iv)  To permit the deferral of delivery of Shares upon exercise ofOptions, subject to such limitations and procedures as the Administrator mayestablish; and
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               (v)  To construe and interpret the terms of the Plan and Options grantedunder the Plan and to make all other determinations deemed necessary oradvisable for administering the Plan.
          (c)  Exclusions. The provisions of Section 4(b) above notwithstanding, theAdministrator shall not be authorized under the Plan to grant so-called“reload” options, to settle any Option in cash, except as permitted underSection 4(b)(iii) above, or to “reprice” any Option previously granted pursuantto the Plan, whether through amendment, cancellation or replacement grants, orany other means.
          (d)  Effect of Administrator’s Decision. All decisions, determinations andinterpretations of the Administrator shall be final and binding on allOptionees. No member of the Committee or the Board, as applicable, shall beliable to any person for any action or determination with respect to the Planthat he or she makes in good faith. In controlling and managing the operationand administration of the Plan, the Administrator shall take action in a mannerthat conforms to the Articles and By-laws of the Company and Applicable Laws.
     5.  Eligibility. Incentive Stock Options may be granted only to Employees.Nonqualified Stock Options may be granted to any Service Provider. Optionsmay be granted to a Service Provider in connection with his or her hiring,retention or otherwise, prior to the date the Service Provider first performsservices to the Company or its Subsidiaries, provided that no such Option shallvest and be exercisable prior to the date the Service Provider first performssuch services.
     6.  Limitations.
          (a)  Incentive Stock Options. Each Incentive Stock Option shall bedesignated as such in the Notice of Grant. Notwithstanding such designation,the aggregate Fair Market Value of Shares (determined on the date of grant)with respect to which Incentive Stock Options held by an Optionee areexercisable for the first time during a calendar year may not exceed OneHundred Thousand Dollars ($100,000). Shares in excess of such amount shall betreated for income tax purposes as subject to Nonqualified Stock Options, withthe determination to be made in the order the Options were granted.
          (b)  Section 162(m).
               (i)  No Optionee shall be granted, in any fiscal year of the Company,Options to purchase more than five hundred thousand (500,000) Shares.
               (ii)  In addition, in connection with his or her initial service, anOptionee may be granted Options to purchase up to an additional two hundredthousand (200,000) Shares that shall not count against the limit of Section6(b)(i) above.
               (iii)  The foregoing limitations shall be adjusted proportionately inconnection with any change in the Company’s capitalization as described inSection 12 below.
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          (c)  No Right to Continued Service. Neither the Plan nor any Option shallconfer upon any Optionee any right to continued service with the Company, norshall it interfere in any way with any right of the Optionee or the Company toterminate the Optionee’s relationship as a Service Provider at any time.
     7.  Term of Plan. Subject to shareholder approval under Section 18 hereof,the Plan shall become effective upon its adoption by the Board. It shallcontinue in effect for a term of ten (10) years, unless sooner terminated underSection 15 hereof.
     8.  Term of Option. The term of each Option shall be stated in theapplicable Option Agreement. The term of an Incentive Stock Option granted toan Optionee who, on the date of grant, owns stock representing more than tenpercent (10%) of the voting power of all classes of stock of the Company or anyParent or Subsidiary shall be no more than five (5) years.
     9.  Option Exercise Price and Consideration.
          (a)  Exercise Price. The per share exercise price of an Option shall bedetermined by the Administrator, subject to the following:
               (i)  In the case of an Incentive Stock Option
                    (A)  granted to an Optionee who, at the time the Option is granted, ownsstock representing more than ten percent (10%) of the voting power of allclasses of stock of the Company or any Parent or Subsidiary, the exercise priceshall be no less than one hundred ten percent (110%) of the Fair Market Valueper Share on the date of grant.
                    (B)  granted to any other Optionee, the exercise price shall be no lessthan one hundred percent (100%) of the Fair Market Value per Share on the dateof grant.
               (ii)  In the case of a Nonqualified Stock Option, the per Share exerciseprice shall be no less than one hundred percent (100%) of the Fair Market Valueper Share on the date of grant.
               (iii)  Notwithstanding the foregoing, Options may be granted to replaceoptions granted under a plan or arrangement of a business or entity, all or aportion of which is acquired by the Company or a Subsidiary, with exerciseprices of less than one hundred percent (100%) of the Fair Market Value perShare on the date of grant.
          (b)  Consideration. The consideration to be paid for Shares to be issuedupon the exercise of Options, including the method of payment, shall bedetermined by the Administrator in accordance with Applicable Laws (and, in thecase of Incentive Stock Options, shall be determined at the time of grant).Such consideration may consist of (i) cash or its equivalent, (ii) other Sharesthat have been owned by the Optionee for more than six (6) months on the dateof surrender and have a Fair Market Value on the date of surrender equal to the
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aggregate exercise price, (iii) delivery of a properly executed exercisenotice, together with irrevocable instructions to a broker in a form acceptableto the Administrator providing for assignment to the Company of the proceeds ofa sale or loan with respect to some or all of the Shares acquired upon exerciseof an Option, pursuant to a program or procedure approved by the Administrator(a so-called “cashless exercise”), or (iv) any combination of the above.Promissory notes of Optionees to the Company shall not be accepted asconsideration for Shares to be issued on exercise of Options.
     10. Exercise of Options.
          (a)  Exercisability. Options granted hereunder shall be exercisable atsuch times and under such conditions as determined by the Administrator and setforth in the Notice of Grant. Except as provided in the Notice of Grant,Options granted to Service Providers who are “non-exempt” Employees, within themeaning of the Fair Labor Standards Act, shall not be exercisable within six(6) months after the date of grant. Options may not be exercised for afraction of a Share.
          (b)  Procedure for Exercise. An Option shall be deemed to be exercisedwhen the Company receives (i) notice of exercise from the Optionee inaccordance with the Option Agreement and (ii) full payment for the Shares inthe form of any consideration and method of payment permitted by the Plan andauthorized by the Administrator. Shares issued upon exercise of an Optionshall be issued in the name of the Optionee or, if requested by the Optionee,jointly in the name of the Optionee and the Optionee’s spouse.
          (c)  Rights as a Shareholder. Until Shares subject to Options are issued(as evidenced by the appropriate entry on the books of the Company or of a dulyauthorized transfer agent of the Company), Optionees shall have no right tovote or receive dividends or any other rights as shareholders with respect tosuch Shares. The Company shall issue (or cause to be issued) Shares promptlyafter Options are exercised. No adjustment shall be made for dividends orother rights for which the record date is prior to the date Shares are issued,except as provided in Section 12 hereunder. The exercise of an Option shalldecrease the number of Shares thereafter available under the Plan and under theOption by the number of Shares as to which the Option is exercised.
          (d)  Termination of Relationship as a Service Provider. If an Optioneeceases to be a Service Provider, other than as a result of the Optionee’s deathor Disability, any Option held by the Optionee may be exercised by the Optioneeto the extent the Option is vested on the date of termination, under the OptionAgreement or other applicable agreement, within such period of time as isspecified in the Option Agreement (but in no event later than the expiration ofthe term of the Option). In the absence of a specified time in the OptionAgreement, an Option shall remain exercisable for three (3) months followingthe Optionee’s termination. If, on the date of termination, an Optionee is notvested as to an entire Option, the Shares covered by the unvested portion ofthe Option shall revert to the Plan. If, after termination, an Optionee doesnot exercise an Option within the time specified in the Option Agreement orthis Section 10(d),
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as applicable, the Option shall terminate, and the Shares covered by theOption shall revert to the Plan.
          (e)  Disability or Death of Optionee. If an Optionee ceases to be aService Provider as a result of the Optionee’s Disability or death, any Optionheld by the Optionee may be exercised by the Optionee, the Optionee’s legalguardian or the Optionee’s estate or a person who acquires the right toexercise the Option by bequest or inheritance, as applicable, to the extent theOption is vested on the date of termination, under the Option Agreement orother applicable agreement, within such period of time as is specified in theOption Agreement (but in no event later than the expiration of the term of theOption). In the absence of a specified time in the Option Agreement, theOption shall remain exercisable for twelve (12) months following the Optionee’stermination. If, on the date of termination, an Optionee is not vested as toan entire Option, the Shares covered by the unvested portion of the Optionshall revert to the Plan. If, after termination, an Optionee does not exercisean Option within the time specified in the Option Agreement or this Section10(e), as applicable, the Option shall terminate, and the Shares covered by theOption shall revert to the Plan.
     11. Non-Transferability of Options. Unless determined otherwise by theAdministrator, Options may not be sold, pledged, assigned, hypothecated,transferred, or disposed of in any manner other than by will or by the laws ofdescent and distribution and may be exercised, during the lifetime of theOptionee, only by the Optionee. If the Administrator in its sole discretionpermits an Option to be transferable, it shall be transferable only by gift orby domestic relations order to or for the benefit of a “family member” of theOptionee, as defined in the General Instructions to Form S-8 under theSecurities Act of 1933, as amended.
     12. Effect of Changes in Capitalization. Subject to any required actionby the shareholders of the Company, the number of Shares covered by eachoutstanding Option, the number of Shares that have been authorized for issuanceunder the Plan but as to which no Options have yet been granted or which havebeen returned to the Plan upon cancellation or expiration of Options, as wellas the price per Share covered by each outstanding Option and the repurchaseprice per Share of unvested Shares purchased upon exercise of Options, shall beproportionately adjusted for any increase or decrease in the number of issuedShares resulting from a stock split, reverse stock split, stock dividend,split-up, spin-off, combination, exchange or reclassification of the CommonStock, or any other increase or decrease in the number of issued Shareseffected without receipt of consideration by the Company. The conversion ofany convertible securities of the Company shall not be deemed to have been“effected without receipt of consideration.” The Board shall make any suchadjustment, and the Board’s determination in that respect shall be final,binding and conclusive. Except as expressly provided herein, no issuance bythe Company of shares of stock of any class, or securities convertible intoshares of stock of any class, shall affect, and no adjustment by reason thereofshall be made with respect to, the number or price of Shares subject toOptions.
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     13. Change in Control.
          (a)  Definition. For purposes of this Plan, a “Change in Control” shallmean the occurrence of any one of the following:
               (i)  An acquisition (other than directly from the Company) of any votingsecurities of the Company by any “Person” (as such term is used in Sections3(a)(9), 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, asamended (the “Act”)), after which such Person, together with its “affiliates”and “associates” (as such terms are defined in Rule 12b-2 under the Act),becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under theAct), directly or indirectly, of more than one-third (33.33%) of the totalvoting power of the Company’s then outstanding voting securities, but excludingany such acquisition by the Company, any Person of which a majority of itsvoting power or its voting equity securities or equity interests is owned,directly or indirectly, by the Company (solely for purposes of this Section13(a), a “Subsidiary”), any employee benefit plan of the Company or any of itsSubsidiaries (including any Person acting as trustee or other fiduciary for anysuch plan), or Dennis B. Gillings;
               (ii)  The shareholders of the Company approve a merger, share exchange,consolidation or reorganization involving the Company and any other corporationor other entity that is not controlled by the Company, as a result of whichless than two-thirds (66.66%) of the total voting power of the outstandingvoting securities of the Company or of the successor corporation or entityafter such transaction are held in the aggregate by the holders of theCompany’s voting securities immediately prior to such transaction; or
               (iii)  The shareholders of the Company approve a liquidation or dissolutionof the Company, or approve the sale or other disposition by the Company of allor substantially all of the Company’s assets to any Person (other than atransfer to a Subsidiary of the Company).
          (b)  Effect of a Change in Control.
               (i)  In the event of a Change in Control, the surviving, continuing,successor, or purchasing corporation or Parent thereof, as the case may be (the“Acquiring Corporation”) may either assume the Company rights and obligationsunder outstanding Options or substitute for outstanding Options substantiallyequivalent options to purchase the Acquiring Corporation’s stock.
               (ii)  Except as otherwise determined by the Administrator, in the eventthat the Acquiring Corporation does not assume or substitute for outstandingOptions, the Administrator shall notify Optionees in writing that outstandingOptions shall remain outstanding for no less than fifteen (15) days from dateof such notice, shall be exercisable to the extent exercisable under the Planand any applicable agreement upon the consummation of the Change
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in Control, and shall terminate and cease to be outstanding upon later ofthe expiration of such fifteen (15)-day period or upon the consummation of theChange in Control. Notwithstanding the foregoing, Shares acquired uponexercise of Options prior to the Change in Control and any considerationreceived pursuant to the Change in Control with respect to such Shares shallcontinue to be subject to all applicable provisions of the Option Agreementsevidencing such Options, except as otherwise may be provided in such OptionAgreements.
               (iii)  For the purposes of this Section 13(b), an Option shall beconsidered assumed if, following a Change in Control, the Option confers theright to purchase or receive, for each Share subject to the Option immediatelyprior to the Change in Control, the consideration (whether stock, cash, orother securities or property) received in the Change in Control by holders ofCommon Stock (and if holders were offered a choice of consideration, the typeof consideration chosen by the holders of a majority of the outstandingShares). If such consideration is not solely common stock of the AcquiringCorporation, the Administrator may, with the consent of the AcquiringCorporation, provide for the consideration to be received upon the exercise ofan Option to be solely common stock of the Acquiring Corporation equal in fairmarket value to the per share consideration received by holders of Common Stockin the Change in Control.
     14. Date of Grant. The date of grant of an Option shall, for allpurposes, be the date on which the Administrator makes the determinationgranting the Option, or such later date as the Administrator shall determine.Notice of such determination shall be given to Optionees within a reasonabletime after the date of grant.
     15. Amendment and Termination of the Plan.
          (a)  Amendment and Termination. The Board may at any time amend, alter,suspend or terminate the Plan, provided that (i) no amendment or terminationmay, in the absence of written consent of the Optionee (or, if the Optionee isnot then living, the affected beneficiary), adversely affect the right of anyOptionee or beneficiary under any Option granted under the Plan prior to thedate such amendment is adopted by the Board and (ii) no amendment may increasethe number of Shares reserved for issuance under the Plan under Section 3,modify the exclusions upon the authority of the Administrator set forth inSection 4(c), increase the limitations on the number of Shares set forth inSection 6(b), decrease the minimum Option exercise price set forth in Section9(a), or effect any other material change in the Plan, unless such amendment isapproved by the Company’s shareholders. Adjustments pursuant to Section 12hereof shall not be subject to the foregoing limitations of this Section 15(a).
          (b)  Termination for Cause; Noncompetition. The provisions of Section15(a) notwithstanding, the Administrator shall retain the right and power to(i) cancel or suspend any Option if the Optionee is terminated for cause, asdetermined by the Administrator in its sole discretion, and (ii) provide forthe forfeiture of Shares or other gain under an Option upon the Optionee’scompeting against the Company or any Subsidiary.
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     16. Conditions Upon Issuance of Shares. Notwithstanding any otherprovision of the Plan, the Company shall have no obligation to issue anddeliver Shares pursuant to the exercise of an Option unless such exercise andthe issuance and delivery of such Shares shall comply with all Applicable Laws,including, without limitation, withholding of all taxes and any requirements ofthe Securities Act of 1933, as amended. The issuance and delivery of suchShares shall be further subject to the approval of counsel for the Company withrespect to such compliance. To the extent the Plan provides for the issuanceof stock certificates to reflect the issuance of Shares, the issuance may beeffected on a non-certificated basis to the extent not prohibited by ApplicableLaws.
     17. Reservation of Shares. During the term of the Plan, the Company shallat all times reserve and keep available a number of Shares sufficient tosatisfy the requirements of the Plan.
     18. Shareholder Approval. The Plan shall be subject to shareholderapproval, which shall be obtained in accordance with Applicable Laws withintwelve (12) months of the adoption of the Plan by the Board.
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