Document:

AGREEMENT

   
 EXHIBIT 10.5
 EMPLOYMENT AGREEMENT
                   THIS EMPLOYMENT AGREEMENT (the “Agreement”), is made as of
this 12th day of September, 2002, by and between NEOSE TECHNOLOGIES, INC. (the “Company”) and Joseph J. Villafranca (the “Executive”),
and, subject to the termination of the Executive’s employment with his current employer, will be effective as of October 1, 2002 (the “Commencement Date”).
 Background
                   The Company believes that the Executive can
contribute to the growth and success of the Company and desires to employ the Executive as the Senior Vice President, Pharmaceutical Development and Operations, on the terms and conditions set forth in this Agreement, and the Executive desires to be
so employed by the Company.
                   NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises contained herein, and intending to be bound hereby, the parties agree as follows:
 Terms
 1.       Employment.
                   1.1.   Term. The Company agrees to employ the Executive in accordance with the terms of this Agreement and the Executive agrees to accept such employment, effective on the
Commencement Date and continuing until terminated pursuant to Section 3 hereof (the “Term”).
                   1.2.   Position. During the Term, Executive will serve
as the Senior Vice President, Pharmaceutical Development and Operations, of the Company, reporting directly to the President and Chief Executive Officer.
                   1.3.   Duties. The Executive will perform such duties
and functions as are customarily performed by the Senior Vice President, Pharmaceutical Development and Operations, of an enterprise the size and nature of the Company, including the duties and functions from time to time assigned to him by the
Chief Executive Officer. Without limiting the generality of the foregoing, the Executive will be responsible for running development programs in support of the Company’s proprietary drug strategy.
                   1.4.   Place of Performance. The Executive shall
perform his services hereunder at the principal executive offices of the Company, which are currently located in Horsham, Pennsylvania. The Executive will be required to travel from time to time for business purposes.
                   1.5.   Time Devoted to Employment. The Executive will
devote his best efforts and substantially all of his business time and services to the performance of his duties under this Agreement. Notwithstanding the foregoing, the Executive may engage in charitable, community service and industry association
activities, and, with the approval of the Board (which approval
  

  
  
 will not be unreasonably withheld), may serve as a member of boards of directors of other companies or organizations, which in the judgment of the Board,
will not present any conflict of interest with the Company, so long as those activities do not interfere with the performance of his duties under this Agreement.
 2.       Compensation, Benefits and Expense Reimbursements.
                   2.1.   Base Salary. The Executive shall receive an
initial annual salary of $280,000 (the “Base Salary”), paid semi-monthly or otherwise in accordance with the Company’s customary payroll practices, as in effect from time to time. Future
salary reviews will be undertaken by the Compensation Committee of the Board of Directors annually, based upon the recommendations of senior management.
                   2.2.   Bonus. The Executive will be eligible to receive
an annual bonus (the “Annual Bonus”) for each completed calendar year during the Term. The target amount of the Annual Bonus is 50% of the Base Salary for the applicable calendar year. The
specific goals and objectives that must be met to receive the target bonus will be established by mutual agreement of the Chief Executive Officer and the Executive within 90 days following the commencement of each calendar year during the Term,
except that, for the balance of the 2002 calendar year, the Executive will receive a bonus equal to $24,500, payable no later than March 31, 2003. The Company will endeavor to pay the Annual Bonus, if any, by the end of the first quarter of the
calendar year following the calendar year to which the Annual Bonus relates. 
                   2.3.   Payment in Lieu of Lost Benefits. Within 30 days after the Commencement Date, the Company will pay to the Executive $50,000 in recognition of Executive foregoing certain
payments from his prior employer.
                   2.4.   Equity
Incentive. The Board has authorized the grant to the Executive of options to purchase 160,000 shares of the Company’s common stock (the “Initial Stock Option”)
effective as of the Commencement Date with a per share exercise price equal to the fair market value of a share of common stock on the Commencement Date, contingent on the commencement of the Executive’s employment with the Company on that
date. The Initial Stock Option is intended to be an incentive stock option, to the extent permitted under Section 422(d) of the Internal Revenue Code (the “Code”). The Initial Stock Option
will be granted under the Company’s1995Stock Option/Stock Issuance Plan (the “Plan). The Initial Stock Option will become vested and first
exercisable with respect to 25% of shares on the Commencement Date, and will become vested and exercisable with respect to an additional 25% of the shares subject thereto on the first, second, and third anniversaries of the Commencement Date,
respectively, contingent on the continued employment of the Executive by the Company on the applicable vesting date, such that the entire option will be fully vested and exercisable on the third anniversary of the Commencement Date (if the Executive
then remains employed by the Company). In addition, the Board has authorized the grant to the Executive of options to purchase 30,000 shares of the Company’s common stock (the “Contingent Stock Option”) effective as of the Commencement Date with a per share exercise price equal to the fair market value of a share of common stock on the Commencement Date, contingent on the commencement of the Executive’s employment with the
Company on that date. The Contingent 
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  Stock Option will be a non-qualified stock option granted under the Plan, and will become vested and first exercisable on the earlier of (i) the first filing with the Food and Drug
Administration of an Investigational New Drug application for the Company’s own proprietary drug candidate that allows the Company to commence clinical trials, and (ii) the fifth anniversary of the Commencement Date. The Executive will be
eligible to receive additional grants in accordance with the Company’s executive incentive options program, at the discretion of the Board or a committee of the Board.
                   2.5.   Expenses. The Executive will be entitled to
reimbursement by the Company for all expenses reasonably incurred by him in connection with the performance of his duties, including, without limitation, travel and entertainment expenses reasonably related to the business of the Company, in
accordance with the policies and procedures established from time to time by the Company.
                   2.6.   Other Benefits. The Executive will be entitled to participate in any benefit plans, policies or arrangements sponsored or maintained by the Company from time to time for its
senior executive officers (which benefits, as of this date, include the right to participate in the Company’s 401(k), employee stock purchase, medical, and dental plans, and coverage under the Company’s group life and disability insurance
policies). Notwithstanding the foregoing, the Executive’s eligibility for and participation in any of the Company’s employee benefit plans, policies or arrangements will be subject to the terms and conditions of such plans, policies or
arrangements. Moreover, subject to the terms and conditions of such plans, policies or arrangements, the Company may amend, modify or terminate such plans, policies or arrangements at any time for any reason.
                   2.7.   Vacations. In addition to holidays observed by
the Company, the Executive shall be entitled to 4 weeks paid vacation time during each year of employment consistent with Company policies, as in effect from time to time.
 3.       Termination.
                   3.1.   In General. The Company may terminate the Executive’s employment at any time. The Executive may terminate his or her employment at any time, provided that before the
Executive may voluntarily terminate his or her employment with the Company, he or she must provide 30 days prior written notice (or such shorter notice as is acceptable to the Company) to the Company. If the Executive resigns, other than for Good
Reason, his employment with the Company prior to the first anniversary of the Commencement Date, the Executive will be required to pay to the Company the amount of $50,000, which amount may be offset from any amounts payable to the Executive
hereunder. Upon any termination of the Executive’s employment with the Company for any reason: (a) the Executive (unless otherwise requested by the Board) concurrently will resign any officer or director positions he or she holds with the
Company, its subsidiaries or affiliates, and (b) the Company will pay to the Executive all accrued but unpaid compensation through the date of termination, and (c) except as explicitly provided in Sections 3 or 5, or otherwise pursuant to COBRA, all
compensation and benefits will cease and the Company will have no further liability or obligation to the Executive, including, but not limited to, any unpaid Annual Bonus. The foregoing will not be construed to limit the
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  Executive’s right to payment or reimbursement for claims incurredunder any insurance contract funding an employee benefit plan, policy or
arrangement of the Company in accordance with the terms of such insurance contract.
                   3.2.   Termination Without Cause. If the Executive’s employment by the Company ceases due to a termination by the Company without Cause or due to death or Disability, then, in
addition to the payments and benefits provided for in Section 3.1 above and subject to Section 3.3 below, the Company will (a) make a lump sum cash payment to the Executive equal to six months of the Executive’s Base Salary, as in effect on
such date, (b) continue to provide medical benefits to the Executive (and, if covered immediately prior to such termination, his or her spouse and dependents) for a period of six months commencing from the date of the Executive’s
termination of employment at a monthly cost to the Executive equal to the Executive’s monthly contribution toward the cost of such coverage immediately prior to such termination, and (c) arrange for the provision to the Executive of
reasonable executive outplacement services by a provider selected by the mutual agreement of the Company and the Executive; provided that if the Company’s obligation to make the payments provided for in clause (a) of this Section 3.2 arises due
to the Executive’s death or Disability, the cash payments described in clause (a) will be offset by the amount of benefits paid to the Executive (or his or her representative(s), heirs, estate or beneficiaries) pursuant to the life insurance or
disability plans, policies or arrangements of the Company by virtue of his or her death or that Disability (including, for this purpose, only that portion of such life insurance or disability benefits funded by the Company or by premium payments
made by the Company). The payments and benefits described in this section are in lieu of (and not in addition to) any other severance arrangement maintained by the Company. 
                   3.3.   Certain Terminations Following a Change in Control. If the Executive’s employment with the Company ceases within twelve months following a Change in Control as a result of (i) a termination by the Company without Cause, or (ii) a resignation by the Executive for Good Reason, then in
lieu of the payments and benefits provided for in Section 3.2, (a) the Company will make a lump sum cash payment to the Executive equal to the sum of (i) one year of the Executive’s Base Salary as in effect on such date, and (ii) the
Executive’s Annual Bonus for the calendar year in which the termination occurs, (b) the Company will continue to provide medical benefits to the Executive (and, if covered immediately prior to such term, his or her spouse and dependents) for a
period of one year commencing from the date of the Executive’s termination of employment at a monthly cost to the Executive equal to the Executive’s monthly contribution toward the cost of such coverage immediately prior to such
termination, (c) the Company will arrange for the provision to the Executive of reasonable executive outplacement services by a provider selected by the mutual agreement of the Company and the Executive, (d) the Company will pay to the
Executive the additional amount, if any, payable pursuant to Section 5 below, and (e) all outstanding stock options then held by the Executive will then become fully vested and immediately exercisable and will remain exercisable for 12 months
following Executive’s termination of employment, notwithstanding any inconsistent language in any equity incentive plan or agreement.
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  4.         Definitions. For purposes of this Agreement:
                   4.1.   “Change in Control” means 

                           4.1.1.   a change in ownership or control of
the Company effected through (i) the direct or indirect acquisition by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company)
of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities; (ii) a change in
the composition of the Board over a period of 36 months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (a) have been board
members continuously since the beginning of such period, or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (a) who were still in office at the time
such election or nomination was approved by the Board; or (iii) the consummation of any consolidation, share exchange or merger of the Company (a) in which the stockholders of the Company immediately prior to such transaction do not own at least a
majority of the voting power of the entity which survives/results from that transaction, or (b) in which a shareholder of the Company who does not own a majority of the voting stock of the Company immediately prior to such transaction, owns a
majority of the Company’s voting stock immediately after such transaction; or
                            4.1.2.   the liquidation or dissolution of the
Company or any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company, including stock held in subsidiary corporations or interests held in subsidiary
ventures.
                   4.2.   “Cause” means
fraud, embezzlement, or any other serious criminal conduct that adversely affects the Company committed intentionally by the Executive in connection with the commencement of his or her employment or the performance of his or her duties as an officer
or director of the Company, or the Executive’s conviction of, or plea of guilty or nolo contendere to, any felony.
                   4.3.   “Good Reason” means, without the
Executive’s prior written consent, any of the following:
                            4.3.1.   an adverse change in the
Executive’s title;
                            4.3.2.   a
reduction in the Executive’s authority, duties or responsibilities, or the assignment to the Executive of duties that are inconsistent, in a material respect, with Executive’s position;
                            4.3.3.   the relocation of the Company’s
headquarters more than 15 miles from Horsham, Pennsylvania, unless such move reduces the Executive’s commuting time;
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                             4.3.4.   a
reduction in the Executive’s Base Salary or in the amount, expressed as a percentage of Base Salary, of the Executive’s Target Bonus;
                            4.3.5.   the Company’s failure to pay or
make available any material payment or benefit due under this Agreement or any other material breach by the Company of this Agreement.
 However, the foregoing events or conditions will constitute Good Reason only
if the Executive provides the Company with written objection to the event or condition within 60 days following the occurrence thereof, the Company does not reverse or otherwise cure the event or condition within 30 days of receiving that written
objection and the Executive resigns his or her employment within 90 days following the expiration of that cure period.
                   4.4.   “Release” means a release
substantially identical to the one attached hereto as Exhibit 4.4.
 5.       Parachute
Payments.
                   5.1.   Generally. All amounts payable to the Executive under this Agreement will be made without regard to whether the deductibility of such payments (considered together with any other entitlements or payments otherwise paid
or due to the Executive) would be limited or precluded by Section 280G of the Code and without regard to whether such payments would subject the Executive to the excise tax levied on certain “excess parachute payments” under Section 4999
of the Code (the “Parachute Excise Tax”).
                   5.2.   Gross-Up. If all or any portion of the payments or other benefits provided under any section of this Agreement, either alone or together with any other payments and benefits
which the Executive receives or is entitled to receive from the Company or its affiliates (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (the
“Payment”) would result in the imposition of a Parachute Excise Tax, the Executive will be entitled to an additional payment (the “Gross-up Payment”) in an amount such that the net amount of the Payment and the Gross-up Payment retained by the Executive after the calculation and deduction of all excise taxes (including any interest or penalties imposed with respect to such taxes)
on the Payment and all federal, state and local income tax, employment tax and excise tax (including any interest or penalties imposed with respect to such taxes) on the Gross-up Payment provided for in this Section 5.2, and taking into account any
lost or reduced tax deductions on account of the Gross-up Payment, shall be equal to the Payment.
                   5.3.   Measurements and Adjustments. The determination of the amount of the payments and benefits paid and payable to the Executive and whether and to what extent payments under
Section 5.2 are required to be made will be made at the Company’s expense by an independent auditor selected by mutual agreement of the Company and the Executive, which auditor shall provide Executive and the Company with detailed supporting
calculations with respect to its determination within 15 business days of the receipt of notice from the Executive or
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  the Company that the Executive has received or will receive a payment that is potentially subject to the Parachute Excise Tax. For the purposes of determining whether any payments will be
subject to the Parachute Excise Tax and the amount of such Parachute Excise Tax, such payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and all “parachute payments” in excess of the
“base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Parachute Excise tax, unless and except to the extent that in the opinion of the accountants such payments (in whole or in part) either do
not constitute “parachute payments” or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the “base amount,” or such “parachute payments”
are otherwise not subject to such Parachute Excise Tax. For purposes of determining the amount of the Gross-up Payment, if any, the Executive shall be deemed to pay federal income taxes at the highest applicable marginal rate of federal income
taxation for the calendar year in which the gross-up payment is to be made and to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the gross-up payment is to be made,
net of the maximum reduction in federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Executive’s
adjusted gross income); and to have otherwise allowable deductions for federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the gross-up payment in the Executive adjusted gross income. Any
Gross-up Payment shall be paid by the Company at the time the Executive is entitled to receive the Payment. Any determination by the auditor shall be binding upon the Company and the Executive.
                   5.4.   Underpayment or Overpayment. In the event of any
underpayment or overpayment to the Executive (determined after the application of Section 5.2), the amount of such underpayment or overpayment will be, as promptly as practicable, paid by the Company to the Executive or refunded by the Executive to
the Company, as the case may be, with interest at the applicable federal rate specified in Section 1274(d) of the Code.
 6.       Timing of Payments
Following Termination. Notwithstanding any provision of this Agreement, the payments and benefits described in Sections 3 and 5 are conditioned on the Executive’s execution and delivery to the Company of a Release in a
manner consistent with the Older Workers Benefit Protection Act and any similar state law that is applicable. The amounts described in Sections 3.2(a) and 3.3(a) will be paid in a lump sum, as soon as the Release becomes irrevocable following the
Executive’s execution and delivery of the Release (provided that the Release has not been revoked by the Executive).
 7.       Restrictive
Covenants. As consideration for all of the payments to be made to the Executive pursuant to Sections 2, 3, and 5 of this Agreement, as well as for any equity incentive awards that the Executive may receive from the Company,
the Executive agrees to be bound by the provisions of this Section 7 (the “Restrictive Covenants”). These Restrictive Covenants will apply without regard to whether any termination of the
Executive’s employment is initiated by the Company or the Executive, and without regard to the reason for that termination.
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                    7.1.   Covenant Not To
Compete. The Executive covenants that, during the period beginning on the Commencement Date and ending on the first anniversary of the termination of the Executive’s employment with the Company for any reason (the
“Restricted Period”), he will not (except in his capacity as an employee or director of the Company) do any of the following, directly or indirectly, anywhere in the world:
                            7.1.1.   engage or participate in any business
competitive with the Business (as defined below);
                            7.1.2.   become interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent or consultant) any person, firm, corporation, association or other entity engaged in any business
competitive with the Business. Notwithstanding the foregoing, the Executive may hold up to 4.9% of the outstanding securities of any class of any publicly-traded securities of any company;
                            7.1.3.   engage in any business, or solicit or
call on any customer, supplier, licensor, licensee, contractor, agent, representative, advisor, strategic partner, distributor or other person with whom the Company shall have dealt or any prospective customer, supplier, licensor, licensee,
contractor, agent, representative, advisor, strategic partner, distributor or other person that the Company shall have identified and solicited at any time during the Executive’s employment by the Company for a purpose competitive with the
Business;
                            7.1.4.   influence or
attempt to influence any employee, consultant, customer, supplier, licensor, licensee, contractor, agent, representative, advisor, strategic partner, distributor or other person to terminate or modify any written or oral agreement, arrangement or
course of dealing with the Company; or
                            7.1.5.   solicit for employment or employ or retain (or arrange to have any other person or entity employ or retain) any person who has been employed or retained by the Company within the 12 months preceding the termination of
the Executive’s employment with the Company for any reason.
                   7.2.   Confidentiality. The Executive recognizes and acknowledges that the Proprietary Information (as defined below) is a valuable, special and unique asset of the business of the Company. As a result, both during the Term
and thereafter, the Executive will not, without the prior written consent of the Company, for any reason either directly or indirectly divulge to any third-party or use for his own benefit, or for any purpose other than the exclusive benefit of the
Company, any Proprietary Information; provided, however, that the Executive may during the Term disclose Proprietary Information to third parties as may be necessary or appropriate to the effective and efficient discharge of his duties as an
employee hereunder (provided that the third party recipient has signed the Company’s then-approved confidentiality or similar agreement) or as such disclosures may be required by law. If the Executive or any of his representatives becomes
legally compelled to disclose any of the Proprietary Information, the Executive will provide the Company with prompt written notice so that the Company may seek a protective order or other appropriate remedy. The non-disclosure and non-use
obligations with respect to Proprietary Information set forth in this Section 7.2 shall not apply to any information
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  that is in or becomes part of the public domain through no improper act on the part of the Executive.
                   7.3.   Property of the Company.
                            7.3.1.   Proprietary
Information. All right, title and interest in and to Proprietary Information will be and remain the sole and exclusive property of the Company. The Executive will not remove from the Company’s offices or premises any
documents, records, notebooks, files, correspondence, reports, memoranda or similar materials of or containing Proprietary Information, or other materials or property of any kind belonging to the Company unless necessary or appropriate in the
performance of his duties to the Company. If the Executive removes such materials or property in the performance of his duties, the Executive will return such materials or property to their proper files or places of safekeeping as promptly as
possible after the removal has served its specific purpose. The Executive will not make, retain, remove and/or distribute any copies of any such materials or property, or divulge to any third person the nature of and/or contents of such materials or
property or any other oral or written information to which he may have access or become familiar in the course of his employment, except to the extent necessary in the performance of his duties. Upon termination of the Executive’s employment
with the Company, he will leave with the Company or promptly return to the Company all originals and copies of such materials or property then in his possession.
                            7.3.2.   Intellectual
Property. The Executive agrees that all the Intellectual Property (as defined below) will be considered “works made for hire” as that term is defined in Section 101 of the Copyright Act (17 U.S.C. § 101) and
that all right, title and interest in such Intellectual Property will be the sole and exclusive property of the Company. To the extent that any of the Intellectual Property may not by law be considered a work made for hire, or to the extent that,
notwithstanding the foregoing, the Executive retains any interest in the Intellectual Property, the Executive hereby irrevocably assigns and transfers to the Company any and all right, title, or interest that the Executive may now or in the future
have in the Intellectual Property under patent, copyright, trade secret, trademark or other law, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration. The Company will be entitled to
obtain and hold in its own name all copyrights, patents, trade secrets, trademarks and other similar registrations with respect to such Intellectual Property. The Executive further agrees to execute any and all documents and provide any further
cooperation or assistance reasonably required by the Company to perfect, maintain or otherwise protect its rights in the Intellectual Property. If the Company is unable after reasonable efforts to secure the Executive’s signature, cooperation
or assistance in accordance with the preceding sentence, whether because of the Executive’s incapacity or any other reason whatsoever, the Executive hereby designates and appoints the Company or its designee as the Executive’s agent and
attorney-in-fact, to act on his behalf, to execute and file documents and to do all other lawfully permitted acts necessary or desirable to perfect, maintain or otherwise protect the Company’s rights in the Intellectual Property. The Executive
acknowledges and agrees that such appointment is coupled with an interest and is therefore irrevocable.
                   7.4.   Definitions. For purposes of this Agreement, the following terms have the meanings defined below:
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                             7.4.1.   “Business” means research, development, manufacture, supply, marketing, licensing, use and sale of biologic, pharmaceutical and therapeutic materials and
products and related process technology directed to (a) the enzymatic synthesis of complex carbohydrates for use in food, cosmetic, therapeutic, consumer and industrial applications, (b) enzymatic synthesis or modification of the carbohydrate
portion of proteins or lipids, or modification of proteins or lipids through the attachment of carbohydrates, (c) carbohydrate-based therapeutics, and (d) the development of protein therapeutics using siallylation, fucosylation, glycosylation,
glycopegylation, or glycoconjugation.
                            7.4.2.   “Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all
patents and patent applications claiming such inventions, (b) all trademarks, service marks, trade dress, logos, trade names, fictitious names, brand names, brand marks and corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets (including research and development, know-how, formulas, compositions, manufacturing and production processes
and techniques, methodologies, technical data, designs, drawings and specifications), (f) all computer software (including data, source and object codes and related documentation), (g) all other proprietary rights, (h) all copies and tangible
embodiments thereof (in whatever form or medium), or similar intangible personal property which have been or are developed or created in whole or in part by the Executive (i) at any time and at any place while the Executive is employed by Company
and which, in the case of any or all of the foregoing, are related to and used in connection with the business of the Company, or (ii) as a result of tasks assigned to the Executive by the Company.
                            7.4.3.   “Proprietary Information” means any and all information of the Company or of any subsidiary or affiliate of the Company. Such Proprietary Information shall include, but shall not be limited to, the following items
and information relating to the following items: (a) all intellectual property and proprietary rights of the Company (including without limitation Intellectual Property) (b) computer codes or instructions (including source and object code listings,
program logic algorithms, subroutines, modules or other subparts of computer programs and related documentation, including program notation), computer processing systems and techniques, all computer inputs and outputs (regardless of the media on
which stored or located), hardware and software configurations, designs, architecture and interfaces, (c) business research, studies, procedures and costs, (d) financial data, (e) distribution methods, (f) marketing data, methods, plans and efforts,
(g) the identities of actual and prospective customers, contractors and suppliers, (h) the terms of contracts and agreements with customers, contractors and suppliers, (i) the needs and requirements of, and the Company’s course of dealing with,
actual or prospective customers, contractors and suppliers, (j) personnel information, (k) customer and vendor credit information, and (l) any information received from third parties subject to obligations of non-disclosure or non-use. Failure by
the Company to mark any of the Proprietary Information as confidential or proprietary shall not affect its status as Proprietary Information under the terms of this Agreement.
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                    7.5.   Acknowledgements. The Executive acknowledges that the Restrictive Covenants are reasonable and necessary to protect the legitimate interests of the Company and its affiliates and that the duration and geographic scope of the Restrictive Covenants are
reasonable given the nature of this Agreement and the position the Executive will hold within the Company. The Executive further acknowledges that the Restrictive Covenants are included herein in order to induce the Company to employ the Executive
pursuant to this Agreement and that the Company would not have entered into this Agreement or otherwise employed the Executive in the absence of the Restrictive Covenants. 
                   7.6.   Remedies and Enforcement Upon Breach.

                           7.6.1.   Specific
Enforcement. The Executive acknowledges that any breach by him, willfully or otherwise, of the Restrictive Covenants will cause continuing and irreparable injury to the Company for which monetary damages would not be an
adequate remedy. The Executive shall not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that such an adequate remedy at law exists. In the event of any such breach by the Executive, the
Company shall have the right to enforce the Restrictive Covenants by seeking injunctive or other relief in any court, without any requirement that a bond or other security be posted, and this Agreement shall not in any way limit remedies of law or
in equity otherwise available to the Company.
                            7.6.2.   Judicial Modification. If any court determines that any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geographical scope
of such provision, such court shall have the power to modify such provision and, in its modified form, such provision shall then be enforceable.
                            7.6.3.   Accounting. If the Executive breaches any of the Restrictive Covenants, the Company will have the right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Executive as the result of such breach. This right and remedy will be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in
equity.
                            7.6.4.   Enforceability. If any court holds the Restrictive Covenants unenforceable by reason of their breadth or scope or otherwise, it is the intention of the parties hereto that such determination not bar or in any way
affect the right of the Company to the relief provided above in the courts of any other jurisdiction within the geographic scope of such Restrictive Covenants.
                            7.6.5.   Disclosure of
Restrictive Covenants. The Executive agrees to disclose the existence and terms of the Restrictive Covenants to any employer that the Executive may work for during the Restricted Period.
                            7.6.6.   Extension of
Restricted Period. If the Executive breaches Section 7.1 in any respect, the restrictions contained in that section will be extended for a period equal to the period that the Executive was in breach.
  - 11 -  

  8.       Miscellaneous.
                   8.1.   No Liability of Officers and Directors for Severance Upon
Insolvency. Notwithstanding any other provision of the Agreement and intending to be bound by this provision, the Executive hereby (a) waives any right to claim payment of amounts owed to him, now or in the future, pursuant
to this Agreement from directors or officers of the Company if the Company becomes insolvent, and (b) fully and forever releases and discharges the Company’s officers and directors from any and all claims, demands, liens, actions, suits, causes
of action or judgments arising out of any present or future claim for such amounts.
                   8.2.   Legal Fees. The Company shall pay the reasonable attorneys’ fees and related expenses and disbursements incurred by the Executive in connection with the negotiation and
preparation of this Agreement (including the term sheet relating thereto) up to a maximum of $4,500.
                   8.3.   Other Agreements. The Executive represents and warrants to the Company that there are no restrictions, agreements or understandings whatsoever to which he is a party that
would prevent or make unlawful his execution of this Agreement, that would be inconsistent or in conflict with this Agreement or Executive’s obligations hereunder, or that would otherwise prevent, limit or impair the performance by Executive of
his duties under this Agreement.
                   8.4.   Successors and
Assigns. The Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise. The duties
of the Executive hereunder are personal to the Executive and may not be assigned by him.
                   8.5.   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to the principles of
conflicts of laws. 
                   8.6.   Enforcement.
Any legal proceeding arising out of or relating to this Agreement will be instituted in the United States District Court for the Eastern District of Pennsylvania, or if that court does not have or will not accept jurisdiction, in any court of
general jurisdiction in the Commonwealth of Pennsylvania, and the Executive and the Company hereby consent to the personal and exclusive jurisdiction of such court(s) and hereby waive any objection(s) that they may have to personal jurisdiction, the
laying of venue of any such proceeding and any claim or defense of inconvenient forum.
                   8.7.   Waivers; Separability. The waiver by either party hereto of any right hereunder or any failure to perform or breach by the other party hereto shall not be deemed a waiver of
any other right hereunder or any other failure or breach by the other party hereto, whether of the same or a similar nature or otherwise. No waiver shall be deemed to have occurred unless set forth in a writing executed by or on behalf of the
waiving party. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically 
  - 12 -  

  waived. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining
provisions hereof which shall remain in full force and effect.
                   8.8.   Notices. All notices and communications that are required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered personally or upon mailing by registered or
certified mail, postage prepaid, return receipt requested, as follows:

	 		If to the Company, to:

Neose Technologies, Inc.
102 Witmer Road
Horsham PA 19044
Attn: General Counsel
Fax: 215-315-9100

	 		With a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attn: Barry M. Abelson, Esquire
Fax: 215-981-4750

	 		If to Executive, to:

Joseph J. Villafranca
1679 Lookaway Court
New Hope, PA 18938
Fax:
215-794-4563

	 		With a copy to:

Dechert
Princeton Pike Corporate Center
P.O. Box 5218
Princeton, NJ 08543-5218
Fax:
609-620-3259

 or to such other address as may be specified in a notice given by one party to the other party hereunder.
                   8.9.   Entire Agreement; Amendments. This Agreement and
the attached exhibits contain the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions,
  - 13
-  

  agreements and understandings of every nature relating to the subject matter. This Agreement may not be changed or modified, except by an Agreement in writing signed by each of the parties
hereto.
                   8.10.   Withholding. The Company
will withhold from any payments due to Executive hereunder, all taxes, FICA or other amounts required to be withheld pursuant to any applicable law.
                   8.11.   Headings Descriptive. The headings of sections
and paragraphs of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
                   8.12.   Counterparts. This Agreement may be executed in
multiple counterparts, each of which will be deemed to be an original, but all of which together will constitute but one and the same instrument.
 [This space left blank intentionally; signature page
follows.]
  - 14 -  

                    IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.

		 	NEOSE TECHNOLOGIES, INC.
	
	 	By: 	

/s/ C. BOYD CLARKE
				

	 	 	 	C. Boyd Clarke
President and Chief Executive Officer

		 	 	JOSEPH J. VILLAFRANCA
	
	 	 	

/s/ JOSEPH J. VILLAFRANCA
				

	 	 	 	 

  - 15 -  

  Exhibit 4.4
 Release and Non-Disparagement Agreement
                   THIS RELEASE AND NON-DISPARAGEMENT AGREEMENT (this “Release”) is made as of the ___ day of _______, _____ by and between ____________________ (the “Employee”) and NEOSE TECHNOLOGIES, INC. (the “Company”).
                   WHEREAS, the Employee’s employment as an executive
of the Company has terminated; and
                   WHEREAS, pursuant to Sections 3 and 5 of the Employment Agreement by
and between the Company and the Employee dated as of September___, 2002 (the “Employment Agreement”), the Company has agreed to pay the Employee certain amounts and to provide him or her with
certain rights and benefits, subject to the execution of this Release.
                   NOW THEREFORE, in consideration
of these premises and the mutual promises contained herein, and intending to be legally bound hereby, the parties agree as follows:
 SECTION 1.   Consideration. The Employee acknowledges that: (a) the payments, rights and benefits set forth in Sections 3 and 5 of the Employment Agreement constitute full settlement of all of his or her rights under the Employment
Agreement, (b) he or she has no entitlement under any other severance or similar arrangement maintained by the Company, and (c) except as otherwise provided specifically in this Release, the Company does not and will not have any other liability or
obligation to the Employee. The Employee further acknowledges that, in the absence of his or her execution of this Release, the payments and benefits specified in Sections 3 and 5 of the Employment Agreement would not otherwise be due to the
Employee.
 SECTION 2.   Release and Covenant Not to Sue. The Employee hereby fully and forever releases and discharges the Company and its parents,
affiliates and subsidiaries, including all predecessors and successors, assigns, officers, directors, trustees, employees, agents and attorneys, past and present, from any and all claims, demands, liens, agreements, contracts, covenants, actions,
suits, causes of action, obligations, controversies, debts, costs, expenses, damages, judgments, orders and liabilities, of whatever kind or nature, direct or indirect, in law, equity or otherwise, whether known or unknown, arising through the date
of this Release, out of his or her employment by the Company or the termination thereof, including, but not limited to, any claims for relief or causes of action under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., or any other federal, state or local statute, ordinance or regulation regarding discrimination in employment and any claims, demands or actions based upon alleged wrongful or retaliatory discharge or breach
of contract under any state or federal law. The Employee expressly represents that he or she has not filed a lawsuit or initiated any other administrative proceeding against the Company (including for purposes of this Section 2, its parents,
affiliates and subsidiaries), and that he or she has not assigned any claim against the Company (or its parents, affiliates and subsidiaries) to any other person or entity. The Employee further promises not to initiate a lawsuit or to bring any
other claim against the Company (or its parents, affiliates and subsidiaries) arising out of or in any way related to his or her employment by the Company or the termination of that employment. The forgoing will not be deemed to release the Company
from (a) claims solely to enforce this Release, (b) claims solely to enforce Sections 3 and 5 of the Employment Agreement, (c) claims for indemnification under the Company’s By-Laws, under any indemnification agreement between the Company and
the Employee or under any similar
     

  agreement or (d) claims solely to enforce the terms of any equity incentive award agreement between the Employee and the Company. This Release will not prevent the Employee from filing a
charge with the Equal Employment Opportunity Commission (or similar state agency) or participating in any investigation conducted by the Equal Employment Opportunity Commission (or similar state agency); provided, however, that any claims by the
Employee for personal relief in connection with such a charge or investigation (such as reinstatement or monetary damages) would be barred.
 SECTION 3.   Restrictive
Covenants. The Employee acknowledges that the terms of the Noncompetition and Confidentiality Agreement by and between the Employee and the Company dated _______________ (the “Noncompetition
Agreement”) will survive the termination of his or her employment. The Employee affirms that the restrictions contained in the Noncompetition Agreement are reasonable and necessary to protect the legitimate interests of
the Company, that he or she received adequate consideration in exchange for agreeing to those restrictions and that he or she will abide by those restrictions.
 SECTION 4.   Non-Disparagement. The Company (meaning, solely for this purpose, Company’s directors and executive officers and other individuals authorized to make official communications on Company’s behalf) will not
disparage the Employee or the Employee’s performance or otherwise take any action which could reasonably be expected to adversely affect the Employee’s personal or professional reputation. Similarly, the Employee will not disparage Company
or any of its directors, officers, agents or employees or otherwise take any action which could reasonably be expected to adversely affect the reputation of the Company or the personal or professional reputation of any of the Company’s
directors, officers, agents or employees.
 SECTION 5.   Cooperation. The Employee further agrees that, subject to reimbursement of his or her
reasonable expenses, he or she will cooperate fully with the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) which relates to matters with which the Employee was involved during
his or her employment with Company. The Employee shall render such cooperation in a timely manner on reasonable notice from the Company.
 SECTION 6.   Rescission
Right. The Employee expressly acknowledges and recites that (a) he or she has read and understands this Release in its entirety, (b) he or she has entered into this Release knowingly and voluntarily, without any duress or
coercion; (c) he or she has been advised orally and is hereby advised in writing to consult with an attorney with respect to this Release before signing it; (d) he or she was provided 21 calendar
days after receipt of the Release to consider its terms before signing it (or such longer period as is required for this Release to be effective under the Age Discrimination in Employment Act or any similar state law); and (e) he or she is provided
seven (7) calendar days from the date of signing to terminate and revoke this Release (or such longer period required by applicable state law), in which case this Release shall be unenforceable, null and void. The Employee may revoke this Release
during those 7 days (or such longer period required by applicable state law) by providing written notice of revocation to the Company. 
 SECTION 7.   Challenge. If the Employee (i) violates or challenges the enforceability of any provisions of this Release, or (ii) violates any provision contained in Section 7 of the Employment Agreement, no further payments, rights
or benefits under Sections 3 and 5 of the Employment Agreement will be due to the Employee. 
 SECTION 8.   Miscellaneous. 
    

                    8.1.   No Admission of
Liability. This Release is not to be construed as an admission of any violation of any federal, state or local statute, ordinance or regulation or of any duty owed by the Company to the Employee. There have been no such
violations, and the Company specifically denies any such violations.
                   8.2.   No Reinstatement. The Employee agrees that he or she will not apply for reinstatement with the Company or seek in any way to be reinstated, re-employed or hired by the
Company in the future.
                   8.3.   Successors and
Assigns. This Release shall inure to the benefit of and be binding upon the Company and the Employee and their respective successors, executors, administrators and heirs. The Employee may make any assignment of this Release
or any interest herein, by operation of law or otherwise. The Company may assign this Release to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or
otherwise.
                   8.4.   Severability. Whenever
possible, each provision of this Release will be interpreted in such manner as to be effective and valid under applicable law. However, if any provision of this Release is held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability will not affect any other provision, and this Release will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision had never been herein contained.
                   8.5.   Entire Agreement; Amendments. Except as
otherwise provided herein, this Release contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings
of every nature relating to the subject matter hereof. This Release may not be changed or modified, except by an Agreement in writing signed by each of the parties hereto.
                   8.6.   Governing Law. This Release shall be governed
by, and enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to the application of the principles of conflicts of laws.
                   8.7.   Counterparts and Facsimiles. This Release may be
executed, including execution by facsimile signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.
 [This
space left blank intentionally; signature page follows.]
    

                    IN WITNESS WHEREOF, the Company has caused this Release to be executed by its duly
authorized officer, and the Employee has executed this Release, in each case as of the date first above written.

		 	NEOSE TECHNOLOGIES, INC.
	
	 	By: 	

	 	 	Name & Title:	 
				

		 	 	EMPLOYEE<PAGE>

                                                                  EXHIBIT 10.190

================================================================================
                    Pharmaceutical Product Development, Inc.

                           Deferred Compensation Plan

================================================================================

                 As Amended and Restated Effective July 1, 2002

<PAGE>

================================================================================

                    Pharmaceutical Product Development, Inc.

                           Deferred Compensation Plan

================================================================================

I.    Name and Purpose

The name of this plan is the Pharmaceutical Product Development, Inc. Deferred
Compensation Plan (the "Plan"). Its purpose is to provide certain select
management or highly compensated employees on the payroll of either
Pharmaceutical Product Development, Inc. (the "Company") or a subsidiary of the
Company (the "Affiliates") with the opportunity to defer compensation earned as
an employee, gain from the exercise of stock options, and shares of Company
stock received from the lapse of restrictions on restricted stock of the
Company.

II.   Effective Date

The Plan shall be amended and restated effective as of July 1, 2002.

III.  Participants

All employees who are officers, senior vice presidents, vice presidents and
executive directors of the Company or an Affiliate who are receiving
compensation in the United States from the Company or an Affiliate shall be
eligible to participate in the Plan. Any such Employee who elects to participate
in the Plan is hereinafter called a "Participant." The Company will establish
for each Participant one or more unfunded deferred compensation accounts, as
specified in Article V.

IV.   Election of Deferral

      A.    On or before December 31 of any year, each Employee eligible to
            participate shall be entitled to make an irrevocable election on the
            form established from time to time by the Committee (hereinafter the
            "Deferral Agreement") to defer receipt of all or a specified portion
            of the salary otherwise payable (whether or not otherwise deferred)
            from the Company for the following calendar year. Such election
            shall remain effective from year to year, unless changed by the
            Employee with respect to the next following calendar year.

      B.    For the first calendar year that an Employee becomes eligible, an
            Employee must complete, execute and return to the Committee a
            Deferral Agreement within 30 days after the Employee becomes
            eligible. Elections for the 2001 calendar year shall be made prior
            to January 31, 2001, in accordance with rules adopted by the
            Committee.

      C.    The term "salary" as used herein shall include all compensation
            other than income from the exercise of stock options, relocation
            expense reimbursements and tuition reimbursements. If a Participant
            wishes to defer the payment of all or a portion of the bonus earned
            for a particular year (whether or not he otherwise elects to defer

                                       -1-

<PAGE>

            salary), he must make a separate election. Such election will apply
            to the fiscal year of the Company in which the bonus is paid. Such
            election must be completed and returned to the Committee on or
            before December 31 immediately preceding the beginning of the fiscal
            year of the Company during which the bonus would be paid; provided,
            however, for the plan year beginning February 1, 2001, such election
            shall be made by January 31, 2001.

      D.    Employees may elect to defer receipt of between one and twenty-five
            percent of salary, other than bonus, in increments of one percent.
            Employees, other than officers, senior vice presidents and vice
            presidents, may elect to defer receipt of between one and
            twenty-five percent of bonus, in increments of one percent.
            Officers, senior vice presidents and vice presidents may elect to
            defer receipt of between one and one hundred percent of bonus in
            increments of one percent.

      E.    A Participant's deferrals under the Plan shall be determined before
            a Participant's contributions to the Pharmaceutical Product
            Development, Inc. Retirement Savings Plan ("RSP"). A Participant
            shall make separate deferral elections with respect to the Plan and
            the RSP. At anytime during a calendar year a Participant by timely
            notifying the Committee, in accordance with it rules and procedures,
            may elect to suspend deferrals to the Plan. Such Participant may
            elect deferral for subsequent calendar years in accordance with the
            procedures in this Article IV.

V.    Deferred Compensation Accounts

      A.    Separate Accounts (and subaccounts if elected in accordance with
            Section IX A. below) shall be established and maintained for each
            Participant reflecting the amount deferred by the Participant in the
            Plan.

      B.    At the end of each calendar quarter an amount equal to the
            Participant's deferral for such quarter shall be credited to the
            appropriate Account of such Participant to reflect the salary or
            bonus otherwise payable during payroll periods ending in that
            calendar quarter but deferred pursuant to the Plan by the
            Participant. Interest will be credited to the Participant's Account
            as of the last day of each calendar quarter based upon the balance
            in the Participant's Account on the first day of such quarter after
            reducing that Account to reflect any distributions or withdrawals
            from such Account during such quarter and after crediting the
            Account with fifty percent of the deferrals for such calendar
            quarter. Interest for each calendar quarter shall be based on the
            three month London Interbank Offered Rate (or similar index
            designated by the Committee) plus 1.5%.

      C.    Separate subaccounts shall be established for a Participant if the
            Participant so elects and the Committee so approves in accordance
            with Article IX.

VI.   Deferral of Stock Option Gain

      A.    For purposes of this Article VI, the following terms shall be
            defined as follows:

                                       -2-

<PAGE>

            Common Stock. "Common Stock" shall mean the common stock of
            Pharmaceutical Product Development, Inc., $0.10 par value per share.

            Consideration Shares. "Consideration Shares" shall mean shares of
            common stock acquired by a Participant (a) on the open market or (b)
            through the exercise of a nonqualified Stock Option that has been
            owned by the Participant for at least (6) six months.

            Date of Exercise. "Date of Exercise" shall mean the date on or after
            which Stock Options designated in a Stock Option Gain Deferral
            Agreement will be exercised and any gain derived therefrom will be
            deferred pursuant to Article VI of this Plan; provided that such
            date shall be at least six months from the date of the Stock Option
            Gain Deferral Agreement.

            Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
            of 1934, as amended, and all rules and regulations promulgated
            thereunder.

            Fair Market Value. "Fair Market Value," with respect to a share of
            Common Stock as of any date, shall mean (a) the closing sales price
            of the Common Stock on the NASDAQ National Market System or on any
            such other exchange on which the Common Stock is traded on such
            date, or in the absence of reported sales on such date, the closing
            sales price on the immediately preceding date on which sales were
            reported, or (b) in the even there is no public market for the
            Common Stock on such date, the Fair Market Value as determined in
            good faith by the Committee in its sole and absolute discretion.

            Gain Shares. "Gain Shares" shall mean the shares of Common Stock
            determined in accordance with the provisions of Section VI E. hereof
            resulting from the exercise of any Stock option pursuant to Article
            VI of this Plan.

            Gain Share Account. "Gain Share Account" shall mean the record of a
            Participant's interest in this Plan represented by the number of the
            Share Units related to Gain Shares, adjusted for hypothetical gains,
            earnings dividends, losses, distributions, withdrawals and other
            similar activities.

            Share Units. "Share Units" shall mean units of deemed investment in
            shares of Common Stock in accordance with Article VI of the Plan.

            Stock Option. "Stock Option" shall mean an option to purchase Common
            Stock from the Company that was granted under a Stock Option Plan.

            Stock Option Gain Deferral Agreement. "Stock Option Gain Deferral
            Agreement" shall mean the form established from time to time by the
            Committee that an Employee completes, executes and returns to the
            Committee to defer receipt of Gain Shares received from the exercise
            of a Stock Option pursuant to Article VI hereof.

                                       -3-

<PAGE>

            Stock Option Plan. "Stock Option Plan" shall mean collectively the
            equity incentive plans adopted by the Company from time to time or
            under which the Company has Stock Options outstanding, and
            individually, such equity incentive plan governing any particular
            Stock Option.

      B.    Subject to provisions of this Article VI, eligible employees may
            elect to defer the receipt and distribution of the gain related to
            the exercise of Stock Options until the "distribution event date"
            elected by the employee pursuant to Article VIII hereof, by filing a
            Stock Option Gain Deferral Agreement with the Committee. A Stock
            Option Gain Deferral Agreement may be filed at any time with respect
            to any number of Stock Options.

      C.    A Stock Option Gain Deferral Agreement must be filed at least six
            months prior to the Date of Exercise and no later than the day
            immediately preceding the first day of the six-month period ending
            on the expiration date of the Stock Option. A Stock Option with
            respect to which a Stock Option Gain Deferral Agreement has been
            filed may not be exercised prior to the date specified in the Stock
            Option Gain Deferral Agreement. A Participant must be an Employee on
            the Date of Exercise to effect a Deferral of Gain Shares hereunder.

      D.    Each Stock Option Gain Deferral Agreement shall set forth: (a) the
            number of Stock Options to be exercised; (b) the date of grant of
            the Stock Options; (c) the Date of Exercise; (d) the date on which
            the Gain Shares credited to the Participant's Gain Share Account
            shall be payable; (e) whether distribution shall be in installments
            or in a lump sum; and (f) any other item determined to be
            appropriate by the Committee. Gain Shares shall be distributed in a
            lump sum in the form of Common Stock.

      E.    An Employee who desires to exercise a Stock Option and to defer
            current receipt and distribution of the related Gain Shares must
            follow the procedures and requirements that are applicable to the
            Stock Option under the Stock Option Plan, including the procedures
            and requirements relating to the exercise of an Option; provided,
            however, that in the case of a deferral of Gain Shares under this
            Plan, the Employee shall only be permitted to tender Consideration
            Shares to pay the entire exercise price for any such Stock Option
            exercised. Notwithstanding the foregoing, the Committee may in its
            discretion accept documentation that the Employee owns the number of
            Consideration Shares necessary to pay the exercise price for the
            Stock Options.

      F.    Upon exercise of a Stock Option, the Gain Shares resulting from the
            exercise of the Stock Option which the Employee has elected to defer
            hereunder shall be determined as follows: (a) the aggregate exercise
            price for all Stock Options to be exercised shall be determined by
            multiplying the exercise price of the Stock Option by the number of
            Stock Options to be exercised at that price; (b) the number of
            Consideration Shares needed to pay the exercise price for such Stock
            Options shall be determined by dividing the aggregate exercise price
            from (a) above by the Fair Market Value of one share of Common Stock
            on the Date of

                                       -4-

<PAGE>

            Exercise; and (c) the difference between the aggregate Fair Market
            Value on the Date of Exercise of the shares of Common Stock acquired
            upon the exercise of the Stock Options and the aggregate exercise
            price of such Stock Options, divided by the Fair Market Value of one
            share of Common Stock on the Date of Exercise, shall be the number
            of Gain Shares resulting from such exercise.

      G.    Subject to the provisions of Section VIII D. hereof, all deferrals
            of Gain Shares hereunder are irrevocable. A Participant may not
            increase the amount of his Gain Share deferrals occurring under any
            given Stock Option Gain Deferral Agreement following submission of
            the Stock Option Gain Deferral Agreement. A Participant may
            terminate a Gain Share deferral any time prior to the Date of
            Exercise by filing, on such forms and subject to such limitations
            and restrictions as the Committee may prescribe in its discretion, a
            revised Stock Option Gain Deferral Agreement with the Committee.
            Under no circumstances may a Participant's Stock Option Gain
            Deferral Agreement be made, modified or revoked retroactively.

      H.    If an Employee makes a valid election under this Article VI to defer
            Gain Shares and if the Stock Option expires without a proper
            exercise of the Stock Option by the Employee, or if the Employee
            fails to properly tender or attest to the Consideration Shares by
            the last day of the Stock Option term, the Employee shall forfeit
            any opportunity to exercise the Stock Option and the Stock Option
            shall be canceled as of the end of the last business day of the
            Stock Option term, according to the terms of the Stock Option Plan.

      I.    A Participant shall be fully vested at all times in his or her Gain
            Share Account.

      J.    Gain Share Accounts are bookkeeping accounts, the value of which
            shall be based upon the performance of the Common Stock. Any and all
            dividends paid with respect to the Common Stock will be deemed to be
            immediately reinvested in Common Stock. It is understood and agreed
            that the Company assumes no risk of any decrease in the value of the
            Common Stock, and the Company's sole obligations are to maintain the
            Participant's Gain Share Account and make payments to the
            Participant as herein provided.

      K.    In the event of a stock dividend, split-up or combination of the
            Common Stock, merger, consolidation, reorganization or
            recapitalization affecting the Common Stock, such that an adjustment
            is determined by the Committee to be appropriate in order to prevent
            dilution or enlargement of the benefits or potential benefits
            intended to be made available under this Article VI, then the
            Committee may make appropriate adjustments to the number of Share
            Units credited to any Gain Share Account. The determination of the
            Committee as to such adjustments, if any, shall be binding and
            conclusive.

      L.    Notwithstanding any other provision of this Plan, the Committee
            shall adopt such procedures as it may determine are necessary to
            ensure that with respect to any Participant who is actually or
            potentially subject to Section 16(b) of the Exchange

                                       -5-

<PAGE>

            Act, the crediting of deemed shares to such Participant's Gain Share
            Account is not deemed to be a nonexempt purchase for purposes of
            such Section 16(b), including without limitation requiring that no
            shares of Common Stock relating to such deemed shares may be
            distributed for six months after being credited to such Deferral
            Account.

      M.    All distributions of a Participant's Gain Share Account shall be in
            the form of shares of Common Stock.

VII.  Deferral of Restricted Stock

      A.    For purposes of this Article VII, the following terms shall be
            defined as follows:

            Common Stock. "Common Stock" shall mean the common stock of
            Pharmaceutical Product Development, Inc., $0.10 par value per share.

            Restricted Stock/Restricted Stock Award. "Restricted Stock" or
            "Restricted Stock Award" shall mean a share of restricted Common
            Stock that was granted to an Employee under a Stock Plan.

            Restricted Stock Deferral Agreement. "Restricted Stock Deferral
            Agreement" shall mean the form established from time to time by the
            Committee that an Employee completes, executes and returns to the
            Committee to defer the receipt of shares of Common Stock upon the
            lapse of restrictions on Restricted Stock Awards.

            Restricted Stock Unit/RSU. "Restricted Stock Unit" or "RSU" shall
            mean units of deemed investment in shares of Common Stock in
            accordance with Article VIII of the Plan.

            Restricted Stock Unit Account/RSU Account. "Restricted Stock Unit
            Account" or "RSU Account" shall mean the record of a Participant's
            interest in this Plan represented by the number of RSUs related to
            shares of Restricted Stock deferred hereunder, adjusted for
            distributions, withdrawals and other similar activities as provided
            in the Plan.

            Stock Plan. "Stock Plan" shall mean collectively the equity
            incentive plans adopted by the company from time to time or under
            which the Company has Restricted Stock Awards outstanding, and
            individually, such equity incentive plan governing any particular
            Restricted Stock Award.

      B.    The provisions of this Article VII shall apply to all deferral
            elections made in compliance with this Article VII. All participants
            who have received Restricted Stock Awards under a Stock Plan of the
            Company, some or all of the restrictions on which have not lapsed as
            of December 31, 2002, and all persons who receive a Restricted Stock
            Award under a Stock Plan of the Company after the effective date of
            this Plan whose Agreement provides that the recipient may elect to
            defer the receipt of such Restricted Stock Award are permitted to
            make deferral

                                       -6-

<PAGE>

            elections with respect to such Restricted Stock Awards under this
            Plan by following the provisions of this Article VII.

      C.    Eligible employees who elect to defer Restricted Stock Awards must
            enter into an irrevocable Restricted Stock Deferral Agreement, in
            the form approved by the Committee, which provides for the exchange
            of shares of Restricted Stock for Restricted Stock Units. A
            Restricted Stock Deferral Agreement may be filed at any time with
            respect to any number of Restricted Shares with respect to which the
            restrictions have not and are not due to lapse for at least six (6)
            months.

      D.    Each Restricted Stock Deferral Agreement shall set forth: (a) the
            number of shares of Restricted Stock to be deferred; (b) the date of
            grant of such shares of Restricted Stock; (c) the date or dates on
            which the restrictions imposed on such shares of Restricted Stock
            lapse; (d) the date on which the Restricted Stock Units credited to
            the Participant's Restricted Stock Unit Account shall become
            payable; and (e) whether distribution of the Restricted Stock Units
            shall be in installments or in a lump sum; and (f) any other item
            determined to be appropriate by the Committee. Participants agree to
            execute any form that may be required by the Company's stock
            transfer agent with respect to book-entry or certificated shares. If
            the shares are not held in book-entry format by the Company's stock
            transfer agent, eligible Employees deferring Restricted Stock Awards
            must also tender the certificates for the shares of Restricted Stock
            with respect to which the Restricted Stock Deferral Agreement is
            being entered into at the time the Restricted Stock Deferral
            Agreement is tendered.

      E.    The effective date of the deferral of Restricted Stock hereunder is
            the close of business on the business day on which the Committee, or
            its designee, receives the Restricted Stock Deferral Agreement, and
            if the shares of Restricted Stock are not held in book-entry format,
            the certificates for the shares of Restricted Stock, along with any
            properly completed and executed stock powers that may be requested
            by the Committee.

      F.    Until the date specified in the Participant's Restricted Stock
            Deferral Agreement as the date on which restrictions on the shares
            of Restricted Stock will lapse, RSU's credited to such Participant's
            Restricted Stock Unit Account upon the deferral of such shares of
            Restricted Stock shall remain subject to forfeiture under the
            provisions of the Stock Plan and any related Restricted Stock Award
            agreement in the same manner as the shares of Restricted Stock
            deferred hereunder. The RSU's will be subject to restrictions
            identical to the restrictions on the shares of Restricted Stock
            deferred hereunder, and the restrictions on the RSU's shall lapse,
            if at all, at the same time and in the same manner that the
            restrictions on the shares of Restricted Stock would have lapsed had
            the participant not made a deferral election.

      G.    For each Participant electing to defer Restricted Stock, upon the
            effective date of the deferral, a RSU Account will be established by
            the Company, reflecting one RSU for each Restricted Stock share
            deferred hereunder. A subaccount

                                       -7-

<PAGE>

            representing cash equal to the earnings credited to the RSU Account
            with respect to dividend equivalents and interest thereon as
            calculated pursuant to Section V. B hereof, will also be
            established, unless the Participant has elected to receive earnings
            attributable to RSU's currently, and not on a deferred basis,
            pursuant to Section VII J. hereof. Earnings will be credited to the
            Participant's cash subaccount as follows: on each date on which the
            Company pays a dividend on its Common Stock, an amount equal to such
            dividend will be credited to the Participant's Account with respect
            to each RSU. Then, an additional amount will be credited to the
            Participant's cash subaccount to reflect earnings pursuant to
            Section V B. hereof to reflect earnings on the dividend equivalents
            from the time they were credited to the cash subaccount hereunder.

      H.    In the event of a stock dividend, split-up or combination of the
            Common Stock, merger, consolidation, reorganization or
            recapitalization affecting the Common Stock, such that an adjustment
            is determined by the Committee to be appropriate in order to prevent
            dilution or enlargement of the benefits or potential benefits
            intended to be made available under this Article VII, then the
            Committee may make appropriate adjustments to the number of Share
            Units credited to any RSU Account. The determination of the
            Committee as to such adjustments, if any, shall be binding and
            conclusive.

      I.    Restricted Stock Units shall be distributed in the form of Common
            Stock. Distributions from a Participant's RSU Account and related
            RSU cash subaccount pursuant to Article VIII hereof will be computed
            as follows: with respect to the Participant's RSU Acccount, one
            share of Common Stock will be distributed for each RSU credited to
            such RSU Account; and with respect to the Participant's RSU cash
            subaccount, cash in the amount credited to such subaccount will be
            paid to the Participant.

      J.    A Participant may elect to receive earnings attributable to the
            Participant's RSU cash subaccount currently, and not on a deferred
            basis, by indicating such an election on the Participant's
            Restricted Stock Deferral Agreement. If such an election is made,
            the Participant will receive in cash on each date on which the
            Company pays a dividend on its shares of Common Stock an amount
            equal to such dividend with respect to each RSU in the Participant's
            RSU Account. Such payment shall be made in lieu of crediting any
            amount to the Participant's RSU cash subaccount pursuant to Section
            VII G. hereof, and such Participant's RSU cash subaccount will be
            deemed to be "zero" for all purposes under the Plan.

VIII. Method of Distribution of Deferred Compensation

      A.    At the time a Participant executes his or her first Deferral
            Agreement, Stock Option Gain Deferral Agreement, or Restricted Stock
            Deferral Agreement, the Participant shall duly designate, execute,
            and file with the Committee on the Deferral Agreement, Stock Option
            Gain Deferral Agreement, Restricted Stock Deferral Agreement, or
            other appropriate form designated by the Committee, the date upon
            which the entire amount of his or her Account, Gain Share Account,

                                       -8-

<PAGE>

            and/or Restricted Stock Unit Account shall become payable. In the
            event of the Participant's termination of employment following the
            attainment of age 55 and the completion of ten (10) years service (a
            "qualified termination event"), a Participant may designate that
            payment of his or her Account, Gain Share Account, and/or Restricted
            Stock Unit Account commences upon (a) the date of the Participant's
            termination of employment or (b) a date 10 years after termination
            of employment (such date hereinafter referred to as a "distribution
            event date"). In the event of the Participant's termination of
            employment for any reason other than death and Disability (as
            hereinafter defined) prior to attaining the age of 55 and completing
            ten (10) years of service, the balance of a Participant's Account,
            Gain Share Account and/or Restricted Stock Unit Account shall be
            paid in a lump sum within thirty (30) days of the date of the
            Participant's termination of employment. In the event of a
            Participant's death, the balance of the Participant's Account, Gain
            Share Account, and/or Restricted Stock Unit Account shall be
            distributed as elected by the Participant pursuant to Section B
            below within thirty (30) days of the date of death. In the event of
            a Participant's Disability, the balance of the Participant's
            Account, Gain Share Account, and/or Restricted Stock Unit Account
            shall be distributed as provided in Section XI hereof in such form
            as elected by the Participant pursuant to Section B below.

      B.    The Participant shall elect one of the following forms of payment
            for the distribution of the balance of his or her Account, Gain
            Share Account, and/or Restricted Stock Unit Account upon a qualified
            termination event, death or Disability:

            (i)   Lump Sum. In the event a Participant elects a single sum
                  payment in the event of death or Disability, or following a
                  qualified termination event, the amount of the Participant's
                  Account, Gain Share Account, and/or Restricted Stock Unit
                  Account shall be paid (a) as soon as practicable following
                  January 1 of the year following the calendar year during which
                  the Participant's qualified termination event occurs, (b)
                  within thirty (30) days of the date of death, or (c) as soon
                  as practicable following the occurrence of the event by which
                  distribution may be made pursuant to Section XI hereof in the
                  event of the Participant's Disability, as the case may be. The
                  Participant shall receive a single sum cash payment equal to
                  the amount credited to his or her Account. The Participant
                  shall receive a single sum in the form of Common Stock equal
                  to the number of Share Units credited to his or her Gain Share
                  Account and/or Restricted Stock Units credit to his or her
                  Restricted Stock Unit Account.

            (ii)  Installments. In the event a Participant elects installment
                  payments, the Participant shall receive the amount credited to
                  his or her Account, Gain Share Account, and/or Restricted
                  Stock Unit Account in ratable semi-annual installments payable
                  over a period of 5, 10 or 15 years; provided however, that in
                  no event may any semi-annual installment (except the last
                  installment) be in an amount of less than $2,000 (or such
                  other amount the Committee may specify); and provided further,
                  that in the event the

                                       -9-

<PAGE>

                  installment period elected by the Participant would otherwise
                  result in one or more semi-annual installments of less than
                  $2,000, then such installment period may be automatically
                  shortened by the Committee to the extent necessary to assure
                  that each such installment (except for the last one) will be
                  an amount of not less than $2,000. Such semi-annual
                  installments shall commence as soon as practicable following
                  the January 1 or July 1 immediately following the
                  Participant's qualified termination event, death, or
                  commencement of payments following Disability, and be payable
                  throughout the installment period to the participant as soon
                  as practicable after each January and July 1 thereafter. In
                  the event a Participant terminates employment before attaining
                  age 55 and completing 10 years of service with the Company or
                  an Affiliate, terminates employment under circumstances deemed
                  by the Committee to be detrimental to the Company or works for
                  a competitor of the Company then the Committee shall,
                  notwithstanding any installment election made by the
                  Participant, have the right to pay the amount the Participant
                  has remaining in his Account, Gain Share Account and/or
                  Restricted Stock Unit Account, in a lump sum payment within
                  thirty (30) days of the Participant's termination of
                  employment.

      C.    A Participant may change his or her elections under A or B at any
            time by duly completing, executing, and filing with the Committee
            his or her new election in an appropriate form designated by the
            Committee; provided however, that for any such change of election to
            be effective, a full calendar year must pass between the calendar
            year during which the Participant duly makes the change of election
            and the calendar year during which distribution of any portion of
            the Participant's Account, Gain Share Account, and/or Restricted
            Stock Unit Account is first to become payable after taking the
            change of election into account. In the event a Participant has not
            made an election under A or B, then the Participant shall be treated
            as having a qualified termination event on the date of the
            Participant's termination of employment under Section A above; and a
            form of payment of a lump sum under Section B above.

      D.    At any time a Participant may withdraw all or any fixed dollar
            portion of the Participant's Account, Gain Share Account, and/or
            Restricted Stock Unit Account by duly completing, executing, and
            filing with the Committee the appropriate form designated by the
            Committee establishing that the Participant has a severe financial
            hardship. The Committee, in its sole and absolute discretion, shall
            determine whether the Participant has suffered a financial hardship
            justifying a withdrawal. In addition, at any time a Participant may
            withdraw all or any fixed dollar portion of the Participant's
            Account, Gain Share Account, and/or Restricted Stock Unit Account by
            duly completing, executing and filing with the Committee the
            appropriate form designated by the Committee for a significant
            detriment withdrawal. The Committee will process such significant
            detriment withdrawal request, but shall cause a forfeiture to the
            Company from the Participant's Account, Gain Share Account, and/or
            Restricted Stock Unit Account of 10% of

                                      -10-

<PAGE>

            the amount requested by the Participant. The Participant shall
            receive 90% of the amount requested.

      E.    Notwithstanding the foregoing provisions of this Article VIII, upon
            a Change in Control, the Plan will be deemed to have been terminated
            and a Participant's Account, Gain Share Account, and/or Restricted
            Stock Unit Account shall be paid to the Participant as elected by
            the Participant pursuant to B hereunder as soon as practicable;
            provided, however, a Participant may elect by duly completing,
            executing, and filing with the Committee on an appropriate form
            designated by the Committee that the Participant elects to continue
            to participate in the Plan, and in such event, the Plan will not be
            deemed to have been terminated with respect to the Participant and
            the Participant's Account and/or Gain Share Account shall not be
            distributed. Such election shall be made during the period ending on
            the date 30 days following the date the Board approves a corporate
            event leading to a Change in Control or announces it to employees
            generally. Upon payment under this Section VIII E, the obligation of
            the Plan and the Company to the Participant shall be fully satisfied
            and completely discharged, and the Participant shall be permanently
            barred from further participation in the Plan. For purposes of this
            Article VIII of the Plan, a "Change in Control" shall be deemed to
            have occurred if:

            (a) Any "Person" as defined in Section 3(a)(9) of the Securities
            Exchange Act of 1934, as amended (the "Exchange Act"), including a
            "group" (as that term is used in Sections 13(d)(3) and 14(3)(2) of
            the Exchange 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
            Common Stock pursuant to which any shares of the Common Stock are
            purchased (an "Offer"); or

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

                                      -11-

<PAGE>

            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 VIII E(c).

            (d) An 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 Offer, Acquisition or Transaction.

      F.    Notwithstanding the foregoing provisions of this Section VIII and
            elections made by a Participant thereunder, if any distribution or
            withdrawal under the Plan to a Participant who is a "Covered
            Employee"(as defined herein) from an Account, Gain Share Account
            and/or Restricted Stock Unit Account will result in any portion of
            the distribution or withdrawal (or any other amount paid by the
            company to such Participant during the same Plan Year) not being tax
            deductible by reason of Section 162(m) of the Internal Revenue Code
            of 1986, as amended from time to time ("Section 162(m)"), then such
            distribution or withdrawal shall be deferred until the earliest to
            occur of (i) the calendar year following the Participant's year of
            termination of employment, (ii) the first calendar year in which
            such Participant is no longer a "Covered Employee", or (iii) such
            later date designated by the Committee in its sole and absolute
            discretion, and such Account, Gain Share Account and/or Restricted
            Stock Unit Account shall continue to accrue interest and have
            investment returns measured in accordance with the terms of this
            Plan until such date. For purposes of this paragraph, "Covered
            Employee" shall mean at any date (iv) any individual who, with
            respect to the previous taxable year of the Company, was a "covered
            employee" of the Company within the meaning of Section 162(m);
            provided, however, that the term "Covered Employee" shall not
            include any such individual who is designated by the Committee, in
            its discretion, at the time of any distribution or withdrawal
            hereunder, as reasonably expected not to be such a "covered
            employee" with respect to the current taxable year of the Company
            and (v) any individual who is designated by the Committee, in its
            discretion, at the time of any distribution or withdrawal, as
            reasonably expected to be such a "covered employee" with respect to
            the current taxable year of the Company or with respect to the
            taxable year of the Company in which any applicable distribution or
            withdrawal will be paid.

      G.    Any amounts debited from a Participant's Account, Gain Share
            Account, and/or Restricted Stock Unit Account by reason of a
            distribution, withdrawal, or otherwise under this Article VIII,
            shall be debited from the Participant's Account, Gain Share Account,
            and/or Restricted Stock Unit Account as the case may be, and such
            other accounts, subaccounts, options, or other allocations in the
            same proportion that the Participant's entire Account, Gain Share
            Account, and/or Restricted Stock Unit Account is credited at the
            time such debit is made, as determined by the Committee.

IX.   In-Service Subaccount

                                      -12-

<PAGE>

      A.    A Participant may request that the Committee establish one or more
            Subaccounts for deferrals made pursuant to Article IV of this Plan
            providing for an in-service withdrawal that is not occasioned by a
            severe hardship or a significant detriment withdrawal by duly
            completing, executing, and filing with the Committee such request on
            an appropriate form designated by the Committee. The Committee may
            condition its approval of any such Subaccount. Each Subaccount the
            Committee approves for a Participant shall be established as of the
            start of the calendar year following the calendar year during which
            the Committee's approval occurs; provided however, that in the event
            the Committee's approval for a Subaccount occurs after December 15
            of a calendar year, then such Subaccount shall be established as of
            the start of the calendar year second following the calendar year
            during which such Committee approval occurred. The portion of an
            Employee's Account not credited to one or more of his or her
            Subaccounts is the Employee's Account.

      B.    Except as provided in the following provisions of this Article IX,
            each Subaccount of a Participant shall be treated as a separate
            Account under the foregoing Articles of this Plan.

      C.    The overall limits on the maximum amounts of deferrals shall apply
            with respect to all of the Participant's Subaccounts as if all such
            Subaccounts were a single Account under the Plan. A Participant may
            designate the total amount and allocation of deferrals among his or
            her Subaccounts by completing, executing, and filing with the
            Committee the appropriate form designated by the Committee by
            December 15 of the calendar year before the calendar year in which
            the change is to be effective. In the event a Participant evidences
            severe financial hardship for a year, then all deferrals to all of
            the Participant's Subaccounts shall be stopped.

      D.    The distribution event date for each of the Participant's
            Subaccounts shall be any distribution event date irrevocably
            specified by the Employee that is no less than three years following
            the date the first amount is actually credited to that Subaccount
            upon duly completing, executing, and filing with the Committee the
            appropriate form designated by the Committee no later than the time
            such Subaccount is established. No later than the establishment of a
            Subaccount for a Participant, the Participant shall irrevocably
            designate on such form a semi-annual installment form of payment for
            a period that is not more than eight semi-annual installments.
            Separate elections under the foregoing provisions of this Section IX
            D. will be made for each Subaccount established for a Participant.
            No withdrawals before the distribution event date may be made from
            any Subaccount. In the event a Participant fails to designate either
            the timing or form of distribution of any Subaccount established for
            the Participant, then any amounts that are or would have been
            allocated to such Subaccount shall be credited instead to the
            Participant's Account. All of a Participant's Subaccounts shall be
            treated as a single Account, under the Plan for purposes of any
            death benefits payable under the Plan.

                                      -13-

<PAGE>

      E.    A Participant may elect to dissolve any Subaccount established on
            his or her behalf and to transfer the balance of that Subaccount in
            multiples of 10 percent of each balance to his or her other
            Subaccounts of the same origin, or 100 percent of such balance to
            his or her Account, by duly completing, executing, and filing with
            the Committee an appropriate form designated by the Committee;
            provided however, that for an election to dissolve a Subaccount to
            be effective, a full calendar year must pass between the calendar
            year during which the Participant duly makes the dissolution
            election and the calendar year during which distribution of any
            portion of such Subaccount is first to become payable; and provided
            further that in the absence of such elective allocation of the
            balance of the Subaccount upon its dissolution, that the balance
            shall be transferred in its entirety to the Participant's Account.
            In no other event may transfers be made among the Participant's
            Subaccounts.

X.    Distribution Upon Death

If any Participant dies before receiving all amounts credited to his Account,
Gain Share Account, and/or Restricted Stock Unit Account, the unpaid amounts in
the Participant's Account, Gain Share Account, and/or Restricted Stock Unit
Account shall be paid as elected by the Participant pursuant to Article VIII
hereof, to the Participant's beneficiary or beneficiaries in accordance with the
last effective beneficiary designation form filed by the Participant with the
Committee. Each Participant shall file with the Committee a form indicating the
person, persons, or entity which are to receive the Participant's benefits under
the Plan if he dies before receiving all the balances in his Account, Gain Share
Account, and/or Restricted Stock Unit Account. A Participant's beneficiary
designation may be changed at any time prior to his death by execution and
delivery of a new beneficiary designation form. If a Participant has failed to
designate a beneficiary or no designated beneficiary survives the Participant,
payment shall be made in a lump sum to the Participant's surviving spouse. If
the Participant has no surviving spouse, the benefits remaining under the Plan
to be paid to a beneficiary shall be payable to the executor or personal
representative of the Participant's estate. A beneficiary who fails to survive a
Participant by at least 10 days shall be deemed to have predeceased the
Participant.

XI.   Effect of Disability of Participant

In the event of the Disability of a Participant, all amounts credited to the
Participant's Account, Gain Share Account and/or Restricted Stock Unit Account
and remaining unpaid on the date of the onset of the Disability shall be paid to
the Participant, in such form as elected by the Participant for each such
account, upon the earlier to occur of the Participant's attainment of the age of
55 with 10 years of service or the cessation of benefit payments to the
Participant under any Company long-term disability plan. For purposes of this
Article XI of the Plan, "Disability" shall mean the total and permanent
disability of a Participant, as determined under the terms of the long-term
disability plan of the Company then in effect, or in the absence of a long-term
disability plan, as determined by the Board, in its sole and absolute
discretion, and shall be deemed for purposes of this Plan to be a Termination of
Employment with PPD, Inc.

XII.  Benefit Plans

                                      -14-

<PAGE>

      A.    The amount of each Participant's compensation which he elects to
            defer under the Plan shall not be deemed to be compensation for the
            purpose of calculating the amount of a Participant's benefits or
            contributions under a pension plan or retirement plan (qualified
            under Section 401(a) of the Internal Revenue Code), but shall be
            deemed to be compensation for purpose of calculating the amount of a
            Participant's amount of life insurance under a Company-supplied life
            insurance plan, the basis for establishing disability payments under
            a disability plan or the basis or amount for any other
            Company-supplied benefit plan where the benefits are based upon an
            employee's compensation.

      B.    With respect to any benefit plan under which an Employee's
            contribution is based on the Employee's compensation, the amount of
            the Participant's contribution to any such plan shall not take into
            account the amount of the Participant's compensation deferred under
            this Plan unless otherwise specifically provided in such plan.

      C.    No amount distributed to a Participant from a Participant's Account,
            Gain Share Account, and/or Restricted Stock Unit Account under this
            Plan shall be deemed to be compensation with respect to a
            Participant's entitlement to benefits under any employee benefit
            plan established by the Company for its employees unless otherwise
            specifically provided in such plan.

XIII. Participant's Rights

Establishment of the Plan shall not be construed to give any Participant the
right to be retained in the Company's or an Affiliate's service or to any
benefits not specifically provided by the Plan. A Participant shall not have any
interest in the deferred compensation and earnings credited to his Account, Gain
Share Account, and/or Restricted Stock Unit Account until such accounts are
distributed in accordance with the Plan. All amounts deferred or otherwise held
for the account of a Participant under the Plan shall remain the sole property
of the Company, subject to the claims of its general creditors and available for
its use for whatever purposes are desired. With respect to amounts deferred or
otherwise held for the account of a Participant, the Participant is merely a
general creditor of the Company; and the obligation of the Company hereunder is
purely contractual and shall not be funded or secured in any way. At its
discretion, the Company may establish one or more grantor trusts to assist the
Company in accumulating the funds needed to meets its obligation under the Plan.

In case the claim of any Participant or beneficiary for benefits under the Plan
is denied, the Committee shall provide adequate notice in writing to such
claimant, setting forth the specific reasons for such denial. The notice shall
be written in a manner calculated to be understood by the claimant. The
Committee shall afford a Participant or beneficiary whose claim for benefits has
been denied 60 days from the date notice of such denial is delivered or mailed
in which to appeal the decision in writing to the Committee. If the Participant
or beneficiary appeals the decision in writing within 60 days, the Committee
shall review the written comments and any submissions of the Participant or
beneficiary and render its decision regarding the appeal all within 60 days of
such appeal.

                                      -15-

<PAGE>

XIV.  Non-alienability and Non-transferability

The rights of a Participant to the payment of deferred compensation as provided
in the Plan shall not be assigned, transferred, pledged or encumbered, or be
subject in any manner to alienation or anticipation. No Participant may borrow
against his Account, Gain Share Account, and/or Restricted Stock Unit Account.
No Account, Gain Share Account, and/or Restricted Stock Unit Account shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind,
whether voluntary or involuntary, including any liability which is for alimony
or other payments for the support of a spouse or former spouse, or for any other
relative of any Participant.

XV.    Statement of Account

Statements will be sent to Participants within 60 days after the end of each
calendar quarter as to the balance in their deferred compensation Accounts, Gain
Share Accounts, and/or Restricted Stock Unit Accounts as of the end of such
calendar quarter.

XVI.   Administration

The Administrator of the Plan shall be the Benefits Administrative Committee of
the Company or any successor committee (the "Committee"). The Committee shall
have authority to adopt rules and regulations for carrying out the Plan and to
interpret, construe, and implement the provisions thereof. Any decision or
interpretation of any provision of the Plan adopted by the Committee shall be
final and conclusive.

XVII.  Amendment and Termination

The Plan may, at any time, be amended, modified, or terminated by the Board of
Directors of the Company. No amendment, modification, or termination shall,
without the consent of a Participant, adversely affect such Participant's right
with respect to amounts accrued in his or her deferred compensation Account,
Gain Share Account, and/or Restricted Stock Unit Account.

XVIII. General Provisions

       A.    Notices. All notices to the Committee hereunder shall be delivered
             to the attention of the Secretary of the Committee. Any notice or
             filing required or permitted to be given to the Committee under
             this Plan shall be sufficient if in writing and hand delivered, or
             sent by registered or certified mail, to the Committee at the
             principal office of the Company. Such notice shall be deemed given
             as of the date of delivery or, if delivery is made by mail, as of
             the date shown on the postmark or the receipt for registration or
             certification.

       B.    Controlling Law. Except to the extent superseded by federal law,
             the laws of the state of North Carolina shall be controlling in all
             matters relating to the Plan.

       C.    Gender and Number. Where the context admits, words in the masculine
             gender shall include the feminine and neuter genders, the plural
             shall include the singular and the singular shall include the
             plural.

                                      -16-

<PAGE>

      D.    Captions. The captions of sections and paragraphs of this Plan are
            for convenience only and shall not control or affect the meaning of
            construction of any of its provisions.

      E.    Action by the Company. Any action required or permitted by the
            Company under the Plan shall be by resolution of its Board of
            Directors or any person or persons authorized by resolution of its
            Board of Directors.

      F.    Facility of Payment. Any amounts payable hereunder to any person
            under legal disability or who, in the judgment of the Committee is
            unable to properly manage his financial affairs may be paid to the
            legal representative of such person or may be applied for the
            benefit of such person in any manner which the Committee may select.

      G.    Withholding Payroll Taxes. To the extent required by the laws in
            effect at the time amounts are deferred or deferred compensation
            payments are made, the Company shall withhold (from other
            compensation in the case of deferrals) any taxes required to be
            withheld for federal, state, or local government purposes.

      H.    Severability. Whenever possible, each provision of the Plan shall be
            interpreted in such manner as to be effective and valid under
            applicable law (including the Internal Revenue Code), but if any
            provision of the Plan shall be held to be prohibited by or invalid
            under applicable law, then (a) such provision shall be deemed
            amended to, and to have contained from the outset such language as
            shall be necessary to, accomplish the objectives of the provision as
            originally written to the fullest extent permitted by law and (b)
            all other provisions of the Plan shall remain in full force and
            effect.

      I.    No Strict Construction. No rule of strict construction shall be
            applied against the Company, the Board of Directors, Committee or
            any other person in the interpretation of any of the terms of the
            Plan or any rule or procedure established by the Company or
            Committee.

      J.    Successors. The provisions of the Plan shall bind and inure to the
            benefit of the Company and its Affiliates and their successors and
            assigns. The term "successors" as used herein shall include any
            corporation or other business entity which shall by merger,
            consolidation, purchase, or otherwise, acquire all or substantially
            all of the business and assets of the Company and successors of any
            such corporation or other business entity.

XIX.  Unfunded State of the Plan

Any and all payments made to the Participant pursuant to the Plan shall be made
only from the general assets of the Company, or at the discretion of the
Company, such payments shall be made from a grantor trust established by the
Company. All accounts under the Plan shall be for bookkeeping purposes only and
shall not represent a claim against specific assets of the Company. Nothing
contained in this Plan shall be deemed to create a trust of any kind or create
any fiduciary relationship.

                                      -17-

<PAGE>

IN WITNESS WHEREOF, Pharmaceutical Product Development, Inc. has caused its
corporate seal to be hereunto affixed and has caused its name to be signed
hereto by its Chief Executive Officer and attested by its Secretary, pursuant to
due authority of its Board of Directors as of this 1st day of July, 2002.

                                   By:  /s/ Fredric N. Eshelman
                                        ----------------------------------------
                                        Chief Executive Officer
                                        Pharmaceutical Product Development, Inc.

(Corporate Seal)

Attest:

/s/ B. Judd Hartman
--------------------------------------
Secretary

                                      -18-

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