Document:

Ex-10.16 Amended and Restated 1999 Stock Plan

 

EXHIBIT 10.16

PHARMANET DEVELOPMENT GROUP, INC.

AMENDED AND RESTATED 1999 STOCK PLAN

     1. Purpose and Eligibility. This Stock Plan (the “Plan”) is intended to advance the interests
of PharmaNet Development Group, Inc., (the “Company”) and its Related Corporations, as defined
below, by enhancing the ability of the Company to attract and retain qualified employees,
consultants, Officers; as defined below, and directors, by creating incentives and rewards for
their contributions to the success of the Company and its Related Corporations. This Plan will
provide to (a) Officers and other employees of the Company and its Related Corporations
opportunities to purchase common stock (“Common Stock”) of the Company pursuant to Options granted
hereunder which qualify as incentive stock options (“ISOs”) under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the “Code”), (b) directors, Officers, employees and consultants
of the Company and Related Corporations opportunities to purchase Common Stock in the Company
pursuant to options granted hereunder which do not qualify as ISOs (“Non-Qualified Options”); (c)
directors, Officers, employees and consultants of the Company and Related Corporations
opportunities to receive shares of Common Stock of the Company (“Awards”); (d) directors,
Officers, employees and consultants of the Company and Related Corporations opportunities to
receive grants of stock appreciation rights (“SARs”); (e) directors, Officers, employees and
consultants of the Company and Related Corporations opportunities to receive grants of restricted
stock units (“RSUs”); and (f) non-employee directors of the Company and Related Corporations
opportunities to purchase Common Stock in the Company pursuant to options granted hereunder
(“Non-Discretionary Options”). ISOs, Non-Discretionary Options and Non-Qualified Options are
referred to hereafter as “Options.” Options, Awards, RSUs and SARs are sometimes referred to
hereafter collectively as “Stock Rights.” Any of the Options and/or Stock Rights may in the
Committee’s discretion be issued in tandem to one or more other Options and/or Stock Rights to the
extent permitted by law.

     For purposes of the Plan, the term “Related Corporations” shall mean a corporation which is a
subsidiary corporation with respect to the Company within the meaning of Section 425(f) of the
Code.

     This Plan is intended to comply in all respects with Rule 16b-3 and its successor rules as
promulgated under Section 16(b) of the Securities Exchange Act of 1934 (“Rule 16b-3”) for
participants who are subject to Section 16 of the Securities Exchange Act of 1934 (the “Exchange
Act”). To the extent any provision of the Plan or action by the Plan administrators fails to so
comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by
the Plan administrators. Provided, however, such exercise of discretion by the Plan
administrators shall not interfere with the contract rights of any grantee. In the event that any
interpretation or construction of the Plan is required, it shall be interpreted and construed in
order to ensure, to the maximum extent permissible by law, that such grantee does not violate the
short-swing profit provisions of Section 16(b) of the Exchange Act and that any exemption
available under Rule 16b-3 or other rule is available.

     2. Administration of the Plan.

 

 

          (a) The Plan may be administered by the entire board of directors of the Company (the
“Board”) or by a committee as defined below (the “Committee”). If the Company is subject to the
provisions of the Exchange Act, the Committee shall consist of two or more members of the Board,
each of whom shall be both an “outside director” within the meaning of Section 162(m) of the Code
and a “non-employee director” within the meaning of Rule 16b-3. Once appointed, such Committee
shall continue to serve until otherwise directed by the Board. A majority of the members of any
such Committee shall constitute a quorum, and all determinations of the Committee shall be made by
the majority of its members present at a meeting. Any determination of the Committee under the
Plan may be made without notice or meeting of the Committee by a writing signed by all of the
Committee members. Subject to ratification of the grant of each Option by the Board (but only if
so required by applicable state law), and subject to the terms of the Plan, the Committee shall
have the authority to (i) determine the employees of the Company and Related Corporations (from
among the class of employees eligible under Section 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and entities eligible under Section
3 to receive Non-Qualified Options, Awards and SARs) to whom Non-Qualified Options, Awards and
SARs may be granted; (ii) determine when Stock Rights may be granted; (iii) determine the exercise
prices of Stock Rights other than Awards, which shall not be less than the fair market value
defined by Section 7; (iv) determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) except for Non-Discretionary Options, determine (subject to Section 6)
when Stock Rights shall become exercisable, the duration of the exercise period and when each
Stock Right shall vest; (vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to or issued in connection with Stock Rights, and the nature of such
restrictions, if any, and (vii) interpret the Plan and promulgate and rescind rules and
regulations relating to it. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final, binding and conclusive unless
otherwise determined by the Board. The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem best.

          No members of the Committee or the Board shall be liable for any action or determination made
in good faith with respect to the Plan or any Stock Right granted under it. No member of the
Committee or the Board shall be liable for any act or omission of any other member of the
Committee or the Board or for any act or omission on his own part, including but not limited to
the exercise of any power and discretion given to him under the Plan, except those resulting from
his own gross negligence or willful misconduct.

          (b) The Committee may select one of its members as its chairman and shall hold meetings at
such time and places as it may determine. All references in this Plan to the Committee shall mean
the Board if no Committee has been appointed. From time to time the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused or remove all members
of the Committee and thereafter directly administer the Plan.

          (c) Stock Rights may be granted to members of the Board, whether such grants are in their
capacity as directors, Officers or consultants. All grants of Stock Rights to

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members of the Board shall in all other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible
for Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on any
matters affecting the administration of the Plan or the grant of any Stock Rights pursuant to the
Plan.

          (d) In addition to such other rights of indemnification as he may have as a member of the
Board, and with respect to administration of the Plan and the granting of Stock Rights under it,
each member of the Board and of the Committee shall be entitled without further act on his part to
indemnification from the Company for all expenses (including advances of litigation expenses, the
amount of judgment and the amount of approved settlements made with a view to the curtailment of
costs of litigation) reasonably incurred by him in connection with or arising out of any action,
suit or proceeding, including any appeal thereof, with respect to the administration of the Plan
or the granting of Stock Rights under it in which he may be involved by reason of his being or
having been a member of the Board or the Committee, whether or not he continues to be such member
of the Board or the Committee at the time of the incurring of such expenses; provided,
however, that such indemnity shall not include any expenses incurred by such member of the
Board or the Committee (i) in respect of matters as to which he shall be finally adjudged in such
action, suit or proceeding to have been guilty of or liable for gross negligence or willful
misconduct in the performance of his duties as a member of the Board or the Committee; (ii) in
respect of any matter in which any settlement is effected to an amount in excess of the amount
approved by the Company on the advice of its legal counsel or (iii) arising from any action in
which person asserts a claim against the Company whether such claim is termed a complaint,
counterclaim, cross-claim, third party complaint or otherwise and provided further that no right
of indemnification under the provisions set forth herein shall be available to any such member of
the Board or the Committee unless within 10 days after institution of any such action, suit or
proceeding he shall have offered the Company in writing the opportunity to handle and defend such
action, suit or proceeding at its own expense. The foregoing right of indemnification shall inure
to the benefit of the heirs, executors or administrators of each such member of the Board or the
Committee and shall be in addition to all other rights to which such member of the Board or the
Committee would be entitled to as a matter of law, contract or otherwise. Provided,
however, the exception in Section 2(d) (iii) shall not apply to an action for indemnification
under circumstances where the Company has failed to provide indemnification to the Board or
Committee member which indemnification is required by this Plan.

          (e) The Board may delegate the powers to grant Stock Rights to executive Officers to the
extent permitted by Delaware law.

     3. Eligible Employees and Others.

          (a) ISOs may be granted to any employee of the Company or any Related Corporation. Those
Officers and directors of the Company who are not employees may not be granted ISOs under the
Plan. Subject to compliance with Rule 16b-3 and other applicable securities laws, Non-Qualified
Options, Awards and SARs may be granted to any director (whether or not an employee), Officers,
employee or consultant of the Company or any Related Corporation. The Committee may take into
consideration a recipient’s individual circumstances

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in determining whether to grant an ISO, a Non-Qualified Option, an Award or a SAR. Granting
of any Stock Right to any individual or entity shall neither entitle that individual or entity to,
nor disqualify him from participation in, any other grant of Stock Rights.

          (b) All directors of the Company who are not employees or 10% stockholders of the Company or
Related Corporations shall automatically receive 15,000 Non-Qualified Options (i) upon election or
appointment to the Board; and (ii) after all Common Stock grants and Non-Qualified Options
previously granted pursuant to this Section 3(b) have vested if vesting occurs during the term of
office of such directors.

               (1) The exercise price of the Options shall be fair market value as defined by Section 7 or
such higher price as may be established by an amendment to this Plan.

               (2) The Options granted under Section 3(b) shall vest in six equal increments of 7,500
Options per director on each June 30 and December 31, provided that the director is still
serving as a director of the Company on the applicable vesting date. To the extent that any
Options which have not been exercised do not vest, the Options shall lapse.

          (c) The Options shall be exercisable for a period of five years from the date of grant,
except where the Board or Committee selects a shorter period at the time of any discretionary
grant.

          (d) The “formula” grant contained in Section 3(b) above shall not be amended more than once
every six months, other than to comport with changes in the Code or other applicable laws.

     4. Common Stock. The Common Stock subject to Stock Rights shall be authorized but unissued
shares of Common Stock, par value $0.001, or shares of Common Stock reacquired by the Company in
any manner, including purchase, forfeiture or otherwise. The aggregate number of shares of Common
Stock which may be issued pursuant to the Plan is 3,150,000 subject to adjustment as provided in
Section 14, and less all Options outstanding as of the date this Plan is approved by the Company’s
stockholders and Options previously exercised under the Second Amended and Restated 1999 Stock
Option Plan. Any such shares may be issued under ISOs, Non-Qualified Options, Awards, RSUs or
SARs, so long as the number of shares so issued does not exceed the limitations in this Section.
If any Stock Rights granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole or in part, or if
the Company shall reacquire any unvested shares, the unpurchased shares subject to such Stock
Rights and any unvested shares so reacquired by the Company shall again be available for grants
under the Plan.

     5. Granting of Stock Rights.

          (a) Stock Rights may be granted under the Plan at any time on and after the approval of
this Plan by the Company’s stockholders. The date of grant of a Stock Right under the Plan will
be the date specified by the Committee at the time it grants the Stock Right; provided,
however, that such date shall not be prior to the date on which the Committee acts to

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approve the grant. The Committee shall have the right, with the consent of the optionee, to
convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Section 17.

          (b) The Committee shall grant Stock Rights to participants that it, in its sole discretion,
selects. Stock Rights shall be granted on such terms as the Committee shall determine except that
ISOs shall be granted on terms that comply with the Code and regulations thereunder.

          (c) A SAR entitles the holder to receive, in cash or in shares of Common Stock, value equal
to (or otherwise based on) the excess of: (a) the fair market value of a specified number of
shares of Common Stock at the time of exercise over (b) an exercise price established by the
Committee. The exercise price of each SAR granted under this Plan shall be established by the
Committee or shall be determined by a method established by the Committee at the time the SAR is
granted, provided the exercise price shall not be less than 100% of the fair market value of a
share of Common Stock on the date of the grant of the SAR, or such higher price as is established
by the Committee. A SAR shall be exercisable in accordance with such terms and conditions and
during such periods as may be established by the Committee. Shares of Common Stock delivered
pursuant to the exercise of a SAR shall be subject to such conditions, restrictions and
contingencies as the Committee may establish in the applicable SAR agreement or document, if any.
Settlement of SARs may be made in shares of Common Stock (valued at their fair market value at the
time of exercise), in cash, or in a combination thereof, as determined in the discretion of the
Committee. The Committee, in its discretion, may impose such conditions, restrictions and
contingencies with respect to shares of Common Stock acquired pursuant to the exercise of each SAR
as the Committee determines to be desirable. A SAR under the Plan shall be subject to such terms
and conditions, not inconsistent with the Plan, as the Committee shall, in its discretion,
prescribe. The terms and conditions of any SAR to any grantee shall be reflected in such form of
agreement or document as is determined by the Committee. A copy of such document, if any, shall be
provided to the grantee, and the Committee may require that the grantee execute such agreement or
document prior to granting the SAR to such person.

          (d) An RSU gives the grantee the right to receive an amount in cash or shares of the
Company’s Common Stock on applicable vesting or other dates, equal to the fair market value of one
share of the Common Stock of the Company. RSUs may be issued either alone, in addition to, or in
tandem with other Stock Rights granted under the Plan. After the Committee determines that it will
grant RSUs under the Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the Restricted Unit Period (as defined below)
applicable to the imposition, if any, of any performance-based condition or other restriction on
the RSUs, the number of RSUs that such person shall be entitled to and the time within which such
person must accept such offer, which shall in no event exceed 30 days from the date upon which the
Committee made the determination to grant the RSUs. The offer shall be accepted by execution of an
RSU agreement in the form determined by the Committee. With respect to an RSU, which becomes
non-forfeitable due to the lapse of time, the Committee shall prescribe in the RSU agreement, the
period in which such restricted Common Stock becomes no longer forfeitable (the “Restricted Unit
Period”). With respect to the granting of the RSU, which becomes non-forfeitable due to the
satisfaction of certain pre-established performance-based objectives imposed by the Committee, the
measurement date of whether such performance-based objectives have been satisfied shall be a date
no earlier than the first anniversary of the date of

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the RSU. A recipient who is granted an RSU shall possess no incidents of ownership with
respect to such underlying Common Stock; provided that the RSU agreement may provide for payments
in lieu of dividends to such grantee. The RSU agreement shall contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the Committee in its sole
discretion. In addition, the provisions of RSU agreements need not be the same with respect to
each grantee.

          (e) Notwithstanding any provision of this Plan, the Committee may impose conditions and
restrictions on any grant of Stock Rights including forfeiture of vested Options, cancellation of
Common Stock acquired in connection with any Stock Right and forfeiture of profits.

          (f) The Stock Rights shall not be exercisable for a period of more than ten years from the
date of grant.

     6. Sale of Shares. Any shares of the Company’s Common Stock acquired pursuant to Stock Rights
granted hereunder shall not be sold to any person subject to Section 16 under the Exchange Act
until at least six months elapse from the date of acquisition of such Stock Rights. Nothing in
this Section 6 shall be deemed to reduce the holding period set forth under the applicable
securities laws.

     7. ISO Minimum Option Price and Other Limitations.

          (a) The exercise price per share relating to all Options granted under the Plan shall not be
less than the fair market value per share of Common Stock on the last trading day prior to the
date of such grant. For purposes of determining the exercise price, the date of the grant shall be
the later of (i) the date of approval by the Committee or the Board, or (ii) for ISOs, the date
the recipient becomes an employee of the Company. In the case of an ISO to be granted to an
employee owning Common Stock which represents more than 10 percent of the total combined voting
power of all classes of stock of the Company or any Related Corporation, the price per share shall
not be less than 110 percent of the fair market value per share of Common Stock on the date of
grant and such ISO shall not be exercisable after the expiration of five years from the date of
grant.

          (b) In no event shall the aggregate fair market value (determined at the time an ISO is
granted) of Common Stock for which ISOs granted to any employee are exercisable for the first time
by such employee during any calendar year (under all stock option plans of the Company and any
Related Corporation) exceed $100,000.

          (c) “Fair market value” shall be determined as of the last trading day prior to the date such
Option is granted and shall mean:

               (1) the closing price on the principal market if the Common Stock is listed on a national
securities exchange, the Nasdaq Stock Market (“Nasdaq”) or the National Association of
Securities Dealers, Inc.’s Over-the-Counter Bulletin Board (the “Bulletin Board”);

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               (2) if the Company’s shares are not listed on a national securities exchange, Nasdaq or the
Bulletin Board, then the closing price if reported or the average bid and asked price for the
Company’s shares as listed in the National Quotation Bureau’s “pink sheets”;

               (3) if there are no prices available under Section 7(c)(1) or (2), then fair market value
shall be based upon the average closing bid and asked price as determined following a polling of
all dealers making a market in the Company’s Common Stock; or

               (4) if there is no regularly established trading market for the Company’s Common Stock, the
fair market value shall be established by the Board or the Committee taking into consideration all
relevant factors including the most recent price at which the Company’s Common Stock was sold.

     8. Duration of Stock Rights. Subject to earlier termination as provided in Sections 5, 9, 10
and 11, each Stock Right shall expire on the date specified in the original instrument granting
such Stock Right (except with respect to any part of an ISO that is converted into a Non-Qualified
Option pursuant to Section 17), provided, however, that such instrument must comply with
Section 422 of the Code with regard to ISOs and Rule 16b-3 with regard to all Stock Rights granted
pursuant to the Plan to Officers, directors and 10% stockholders of the Company.

     9. Exercise of Options and SARs; Vesting of Stock Rights. Subject to the provisions of
Sections 3(b) and 9 through 13, each Option granted under the Plan shall be exercisable as
follows:

          (a) The Options and SARs shall either be fully vested and exercisable from the date of grant
or shall vest and become exercisable in such installments as the Committee may specify.

          (b) Once an installment becomes exercisable it shall remain exercisable until expiration or
termination of the Option and SAR, unless otherwise specified by the Committee.

          (c) Each Option and SAR or installment, once it becomes exercisable, may be exercised at any
time or from time to time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable.

          (d) The Committee shall have the right to accelerate the vesting date of any installment of
any Stock Right; provided that the Committee shall not accelerate the exercise date of any
installment of any Option granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to Paragraph 17) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code as described in Section 7(b).

     10. Termination of Employment. Subject to any greater restrictions or limitations as may be
imposed by the Committee upon the granting of any Option, if an ISO optionee ceases to

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be employed by the Company and all Related Corporations other than by reason of death or
disability as defined in Section 11, no further installments of his ISOs shall become exercisable,
and his ISOs shall terminate as provided for in the grant or on the day three months after the day
of the termination of his employment, whichever is earlier, but in no event later than on their
specified expiration dates, except to the extent that such ISOs (or unexercised installments
thereof) have been converted into Non-Qualified Options pursuant to Section 17. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided that the period of
such leave does not exceed 90 days or, if longer, any period during which such optionee’s right to
re-employment is guaranteed by statute. A leave of absence with the written approval of the
Company’s Board shall not be considered an interruption of employment under the Plan, provided
that such written approval contractually obligates the Company or any Related Corporation to
continue the employment of the optionee after the approved period of absence. ISOs granted under
the Plan shall not be affected by any change of employment within or among the Company and Related
Corporations so long as the optionee continues to be an employee of the Company or any Related
Corporation.

     11. Death; Disability. Subject to any greater restrictions or limitations as may be imposed
by the Committee upon the granting of any Option:

          (a) If the holder of an Option or SAR ceases to be employed by the Company and all Related
Corporations by reason of his death, any Options or SARs of such employee may be exercised to the
extent of the number of shares with respect to which he could have exercised it on the date of his
death, by his estate, personal representative or beneficiary who has acquired the Options or SARs
by will or by the laws of descent and distribution, at any time prior to the earlier of the Option
or SARs specified expiration date or three months from the date of the employee’s death.

          (b) If the holder of an Option or SAR ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise any Option or SARs
held by him on the date of termination of employment until the earlier of (i) the Options or SARs
specified expiration date or (ii) one year from the date of the termination of the person’s
employment. For the purposes of the Plan, the term “disability” shall mean “permanent and total
disability” as defined in Section 22(e)(3) of the Code or successor statute.

     12. Assignment, Transfer or Sale.

          (a) No ISO granted under this Plan shall be assignable or transferable by the grantee except
by will or by the laws of descent and distribution, and during the lifetime of the grantee, each
ISO shall be exercisable only by him, his guardian or legal representative.

          (b) The shares underlying Stock Rights granted to any Officers, director or a beneficial
owner of 10% or more of the Company’s securities registered under Section 12 of the Exchange Act
(“10% Owner”) shall not be sold, assigned or transferred by the grantee until at least six months
elapse from the date of the grant thereof.

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          (c) Notwithstanding (b) above, any Officer, director or 10% Owner may transfer Stock Rights
other than ISOs to members of his or her immediate family (i.e. children, grandchildren or
spouse), to trusts for the immediate benefit of such family members and to partnerships or limited
liability companies in which such family members are the only partners or members, upon approval
of the Committee so long as no consideration is received for the transfer.

     13. Terms and Conditions of Stock Rights. Stock Rights shall be evidenced by instruments
(which need not be identical) in such forms as the Committee may from time to time approve. Such
instruments shall conform to the terms and conditions set forth in Sections 5 through 12 hereof
and may contain such other provisions as the Committee deems advisable which are not inconsistent
with the Plan. In granting any Stock Rights, the Committee may specify that Stock Rights shall be
subject to the restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one or more Officers
of the Company to execute and deliver such instruments. The proper Officers of the Company are
authorized and directed to take any and all action necessary or advisable from time to time to
carry out the terms of such instruments.

     14. Adjustments Upon Certain Events.

          (a) Subject to any required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Stock Right, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no Stock Rights have yet
been granted or which have been returned to the Plan upon cancellation or expiration of a Stock
Right, as well as the price per share of Common Stock (or cash, as applicable) covered by each such
outstanding Stock Right, shall be proportionately adjusted for any increases or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company shall not be deemed
to have been “effected without receipt of consideration.” Such adjustment shall be made by the
Committee, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock subject to a
Stock Right. No adjustments shall be made for dividends or other distributions paid in cash or in
property other than securities of the Company.

          (b) In the event of the proposed dissolution or liquidation of the Company, the Committee
shall notify each Participant as soon as practicable prior to the effective date of such proposed
transaction. To the extent it has not been previously exercised, a Stock Right will terminate
immediately prior to the consummation of such proposed action.

          (c) In the event of a merger of the Company with or into another corporation, or a “Change in
Control” (as defined below), each outstanding Stock Right shall be assumed (as

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defined below) or an equivalent option or right substituted by the successor corporation or a
parent or subsidiary of the successor corporation. In the event that the successor corporation
refuses to assume or substitute for the Stock Rights, the Participants shall fully vest in and have
the right to exercise their Stock Rights, including shares or cash as to which it would not
otherwise be vested or exercisable. If a Stock Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the Committee shall
notify the Participant in writing or electronically that the Stock Right shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and the Stock Right
shall terminate upon the expiration of such period.

          For the purposes of this subsection (c), “Change in Control” means the occurrence of any of
the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities; (ii) the
consummation of the sale or disposition by the Company of all or substantially all of the Company’s
assets; or (iii) the consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting securities of the
Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation.

          For the purposes of this subsection (c), the Stock Right shall be considered “assumed” if,
following the merger or Change in Control, the option or right confers the right to purchase or
receive, for each share of Common Stock subject to the Stock Right immediately prior to the merger
or Change in Control, the consideration (whether stock, cash, or other securities or property)
received in the merger or Change in Control by holders of Common Stock for each share held on the
effective date of the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in the merger or Change in Control is not solely common stock
of the successor corporation or its parent, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of the Stock Right, for
each share of Common Stock subject to the Stock Right, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or Change in Control.

          (d) Notwithstanding the foregoing, any adjustments made pursuant to Section 14(a), (b) or (c)
with respect to ISOs shall be made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a “modification” of such ISOs (as
that term is defined in Section 425(h) of the Code) or would cause any adverse tax consequences for
the holders of such ISOs. If the Committee determines that such adjustments made with respect to
ISOs would constitute a modification of such ISOs it may refrain from making such adjustments.

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          (e) No fractional shares shall be issued under the Plan and the optionee shall receive from
the Company cash in lieu of such fractional shares.

     15. Means of Exercising Stock Rights.

          (a) A Stock Right (or any part or installment thereof) shall be exercised by giving written
notice to the Company at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is being exercised,
accompanied by full payment of the exercise price therefor either (i) in United States dollars by
check or wire transfer; or (ii) at the discretion of the Committee, through delivery of shares of
Common Stock having a fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right; or (iii) at the discretion of the Committee, by any combination of (i),
(ii) and (iii) above. If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (ii), (iii) or (iv) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant of the Stock
Right in question. The holder of a Stock Right shall not have the rights of a stockholder with
respect to the shares covered by his Stock Right until the date of issuance of a stock certificate
to him for such shares. Except as expressly provided above in Section 14 with respect to changes
in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights
for which the record date is before the date such stock certificate is issued.

          (b) Each notice of exercise shall, unless the shares of Common Stock are covered by a then
current registration statement under the Securities Act of 1933, as amended (the “Act”), contain
the holder’s acknowledgment in form and substance satisfactory to the Company that (i) such shares
are being purchased for investment and not for distribution or resale (other than a distribution
or resale which, in the opinion of counsel satisfactory to the Company, may be made without
violating the registration provisions of the Act), (ii) the holder has been advised and
understands that (1) the shares have not been registered under the Act and are “restricted
securities” within the meaning of Rule 144 under the Act and are subject to restrictions on
transfer and (2) the Company is under no obligation to register the shares under the Act or to
take any action which would make available to the holder any exemption from such registration, and
(iii) such shares may not be transferred without compliance with all applicable federal and state
securities laws. Notwithstanding the above, should the Company be advised by counsel that issuance
of shares should be delayed pending registration under federal or state securities laws or the
receipt of an opinion that an appropriate exemption therefrom is available, the Company may defer
exercise of any Stock Right granted hereunder until either such event has occurred.

     16. Term, Termination and Amendment.

          (a) This Plan was adopted by the Board, but is subject to stockholder approval. This Plan if
approved by the Company’s stockholders, amends and supersedes the Company’s Second Amended and
Restated 1999 Stock Plan.

11

 

          (b) The Board may terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate ten (10) years from the earlier of the date the Plan is adopted by the Board or the date
the Plan received stockholder approval. No Stock Rights may be granted under the Plan while the
Plan is terminated. Termination of the Plan shall not impair rights and obligations under any
Stock Right granted while the Plan is in effect, except with the written consent of the grantee.

          (c) The Board at any time, and from time to time, may amend the Plan. However, except as
provided in Section 14 relating to adjustments in Common Stock, no amendment shall be effective
unless approved by the stockholders of the Company to the extent (i) stockholder approval is
necessary to satisfy the requirements of Section 422 of the Code or (ii) required by the rules of
the principal national securities exchange or trading market upon which the Company’s Common Stock
trades. Rights under any Stock Rights granted before amendment of the Plan shall not be impaired by
any amendment of the Plan, except with the written consent of the grantee.

          (d) The Board at any time, and from time to time, may amend the terms of any one or more Stock
Rights; provided, however, that the rights under the Stock Right shall not be impaired by any such
amendment, except with the written consent of the grantee.

     17. Conversion of ISOs into Non-Qualified Options; Termination of ISOs. The Committee, at the
written request of any optionee, may in its discretion take such actions as may be necessary to
convert such optionee’s ISOs (or any installments or portions of installments thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of the Company or a
Related Corporation at the time of such conversion.  Provided, however, the
Committee shall not reprice the Options or extend the exercise period or reduce the exercise price
of the appropriate installments of such Options without the approval of the Company’s
stockholders. At the time of such conversion, the Committee (with the consent of the optionee) may
impose such conditions on the exercise of the resulting Non-Qualified Options as the Committee in
its discretion may determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have such optionee’s
ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the
Committee takes appropriate action. The Committee, with the consent of the optionee, may also
terminate any portion of any ISO that has not been exercised at the time of such termination.

     18. Application of Funds. The proceeds received by the Company from the sale of shares
pursuant to Stock Rights granted under the Plan shall be used for general corporate purposes.

     19. Governmental Regulations. The Company’s obligation to sell and deliver shares of the
Common Stock under this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.

12

 

     20. Tax Withholding.

     A. The Company’s obligation to deliver shares of Common Stock upon the issuance, exercise or
vesting of Stock Rights (such term includes options, stock appreciation rights, restricted stock
awards and restricted stock units) under the Plan shall be subject to the satisfaction of all
applicable income and employment tax withholding requirements.

     B. The Committee may, in its discretion, provide any or all Optionees and Participants to whom
Stock Rights are granted under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such individuals may become subject
in connection with the issuance, exercise or vesting of those Stock Rights. Such right may be
provided to any such holder in either or both of the following formats:

          Stock Withholding: The election to have the Company withhold, from the shares of
Common Stock otherwise issuable upon the issuance, exercise or vesting of such Stock Rights, a
portion of those shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by such individual. The
shares of Common Stock so withheld shall reduce the number of shares of Common Stock authorized for
issuance under the Plan.

          Stock Delivery: The election to deliver to the Company, at the time of the issuance,
exercise or vesting of the Stock Rights, one or more shares of Common Stock previously acquired by
such holder (other than in connection with the issuance exercise or vesting of the shares
triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the individual. The
shares of Common Stock so delivered shall not be added to the shares of Common Stock authorized for
issuance under the Plan.

     C. For purposes of this Section 20, the term Withholding Taxes shall mean the applicable
income and employment withholding taxes which the Company must collect from the Optionee or
Participant in connection with the issuance, exercise or vesting of the Stock Rights granted to
him or her under the Plan.

     21. Notice to Company of Disqualifying Disposition. Each employee who receives an ISO must
agree to notify the Company in writing immediately after the employee makes a Disqualifying
Disposition of any Common Stock acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such Common Stock before the later of (i)
two years after the date of employee was granted the ISO or (ii) one year after the date the
employee acquired Common Stock by exercising the ISO. If the employee has died before such stock
is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

     22. Continued Employment. The grant of a Stock Right pursuant to the Plan shall not be
construed to imply or to constitute evidence of any agreement, express or implied, on the part of
the Company or any Related Corporation to retain the grantee in the employ of the Company or a
Related Corporation, as a member of the Company’s Board or in any other capacity, whichever the
case may be.

13

 

     23. Governing Law; Construction. The validity and construction of the Plan and the
instruments evidencing Stock Rights shall be governed by the laws of the State of Delaware. In
construing this Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.

     24. Forfeiture of Stock Rights. Notwithstanding any other provision of this Plan, all
vested Stock Rights shall be immediately forfeited in the event of:

          (a) Termination of the relationship with the grantee for cause including, but not limited to,
fraud, theft, dishonesty and violation of Company policy;

          (b) Purchasing or selling securities of the Company without written authorization in
accordance with the Company’s inside information guidelines then in effect;

          (c) Breaching any duty of confidentiality including that required by the Company’s inside
information guidelines then in effect;

          (d) Competing with the Company;

          (e) Failure to execute the Company’s standard stock option agreement, or applicable SAR
agreement or document; or

          (f) A finding by the Company’s board of directors that grantee has acted against the
interests of the Company.

14Ex-10.18 Audit Committee Charter

 

EXHIBIT 10.18

The Audit Committee Charter

of

PharmaNet Development Group, Inc.

 

As originally approved by the Board of Directors

of

PharmaNet Development Group, Inc.

on

February 19, 2004 and as amended on August 24, 2006

1. Statement of Purpose and Policy

     There shall be a committee of the board of directors of PharmaNet Development Group, Inc. (the
“Company”) to be known as the Audit Committee. The Audit Committee is appointed by the board to
assist the board in monitoring (1) the integrity of the financial statements of the Company, (2)
the independent auditor’s qualifications and independence, (3) the performance of the Company’s
internal audit function and independent auditors, and (4) the compliance by the Company with legal
and regulatory requirements. The Audit Committee shall also be responsible for engaging and firing
the Company’s independent registered public accounting firm.

     The Audit Committee shall fulfill its oversight responsibility to the stockholders relating to
the annual independent audit of the Company’s financial statements, the internal financial
reporting practices of the Company, any special audits, and the quality and integrity of the
financial statements of the Company. In addition, the Audit Committee shall provide assistance
with regard to the systems of internal accounting and financial controls, disclosure controls, and
the legal compliance and ethics programs as established by management and the board. In so doing,
it is the responsibility of the Audit Committee to maintain free and open means of communication
between the directors, the independent auditors, and the financial management of the Company. The
Audit Committee, as representatives of the stockholders, is charged with the ultimate authority and
responsibility to select, evaluate, and where appropriate, replace the Company’s independent
auditors.

2. Organization

     (a) The Audit Committee shall have at least three members, comprised solely of Independent
Directors (as defined in Section 2(b) below), each of whom is able to read and understand
fundamental financial statements, including the Company’s balance sheet, income statement, and cash
flow statement, and at least one of whom is an Audit Committee Financial Expert (as defined in
Section 2(c) below).

     (b) Independent Directors shall not be officers or employees or affiliated persons of the
Company or its subsidiaries or any other individual having a relationship, which would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director. The
following persons shall not be considered independent:

 

 

     (i) a director who has been employed by the Company or any of its affiliates for
the current year or any of the past three completed fiscal years;

     (ii) a director who during the current fiscal year has accepted any compensation
from the Company or any of its affiliates, other than compensation for board or
committee service, or who during any of the past three completed fiscal years has
received compensation from the Company or any of its affiliates, other than compensation
for board or committee service, in excess of $60,000;

     (iii) a director who is a member of the immediate family of an individual who is,
or has been in any of the past three completed fiscal years, employed by the Company or
any of its affiliates as an executive officer. Immediate family includes a person’s
spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law,
sister-in-law, son-in-law, daughter-in-law, and anyone who resides in such person’s
home;

     (iv) a director who is a partner in, or a controlling shareholder or an executive
officer of, any for-profit business organization to which the Company made, or from
which the Company received, payments (other than those arising solely from investments
in the corporation’s securities) that exceed 5% of the Company’s or business
organization’s consolidated gross revenues for that year, or $200,000, whichever is
more, in the current year or any of the past three completed fiscal years;

     (v) a director who is employed as an executive of another entity where any of the
Company’s executives serve on that entity’s compensation committee; or

     (vi) a director who was a partner or employed by the Company’s independent auditor
during the current year or any of the past three completed fiscal years.

     (c) An Audit Committee Financial Expert shall mean a person who has the following attributes:

     (i) An understanding of generally accepted accounting principles and financials
statements;

     (ii) The ability to assess the general application of such principles in connection
with the accounting for estimates, accruals and reserves;

     (iii) Experience preparing, auditing, analyzing, or evaluating, financial
statements that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can reasonably be
expected to be raised by the Company’s financial statements, or experience actively
supervising one or more persons engaged in such activities; or

     (iv) An understanding of internal controls and procedures for financial reporting;
and

 

 

     (v) An understanding of Audit Committee functions.

     (d) A person shall have acquired such attributes through:

     (i) Education and experience as a principal financial officer, principal accounting
officer, controller, public accountant, or auditor, or experience in one or more
positions that involve the performance of similar functions;

     (ii) Experience actively supervising a principal financial officer, principal
accounting officer, controller, public accountant, auditor, or person performing similar
functions;

     (iii) Experience overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing, or evaluation of financial
statements; or

     (iv) Other relevant experience.

3. Responsibilities

     In carrying out its responsibilities hereunder, the Audit Committee’s policies and procedures
should remain flexible, in order to best react to changing conditions and to ensure to the
directors and stockholders that the corporate accounting and reporting practices of the Company are
in accordance with all current requirements and are of the highest quality. The Audit Committee
shall review and reassess the adequacy of this charter in meeting these objectives on an annual
basis.

     In carrying out these responsibilities, the Audit Committee shall:

     (i) As a committee of the board of directors, appoint, rotate lead audit partners
(to the extent required by law or deemed prudent to ensure independence), and determine
the compensation of, and oversee the work of the independent auditors of the Company;

     (ii) Approve, in advance, the provision by the independent auditors of any and all
permissible non-audit services, and require the provision of any such non-audit services
be disclosed in periodic reports filed by the Company with the Securities and Exchange
Commission subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended;

     (iii) Meet with the independent auditors and financial management of the Company to
review the scope of the proposed audit for the current year and the audit procedures to
be utilized, and at the conclusion thereof review such audit, including any comments or
recommendations of the independent auditors;

     (iv) Review with the independent auditors and the Company’s financial and
accounting management, the adequacy and effectiveness of the accounting and

 

 

financial controls of the Company, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis should be given to
the adequacy of such internal controls to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper;

     (v) Have the sole authority to review and approve all related party transactions
between the Company or any subsidiary and any executive officer, director or affiliate
of the Company, including persons or entities controlled by or under common control with
such executive officers, directors or affiliates, and such other persons or entities
described in SEC Regulation S-K, Item 404;

     (vi) Establish procedures for the receipt, retention, and treatment of complaints
regarding accounting, internal controls, and Audit Committee matters. These procedures
shall provide for the confidential and anonymous submission of complaints;

     (vii) Require the independent auditors to report to the Audit Committee the
critical accounting policies and practices to be used, all alternative treatments of
financial information within Generally Accepted Accounting Principles that have been
discussed with management, the ramifications of the use of such alternative disclosures
and treatments, the treatment preferred by the independent auditor, any accounting
disagreements between the independent auditors and management, and all other material
written communications between the independent auditors and management, such as any
management letter or schedule of unadjusted differences;

     (viii) Review the financial statements to be included in the Annual Report on Form
10-K, and the disclosures made in management’s discussion and analysis, with management
and the independent auditors to determine that the independent auditors are satisfied
with the disclosure and content of the financial statements, and to recommend to the
board whether the audited financial statements should be included in the Annual Report.
Any changes in accounting procedures should be explained in the Annual Report;

     (ix) Review the interim financial statements, management’s discussion and analysis,
and earnings releases with management and the independent auditors prior to the filing
of the Company’s Quarterly Report on Form 10-Q. The Audit Committee will recommend to
the board whether the interim financial statements should be included in the Quarterly
Report. Also, the Audit Committee shall discuss the results of the quarterly review and
any other matters required to be communicated to the Audit Committee by the independent
auditors under generally accepted auditing standards. The chair of the Audit Committee
may represent the entire committee for the purposes of this review;

     (x) Provide sufficient opportunity for the independent auditors to meet with the
members of the Audit Committee without members of management present. Among the items to
be discussed in these meetings are the independent auditor’s

 

 

evaluation of the Company’s financial and accounting personnel, the adequacy of the
Company’s internal controls, and the cooperation that the independent auditors received
during the course of the audit;

     (xi) Resolve all disagreements between the Company’s management and the auditor
regarding financial reporting;

     (xii) Ensure receipt from the independent auditors of a formal written statement
delineating all relationships between the auditors and the Company;

     (xiii) Inquire about the independent auditors’ past and continuing compliance with
auditor independence rules and about their program for enhancing safeguards to ensure
that conflicts do not arise in the future;

     (xiv) Submit the minutes of all meetings of the Audit Committee to, or discuss the
matters discussed at each committee meeting with, the board of directors;

     (xv) Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its judgment,
that is appropriate;

     (xvi) Review the Company’s Code of Ethics and the Company’s compliance therewith;
and

     (xvii) Review and discuss with management all Section 302 and 906 certifications
that are required.

4. Meetings

     The Audit Committee shall meet a minimum of four times annually to discuss with management the
annual audited financial statements and quarterly financial statements.

5. Resources and Authority

     The Audit Committee shall have the resources and authority appropriate to discharge its
responsibilities, including the exclusive authority to engage outside auditors for regular and
special audits, reviews and other procedures, and to retain independent legal counsel and other
advisors, as it determines necessary to carry out its duties. In furtherance of this
responsibility, the Company shall provide the funding as required by Section 301 of the
Sarbanes-Oxley Act of 2002 and Section 10A(m)(6) of the Securities Exchange Act of 1934, as
amended.

6. Limitation of Audit Committee’s Role

     While the Audit Committee has the responsibilities and powers set forth in this Charter, it is
not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s
financial statements and disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.

 

 

7. Effective Date

     This Audit Committee Charter shall become effective immediately upon its approval and adoption
by the board of directors of the Company. This Audit Committee Charter shall be reviewed on an
annual basis to assess its adequacy. This Audit Committee Charter replaces the Charter adopted on
February 19, 2004.

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